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).

A multinational is a company operating in many countries: it designs in some, produces in others and sells in almost all of them.

1. a) Give two examples of multinationals you use or see daily and explain what makes them multinationals.
2. b) Argue two advantages they have over a neighbourhood shop (they buy and produce on a large scale, more cheaply) and one disadvantage for the neighbourhood (the profit leaves the area and they compete with local shops).

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).

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.

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.

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).

Your brother wants a games console only sold in the United States for $400$ dollars; the exchange rate is $1,10$ dollars per euro.

1. a) Calculate how many euros it costs today.
2. b) If in a month's time the rate moves to $1,00$ dollar per euro (the euro weakens), calculate the new price in euros and explain who wins and who loses when your own currency weakens (importing becomes dearer; exporting becomes cheaper for those abroad).

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.

During an international logistics crisis, the collapse of major Asian ports disrupted the supply of microchips to Europe, halting automotive assembly lines, making new vehicles $20\,\%$ more expensive, and forcing temporary layoffs (ERTE).

1. a) Contrast the 'just-in-time' production model (lean production with near-zero inventory to minimise costs) with the 'just-in-case' model (precautionary stockpiling). Why did hyperglobalisation massively incentivise the former, and what structural vulnerability did it create in the face of supply shocks?
2. b) The European Union is considering two options to secure the supply of strategic components:

• Option A: Subsidise the construction of semiconductor plants in Europe, which requires billions of euros of public money and will yield chips that are $30\,\%$ more expensive than Asian ones.

• Option B: Continue importing from Asia, but mandate by law that companies diversify suppliers across at least four different countries and finance a joint warehouse with a six-month reserve stockpile.

Compare the costs, benefits, and risks of each alternative for taxpayers, businesses, and consumers, and defend which one you would adopt.

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.