Clip URL: https://criticalcommons.org/view?m=7n3xia6QP
Concepts: Gains from trade, production possibilities, opportunity costs, comparative advantage, foreign direct investment, national spending approach, technology transfer
Background: In Queen Sono, we get hints of Africa's abundance of natural resources, such as the diamond mine in episode 1 and the mention of an oil rig in episode 3. The non-governmental organization Afrifeed also accuses the company Superior Solutions of planning to exploit Africa's natural resources. The heiress of the private arms company Superior Solutions concludes her speech by saying: "All these regions have the resources to support big businesses, to attract foreign direct investment. We all dream of an Africa that is at peace with itself, an Africa ready for a new and prosperous future."
Question 1: Research what commodities Sub-Saharan African countries mainly export. Then, using trade theories, explain how African countries can benefit from trade.
Question 2: Table 1 illustrates the advantages of the two countries, expressed in terms of how many hours it takes to produce each good. To simplify, let's say that each country has 100 worker hours.
|Copper (hours per thousand tonnes)||Computer (hours per unit)|
Table 1. Number of Hours to Produce One Unit
First, calculate the production possibilities before any trade. Second, calculate the opportunity costs and discuss which country has a comparative advantage in producing copper and computers.
Question 3: Discuss whether foreign direct investment can help increase the economic growth of Africa's poorer countries.
Clip URL: https://criticalcommons.org/view?m=jGhQ8IpSz
Concepts: Absolute advantage, comparative advantage
Background: The Australian minister of defense must choose between ordering military submarines from Australia or from Japan. Japanese submarines are as efficient but cheaper to purchase. The minister decides to order them from Australia to favor an Australian company, though recognizing the significant cost difference.
Question: Use the concepts of absolute and comparative advantages to discuss under which conditions the Australian minister of defense could have made a correct decision.