Germany Jahrgangsstufe 11 Economics and Law
Chapters: 4
1. The economic order as a framework
Economic order as a framework
- Market Failure – A market fails when buying and selling on its own does not give the best result for society. Resources are used in the wrong amounts: too much of some goods (pollution, cigarettes), too little of others (street lights, vaccines, education). Main causes: externalities, public goods, merit and demerit goods, imperfect information, market power and unfair inequality. Governments try to fix it with taxes, subsidies, rules, direct provision and information, but government action can also fail.
2. Law as a framework for action
Law as a framework for action
- Rule of Law – The rule of law means everyone, including the government and its leaders, must follow the same known laws, which are applied equally by fair and independent courts. Its main principles are supremacy of law, equality before the law, clear and public laws, fair trials, protected rights and separation of powers. Laws are made and changed through an open process, can be reviewed by courts against a constitution or charter of rights, and countries also agree to international law through treaties.
3. International economic interdependence
International economic integration
- International Trade – International trade is buying and selling goods and services across the boundaries of countries. Selling abroad is export; buying from abroad is import. It helps nations (foreign exchange, growth, jobs) and firms (profit, new markets). Exports and imports follow fixed steps and need many documents, such as the letter of credit and bill of lading. The WTO (1995) makes trade rules and works to cut trade barriers.
- International Trade: Basis, Balance, WTO and Ports – International trade is the exchange of goods and services between countries. It began with barter, grew along routes like the Silk Route, passed through the cruel slave trade and colonial trade, and expanded with industry. Countries trade because they differ in resources, population, development, foreign investment and transport. Balance of trade compares exports and imports. Trade can be bilateral or multilateral; free trade lowers barriers, while dumping sells goods abroad below cost. The WTO sets global rules, regional blocs group neighbours, and ports of many types act as gateways.
4. Global future trends
Global future trends
- The Making of a Global World – People, goods, ideas and germs have moved across the world for thousands of years: on the silk routes, with food crops like potato and maize, and with diseases like smallpox. Between 1815 and 1914 the world economy grew through three flows: goods, labour and capital, helped by railways, steamships and refrigerated ships. Colonies paid a price: rinderpest in Africa and indentured labour from India. After the First World War came mass production in the USA and then the Great Depression of 1929, which hit India's farmers hard. After 1945, the Bretton Woods system, the IMF and the World Bank rebuilt the world economy.