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A2 Economics 10th
http://www.youtube.com/watch?v=
Pbj9auFz9Ck&safe=active
Balance of Payments
account
3. Net income flows
Not all flows of money are from trade
in goods and services
Income flow from use of factors of
production overseas
Interest, profits and dividends on UK
assets abroad
These also flow out of the country to
overseas owners
Net income flows are the difference
between inward and outward flows
These tend to be positive in the UK
4. Current transfers
Net current transfers consist mainly
of government transfers to and from
overseas organisations e.g. the EU
Task 1
Look at the graph, What 3 sectors provide
the largest contribution to exports
Can you find more recent data on exports
and imports by sector for the UK?
Can you think of examples of such
products
Can you think of companies that produce
them
Task 2
1. Foreign Direct Investment- Can you find
out who is the biggest foreign investor in
the UK
2. Where does the UK invest its money
internationally
3. In 2013 can you find if FDI was positive
or negative.
4. Using the data write a paragraph
discussing the significance of FDI to the
UK in recent years.
Task 3
1. What is the UKs largest export market
2. Can you think of any reasons why
export declined in this period to many
countries
Exports and Capital inflows Today we will look at what Britain exports
well
Why it might not be good at exporting
some products
Why the UK seems to attract so much
foreign investment.
Task 4
1. Describe what has occurred in the overall
current account.
2. Can you find any Data that reverses the
fall in the balance of trade- Is there any
sign of an export led recovery
3. Of the data you have found in your
research- what are the key changes
compared to this data
homework
Explain the main factors which might help
determine the volume of UK exports and
imports. (15 marks)
the UK may adopt a strategy of export-led growth (1 mark). This may be because it is
perceived as the most rapid way of achieving economic growth (1 mark) and/or
because it feels itself to be very competitive in world markets (1 mark). It may
recognise that a good export performance will initiate a multiplier effect (1 mark) which
should benefit the economy beyond the export sector (1 mark) and that exports may
well encourage supply-side improvements (1 mark) such as innovation and higher
productivity to sustain good external performance (1 mark)
favourable terms of trade (examiners note that this term is not included in the
specification but candidates may well discuss relative export/import prices even if the
term is not used)
the need for imports of raw materials, energy and/or finished goods, e.g. because the
UK has lost so much of its industrial base
a sustained favourable exchange rate motivates an export drive
absolute/comparative advantage, e.g. UK comparative advantage in financial services
the impact on UK exports of overseas recession, especially the US and the EU as far
as the UK is concerned
exchange rate movements
relative inflation rates
relative rates of productivity (traditionally unfavourable for the UK) and impact on
competitiveness
the ability of the UK to impose protectionist policies
any other valid point. Up to 7 marks per explanation
(1 mark for identification and 6 marks for the explanation)
However, it may be that a candidate devotes much of his/her answer to the issue of
comparative advantage and develops the point with a numerical example. If this is the
case award up to 10 marks for an explanation of comparative advantage.
make use of diagrams in the analysis Up to 2 marks per diagram
Long-term factors
The UK manufacturing sector
has been in long-term decline
for more than twenty years.
Although there are some world
class manufacturing
companies, the size of the
manufacturing sector is not
large enough both to meet
consumer demand in the UK
and also to export sufficient
volumes of products to pay for
a growing demand for imports
Evaluation