Economics Example Bank

Singapore Continuing Education and Training Scheme

Interventionist supply side policy

Introduced in 2015

Subsidy for workers who wish to improve their skills

2017 - 2019, decrease in unemployment

2018 MTI study:

• Workers were more employable

• Enjoyed a wage premium of 5.8% in the year after training

Vietnam spending on infrastructure

Interventionist supply side policy

Recent historical annual infrastructure spending was more than 5% of GDP

2016 - 2018, inflation rate decreased from 3.5% to 2.8%

2017 unemployment: 1.87%

2018 unemployment: 1.16%

US Financial Crisis 2008

Fiscal policy: $831 billion in government spending to boost economic growth (AD) by the Obama administration

Monetary policy: the federal reserve bank (US) decreased interest rate to a range of 0 to 0.25% in 2009

Unemployment rate decreased from 9.9% in 2009 to 3.5% in 2020

UK Corporation Tax Cut

Market-based supply side policy

Reduced between 2010 and 2016 from 28% to 20%

Reduced unemployment rate from 7.79% - 4.81%

Business investment index increased from 117 to 163

Microsoft Market Power

Bundled Internet Explorer into operating system

Windows operating system available to 90% of all computers, forces consumers to use

Lack of choice

Has an artificial distribution advantage

Shielded from competition

Detrimental to the pace of innovation and the quality of products

NAFTA (North American Free Trade Agreement)

Between the US, Canada and Mexico

Eliminated most tariffs on products

Pros:

• Increase in FDI

• Technological advancements

• Product diversification

Cons:

• Canada and US saw Mexico as a low cost location for factories

  • Environmental impacts and exploitation of resources

• Mexican production (agriculture) can not compete with subsidised US and Canadian counterparts

  • Leads to unemployment

• Trade diversion

  • Less efficient Mexican producers replace more efficient non-member countries in US and Canadian markets

  • Leads to loss in global efficiency

Pfizer Monopoly

Benefits from abnormal profit

Able to do research and development

Quickly developed COVID vaccine during pandemic

EU Emissions Trading Scheme

International cap and trade system

Since 2005

Limits the emission of specific pollutants to achieve EU climate targets

Acts as an economic incentive to emit less, and instead gain profit

Emissions have reduced by 35% between 2005 and 2021

Germany Investment in Education and Training

Interventionist supply side policy

Apprentice system

Combines classroom learning with on-the-job training to prepare workers for specific industries

UK and Ukraine FTA extension

All tariffs and quotas removed

Aims to support Ukraine’s long term economic recovery from Russian invasion

Pros:

• More exports to the UK, increasing Ukraine’s AD

• More choice

• Boosts opportunities for Ukraine in key sectors (oils, grains etc.)

Cons:

• Bad economic situation in Ukraine, so less competitive production

• Russian invasion disrupted Ukrainian supply chains and transport routes

• Loss of government revenue for both countries

South Korea, Colombia and Mercosur

• In 2013, Colombia and South Korea signed an FTA

• South Korea ($1 305 billion) had an economy 3 times bigger than Colombia ($381 billion)

• In 2017, Colombia became a member of the Mercosur Preferential Trade Agreement

• Before 2017, Korea had the upper-hand on trade negotiations with Colombia

• After 2017, Colombia had a combined GDP (with Mercosur and South Korea) of $2 807 billion, bargaining power almost twice as large as South Korea’s

Eurozone

• Monetary union

• 20 member states

• Monetary policy controlled by European Central Bank

• Unable to manipulate the interest rate according to the economic state of their own country

Venezuela (ELDC)

• Placed last on the international property rights index

• Foreign direct investment has been decreasing since 2011

• Only devotes less than 4% of GDP towards investment in infrastructure, as compared to the higher rates of other countries in the region

• Downward trend of real GDP between 2012 ($372.59 billion) and 2020 ($43.79 billion)

Malawi

Microfinance for farmers

• Gives finance to farmers to purchase fertiliser and invest in irrigation systems

• Increases productivity

• Increased job opportunities in agriculture sector

• May double maize output

• Can pollute waterways