ECS3702 Assignment 2
(COMPLETE ANSWERS)
Semester 2 2025 - DUE
22 September 2025
[Document subtitle]
[School]
[Course title]
,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.
Discuss the potential trade effects and subsequent channels through which the covid-19 pandemic has
affected a developing economy such as South Africa. [5 marks]
Trade Effects and Channels of COVID-19 Impact on South Africa
1. Disruption of Global Supply Chains:
Lockdowns and restrictions worldwide disrupted imports of raw materials and intermediate
goods, affecting South Africa’s manufacturing and export sectors.
2. Decline in Export Demand:
Global recession reduced demand for key South African exports such as minerals, precious
metals, and agricultural products, leading to lower export revenues.
3. Reduction in Trade Volumes:
Port closures, logistical challenges, and transport restrictions led to delays and increased costs,
reducing the volume of both imports and exports.
4. Foreign Direct Investment (FDI) Slowdown:
Uncertainty and economic downturn caused a decline in FDI inflows, limiting capital availability
for trade-related investments and expansion.
5. Exchange Rate Volatility and Inflation:
Trade shocks contributed to currency depreciation, increasing import costs and inflationary
pressures, which affected consumer purchasing power and trade competitiveness.
Trade Effects and Channels of COVID-19 Impact on South Africa
1. Global Supply Chain Disruptions:
COVID-19 led to factory shutdowns and transport restrictions worldwide, causing shortages of
, key inputs and raw materials. South African manufacturers and exporters faced delays and
higher costs, disrupting production and exports.
2. Decline in Export Demand:
As major trading partners entered recessions, demand for South Africa’s main exports—like
minerals (gold, platinum), metals, and agricultural goods—fell sharply. This caused a drop in
export earnings, impacting foreign exchange reserves and government revenues.
3. Trade Volume Reduction and Logistics Challenges:
Border closures, port congestion, and reduced air and sea freight capacity resulted in lower
trade volumes and increased delivery times. This hampered South Africa’s ability to trade
efficiently, affecting both imports of essential goods and exports.
4. Decrease in Foreign Direct Investment (FDI):
Economic uncertainty and global risk aversion led to reduced FDI inflows into South Africa. This
constrained investment in trade-related infrastructure and industries, slowing economic
recovery and long-term growth potential.
5. Currency Depreciation and Inflationary Pressure:
The trade shocks combined with capital outflows caused the South African Rand to weaken. This
made imports more expensive, fueling inflation and reducing the purchasing power of
consumers, further dampening domestic demand and trade competitiveness.
QUESTION 2 Explain briefly In your own words why international trade is important for a developing
country. [10 marks]
Importance of International Trade for a Developing Country
International trade is crucial for developing countries because it helps them grow their economies and
improve living standards. Here’s why:
1. Access to Larger Markets: Developing countries often have small domestic markets. Trading
internationally allows them to sell goods and services to more people, increasing sales and
income.
2. Foreign Exchange Earnings: By exporting goods, developing countries earn foreign currency,
which they need to buy essential imports like machinery, technology, and raw materials.
3. Economic Growth: Trade encourages specialization based on comparative advantage, meaning
countries produce what they are most efficient at, leading to better productivity and growth.
4. Technology Transfer: Trading with developed countries exposes developing countries to new
technologies and better methods of production, which can boost their industries.
5. Employment Creation: Increased production for export markets often creates jobs, reducing
poverty and improving living conditions.
, 6. Improved Quality of Goods: Competition from international markets encourages producers to
improve the quality of their goods and services.
7. Diversification: Trade helps countries diversify their economies by developing new industries,
reducing dependence on a few products.
Overall, international trade acts as a catalyst for development by integrating developing countries into
the global economy, enhancing income, and fostering sustainable growth.
Why International Trade is Important for a Developing Country
1. Bigger Market: Developing countries can sell their products to many more people around the
world, not just at home.
2. Earn Foreign Money: Selling goods abroad helps them get foreign money, which they need to
buy important things they don’t make themselves.
3. Grow the Economy: Trade helps the country make more things it is good at, which helps the
economy grow faster.
4. Learn New Technology: By trading with richer countries, developing countries can get new tools
and ideas to improve their businesses.
5. Create Jobs: Making products for export means more jobs for people, helping to reduce
poverty.
6. Better Products: International competition pushes local businesses to improve the quality of
their goods.
7. More Variety: Trade helps countries develop different kinds of industries so they don’t rely on
just one product.
In short, international trade helps developing countries become richer, create jobs, and improve
people’s lives.
2 3 QUESTION 3 Consider the following hypothetical scenario of two countries, Togo and Mali. Table 1:
Output per worker hour Output Togo Mali Cheese (ton/hr) 20 10 Aircrafts (Units/hr) 60 20 (i) State the
products of absolute advantage and absolute disadvantage for both countries. You must explain how
you arrived at your answer. [5 marks]
Given data:
Product Togo (ton/hr or units/hr) Mali (ton/hr or units/hr)
Cheese 20 tons/hr 10 tons/hr
(COMPLETE ANSWERS)
Semester 2 2025 - DUE
22 September 2025
[Document subtitle]
[School]
[Course title]
,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.
Discuss the potential trade effects and subsequent channels through which the covid-19 pandemic has
affected a developing economy such as South Africa. [5 marks]
Trade Effects and Channels of COVID-19 Impact on South Africa
1. Disruption of Global Supply Chains:
Lockdowns and restrictions worldwide disrupted imports of raw materials and intermediate
goods, affecting South Africa’s manufacturing and export sectors.
2. Decline in Export Demand:
Global recession reduced demand for key South African exports such as minerals, precious
metals, and agricultural products, leading to lower export revenues.
3. Reduction in Trade Volumes:
Port closures, logistical challenges, and transport restrictions led to delays and increased costs,
reducing the volume of both imports and exports.
4. Foreign Direct Investment (FDI) Slowdown:
Uncertainty and economic downturn caused a decline in FDI inflows, limiting capital availability
for trade-related investments and expansion.
5. Exchange Rate Volatility and Inflation:
Trade shocks contributed to currency depreciation, increasing import costs and inflationary
pressures, which affected consumer purchasing power and trade competitiveness.
Trade Effects and Channels of COVID-19 Impact on South Africa
1. Global Supply Chain Disruptions:
COVID-19 led to factory shutdowns and transport restrictions worldwide, causing shortages of
, key inputs and raw materials. South African manufacturers and exporters faced delays and
higher costs, disrupting production and exports.
2. Decline in Export Demand:
As major trading partners entered recessions, demand for South Africa’s main exports—like
minerals (gold, platinum), metals, and agricultural goods—fell sharply. This caused a drop in
export earnings, impacting foreign exchange reserves and government revenues.
3. Trade Volume Reduction and Logistics Challenges:
Border closures, port congestion, and reduced air and sea freight capacity resulted in lower
trade volumes and increased delivery times. This hampered South Africa’s ability to trade
efficiently, affecting both imports of essential goods and exports.
4. Decrease in Foreign Direct Investment (FDI):
Economic uncertainty and global risk aversion led to reduced FDI inflows into South Africa. This
constrained investment in trade-related infrastructure and industries, slowing economic
recovery and long-term growth potential.
5. Currency Depreciation and Inflationary Pressure:
The trade shocks combined with capital outflows caused the South African Rand to weaken. This
made imports more expensive, fueling inflation and reducing the purchasing power of
consumers, further dampening domestic demand and trade competitiveness.
QUESTION 2 Explain briefly In your own words why international trade is important for a developing
country. [10 marks]
Importance of International Trade for a Developing Country
International trade is crucial for developing countries because it helps them grow their economies and
improve living standards. Here’s why:
1. Access to Larger Markets: Developing countries often have small domestic markets. Trading
internationally allows them to sell goods and services to more people, increasing sales and
income.
2. Foreign Exchange Earnings: By exporting goods, developing countries earn foreign currency,
which they need to buy essential imports like machinery, technology, and raw materials.
3. Economic Growth: Trade encourages specialization based on comparative advantage, meaning
countries produce what they are most efficient at, leading to better productivity and growth.
4. Technology Transfer: Trading with developed countries exposes developing countries to new
technologies and better methods of production, which can boost their industries.
5. Employment Creation: Increased production for export markets often creates jobs, reducing
poverty and improving living conditions.
, 6. Improved Quality of Goods: Competition from international markets encourages producers to
improve the quality of their goods and services.
7. Diversification: Trade helps countries diversify their economies by developing new industries,
reducing dependence on a few products.
Overall, international trade acts as a catalyst for development by integrating developing countries into
the global economy, enhancing income, and fostering sustainable growth.
Why International Trade is Important for a Developing Country
1. Bigger Market: Developing countries can sell their products to many more people around the
world, not just at home.
2. Earn Foreign Money: Selling goods abroad helps them get foreign money, which they need to
buy important things they don’t make themselves.
3. Grow the Economy: Trade helps the country make more things it is good at, which helps the
economy grow faster.
4. Learn New Technology: By trading with richer countries, developing countries can get new tools
and ideas to improve their businesses.
5. Create Jobs: Making products for export means more jobs for people, helping to reduce
poverty.
6. Better Products: International competition pushes local businesses to improve the quality of
their goods.
7. More Variety: Trade helps countries develop different kinds of industries so they don’t rely on
just one product.
In short, international trade helps developing countries become richer, create jobs, and improve
people’s lives.
2 3 QUESTION 3 Consider the following hypothetical scenario of two countries, Togo and Mali. Table 1:
Output per worker hour Output Togo Mali Cheese (ton/hr) 20 10 Aircrafts (Units/hr) 60 20 (i) State the
products of absolute advantage and absolute disadvantage for both countries. You must explain how
you arrived at your answer. [5 marks]
Given data:
Product Togo (ton/hr or units/hr) Mali (ton/hr or units/hr)
Cheese 20 tons/hr 10 tons/hr
