Transport and communication costs

[Maximum number: 12]

Extract A Senegal - Selected indicators
- Population of Senegal in 2021 was 17.2 million
- GDP of Senegal in 2021 was $25.5bn

Gross Domestic Product (GDP) growth rates

Table for Question Edexcel A-Level Business A2 4.3.1 3c Transport and Communication Costs Questions question 1 — Edexcel A-Level Business A2

* estimate

Extract B Africa's Free Trade Area The African Continental Free Trade Area (AfCFTA) started in 2021. All African countries have signed the agreement, apart from Eritrea. It is hoped that these 54 countries will grow together to form a single market.

They have pledged to eliminate import tariffs on 97% of goods traded between African countries over a period of time. It is hoped that this will increase trade between African countries, which will in turn boost economic growth, bringing more prosperity and social equality to those on the continent.

According to the World Economic Forum, African nations currently trade more internationally than with each other. Only 17% of African exports go to other African countries, whereas in Asia 59% of its exports go to other Asian countries and in Europe it is 68%.

Extract C Senegal attracts investors The largest wind farm in West Africa is in Senegal, 70 km northeast of Dakar. Stretching across 41 hectares, the Taiba N'Diaye wind power project has attracted over $400m of Foreign Direct Investment (FDI). When operating at full capacity, it will provide two million people with electricity and supply nearly a sixth of Senegal's power needs.

It is not the only large energy project that looks set to transform Senegal's economy. Reserves of more than 1 billion barrels of oil and 40,000 billion cubic feet of gas have been found just offshore. Another major find by British oil company BP and US operator Kosmos Energy has led to the development of the $4.8bn Greater Tortue Ahmeyim (GTA) project, which has 15 trillion cubic feet of recoverable gas reserves.

As a result of the oil and gas discoveries investor interest has increased, encouraged by the appealing nature of the broader Senegalese market. In a relatively unstable region, with recent coups in Guinea and Mali and turbulence in Côte d'Ivoire, Senegal stands out for its political stability.

Extract D The second wave of globalisation was enabled by technology The worldwide expansion of trade after the Second World War was largely possible because of reductions in costs. This was due to technological advances, such as the development of commercial aviation, the increase in productivity in shipping and the improvements in communication.

The reductions in costs had an impact, not only on the volumes of trade, but also on the types of exchanges that were possible and profitable.

By the end of the 20th century...
- Passenger air transport costs were $10.74 \%$ of the costs in 1930
- Sea freight costs were 22.32% of the costs in 1930
- International calling costs were 0.03% of the costs in 1930

Assess the role of reduced costs of transport and communication in increasing globalisation.

QS9 Interpret, apply and analyse information in written, graphical and numerical
forms.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the general marking guidance. The indicative content below exemplifies some of the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- Transport and communication costs have reduced significantly since
1945
- Shipping, with the advent of containerisation, has made it much easier and cheaper to move goods around the world
- What would have been uneconomic previously now became viable, thus
increasing the amount and type of goods traded
- Cheaper air travel made face-to-face interaction more common,
increasing integration and understanding as well as benefiting trading
arrangements
- Communication has improved, satellites and technological advances have reduced the cost of communicating to a fraction previously
experienced
- All of these have increased globalisation by making it easier and cheaper for economies to integrate
- However, there are other factors that have played an important part in
increasing globalisation
- The World Trade Organisation (WTO) organises rounds of negotiations to increase and liberalise trade such as the Doha round
- The WTO supervises world trading arrangements and trade negotiations and promotes the benefits of free trade
- It helps to resolve disputes between governments such as the agreement on harmful fishing subsidies
- The expansion of trading blocs has done much to liberalise trade such as the EU and more recently in Extract B, the AfCFTA
- Political change such as the opening up of previously closed economies has increased integration
- Labour has become more mobile, migration of people spread ideas and
culture leading to further globalisation

- Transport and communication costs is just one of several factors but it is an important contributor to trade liberalisation

Level	Mark	Descriptor
	0	A completely inaccurate response.
Level 1	1-2	Isolated elements of knowledge and understanding - recall based. Weak or no relevant application to business examples. Generic assertions may be presented.
Level 2	3-4	Elements of knowledge and understanding, which are applied to the business example. Chains of reasoning are presented, but may be assertions or incomplete. A generic or superficial assessment is presented.
Level 3	5-8	Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Analytical perspectives are presented, with developed chains of reasoning, showing cause(s) and/or effect(s). An attempt at an assessment is presented, using quantitative and/or qualitative information, though unlikely to show the significance of competing arguments.
Level 4	9-12	Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. A coherent and logical chain of reasoning, showing cause(s) and/or effect(s). Assessment is balanced, wide ranging and well contextualised, using quantitative and/or qualitative information and shows an awareness of competing arguments/factors, leading to a supported judgement.

Edexcel A-Level Business A2 4.3.1 3c Transport and Communication Costs Questions question 1