- Define and explain Globalisation Debated in your own words
- Use key terms such as comparative advantage accurately
- Apply what you have learned to new examples and questions
- Avoid the common mistakes learners make with this topic
This lesson focuses on Globalisation Debated: assess the winners, losers and future of global integration.
Assess the winners, losers and future of global integration.
Key ideas
Protectionism versus free trade
Tariffs and quotas shield domestic jobs and infant industries and can protect national security, but they raise consumer prices, invite retaliation and shelter inefficiency. Globalisation has lifted millions from poverty through trade-led growth, yet created losers in declining industries — hence demands for retraining and compensation.
The gains from trade
Ricardo showed that if Portugal gives up less wine to make cloth than England does, both gain by specialising and trading — even if Portugal is better at both. Trade enlarges both nations' consumption possibilities, though the gains may be unevenly shared within each country.
Key term — comparative advantage: Ricardo's principle that countries gain by specialising in what they produce at the lowest opportunity cost — even if another country is more efficient at everything.
The UK imposes a 10% tariff on imported bicycles priced at £200. Calculate the new price and identify the winners and losers.
Calculate the tariff: 10% of £200 = £20. New price to consumers: £200 + £20 = £220. Winners: domestic bicycle producers (who can raise prices) and the government (tariff revenue). Losers: consumers, who pay £20 more per bicycle.
Answer: The price rises to £220. Domestic firms and the Treasury gain; consumers lose £20 per bicycle.
- Thinking exports are good and imports bad Imports give consumers choice and lower prices and supply inputs for exporters — a surplus is not automatically better than a deficit.
- Confusing depreciation with devaluation Depreciation is a market-driven fall in a floating currency; devaluation is a deliberate cut in a fixed exchange rate.
Practice
Workers in industries exposed to import competition may lose jobs and wages, while skilled workers and consumers gain.
Countries gain by specialising in goods they produce at the lowest opportunity cost, then trading.
$63.50 (50 × 1.27).
They become cheaper in foreign currency, boosting demand for them.
Quick check
Which of these best defines "comparative advantage"?
What is a quota?
Give one argument for and one against tariffs.
- Globalisation Debated: assess the winners, losers and future of global integration.
- Protectionism versus free trade: Tariffs and quotas shield domestic jobs and infant industries and can protect national security, but they raise consumer prices, invite retaliation and shelter inefficiency.
- exchange rate: The price of one currency in terms of another, e.g.
- Watch out for: thinking exports are good and imports bad