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UNIVERSITY OF EAST ANGLIA
School of Economics
School-Led Exam December 2021-22

ECO-5005A
Copyright of the University of East Anglia


International Trade and Integration
ECO-5005A

Timings
This examination paper will be available for 48 hours, from 3PM UK time on
December 14th 2021, to 3PM UK time on December 16th 2021
It is recommended you spend a maximum of 3 hours completing this paper.
Students entitled to Assessment Adjustments should apply any extra or rest break
time to which you are entitled to in addition to this time. (e.g. for 25% extra time
under RA, you may allocate an extra 45 minutes to complete the written assignment
within the 48 hours window when the submission stays open on BB).


Instructions
Answer any TWO questions from Section A.
Answer any ONE question from Section B.
Address any THREE topics from Section C.

The TOTAL number of marks available for the paper is 100 MARKS.
Numbers in square brackets [ ] indicate the marks available for each part of the
paper.

Additional materials
You can use ALL materials available on the module Blackboard, as well as additional
readings, videos and data sources, as long as these are properly referenced in your
paper.
Where the question is specifically asking you to manipulate data or provide graphical
representations of data, you can use any software that you are most familiar with to
construct graphical output from original data sources.
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Academic Integrity
To maintain academic integrity students are required to:

- Ensure that all work produced is solely their own. Students are advised that
their work will be checked using text matching software to determine any
similarity with the work of other students or with other published materials.
The University policy regarding plagiarism and collusion will apply to this
examination. A copy of the policy can be viewed here: Plagiarism and Collusion

Submission
This assessment is INDIVIDUAL for all students in the cohort. You should include
YOUR STUDENT NUMBER on the first page of the assignment and/or as a header
on any subsequent pages.
Please type all your answers and submit the paper as one single file, in either Word
or PDF format (recommended).
All graphs or images that you might have created in alternative software should be
copied into the final (Word or PDF) document to support your answer.
Further guidance on uploading handwritten answers can be found here under the
FAQ section. It is your responsibility to make sure that your answers are legible.
For each Section clearly indicate at the start of each answer which specific question
you are answering (e.g. C.iv.) For Section C we also recommend the use of separate
headings for each sub-topic that you are addressing.
The submission point for this assessment will close at 3PM UK time on THURSDAY
DECEMBER 16th 2021, 48 hours after being made available to you on BlackBoard
(BB) on TUESDAY at 3pm DECEMBER 14th 2021. It is recommended that you
submit your exam script as soon as completed and not wait for the closing time for
submission. Allow enough time for editing and BB uploading of your answers file.
The expected time commitment to complete the written assignment within the given
48h window is 3 hours. Students who are provided extra time based on reasonable
adjustments (RA) in their assessments should allocate a proportional extra time for
the task (e.g. for 25% extra time under RA, you may allocate an extra 45 minutes to
complete the written assignment within the 48 hours window when the submission
stays open on BB).
You can think of this assessment as a hybrid between an open-book examination
paper (especially with respect to the first two sections where a set of short questions
will test your learning on trade theories and trade policies or factor mobility) and a
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third section with a pre-announced summative task expecting you to synthesise your
learning on three topics covered in the module’s asynchronous discussion board.
For the first two sections (Section A and Section B) you are expected to provide
short answers only. (The indicative word count is 400, including graphs or diagrams,
but this is not to be specifically indicated in your scripts.)
For the third section you should follow the set word count (of 1,500 words) and
include the word count with your script, at the end of Section C. For this specific
word count the usual allowance of (+/-10%) applies.
Please note that the assignment is not time-tracked; i.e. the clock will not start ticking
when you open it and you do not have to be online the whole time working on the
assignment. You only need to make sure that you are submitting the paper
INDIVIDUALLY as one completed file (i.e. as one WordDoc or PDF file with all
answers including your student number, and indicating the questions selected and/or
clear topic headings and a word count – see as well below). The individual
submission by the deadline of December 16th at 3pm UK time is via
BB→Summative Assessment→{002}{ECO-5005A-21-SEM1-A}.
For any technical or personal difficulties experienced during the time of your
assessment window, please keep a note of all relevant contacts in the Student
Information Zone at the link available here.
All remaining subject specific questions should be directed to the tutor in charge of
the specific topic, i.e. either [email protected] or [email protected]
BEFORE the start of the assessment window opening at 3pm UK time on December
14th.


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SECTION A
Answer any TWO questions from the following FOUR (including all sub-questions, as
applicable in each case). Each question accounts for [15 marks]
1. Assume there are only two countries, “Home” and “Foreign”. Two goods are
being produced in the world economy, wine and cheese, using only one factor
of production, labour. The technology of both “Home” and “Foreign”
economies can be summarized by labour productivity in each industry,
expressed in terms of the unit labour requirement; the number of hours of
labour required to produce a pound of cheese and a gallon of wine. The unit
labour requirements for both cheese and wine for Home and Foreign is
provided in the table below.

Unit Labour
costs
Home Foreign
Cheese 1 hour for a pound 6 hours for a
pound
Wine 2 hours for a gallon 3 hours for a
gallon

Using the information above, define the concepts of “Absolute Advantage” and
“Comparative Advantage”. Explain how Home and Foreign can both benefit by
trading with each other.

2. In our discussion on the impact of trade on the distribution of income, we said
that there are two major ways that trade affects the distribution of income.
First, resources cannot move immediately or without cost from one industry to
others; therefore, there are short-term adjustment costs related to trade.
Second, industries differ in the factors of production they demand. A shift in
the mix of goods a country produces will usually reduce the demand for some
factors of production, while raising the demand for others. This is a long-term
consequence of trade.
Discuss how both these factors contributed to higher income inequality in
developed countries over the previous three decades.

3.
i.) How is terms of trade related to economic welfare?
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ii.) Do you agree with the following statement: “Poorer consumers benefited
much more from lower import prices than richer consumers”? Justify your
answer.
iii.) Show how export-biased growth tends to worsen a growing country’s
terms of trade.

4.
i.) Explain the concepts of internal and external economies of scale.
ii.) Do you agree with the following statement: “In industries characterized by
external economies of scale, comparative advantage usually provides only a
partial explanation of the pattern of trade”? Justify your answer.
iii.) What do we mean by dynamic increasing returns? Can dynamic scale
economies justify protectionism?

SECTION B
Answer ONE question from the following TWO (including all sub-questions, as
applicable in each case). Each question accounts for [25 marks]

5. This question requires you to explore original data sources (e.g. UNCTAD)
and construct your own graphs, using any software you are familiar with (e.g.
Excel) from the data in the original source. Specifically, you are expected to:

i.) Explore the data sources suggested in your module BB material (e.g.
capturing international trade or capital flows), to illustrate recent trends in
globalisation or deglobalisation. Present your findings in a graphical
format by constructing TWO separate graphs representing trends in
relevant indicators worldwide/OR for two country-specific (or two region-
specific) examples. [20 marks]

[Hint: label all graphs accurately, indicating clearly the original data source,
as well as your ‘own calculations’; clarify the definition of all indicators
used and label all graph axes in a transparent way].

ii.) What can you conclude about trends in economic globalisation or
deglobalisation based on the illustrations in part i.) ? [5 marks]

6. This question is inviting you to relate the analytical framework on factor
mobility to real world scenarios or related evidence.
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[Hint: You could draw and label all diagrams by hand, then photograph your
graphical representations with appropriate labels before inserting them into
your answers paper. Ensure that any photographic material used is clearly
legible.]

i.) Recollect the standard models illustrating the effects of immigration in
the short-run, using a specific factor framework (e.g. Lecture 9).
Capture within an appropriate diagram the short-run effects of
immigration on the HOME economy with two sectors, manufacturing
and agriculture. Within your diagram, attach specific labels AND/OR
identify specific areas that illustrate the followings [20 marks]:

• A pre-immigration equilibrium wage of £25,000.
• A change in equilibrium wages through migration by £1,000.
• The original employment in agriculture of 10,000 native workers.
• The original employment in manufacturing before immigration, knowing
that the total native labour force in the two sectors of HOME was
30,000 workers.
• An increase in the labour force through immigration by 10,000 workers.
• The area on the diagram representing the total wage bill paid out after
immigration to everyone in HOME manufacturing.
• How much is the new, total wage bill in HOME, after immigration.
• The area on the diagram representing total returns to capital owners in
the HOME economy after wages have adjusted through short-run
immigration.


ii.) Briefly clarify the way in which short-run effects of immigration differ from
long-run effects of immigration in the HOME economy. Explain your reasoning
in words and bring in evidence from the economic literature to support your
claims. [5 marks]
[Hint: no further diagrams are needed for this sub-question]

SECTION C
7. This section invites you to demonstrate how you are meeting the learning
objectives of this module, focussing on your grasp of central concepts and theories
that are used by economists to explain global trade flows, integration and trade-
related policy issues. The specific skills would be reflected in your ability to analyse
and synthesise information on a series of relevant topics, as discussed in the ECO-
5005A Discussion Board during weeks 4-11, or in an optional collaborative session
and the lecture of week 11. [45 marks in TOTAL]
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You should provide a balanced answer, drawing on THREE topics selected from
below. Along with your own research, use any findings and feedback received from
peers and tutors over the semester, within the discussion board threads of this
module.

Your answer should summarise your learning on THREE of the following topics.
Please provide separate HEADINGS for EACH of the topics addressed within your
paper.

Each summary would contribute to a maximum of 15 marks. The word count for Section
C as a whole is max 1,500 words. Within this total, the word count can vary slightly
between sub-topics.
]
i.) Wk 4 Discussion Topic:
The Gravity model or the Theory of
Comparative Advantages
ii.) Wk 5 Discussion Topic: The Specific Factors Model
iii.) Wk 6 Discussion Topic: The Heckscher-Ohlin Model
iv.) Wk 7 Discussion Topic:
External economies of scale or the Standard
trade model.
v.) Wk 8 Discussion Topic:
Globalisation vs Deglobalisation and Trade
policy instruments
vi.) Wk 9 Discussion Topic:
Trade Agreements and Arguments for and
against free trade or protectionism.
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vii.) Wk 10 Discussion Topic: International labour mobility
viii.) Wk11 Discussion Topic: International capital mobility (FDI).
ix.) Final /Collaborative lecture: Trade controversies and the Environment

Please make sure to indicate a total Section C word count at the end of your
Section C, based on the summaries of all three sub-topics tackled.
[Headings used for each sub-topic ( i.) - ix.) ) can be excluded from the
section word count.]

Where you are using diagrams to support your answers, carefully label all elements
therein and detail in your own words and sentences what each element of the graph
would represent. Graphs are not always necessary to support an argument in this
Section. Instead, your answers should indicate a good understanding of the
concepts and theories presented in this module, along with evidence discussed in
your video presentations.
Where you are using additional research beyond the textbook to support your
answer, references should be included at the end of the paper.
[All references used are optional but can strengthen your argument. Any
references list provided would be acknowledged as good practice but should
NOT be included in the final word count for this section.]

END of PAPER





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