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Pearson Edexcel
Centre Number
Candidate Number
International
Advanced Level
Economics
International Advanced Level
Unit 4: Developments in the Global Economy
Tuesday 10 June 2014 Afternoon
Time: 2 hours
You do not need any other materials.
Paper Reference
WEC04/01
Total Marks
Instructions
Information
Advice
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P44565A
2014 Pearson Education Ltd.
1/1/1/1
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SECTION A
Answer ONE question from this section.
You should spend 60 minutes on this section.
You should include diagrams in your responses where appropriate.
1 (a) To what extent is rapid population growth a constraint on a countrys
economic development?
(15)
(b) Providing debt relief for developing countries is the best way to promote their
economic growth.
Critically examine this statement in relation to a developing country or countries
of your choice.
(25)
2 Between January 2013 and August 2013, the Indian rupee depreciated against other
currencies by an average of 20%. In August 2013 Indias annual current account
deficit on the balance of payments was 4.9% of its GDP.
(a) Evaluate the likely effects of this depreciation on Indias economy.
(15)
(b) Apart from the depreciation of the rupee, assess measures that India could take
to reduce its current account deficit on the balance of payments.
(25)
3 (a) With reference to a country of your choice, discuss the factors that might cause its
economy to have a fiscal deficit.
(15)
(b) To what extent is a large public sector debt harmful to an economy?
(25)
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Question 1
Question 2
Question 3
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SECTION B
Answer EITHER Question 4 OR Question 5.
You should spend 60 minutes on this section.
If you answer Question 4 put a cross in this box
200 000
US
180 000
EU
China
160 000
US$ million
140 000
120 000
100 000
80 000
60 000
40 000
20 000
0
2002 2003
2004
2005
2006
2007
2008 2009
2010
(Source: How Sub-Saharan Africa is evolving into a global economic powerhouse, Business Insider,
22 November 2012, www.businessinsider.com/sub-saharan-africa-economy-2012-11)
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2011
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35
40
45
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African countries to tempt Chinese manufacturing firms into moving their production
to Africa as their domestic labour costs rise. We need to prepare ourselves to provide
a welcoming home for some of the industries in which the Chinese will no longer be
competitive, she said.
(Source: adapted from Jobs clamour grows over Chinese investment, Business Day Live, 23 July 2013,
www.bdlive.co.za/africa/africanbusiness/2013/07/23/jobs-clamour-grows-over-china-investment)
(a) With reference to Extract 1, explain the effect of China importing large quantities
of raw materials from a developing country on the value of the developing
countrys currency.
(4)
(b) With reference to the information provided, analyse two possible reasons for the
changes in Sub-Saharan African trade patterns between 2002 and 2011.
(8)
(c) With reference to Extract 1, evaluate the benefits to countries in Sub-Saharan
Africa of receiving loans from China.
(12)
(d) Assess the case for Sub-Saharan African countries introducing trade barriers
against Chinese imports.
(16)
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(a) With reference to Extract 1, explain the effect of China importing large quantities
of raw materials from a developing country on the value of the developing
countrys currency.
(4)
. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............ ............................................................................................................................... . . . . . . . . . . . . . . . . . . . . . .
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(b) With reference to the information provided, analyse two possible reasons for the
changes in Sub-Saharan African trade patterns between 2002 and 2011.
(8)
. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............ ............................................................................................................................... . . . . . . . . . . . . . . . . . . . . . . .
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(d) Assess the case for Sub-Saharan African countries introducing trade barriers
against Chinese imports.
(16)
. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............ ............................................................................................................................... . . . . . . . . . . . . . . . . . . . . . . .
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Percentage of GDP
4
5
5
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
5
6
6
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
(Source: epp.eurostat.ec.europa.eu/tgm/graph)
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For a while, these trends were not widely noticed. After the investment boom in
the early 1990s, infrastructure was in a relatively good state. However, the transport
system is suffering from a lack of investment. Potholes are increasingly evident on
the roads. The closure of the most important train line from Berlin in the summer of
2013 doubled the travel time from the capital to Wolfsburg where the headquarters
of Volkswagen, the major German automobile manufacturer, is located. An increasing
number of bridges are closed to heavy loads, and lorries sometimes have to make
detours of several hundred kilometres. The waterways are in a poor condition, too.
Additionally, qualified personnel are increasingly scarce, given the rapidly ageing
workforce. All this makes production in Germany increasingly difficult and expensive.
Labour productivity is now roughly at the level of 2007.
20
25
30
35
(Source: adapted from The German miracle is now running out of road, The Financial Times,
30 August 2013, http://www.ft.com)
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(b) With reference to Figure 2 and Extract 1, analyse two possible reasons for the low
rates of economic growth in Germany since 2011.
(8)
. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............ ............................................................................................................................... . . . . . . . . . . . . . . . . . . . . . . .
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(c) Germany has historic strengths in capital goods, luxury cars and chemicals
(Extract 1, lines 56). To what extent is such specialisation beneficial for a country?
(12)
. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............ ............................................................................................................................... . . . . . . . . . . . . . . . . . . . . . . .
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(d) Assess the case for increased infrastructure investment by the German government.
(16)
. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............ ............................................................................................................................... . . . . . . . . . . . . . . . . . . . . . . .
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Every effort has been made to contact copyright holders to obtain their permission for the use of copyright
material. Edexcel, a product of Pearson Education Ltd. will, if notified, be happy to rectify any errors or omissions
and include any such rectifications in future editions.
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