Friday 25 May 2012 Afternoon

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1 Friday 25 May 2012 Afternoon GCSE ECONOMICS A593/01/SM The UK Economy and Globalisation STIMULUS MATERIAL *A * Duration: 1 hour 30 minutes INSTRUCTIONS TO CANDIDATES This is a clean copy of the stimulus material which you have already seen. You may not take your previous copy of the stimulus material into the examination. You may not take notes into the examination. INFORMATION FOR CANDIDATES This document consists of 8 pages. Any blank pages are indicated. INSTRUCTION TO EXAMS OFFICER / INVIGILATOR Do not send this stimulus material for marking; it should be retained in the centre or recycled. Please contact OCR Copyright should you wish to re-use this document. [A/501/5499] DC (LEO/SW) OCR is an exempt Charity Turn over

2 2 Trade benefits all? The growth in world trade has significantly increased over the last few decades. Emerging economies such as the BRIC nations (Brazil, Russia, India and China) have contributed to this growth. There are many benefits to economies of this increase in trade, but alongside these there are also a number of drawbacks. The recent global recession shows how economies around the world are now interconnected. 3 Fig. 1 GDP growth in selected economies Q to Q quarterly % change in GDP Key: UK Germany Spain Greece US Japan 5 Q1 Q2 Q3 Q4 Q1 Q2 Q year Q4 Q1 Q2 2010

3 The control of inflation is a major objective of most economies. Recent inflation rates within selected economies are shown in Fig Fig. 2 Annual inflation rates in selected economies 4 3 annual inflation rate (%) 2 1 Key: EU UK Germany Spain Greece US Japan year 2009 Turn over

4 The UK is a major trading nation and its exports to selected economies are shown in Fig Fig. 3 UK exports to selected economies Key: 33.5 bn value of exports in 2010 ( bn) + % change on 2009 Sweden 4.1 bn USA 33.5 bn Ireland 15.3 bn 17.7 UK exports 8.2 Spain 8.9 bn France 17.9 bn 15.8 Switzerland 3.9 bn 12.0 Italy 8.2 bn Belgium 10.5 bn 13.0 Poland 2.7 bn Germany 24.8 bn Netherlands 17.4 bn +5.3 China 5.1 bn 29.8 India 2.9 bn Japan 3.4 bn Australia 2.8 bn

5 5 Fig. 4 The main goods exported from the UK What the UK sells overseas the Top 10 products Key: value of exports + % change on 2009 medicines in 2010 ( bn) 16.9 bn petrol cars other oils engines telecoms 12.4 bn 11.8 bn aerospace 9.9 bn 9.6 bn equipment chemicals scientific alcoholic 7.6 bn instruments drinks 5.6 bn 5.3 bn 4.8 bn 4.6 bn Fig. 5 UK Current account balance billion year Turn over

6 6 International trade can cause countries to clash as shown in Figs. 6 and 7. Fig. 6 Newspaper headlines in 2010 Headline A EU puts a quota on cotton imported from China Headline B US increases tariff on steel imported from the EU by 10% Fig. 7 China and the USA a trade war? China is to enforce anti-dumping duties on chicken imports from the USA, accusing US poultry firms of exporting the meat at unfairly low prices. In just the latest in a series of trade disputes between the two countries, China s Commerce Department said the tariffs will start shortly. China launched an investigation into chicken imports from the USA in September 2010, a day after the USA put tariffs on imports of tyres from China. President Obama said that he would get much tougher with China on trade.

7 7 Fig. 8 Increasing globalisation Globalisation is a word which is on everyone s lips these days, from politicians to businessmen. Globalisation is not new, but it is a product of the industrial revolution. Britain grew rich in the 19th century as the first global economic superpower. The pace, scope and scale of globalisation have accelerated dramatically since World War II, and especially in the last 25 years. The rapid spread of information technology and the Internet are changing the way companies organise production, and increasingly allowing services as well as manufacturing to be globalised. Drivers which have affected globalisation are shown in Fig. 9. Fig. 9 What has driven globalisation? Cheaper transportation Faster communication Improved IT Higher living standards Turn over

8 8 Fig. 10 Poverty and the impact of trade on poverty Nearly 13 million people live in relative poverty in the UK. The UK has a higher proportion of its population living in relative poverty than most other EU countries. Absolute poverty is all about not having enough money to pay for the things you need. This means that you may not have enough to eat, may be unable to heat your home, and may not have adequate warm clothing. Trade between countries can help to reduce poverty in a country. It can help people in a country to earn more money and, therefore, spend more on material goods. However, trade can also cause an increase in the income inequality in a country. Fig. 11 Relative poverty in selected EU countries in 2010 (= 60% of median income after housing costs.) 20, , , , , , 000 8, 000 6, 000 4, 000 2, Luxembourg Ireland UK Sweden Netherlands Germany Belgium France Italy Spain Greece Poland Copyright Information OCR is committed to seeking permission to reproduce all third-party content that it uses in its assessment materials. OCR has attempted to identify and contact all copyright holders whose work is used in this paper. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced in the OCR Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download from our public website ( after the live examination series. If OCR has unwittingly failed to correctly acknowledge or clear any third-party content in this assessment material, OCR will be happy to correct its mistake at the earliest possible opportunity. For queries or further information please contact the Copyright Team, First Floor, 9 Hills Road, Cambridge CB2 1GE. OCR is part of the Cambridge Assessment Group; Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.

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