HSC Economics

Topic 1 – The Global Economy

Introduction to the Global Economy
The global economy

View the presentation “Did You Know” from within my YouTube favourites folder. Read through
the introductory section on pp 1-2 then watch “The Global Economy: Globalisation” to stimulate
discussion re Globalisation (may well come back to this video at a later stage).

Powerpoint 01

Handout showing tables 1.1 and 1.2

What are some interesting things to be gleaned from this information?

Globalisation: copy the definition from the glossary

Notes
Determining the level or degree of globalisation can be done by looking at major indicators of
integration between economies. The major levels that we need to consider are:
• International trade flows
• International financial flows
• International investment flows and transfers of technology
• The movement of workers between counties

Make notes on this section of the text under the headings provided from p2-7

Changes in international trade flows

Powerpoint 02

Work through section in text and summarise on board

Australia’s Trade Flows - handout

Gittins article – “India’s merry-go-round gets a push from the top”

Changes in global financial markets

Powerpoint 03

Make notes on the board from this section. Include discussion of the growth of global forex
markets, the role of the main participants in forex markets (traders, investors and speculators)
and the economic impact of these changes.

Powerpoint 04

Gittins article “How globalisation is helping poor countries”

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The international business cycle

Powerpoint 05

Analysing statistics worksheet

Read through Section 1.4 of the text and complete the following:
1. Examine Fig 1.10 and describe the level of correlation demonstrated. What evidence
does this provide for the existence of an international business cycle?
2. Describe the ways in which globalisation has led to an increased integration of
economies.
3. Despite the existence of such linkages, there are differences between economies, even
ones that are at similar stages of economic development. Describe the differences that
exist.

Trade in the Global Economy

Advantages and disadvantages of free trade

Read through 2.1. Have students copy the advantages and disadvantages tables.

Powerpoint 06 – Theory of trade

Reasons for protection

Define protection

Summarise the arguments presented in the text.

Gittins article re transnational corporations

Methods of protection

Summarise the methods of protection as outlined in the text.

Article – “A new protectionism…”

Trade agreements

Powerpoint 07 – Trade agreements

Students make notes on the various trade agreements outlined from p27 starting with APEC.

Read through the handout “APEC at a Glance”. Write a brief (c. one page) report which outlines
the “who, what, why, where and how” of APEC.

View Clickview – “Globalisation and Free Trade – At What Price?” with accompanying
questions.
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International organisations

Direct students to the following url and have them undertake the revision lessons for the topic
“Why trade?”.
http://www.s-cool.co.uk/topic_index.asp?subject_id=11

View the wmv file “students tour” which looks at the WTO and answer the following questions:

1. How are decisions made in meetings of the General Council of the WTO?
2. Who is represented at the WTO? Why is it restricted to governments?
3. What percentage of world trade is covered by the WTO?
4. Why do countries want to join the WTO?
5. What is the response of the WTO representative to the criticism that all the WTO does is
legitimize the existing trade power structures?
6. What role does the WTO play in the settling of trade disputes between member
countries?
7. Will both countries and individuals within those countries benefit from free trade? Explain.
8. What difficulties are faced by developing countries in terms of their membership of the
WTO?

Students should summarise the information on the major international organisations as outlined
in the text on pp 35-40.

Using the handouts on the benefits and misunderstandings of the WTO, write an essay (max
750 words) which assesses the value of the WTO as an international organisation to promote
global trade.

Divisions in the Global Economy

Variations in the standard of living in the global economy

View Clickview – “Impacts of globalisation” with accompanying questions.

Students should summarise the notes from 3.1 on p 43-44.

Differences in income and economic growth

Answer review questions on p 46

Differences in economic development

Standards of living in different countries can be compared on the basis of GDP per capita
and/or a host of other material and non-material indicators such as the levels of adult literacy,
nutrition, energy consumption and health services, all of which provide an indication as to the
quality of life. The Human Development Report 2004, released by the UN Development
Program based on 2002 data, separates 177 countries into three categories on the basis of
GDP per capita and other human development indicators.

The first ranked group of countries, called high human development countries, consisted of 55
countries, including Canada, the USA, Australia, NZ, Germany, France, Italy, the UK, Norway
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and Singapore. There were 86 medium human development countries including Mexico,
Malaysia, the Russian Federation, China, India, Brazil, Indonesia, Turkey, Thailand and
Vietnam. There were 36 low human development countries including Nigeria, Pakistan,
Ethiopia, Tanzania, Sudan, Congo, Uganda, Zambia, Rwanda and Mozambique.

In addition to the various data collected, the UNDP calculates what they call a Human
Development Index (HDI) by measuring three variables considered to be crucial for human
development or progress: life expectancy at birth; literacy and educational attainment; and per
capita income. The 55 countries in the high human development category had HDI values
ranging from 0.8 to 0.95. The 86 middle ranked countries had HDI values between 0.5 and
0.79. The lowest ranked 36 countries ranged from 0.27 to 0.49.

Examine handout Table 3.1. Account for why countries ranked in each of the three different
categories were ranked there.

Examine handout Table 3.2. Account for why the specific countries listed are at the top, in the
middle and at the bottom, respectively.

Read though pages 47 and 48 and make notes on anything that you feel needs to be added
that has not already yet been covered above.

Powerpoint 08 – Economic growth and development

Categories of development in the global economy

Largely covered this earlier at the beginning of the topic

Review questions p 51

http://www.imf.org/external/mmedia/view.asp?eventID=903
Make notes on the World Economic Outlook press conference from October 17 re the outlook
for individual economy and global growth.

Causes of inequality in the global economy

Students should work through and summarise this section of the text, using the headings and
sub-headings provided.

Powerpoint 09 – Causes of inequality

The impact of globalisation

Students should work through and summarise this section of the text, using the headings and
sub-headings provided.