Assessment: Part Seen- Part Unseen

Autumn Semester 2020

Module Code: EC5002NI

Module Title: International Business and World Market

Module Leader: Rupak Aryal

Type: Individual
Description: Students are required to write an elaborative
answer for the given questions in paragraph format.

Weight: This accounts for 50% of your total module grades.

Submission Date: 14 May 2021 (09.00 PM)

When Coursework is 14 May 2021 (09.00 AM)

given out:

Submission Submit the following to Islington College RTE department

Instructions: before the due date:
● Submit via Google classroom

Warning: London Metropolitan University and Islington College

takes Plagiarism seriously. Offenders will be dealt with
sternly.

© London Metropolitan University

 Plagiarism Notice

You are reminded that there exist regulations concerning plagiarism.

Extracts from University Regulations on Cheating, Plagiarism and Collusion
Section 2.3: “The following broad types of offence can be identified and are provided as
indicative examples …..
(i) Cheating: including copying coursework.
(ii) Falsifying data in experimental results.
(iii) Personation, where a substitute takes an examination or test on behalf of the
candidate. Both candidate and substitute may be guilty of an offence under
these Regulations.
(iv) Bribery or attempted bribery of a person thought to have some influence on the
candidate’s assessment.
(v) Collusion to present joint work as the work solely of one individual.
(vi) Plagiarism, where the work or ideas of another are presented as the candidate’s
own.
(vii) Other conduct calculated to secure an advantage on assessment.
(viii) Assisting in any of the above.

Some notes on what this means for students:

(i) Copying another student's work is an offence, whether from a copy on paper or
from a computer file, and in whatever form the intellectual property being copied
takes, including text, mathematical notation and computer programs.
(ii) Taking extracts from published sources without attribution is an offence. To
quote ideas, sometimes using extracts, is generally to be encouraged. Quoting
ideas is achieved by stating an author's argument and attributing it, perhaps by
quoting, immediately in the text, his or her name and year of publication, e.g. " e
= mc2 (Einstein 1905)". A reference section at the end of your work should then
list all such references in alphabetical order of authors' surnames. (There are
variations on this referencing system which your tutors may prefer you to use.) If
you wish to quote a paragraph or so from published work then indent the
quotation on both left and right margins, using an italic font where practicable,
and introduce the quotation with an attribution.

Further information in relation to the existing London Metropolitan University regulations

concerning plagiarism can be obtained from http://www.londonmet.ac.uk/academic-
regulations
Assignment Brief
Ensure you indicate where your arguments were found – online, in journal articles or in
textbooks.

You need to use academic sources where relevant and

● use Harvard style referencing in both the main body of the text and the
bibliography.

You ought to show you have used some textbooks on globalisation or economics –
such as those listed in the module guide. Be wary of websites – wiki and non-validated
ones should be avoided whereas more ‘legitimate’ sites such as Financial Times or the
Economist are more acceptable and are preferred.

You should aim to;

● use fully formed sentences not short phrases or bullet points,
● you should ensure you show where one idea ends and the next starts by using
separate paragraphs

Marking Criteria:
1. Focus on question and degree to which it covers all aspect of the work
2. Ability to connect question with the theory
3. Student clearly supports or rejects a statement/ quote, and provide relevant
logics
4. Degree to which answer demonstrates coherence and consistency
5. Clarity and presentation of work

Answer Guidance: Your answer should demonstrate wide reading, a good

understanding of the theoretical and empirical material, a solid grasp of contemporary
policy and institutional issues, analytical exposition and critical evaluation. It should be
well-structured and presented, making appropriate use of empirical evidence, graphs
and footnotes, and with full referencing of material used.
 Part 1: Case Study
Read the following case and answer the question that follows:
The Dutch Disease and De-industrialization
Developing a new exportable natural resource can cause problems. One, discussed
later in this chapter, is the problem of “immiserizing growth”: If you are already exporting
and your export expansion lowers the world price of your exports, you could end up
worse off. A second is the apparent problem called the “Dutch disease”, in which new
production of a natural resource results in a decline in production of manufactured
products (deindustrialization).
For the Netherlands, the origin of the disease was the development of new natural gas
fields under the North Sea. It seemed that the more the Netherlands developed its
natural gas production, the more depressed its manufacturers of traded goods became.
Even the windfall price increases that the two oil shocks offered the Netherlands (all fuel
prices skyrocketed, including that for natural gas) seemed to add to industry’s slump.
The Dutch disease has been thought to have spread to Britain, Norway, Australia,
Mexico, and other countries that have newly developed natural resources.
The main premise of this fear is correct: Under many realistic conditions, the windfall of
a new natural resource does indeed erode profits and production in the manufactured
goods sector. Deindustrialization occurs for the same reason that underlies the
Rybczynski theorem introduced in this chapter: The new sector draws production
resources away from the manufacturing sector. Specifically, to develop output of the
natural resource, the sector must hire labor away from the manufacturing sector, and it
must obtain capital that otherwise would have been invested in the manufacturing
sector. Thus, the manufacturing sector shrinks..
Journalistic coverage of the link between natural resource development and de-
industrialization tends to discover the basic Rybczynski effect in a different way. The
press tends to notice that the development of the exportable natural resource causes
the nation’s currency to rise in value on foreign exchange markets because of the
increased demand for the country’s currency as foreign buyers pay for their purchases.
A higher value of the nation’s currency makes it harder for its industrial firms to compete
against foreign products whose price is now relatively lower. To the manufacturing
sector this feels like a drop in demand, and the sector contracts. The foreign exchange
market, in gravitating back toward the original balance of trade, is producing the same
result we would get from a barter trade model: If you export more of a good, you’ll end
up either exporting less of another good or importing more. Something has to give so
that trade will return to the same balance as before.
Even though the Dutch disease does lead to some de-industrialization, it is not clear
that this is really a national problem. Merely shifting resources away from the
manufacturing sector into the production of natural resources is not necessarily bad,
despite a rich folklore assuming that industrial expansion is somehow key to prosperity.
The country usually gains from developing production of its natural resources, as long
as this growth does not tip into the realm of the immiserizing.
DISCUSSION QUESTION
What is Dutch Disease? Why do many real-world examples of Dutch disease originate
from developments in energy products?

[25 Marks]

Part 2: Long Answer Question

Read the following question and answer them accordingly.

QN. 1
In the book, “The general theory of employment, interest, and money”, John Maynard
Keynes referred many trade theories arguing for trade liberalization as the slaves of
economic theory. What are the flaws of the trade liberalization theories? Are the trade
wars outcomes of those flaws of trade liberalization theories?
[25 Marks]

QN. 2
On August 11, 2015, the people’s bank of China devaluated its Yuan Renminbi by
knocking over 3% of its value. What are the implications of such devaluation?
[25 Marks]

QN. 3
Although Nepal face massive trade deficit, the massive deficit is not evident beyond the
current account. Why?
[25 Marks]