(d)NJC 2009 Question Analysisd) With reference to Extract 6 and your own knowledge, discuss how globalisation has affected trade patterns in the world and whether the changing patterns are consistent with the theory of comparative advantage.Thought processWhat is the trade pattern, what happened to exports? The type of exports as well as who are importing or exportingHow has increase movement of capital, labour, goods and services as well as exchange of technology caused this to happen?Explain from the view of developed worldExplain from the view of the developing worldTo what extent does CA explain this observationYesDue to gain in CA, lower Opportunity costNoOther reasons such as changes in demandNoCA assumes Factor immobility but changing trade patterns is due to movement of K between countriesKey WordsGlobalisationTrade PatternsTheory of Comparative AdvantageCommand wordDiscuss how WhetherGlobalisation -> changing trade patterns, evidence from extractEvidenceIncreased in manufactured exports as compared to agricultural productsReasonincreased in FDI and industrial productions in developing countries, domestic consumption of primary products and minerals used as raw materials is likely to be higher, hence reducing the quantity of such goods exported. EvidenceIncreased share of manufactured exports by developing countriesReason for EvidenceIncreased in flow of Capital (FDI) to developing countries from developed countriesWhy?To take advantage of relative low labour and operating costsLinkHence, increase in manufactured products in developing countriesEvidencedecline in developed countries' share of world manufactured exports Fragmentation of world supply chainReason for itupstream activities to be done in developed countriesLabour intensive and lower value added processes such as production and assembly to be done at low-cost developing countries.LinkHence, decrease in manufactured products in developed countriesEvidenceincrease in share of world argicultural exports by developed countriesReasonMore markets to be opened with rapid growth in emerging economies who are unable to satisfy domestic demand of agricultural products and require imports from developed countries.Does theory of comparative advantage explains this observationYesDeveloping countries are able to acquire comparative advantage in labour intensive and some even capital intensive manufacturesWhyDue to flow of capital and technology flows from developed countriesNoChanging trade patterns may be due to demand factors instead of comparative advantageWhyIncrease in developed countries' share of agricultiral exports could be due to increase overall global demand for processed food, rather than any change in comparative advantageNoCA assumes factor immobility between countries. Yet, the changing trade patterns are due to increased movement of capital, labour and technology between countries. Hence comparative advantage does not explain the observation.

(e)e) Evaluate the possible opportunities and challenges that globalisation could bring to an emerging economy like South Africa and a developed country like Japan.Thought processOpportunties and Challenges --> 4 main macro aims as well as 2 micro aimsGlobalisation - movement of g&S, capital and labour as well as exchange of technologyDeveloped country: JapanDeveloping country: South AfricaDeveloping(-)(+)BOPMay be spending more on imports of capital for industrialisation process. BOP worsensIncreased exports due to expansion of market (increased movemenr of goods and service).EvTemporary, imports will decrease as industries maturesTOT may be unfavourable especially for primary productsUnemploymentStructural unemployment as workers may lack the necessary skills required for industrialisation processMore jobs created due to inflow of FDIEvUpgrade of skills from primary to secondary sector may not be extensive and labours are able to pick up the skills relatively easilyOver-dependence on FDI could cause greater instability and makes the country more vulnerable.Stifle development of local enterpriseGrowthTrade can be used as engine of growth and increase inflow of capital helps with potential growthEvEfficiency gains may be localised in specific industries or geographical area, with little improvement in general standard of livingInflationGrowth may lead to demand pull inflationMaterial standard of living may fall due to fall in real income from rising inflationEfficiencyNegative externalities due to environmental degradation and faster depletion of resources.Would require government to closely monitor the effects of pollution and deforestation.EquityBenefits of globalisation may be accrue only to the minority, asset owners and skilled professionals. There can be a trickle down effect, as increased income and consumption spread across various sectors and raise general income levels.Developed(-)(+)BOPEvUnemploymentEvGrowthEvInflationEfficiencyEquity