Practise Edexcel Business questions on globalisation, trade and international operations, applying global opportunities and risks to a firm’s strategy.
Sources for use with Extract A Asia’s need for coal to lift Australian coal exports in 2019 The increasing import of coal by India and Southeast Asia has been driven by the greater use of electricity. This will lead to a strong increase in Australian coal exports over the next five years. The International Energy Agency (IEA) predicts a 4.6% rise in coal‑powered generation in India. Strong economic growth in Indonesia and Vietnam will increase the need for coal by 5%. The Australian economy is dominated by its service sector, even though it produces a lot of coal and other minerals. The service sector makes up 62.7% of Australian GDP and employs 78.8% of the labour force. Australian GDP in 2019 was estimated at A$1.9 trillion. Extract B Vietnam’s rising Foreign Direct Investment (FDI) inflow Up to the year 2019 there have been 10 consecutive years of increase in FDI inflow into Vietnam. There is a significant increase in both the volume and the value of FDI projects. In 2019, there were 3,478 new projects, a 28.2% increase on the previous year. These new projects brought in an extra US$31.8bn, a 3.1% increase on the previous year. South Korea was the top investor in Vietnam in 2019 investing US$7.9bn, followed by Hong Kong at US$7.8bn. Vietnam has benefitted from the US‑China trade war, and the political tension in Hong Kong. Vietnam is being chosen by investors among other ASEAN countries because of its cultural similarity to China, low labour costs and pro‑investment policies. The Vietnamese processing and manufacturing sector attracted 68% of Vietnam’s total FDI in 2019. In June 2019, Apple announced its plan to start trial production of the wireless earphones, AirPods, in Vietnam to avoid the cost of tariffs imposed on China by the US. The World Bank expects FDI to continue to rise in 2020. Manufacturers are showing interest in the Central Region where land available for industrial use is vast. However, it is critical for the Vietnamese government to better integrate into the global supply chain and improve the skills of the labour force. 5 5 10 15
3 Extract C Vietnam ranked 70th in World Bank’s 2020 Ease of Doing Business Ranking Vietnam was placed 70th out of 190 economies in the World Bank’s 2020 Ease of Doing Business ranking. The ranking was down one place from the previous year, despite a higher score of 69.8 points out of 100. In the report, the World Bank marked and ranked economies in ten areas including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, employing workers, and dealing with the government. Vietnam was said to have made significant improvements in getting credit and paying taxes, resulting in increases of 5% to 7% annually. Other areas witnessed minor improvements or remained unchanged. The ranking of other Southeast Asian countries were Malaysia (12th), Thailand (21st), Indonesia (73rd), the Philippines (95th), Brunei (66th), Cambodia (144th) and Laos (154th). Elsewhere, New Zealand came first in the 2020 ranking, followed by Singapore, Hong Kong (China), Denmark, the South Korea and the US. Extract D European Parliament approves EU‑Vietnam free trade and investment deal The EU‑Vietnam trade agreement, described as the most modern and ambitious agreement ever concluded between the EU and a developing country, received the European Parliament’s backing on the 20 February 2020. The agreement will remove virtually all customs duties between the EU and Vietnam over the next ten years, including on Europe’s main export products to Vietnam. European businesses will also be able to bid on public tenders put out by the Vietnamese government and several cities, including Hanoi. The main EU imports from Vietnam include telecommunications equipment, clothing and food products. The EU mainly exports goods such as machinery and transport equipment, chemicals and agricultural products to Vietnam. Vietnam is the EU’s second largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, its trade in goods is worth €47.6bn a year and €3.6bn when it comes to services. EU exports to the country have grown between 5% and 7% annually. The EU’s trade deficit with Vietnam was €27bn in 2018.
Australia is a developed economy.
Explain one characteristic of a developed economy.
Assess the importance of trade liberalisation in increased globalisation.
Extract A Thailand's economy - 2021 - Thailand is the 22nd largest exporting country in the world - It has a positive trade balance of $34.3bn - The gross domestic product (GDP) of Thailand is $546bn with a population of 69,410,000 - Thailand is the largest exporter of natural rubber in the world - It has a 33.3\% share of the global export market for rubber that is worth $4.63bn annually - Almost half of Thailand's rubber (42.4\%) is exported to China.
Extract B Vietnam's GDP between 2000 and 2020 in billion $
Extract C International trade in developing economies Over the last two decades, developing economies have made a big increase in their share of world trade. By 2019, the value of goods exported from developing countries had increased to 44.3\% of the global total and the value of services exported increased to 30\% of the global total. Several growing countries doubled their share of global trade from 2010 to 2019. - Vietnam tripled its share of world exports of goods from 0.47\% in 2010 to 1.4\% in 2019 and its share of world exports of services grew from 0.19\% to 0.45\% - Thailand almost doubled its share of world services exports from 0.87\% to 1.34\% - United Arab Emirates quadrupled its share of service exports from 0.3\% to 1.2\% - Bangladesh almost doubled its share of total services exports from 0.13\% to 0.2\% and its total goods exports from 0.06\% to 0.1\%.
Extract D Regional Comprehensive Economic Partnership (RCEP) trade deal In November 2020, the RCEP was signed in Hanoi, Vietnam after eight years of negotiations. Its 15 members are Australia, China, Japan, New Zealand, South Korea, plus 10 members of the Association of Southeast Asian Nations (ASEAN): Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Once agreed by all its members it will form the world's largest trade bloc, covering 30\% of global output and almost one third of the global population.
Extract A Thailand's economy - 2021 - Thailand is the 22nd largest exporting country in the world - It has a positive trade balance of $34.3bn - The gross domestic product (GDP) of Thailand is $546bn with a population of 69,410,000 - Thailand is the largest exporter of natural rubber in the world - It has a 33.3\% share of the global export market for rubber that is worth $4.63bn annually - Almost half of Thailand's rubber (42.4\%) is exported to China.
Using Extract A, calculate to two decimal places the GDP per capita of Thailand.
Explain one advantage for Thailand of specialising in the production of rubber.
Discuss the extent to which economic growth in a country such as Vietnam may
have caused its employment patterns to change.
Assess how economic growth in developing economies may affect the trade
opportunities for European businesses.
Assess the possible impact on businesses in countries such as Thailand and
Vietnam from their membership of a trading bloc.