Discuss the likely benefits of increased economic integration for sub‑Saharan African countries

Edexcel A-Level Economics June 2020 Paper 2 Extract

Discuss the likely benefits of increased economic integration for sub‑Saharan African countries. (15 marks)

Paragraph 1

1. One benefit of increased economic integration is an increase in potential growth through specialisation.
2. When free trade is possible, countries are encouraged to specialise in the goods and services where they have a comparative advantage.
3. This is the good or service where they have a lower opportunity cost.
4. This means that countries can produce more goods and services when their factors of production are fully employed.
5. This means there is increase in potential output around African countries, which can be illustrated by an increase in long-run aggregate supply.
6. This can lead to an increase in potential growth and a fall in the inflation rate.

Evaluation

1. One downside with an increase in specialisation and trade is that it can cause structural unemployment.
2. Workers in certain industries could lose their jobs when their industry declines and those goods and services get imported instead.
3. This costs the government as they have to increase spending on welfare payments but also on re-training schemes.

Paragraph 2

1. Another benefit of increased economic integration is lower prices
2. As trade agreements are formed, countries can reduce protectionist measures such as tariffs.
3. This means that countries are able to import goods and services cheaper.
4. This means that firms can benefit from lower costs of production.
5. For example, figure 1 mentions farm equipment, which could become cheaper.
6. This would mean that short-run aggregate supply can increase, leading to economic growth and a fall in cost-push inflation.
7. Extract A also mentions the aim of helping farmers 'earn a living income'.
8. As the economy grows, there the derived demand for labour increases which provides more job opportunities allowing people to increase their income.

Evaluation

1. However, trade agreements would lead to a loss of domestic output.
2. As imports became cheaper, domestic firms become less competitive so they lose out on demand.
3. This means they have to reduce output, causing producer surplus to fall.

A-Level Economics Tutoring

I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique.