Examine the features and trends of the international economy including the global economy and globalisation, gross world product, trade in goods and services, financial flows, investment and transnational corporations, technology, transport and communication, and the international and regional business cycles

A 6 mark response needs a definition of globalisation, three or four specific impacts, and explicit links to growth and development.

Define globalisation

The process of increasing integration of national economies through the flow of goods and services, capital, labour, technology and ideas across borders. It is driven by lower transport costs, lower communication costs, financial deregulation and trade liberalisation.

Impact 1: Higher world trade and economic growth

World trade as a share of gross world product has roughly doubled since 1990 (World Bank). Specialisation according to comparative advantage has lifted productivity and real GDP, particularly in trade-oriented economies such as Singapore and Vietnam.

Impact 2: Catch-up growth in developing economies

China lifted more than 800 million people out of absolute poverty between 1981 and 2019 (World Bank), with average real GDP growth above 8 percent for two decades. India, Vietnam and Indonesia have followed a similar export-led growth model.

Impact 3: Uneven distribution of gains

Globalisation has widened the within-country gap between high-skilled and low-skilled workers in advanced economies. Real median wages in the US grew far slower than top-decile wages between 1990 and 2024.

Impact 4: Convergence on living standards but persistent gaps in development

GDP per capita has converged for emerging Asia but sub-Saharan Africa has lagged. Human Development Index gaps remain wide.

Markers reward (1) accurate definition, (2) two or three current examples, (3) explicit growth-versus-development distinction.

A 4 mark response needs a TNC definition, two roles, and a recent example.

Definition

A TNC is a firm that owns or controls production or service facilities in more than one country, with operations linked across borders.

Role 1: Foreign direct investment (FDI)

TNCs account for roughly two-thirds of world FDI flows (UNCTAD). They build factories, services hubs and R&D centres in host countries, creating jobs and tax revenue.

Role 2: Trade and global value chains

TNCs organise about 80 percent of world trade through global value chains, in which intermediate inputs cross borders multiple times before final assembly. Apple's iPhone supply chain (designed in California, components from Japan/Korea, assembled in China and Vietnam) is the textbook example.

Example

BHP and Rio Tinto are Australian-headquartered TNCs that earn most revenue from iron ore exports to East Asia and reinvest profits across mining operations in Chile, Mongolia and Australia.

Markers reward an accurate definition, two clearly distinct roles, and a current example with a figure.

Definition (1 mark). Globalisation is the process of increasing economic integration between countries through the flow of goods and services, capital, labour, technology and ideas across national borders.

The four engines (2 marks, at least three named for full marks). Lower transport costs (containerisation), lower communication costs (fibre/internet), trade liberalisation (WTO/FTAs cutting tariffs) and financial deregulation (removal of capital controls since the 1980s).

Marking spine: accurate definition (1), at least three engines named correctly (2). A definition that only mentions trade, or lists engines with no definition, caps at 2.

What it measures (2 marks). Gross world product is the sum of the final goods and services produced by all national economies in a year, i.e. world GDP; it is the standard measure of the size of the global economy.

Approximate value (2 marks). Around $115 trillion in 2025 (IMF World Economic Outlook), with world real GDP growth averaging roughly 3.0 to 3.3 percent per year over the decade to 2025, interrupted by the 2008 GFC and the 2020 COVID-19 recession.

Full marks need the definition AND a dated figure; a figure alone, or a definition with no data, caps at 2 to 3.

A 5-mark "describe and explain" rewards (i) an accurate reading of the trend with figures and turning points, and (ii) an explanation using the drivers of globalisation, not just a restatement.

Describe the trend (about 2 marks). Trade's share of gross world product rose steadily from about 39% in 1990 to a peak of about 61% in 2008 - more than a 20 percentage point rise over 18 years - then eased back to around 57 to 58% from 2015 to 2024, a plateau rather than a reversal. Quote the 1990, 2008 and 2024 figures and identify 2008 as the turning point.

Explain with the drivers (about 3 marks). The 1990 to 2008 rise reflects falling transport and communication costs, WTO/GATT tariff cuts and financial deregulation integrating national economies faster than output grew. The post-2008 plateau ("slowbalisation") reflects the GFC's dampening of trade finance, a slower pace of new trade liberalisation, some re-shoring of supply chains, and rising trade tensions (e.g. US-China tariffs from 2018), even though absolute trade volumes kept growing.

Marking spine: accurate trend with the three anchor figures and the 2008 turning point (2), at least two drivers linked to the 1990-2008 rise (2), and the post-2008 plateau explained rather than ignored (1). A description with no drivers, or drivers with no reference to the data, caps at 3. (Figures are an owned ExamExplained dataset modelled on World Bank World Development Indicators trade-to-GDP data; treat as illustrative.)

A 6-mark "explain" needs two clearly distinct features, each with a mechanism linking it to GWP growth and a current example.

Feature 1: Trade liberalisation (about 3 marks). WTO/GATT rounds and regional FTAs (e.g. RCEP) cut average tariffs on manufactures from roughly 40 percent in 1947 to under 5 percent by 2020 (WTO), allowing countries to specialise according to comparative advantage. This raises productivity and output; Vietnam's export-led manufacturing growth (averaging above 6 percent real GDP growth through the 2010s and 2020s, World Bank) illustrates the mechanism.

Feature 2: FDI and transnational corporations (about 3 marks). Global FDI flows of around $1.5 trillion a year (UNCTAD) let TNCs build production and R&D capacity in host countries, transferring capital, technology and management practice. This lifts host-country productivity and output; China's opening to FDI from the 1990s is a widely cited driver of its sustained high growth.

Marking spine: two distinct features (not two examples of the same feature) each with a mechanism to GWP (2 marks each) and a current, dated example (1 mark each). Listing features with no mechanism, or only one feature developed, stays mid-band.

Growth vs development (about 2 marks). Economic growth is an increase in the volume of goods and services produced (real GDP); economic development is a broader improvement in wellbeing, including health, education, income distribution and quality of life, often measured with the Human Development Index (HDI).

Why globalisation can decouple them (about 3 marks). Globalisation raises GWP and national GDP by expanding trade, investment and technology flows, but the gains are not automatically shared. Within a trade-opening economy, capital and skilled labour typically capture a larger share of the gains than unskilled labour, so income inequality can widen even as GDP rises (e.g. slower real median-wage growth than top-decile wage growth in several advanced economies since 1990). A resource-exporting economy can also record strong GDP growth from a commodity boom while human development indicators (health, education access) lag if the gains are not reinvested domestically.

Marking spine: accurate growth/development distinction (2), a mechanism for the decoupling with a named example (2), explicit statement that growth does not guarantee development (1).

An 8-mark "analyse" needs a sustained argument showing HOW globalisation's channels produce growth and development outcomes, with a balanced judgement, current data and named countries, not a list of unlinked effects.

Band 6 PLAN.

Thesis: Globalisation has been a net positive for global economic growth and, more unevenly, for development, because trade, financial and investment integration raise output through specialisation and capital transfer, but the gains are distributed unequally within and between countries, so growth has outpaced development in several respects.

Argument 1 - trade and investment integration have lifted global and national output. Evidence: gross world product is around $115 trillion in 2025 (IMF), roughly triple its 1995 level in nominal terms; world trade's share of GWP rose from about 39% in 1990 to a peak near 61% in 2008 (illustrative ExamExplained/World Bank-style series). Mechanism: comparative advantage lets countries specialise, raising productivity; FDI (around $1.5 trillion a year, UNCTAD) transfers capital and technology to host economies.

Argument 2 - catch-up growth has narrowed some development gaps. Evidence: China lifted more than 800 million people out of extreme poverty between 1981 and 2019 (World Bank) on the back of export-led, FDI-financed manufacturing growth; Vietnam and India have followed similar paths. Mechanism: export-led growth financed by FDI raises employment and incomes faster than closed economies typically achieve, and rising incomes fund health and education spending, lifting HDI.

Argument 3 - the gains are unevenly distributed, so growth has outrun development in places. Evidence: within advanced economies, real median wage growth has lagged top-decile wage growth since 1990 as globalisation and automation have favoured skilled labour and capital; sub-Saharan Africa's HDI gains have lagged emerging Asia's despite broadly similar exposure to trade. Mechanism: capital and skilled labour are more mobile and capture a larger share of integration's gains than low-skilled labour, and countries without complementary institutions (education, infrastructure, stable governance) convert trade openness into growth but not broad-based development.

Counter-weight / judgement: globalisation is not the sole cause of these gaps (domestic policy and governance matter enormously), but on balance the evidence supports a positive overall effect on growth, a more mixed effect on development, and a clear need for complementary domestic policy to spread the gains.

Model paragraph (Argument 2). The clearest evidence that globalisation can drive genuine development, not just growth, is China's post-1990s trajectory. Opening to foreign direct investment and export markets under WTO accession in 2001 let China build export-oriented manufacturing capacity financed substantially by transnational corporations seeking lower costs and new markets. The resulting growth, averaging above 8 percent a year for two decades, funded rapid gains in health, education and infrastructure, and lifted more than 800 million people out of extreme poverty between 1981 and 2019 (World Bank) - a genuine development outcome, not merely a GDP statistic. Vietnam and, more recently, India illustrate the same export-led, FDI-financed mechanism. This shows that globalisation's growth channel can translate into development where a country combines trade and investment openness with domestic investment in human capital, though the outcome is far from automatic elsewhere.

Marker's note: markers reward a sustained thesis that ANALYSES the mechanism linking globalisation to growth AND development (not a list of "advantages and disadvantages"); at least three distinct channels (trade, FDI/TNCs, technology) each with a mechanism; CURRENT, dated data (GWP 2025, China's 1981-2019 poverty figure, the trade-share turning point); an explicit growth-versus-development distinction; and a calibrated judgement. A four-paragraph list of unlinked facts, or an answer with no data, cannot reach the top band.