Syllabus: AQA A-level Economics
Module: The National and International Economy
Lesson: 4.2.14 The International Economy

Introduction

This article unpacks section 4.2.14 of the AQA A-level Economics specification, titled The international economy, part of the broader theme of The national and international economy (Section 4.2). It’s where macroeconomics meets the global stage. Students analyse trade, exchange rates, and global economic policy, and develop the ability to think critically about the UK’s role in a complex international system. Aligned with the AQA specification, this section is essential for understanding interconnected economies, making it directly relevant to current affairs and economic decision-making in the real world.

Key Concepts

The AQA specification outlines the following key areas under 4.2.14:

• Globalisation: Definitions, causes, characteristics, and consequences.

• Trade: Benefits and costs of free trade, comparative advantage, the role of the World Trade Organization (WTO).

• Protectionism: Reasons for and effects of tariffs, quotas, and subsidies.

• Trading Blocs: Types, examples (e.g. EU, ASEAN), and their economic implications.

• Balance of Payments: Components and implications of deficits/surpluses.

• Exchange Rates: How they are determined, effects on competitiveness, types (floating vs fixed), and causes of changes.

• International Competitiveness: How it’s measured, its importance, and how it can be improved.

• Global Institutions: Role of the IMF, World Bank, and WTO in managing economic interdependence.

• Development Economics: Link between international trade and development, trade vs aid debate.

This section is tightly linked with quantitative skills, such as interpreting trade and exchange rate data, analysing terms of trade, and evaluating macroeconomic policy decisions on an international scale.

Real-World Relevance

This topic is arguably the most current-facing part of the A-level course. It plugs straight into live economic events:

• Post-Brexit UK Trade Deals: The UK’s negotiation of bilateral agreements post-EU membership highlights the impact of protectionism, sovereignty, and global trade rules.

• US-China Trade Relations: Tariffs and retaliatory measures between the two economies give concrete examples of protectionism and political influences on trade.

• Global Supply Chain Disruptions: From semiconductors to food, the COVID-19 pandemic and geopolitical events (e.g., Ukraine conflict) revealed vulnerabilities in globalisation.

• Currency Fluctuations: The 2022–2023 volatility in the pound against the dollar affected imports, inflation, and investment—practical examples of exchange rate effects.

• Emerging Markets: Countries like Vietnam and Bangladesh illustrate international competitiveness in action, with shifts in FDI, labour costs, and global production.

These examples help students grasp how economic theory plays out in real decisions affecting jobs, prices, and growth.

How It’s Assessed

Section 4.2.14 is examined within Paper 2: National and international economy. Question types typically include:

• Short-answer data response: e.g., interpreting balance of payments data or exchange rate movements.

• Extended essays: Apply and evaluate concepts like protectionism or globalisation.

• Quantitative analysis: Calculations or graphical interpretation related to trade data or terms of trade.

Command words like analyse, evaluate, and discuss are frequent, and responses are marked for clarity of argument, use of theory, application to context, and ability to form supported judgements. This is an ideal section to prepare students for synoptic links with development economics and policy-making.

Enterprise Skills Integration

This unit builds high-value enterprise skills, particularly:

• Decision-making: Judging the trade-offs between protectionism and free trade or choosing policies to improve competitiveness.

• Problem-solving: Evaluating economic strategies for countries facing trade deficits or currency volatility.

• Critical thinking: Challenging assumptions about globalisation or the role of supranational institutions.

• Numeracy and data literacy: Analysing economic indicators like exchange rate trends or trade balance figures.

Using tools like MarketScope AI can bring these to life—students can simulate trade decisions and see real-time impacts on fictional economies, deepening their understanding through practice.

Careers Links

This section links strongly with Gatsby Benchmarks 4 (linking curriculum learning to careers) and 5 (encounters with employers):

• Economics and Trade Analysts (e.g. HM Treasury, Bank of England)

• Policy Advisors (e.g. Foreign Office, IMF, OECD)

• International Development Officers (e.g. NGOs or World Bank)

• Finance & FX Trading (e.g. investment banks, fintech firms)

• Business Development Managers (especially in export-focused firms)

It also sets students up for university study in international relations, development economics, or global business management.

Teaching Notes

• Start with a map: Use trade flow diagrams and global trade maps to anchor abstract content.

• Layer in data: Get students hands-on with recent ONS trade figures or FX charts from the Bank of England.

• Mini case studies work: Use short snapshots of Brexit negotiations, WTO rulings, or China’s Belt and Road initiative to illustrate theory.

• Common pitfalls: Students often confuse comparative advantage with absolute advantage and struggle to link exchange rate shifts to current account changes—practice questions help.

• Stretch ideas: Explore ethical questions around trade and development. Is trade always the answer? What about sustainability?