Practise globalisation through trade-share calculations, transport and communication changes, FDI, migration and distributional effects across countries.
In 2021, 2.4 million migrants moved into the European Union (EU) from non-EU countries. In 2022, this number rose to 5.1 million.
Evaluate the likely benefits of a significant increase in migration into the EU.
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.
QS9: Interpret, apply and analyse information in written, graphical, tabular and numerical forms.
Knowledge, Application and Analysis ( 12 marks) - indicative content
- Understanding of migration
Benefits may include:
- Reduction in skills shortages in labour markets, increasing productivity;
may help decrease production bottlenecks
- Effects on labour market: rise in competition, reduction of wage and unit labour costs, making exports more internationally competitive
- Reduction in voluntary unemployment/increase in filling of job vacancies;
make the labour market more flexible as migrants are willing to take up jobs that are hard to fill, including seasonal and low-skilled work
- Increase in economic growth as a result of an increase in LRAS: lower price level and higher real output
- Rise in tax receipts for governments of countries in the EU resulting in an improvement in public finances
- May bring new ideas and entrepreneurship, contributing to innovation and the creation of new businesses
- Helps to counteract the ageing population in many EU countries by increasing the birth rate and supporting the dependency ratio
- Migrants often work in essential sectors such as healthcare, education, and social services, helping to meet the demand for these services and supporting the overall functioning of society
N.B. Award maximum of Level 3 ( 9 marks) if a candidate does not refer to the EU in their answer
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
Displays isolated, superficial or imprecise knowledge and understanding of economic terms, principles, concepts, theories and models.
Use of generic material or irrelevant information or inappropriate examples.
Descriptive approach which has no chains of reasoning.
Level 2
4-6
Displays elements of knowledge and understanding of economic terms, principles, concepts, theories and models.
Limited application of knowledge and understanding to economic problems in context.
A narrow response or superficial, only two-stage chains of reasoning in terms of cause and/or consequence.
Level 3
7-9
Demonstrates accurate knowledge and understanding of economic terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the question. Some evidence and contextual references are evident in the answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause and/or consequence are evident but they may not be developed fully or some stages are omitted.
Level 4
10-12
Demonstrates accurate and precise knowledge and understanding of economic terms, principles, concepts, theories and models. Ability to link knowledge and understanding in context using appropriate examples which are fully integrated to address the broad elements of the question.
Analysis is clear, coherent, relevant and focused. The answer demonstrates logical and multi-stage chains of reasoning in terms of cause and/or consequence.
Evaluation (8 marks) - indicative content
- Depends on the magnitude of the increase in migration: as 2.7 million/ 112.5% increase within one year is large, the impact on the EU is likely to be significant
- Depends on whether migrants find jobs or remain economically inactive or unemployed
- Depends on the skills of migrants, e.g. there may be a skills mismatch
- Depends on whether migration into the EU is permanent or temporary
- Impact on wages depends on whether migrants are skilled or non-skilled or non-working
- Net migration / emigration figures are important
Costs may include:
- Pressure on public services: housing, health, education, social security/ benefit systems - impacts public finances in the long run
- Rise in unemployment of domestic workers as they can be displaced by migrants who may be willing to work for low wages
- Impact on origin countries e.g. brain drain, loss of workforce, loss of tax revenue to the governments of non-EU countries
- Negative externalities/external costs e.g. crime or environmental issues
- Increase in the supply of labour can put downward pressure on wages, particularly in low-skilled jobs;
this can affect the income levels of workers in the EU and lead to income inequality
- Governments may need to reallocate resources to address the needs of migrants, which can divert funds from other important areas
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2
4-6
Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3
7-8
Evaluation recognises different viewpoints and/or is critical of the evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.
Which one of the following factors has contributed to increased globalisation in the last 50 years?
An increase in the cost of transport
An increase in the cost of communications
A reduction in tariffs and quotas
A reduction in the number of trading blocs
C
In the first quarter of 2022 the USA and Australia both experienced inflows of foreign direct investment (FDI) of $67 billion and $59 billion respectively.
Evaluate the potential economic benefits to a developed country of FDI inflows.
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.
QS9: Interpret, apply and analyse information in written, graphical, tabular and numerical forms.
Knowledge, Application, Analysis (12 marks) - indicative content
- Understanding of FDI
Economic benefits could include:
- Inflows into the financial account of the balance of payments
- Long term improvement on the current account of balance of payments if exports rise (a rise in foreign currency earnings)
- Economic growth - greater injection into the circular flow;
AD/AS analysis and multiplier effects on real GDP
- Increase in skills of the workforce if TNCs invest in training programmes
- Increased employment in the host country
- Development of new infrastructure by TNCs
- New methods of production and working practices
- Use of cleaner technology resulting in less negative externalities/ environmental degradation
- Productivity and technology transfer
- Increased tax revenue to government
- Could help close the country's savings gap
N.B. Award maximum of Level 3 ( 9 marks) if a candidate does not refer to a developed country in their answer
Level
Mark Descriptor
0 No rewardable material.
Level 1
1-3
Level 2
4-6
A narrow response or superficial, only two-stage chains of reasoning in
terms of cause and/or consequence.
Level 3
7-9
Demonstrates accurate knowledge and understanding of economic terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the question. Some evidence and contextual references are evident in the answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause and/or consequence are evident but they may not be developed fully or some stages are omitted.
Level 4
10-12
Demonstrates accurate and precise knowledge and understanding of economic terms, principles, concepts, theories and models. Ability to link knowledge and understanding in context using appropriate examples which are fully integrated to address the broad elements of the question.
Analysis is clear, coherent, relevant and focused. The answer demonstrates logical and multi-stage chains of reasoning in terms of cause and/or consequence.
Evaluation (8 marks) - indicative content
- Negative impact on the current account of balance of payments due to the repatriation of profits and dividends by TNCs abroad
- Higher competition for domestic producers who may not be able to compete
- Impact on economic growth depends on the value of the multiplier and/or the level of spare capacity in the economy
- Poorly paid employment and low-skilled jobs if TNCs bring their own skilled workers and managers from abroad
- Increased dependence of economy on decisions made by managers abroad. Significant if the investment is withdrawn in the future which could lead to economic and social disruption (given TNCs are footloose)
- Domestic firms might not benefit if technologies are protected by patents
- Increase in negative production externalities/environmental degradation
- Tax avoidance schemes and transfer pricing could be used by TNCs
- TNCs may exert political influence, e.g. on governments tax policies
- Impact on the economy might be small (if there is little value added)
- Overall impact depends on net FDI (inflows minus outflows)
- FDI inflows as a proportion of GDP is more significant than absolute values e.g. Australia FDI inflows are a larger proportion of GDP compared to USA
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2
4-6
Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3
7-8
Evaluation recognises different viewpoints and/or is critical of the
evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.
Released first on EDEXCEL AP DISCORD https://sites.google.com/view/ap-edexcel/
Between 2000 and 2022 globalisation was a significant factor that led to an increase in average incomes in Indonesia. However, income inequality within the country also increased during the same period. Evaluate reasons why globalisation may lead to an increase in income inequality within a country. Refer to a country of your choice in your answer.
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.
QS9: Interpret, apply and analyse information in written, graphical, tabular and numerical forms.
Knowledge, Application and Analysis ( 12 marks) - indicative content
- Understanding of globalisation
- Understanding of income inequality
Reasons may include:
- Inward migration of low-skilled workers may depress wage rates and
could widen the wage gap between skilled or semi-skilled, and unskilled workers who are likely to experience a reduction in their relative wage
- Skilled workers can earn higher incomes as there will be increased global
demand for their services
- Workers who are mobile and who have the skills can move from declining to expanding industries
- Workers who lack the skills and occupational mobility are likely to face structural unemployment
- Businesses may gain greater profits as they are able to locate to low-
cost countries, and therefore workers in developed economies may be
made redundant
N.B. Accept why globalisation increases income inequality as KAA and why it does not as EV, or vice versa
N.B. Award maximum of Level 3 ( 9 marks) if a candidate does not refer
to a country(s) in their answer
Level
Mark Descriptor
0 No rewardable material.
Level 1
1-3
Displays isolated, superficial or imprecise knowledge and understanding of economic terms, principles, concepts, theories and models.
Use of generic material or irrelevant information or inappropriate examples.
Descriptive approach which has no chains of reasoning.
Level 2
4-6
Displays elements of knowledge and understanding of economic terms, principles, concepts, theories and models.
Limited application of knowledge and understanding to economic problems in context.
A narrow response or superficial, only two-stage chains of reasoning in terms of cause and/or consequence.
Level 3
7-9
Demonstrates accurate knowledge and understanding of economic terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the question. Some evidence and contextual references are evident in the answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause and/or consequence are evident but they may not be developed fully or some stages are omitted.
Level 4
10-12
Demonstrates accurate and precise knowledge and understanding of economic terms, principles, concepts, theories and models. Ability to link knowledge and understanding in context using appropriate examples which are fully integrated to address the broad elements of the question.
Analysis is clear, coherent, relevant and focused. The answer demonstrates logical and multi-stage chains of reasoning in terms of cause and/or consequence.
Evaluation (8 marks) - indicative content
- Improvements in labour mobility as a result of globalisation might help to reduce income inequality
- Economic growth resulting from globalisation could lead to an increase in tax revenue for governments that may be spent on raising incomes of low-income groups
- TNCs usually spend on training, so human capital may increase resulting in a decrease in unemployment and income inequality
- Higher profits of businesses can be used to raise wages of unskilled workers
- Increased protectionism may be reducing the impact of globalisation on income inequality
- Higher average incomes associated with globalisation might not necessarily result in increased income inequality i.e. the impact is unlikely to be the same for different countries
- Other factors are more important than globalisation in causing inequality
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2
4-6
Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3
7-8
Evaluation recognises different viewpoints and/or is critical of the evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.