Globalisation, free trade and protectionism

Explain what globalisation is and name two factors that have made it possible (cheap container transport, the internet). Then, play label detective: find three products at home or in your school bag and their country of manufacture, and comment on anything that surprised you.

Follow the journey of a $12\ \text{€}$ T-shirt: cotton from India, yarn and fabric woven in Bangladesh, made up in Bangladesh, designed in Spain, shipped by boat to Valencia and sold in a shop in your city.

1. a) Count how many countries take part and explain why it is called a 'global value chain'.
2. b) Argue why each stage is done where it is done (costs, know-how, closeness to the customer).

Define export and import with a Spanish example of each (selling oranges to Germany; buying mobile phones manufactured in Asia or oil). Explain the two reasons why a country buys goods from abroad: because it lacks the product or because others produce it more cheaply.

Each country specialises in what it produces best or most cheaply: Spain exports oil, oranges and cars, and buys oil and technology.

1. a) Explain why that exchange benefits both sides (each one does its own thing and buys the rest).
2. b) Argue what would happen if your country tried to produce everything, even bananas or microchips (dearer, less efficient).

When a German tourist spends $800\ \text{€}$ at a hotel in Benidorm, Spain is 'exporting' services even though nothing crosses the border in a lorry.

1. a) Explain why tourism counts as an export (money comes in from abroad in exchange for a service done here).
2. b) Give two more examples of 'invisible exports' (a foreign student paying for a master's degree here, a Spanish software company selling licences to Chile).

The figure shows the trade balance of Exportia, an imaginary country, over two years: what it sold abroad (exports) and what it bought (imports), in billions of euros. In $2024$, it imported $280$ and had a deficit of $40$: it bought $40$ more from abroad than it sold.

1. a) Calculate Exportia's exports in $2024$, which is the missing figure in the chart.
2. b) Calculate the balance for $2023$ and state whether it was a surplus or a deficit.

Last year, Naranjania exported goods worth $400$ billion euros and imported $350$.

1. a) Calculate its trade balance and state whether it was a surplus or a deficit.
2. b) This year it exports $380$ and imports $430$: calculate the new balance and explain what has changed.
3. c) Reason why a deficit is not always bad news: what is the difference between importing sweets and importing machinery for factories?

The trade balance of Vendelandia, in billions of euros: in $2022$ it exports $310$ and imports $300$; in $2023$ it exports $305$ and imports $330$; in $2024$ it exports $290$ and imports $350$.

1. a) Calculate the balance of each year and say whether it is a surplus or a deficit.
2. b) Describe the trend and give two possible explanations (it loses competitiveness; the bill for the energy it imports rises).
3. c) Argue why a deficit that repeats and grows worries more than a one-off one.

Zapatilandia produces trainers, but imported ones are cheaper: costing $50\ \text{€}$ compared to $55\ \text{€}$ for local ones. The government introduces a tariff of $20\ \%$ on imported trainers.

1. a) Calculate the new price of the imported trainers.
2. b) Explain who wins and who loses from the tariff: the local factory, its workers, and the buyers.
3. c) What could the neighbouring country do in response, and what is this risk called (retaliation, trade war)?

The local cheese of Queseria costs $9\ \text{€}$ a kilo; the imported one, $7\ \text{€}$. The Government is considering a $30\ \%$ tariff on imported cheese.

1. a) Calculate the price of the imported one with the tariff and compare it with the local one.
2. b) Explain who celebrates the tariff and who pays for it (local cheesemakers and their jobs, versus buyers, who pay more).
3. c) Analyse what can happen if the neighbouring country responds with a tariff on Queseria's wine (a trade war: it is paid by the wine exporters).

The government of "Nordia" approves a $25\,\%$ tariff on imported steel to protect its traditional steelmaking industry from cheap foreign competition. Six months later, the steel employers' association celebrates that $3.000$ blast furnace jobs have been saved; however, the automotive and home appliance employers' associations announce mass layoffs and a $15\,\%$ drop in their exports.

1. a) Explain the economic mechanism connecting the tariff applied to steel with the crisis triggered in Nordia's automotive and home appliance sectors.
2. b) If steel-exporting countries respond by imposing retaliatory tariffs on Nordia's agricultural products, analyse who ultimately bears the final net cost of the trade war that was started.
3. c) Evaluate under what very specific theoretical conditions (such as the 'infant industry' argument or 'national strategic security') a temporary tariff could be justified, and determine with reasoning whether Nordia's traditional steelmaking industry meets these requirements or not.

Spain is part of the European Union and the single market: goods, people, services, and money move freely between member countries, and $20$ of them share the euro.

1. a) Explain two concrete advantages for you (travelling or studying in another EU country, shopping online at a European shop without customs duties, not having to exchange currency).
2. b) Give an example of a product we buy from another EU country and another that we sell to them, and explain why trading within the union is easier than outside it.

Analyse the following statement: "The commercial and financial globalisation of recent decades has been a zero-sum game where only multinational corporate elites have enriched themselves at the expense of the rest of humanity."

1. a) Refute the idea that globalisation has been a "zero-sum game" by providing economic arguments regarding the evolution of extreme global poverty in emerging countries and the purchasing power of consumers in Western economies.
2. b) Justify why, despite overall welfare gains, the manufacturing working class in advanced economies (such as traditional industrial hubs) perceives that it has been the major loser in the process.
3. c) Design an international economic policy measure (in the tax or labour sphere) aimed at redistributing the gains from global trade more equitably without resorting to protectionist barriers.

More than $80\,\%$ of the active ingredients used to manufacture essential painkillers and antibiotics in Europe are produced in only two Asian countries due to absolute advantages in labor costs and less demanding environmental regulations.

1. a) Use the concepts of "opportunity cost" and "negative externality" to explain why the free market, guided exclusively by short-term profit maximization, has led to a geographic concentration of such magnitude in an essential good.
2. b) Three approaches are proposed to reduce the continent's health vulnerability:

1. Full reindustrialization (producing all active ingredients within Europe through state subsidies).

2. Mandatory strategic reserves (requiring pharmaceutical companies and hospitals by law to maintain a twelve-month frozen physical stock).

3. 'Friendshoring' and diversification (signing binding trade agreements with strategic partners spread across several continents).

Evaluate the economic feasibility and risks of each measure, and defend a combination of them that maximizes health security at the lowest cost to public budgets.