ECS3702 Assignment 2
(COMPLETE ANSWERS)
Semester 2 2025 - DUE
22 September 2025
NO PLAGIARISM
[Pick the date]
[Type the company name]
,Exam (elaborations)
ECS3702 Assignment 2 (COMPLETE
ANSWERS) Semester 2 2025 - DUE 22
September 2025
Course
International Trade (ECS3702)
Institution
University Of South Africa (Unisa)
Book
International Economics
ECS3702 Assignment 2 (COMPLETE ANSWERS) Semester 2 2025 - DUE 22
September 2025; 100% TRUSTED Complete, trusted solutions and
explanations.Ensure your success with us.
• Q1 (COVID-19 trade effects)
• Q2 (Why trade matters for a developing country)
• Q3 (Togo–Mali: absolute & comparative advantage; the two scenarios + calculations)
• Q4 (Heckscher-Ohlin / basis & gains from trade — explanation + diagram notes)
• Q5 (Partial-equilibrium effect of a 20% ad-valorem tariff on palm oil)
• Terms of Trade (definition, measurement, improvement/decline, and how to get & plot UNCTAD data)
QUESTION 1 — COVID-19: potential trade
effects and channels (5 marks)
Give 4–5 crisp points (each 1 mark approx):
1. Supply-side disruption to exports and imports. Lockdowns, factory closures and
logistics bottlenecks reduced output and export volumes (minerals, autos, manufactures)
and interrupted imports of intermediate goods, raising production costs.
, 2. Demand shock & commodity price swings. Global demand fell sharply in 2020, hurting
commodity exporters (minerals, oil). Price volatility changed export revenues and
government receipts.
3. Trade finance & export credit constraints. Increased risk aversion tightened trade
finance, raising costs and reducing the ability of exporters (especially SMEs) to ship.
4. Transport and logistics channel. Port congestion, container shortages and air cargo
collapse increased freight costs and delivery times, reducing competitiveness and
increasing import prices.
5. Policy and regulatory channel. Temporary export bans, import restrictions and
changing sanitary rules disrupted established trade patterns; stimulus and protectionist
measures affected relative prices and welfare.
(For South Africa specifically: reliance on mining and manufactured exports, reliance on
imported intermediates, and tourism/services linkages amplified these channels.)
QUESTION 2 — Why international trade is
important for a developing country (10
marks)
Write this as a short essay (use ~6–8 bullet paragraphs):
1. Access to larger markets & specialization. Trade lets small domestic firms access
foreign demand, exploit scale economies, and specialise in goods where they are
relatively productive.
2. Technology transfer & productivity growth. Imports of capital goods, foreign direct
investment and exposure to competition accelerate technology adoption and efficiency
improvements.
3. Access to inputs and intermediate goods. Imports provide cheaper or higher-quality
inputs (machinery, parts) that raise domestic firms’ competitiveness and lower production
costs.
4. Export earnings and foreign exchange. Exports generate FX needed for imports, debt
servicing and macro stability — critical for countries with narrow tax bases.
5. Diversification and risk sharing. Trade allows diversification of production/export
baskets and reduces dependence on a single domestic market; access to many suppliers
reduces supply shocks.
6. Employment & structural transformation. Export sectors (manufacturing,
agribusiness) can create jobs and help shift labour from low-productivity agriculture to
higher-productivity sectors.
7. Price signals and consumer welfare. Trade lowers consumer prices and increases
variety, improving real incomes especially for poorer households.
(COMPLETE ANSWERS)
Semester 2 2025 - DUE
22 September 2025
NO PLAGIARISM
[Pick the date]
[Type the company name]
,Exam (elaborations)
ECS3702 Assignment 2 (COMPLETE
ANSWERS) Semester 2 2025 - DUE 22
September 2025
Course
International Trade (ECS3702)
Institution
University Of South Africa (Unisa)
Book
International Economics
ECS3702 Assignment 2 (COMPLETE ANSWERS) Semester 2 2025 - DUE 22
September 2025; 100% TRUSTED Complete, trusted solutions and
explanations.Ensure your success with us.
• Q1 (COVID-19 trade effects)
• Q2 (Why trade matters for a developing country)
• Q3 (Togo–Mali: absolute & comparative advantage; the two scenarios + calculations)
• Q4 (Heckscher-Ohlin / basis & gains from trade — explanation + diagram notes)
• Q5 (Partial-equilibrium effect of a 20% ad-valorem tariff on palm oil)
• Terms of Trade (definition, measurement, improvement/decline, and how to get & plot UNCTAD data)
QUESTION 1 — COVID-19: potential trade
effects and channels (5 marks)
Give 4–5 crisp points (each 1 mark approx):
1. Supply-side disruption to exports and imports. Lockdowns, factory closures and
logistics bottlenecks reduced output and export volumes (minerals, autos, manufactures)
and interrupted imports of intermediate goods, raising production costs.
, 2. Demand shock & commodity price swings. Global demand fell sharply in 2020, hurting
commodity exporters (minerals, oil). Price volatility changed export revenues and
government receipts.
3. Trade finance & export credit constraints. Increased risk aversion tightened trade
finance, raising costs and reducing the ability of exporters (especially SMEs) to ship.
4. Transport and logistics channel. Port congestion, container shortages and air cargo
collapse increased freight costs and delivery times, reducing competitiveness and
increasing import prices.
5. Policy and regulatory channel. Temporary export bans, import restrictions and
changing sanitary rules disrupted established trade patterns; stimulus and protectionist
measures affected relative prices and welfare.
(For South Africa specifically: reliance on mining and manufactured exports, reliance on
imported intermediates, and tourism/services linkages amplified these channels.)
QUESTION 2 — Why international trade is
important for a developing country (10
marks)
Write this as a short essay (use ~6–8 bullet paragraphs):
1. Access to larger markets & specialization. Trade lets small domestic firms access
foreign demand, exploit scale economies, and specialise in goods where they are
relatively productive.
2. Technology transfer & productivity growth. Imports of capital goods, foreign direct
investment and exposure to competition accelerate technology adoption and efficiency
improvements.
3. Access to inputs and intermediate goods. Imports provide cheaper or higher-quality
inputs (machinery, parts) that raise domestic firms’ competitiveness and lower production
costs.
4. Export earnings and foreign exchange. Exports generate FX needed for imports, debt
servicing and macro stability — critical for countries with narrow tax bases.
5. Diversification and risk sharing. Trade allows diversification of production/export
baskets and reduces dependence on a single domestic market; access to many suppliers
reduces supply shocks.
6. Employment & structural transformation. Export sectors (manufacturing,
agribusiness) can create jobs and help shift labour from low-productivity agriculture to
higher-productivity sectors.
7. Price signals and consumer welfare. Trade lowers consumer prices and increases
variety, improving real incomes especially for poorer households.
