AQA A-level ECONOMICS 7136/2 Paper 2 National and International Economy Question Paper + Mark scheme [MERGED] June 2022

AQA

A-level

ECONOMICS

7136/2

Paper 2 National and International Economy

Question Paper + Mark scheme [MERGED]

June 2022

IB/M/Jun22/E5 7136/2

Time allowed: 2 hours

Materials

For this paper you must have:

• an AQA 12-page answer book

• a calculator.

Instructions

• Use black ink or black ball-point pen. Pencil should only be used for drawing.

• Write the information required on the front cover of your answer book.

The Paper Reference is 7136/2.

• In Section A, answer EITHER Context 1 OR Context 2.

• In Section B, answer ONE essay.

Information

• The marks for questions are shown in brackets.

• The maximum mark for this paper is 80.

• There are 40 marks for Section A and 40 marks for Section B.

Advice

• You are advised to spend 1 hour on Section A and 1 hour on Section B.

A-level

ECONOMICS

Paper 2 National and International Economy

2

IB/M/Jun22/7136/2

Section A

Answer EITHER Context 1 OR Context 2.

EITHER

Context 1 Total for this context: 40 marks

Investment in Africa

Study Extracts A, B and C and then answer all parts of Context 1 which follow.

Extract A

Figure 1: Real GDP (US$ bn), selected African

 nations, 2015–2018

Figure 2: Foreign direct investment (FDI) net

 inflows (US$ bn), selected African

 nations, 2015–2018

Country 2015 2016 2017 2018

Egypt 250.0 260.9 271.8 286.3

Kenya 52.3 55.4 58.1 61.7

Liberia 2.6 2.6 2.5 2.6

Morocco 113.4 114.6 119.5 123.2

Nigeria 461.8 454.4 458.0 466.9

Country 2015 2016 2017 2018

Egypt 6.9 8.1 7.4 8.1

Kenya 0.6 0.7 1.3 1.6

Liberia 0.2 0.3 0.2 0.1

Morocco 3.3 2.2 2.7 3.5

Nigeria 3.0 4.5 3.5 2.0

 Source: World Bank, 2020 Source: World Bank, 2020

Extract B: Foreign direct investment in Africa

In 2018, foreign direct investment (FDI) in Africa rose to $46 billion, an 11% increase on the

previous year. Morocco and Kenya saw some of the biggest rises in FDI, although many

nations in Sub-Saharan and Central Africa experienced falls. Nations with high and stable

growth seem better able to attract FDI inflows.

It was expected that increased rates of economic growth in Africa, along with progress towards

the African Continental Free Trade Area (AfCFTA) agreement and key improvements in

infrastructure, would boost FDI. Multinational corporations (MNCs) from developing countries

have been expanding their activities in Africa but investors from developed countries remain

key. French companies are currently the largest investors in Africa, followed by the

Netherlands, the United States and the UK. Africa is a key producer of commodities and with

higher demand and rising commodity prices, FDI inflows are expected to increase even further.

The growing number of special economic zones (SEZs) are also likely to help Africa attract

more FDI. SEZs are areas with relaxed trade rules, little regulation and little or no tax on firms

that invest in the zone. This makes locating in a SEZ very appealing to foreign firms. The

creation of these zones has helped to promote development in several Asian economies and

many African nations hope to make their economies more business-friendly. There are an

estimated 237 SEZs in the African continent already.

FDI can have many benefits. It should create employment, boost long-run economic growth

and increase exports. SEZs and improving competitiveness should contribute to the

achievement of key macroeconomic objectives and the development of a country’s economy.

5

10

15

20

Source: News reports, 2020

3

IB/M/Jun22/7136/2

Turn over ►

Extract C: Problems for Africa

It has been said that ‘investing in Africa is only for the brave’. Some of the issues faced by firms

include lack of infrastructure such as poor electricity and transport networks, bureaucracy,

political instability and corruption. African nations’ current share of global trade is only around

3%.

Since African governments began to use SEZs in the early 1970s, they have failed to attract

significant investment, to promote exports, or to create sustainable industrial development.

SEZs create distortions in markets, with too much focus on short-term gains. Often, conflicts of

interest occur between host governments and investors. Many MNCs, that have been attracted

to Africa by the SEZs, have been accused of doing little to improve the living standards of the

African people. It has been said that they do not create many jobs, they exploit workers and

damage the environment. Too often, profits are not reinvested in Africa but distributed to

shareholders or invested elsewhere.

Some argue that African governments should be doing more to improve the living standards of

their citizens, rather than relying on foreign firms. However, high debts, high unemployment

rates and low tax revenues often make it difficult for the governments of African nations to

develop their economies without investment from abroad.

5

10

15

Source: News reports, 2020

0 1 Using the data in Extract A (Figure 1), if 2015 is the base year, calculate the index of

Egypt’s real GDP in 2018.

Give your answer to one decimal place.

[2 marks]

0 2 Explain how the data in Extract A (Figures 1 and 2) show that nations with high and

stable economic growth attract rising foreign direct investment (FDI) inflows.

[4 marks]

0 3 Extract B (lines 18–19) states: ‘FDI can have many benefits. It should create

employment, boost long-run economic growth and increase exports.’

With the help of a suitable diagram, explain how a rise in inward foreign direct investment

(FDI) may lead to increased exports.

[9 marks]

0 4 Extract C (lines 13–14) states: ‘Some argue that African governments should be doing

more to improve the living standards of their citizens, rather than relying on foreign firms.’

Using the data in the extracts and your knowledge of economics, assess the view that to

improve the living standards of their citizens, African nations should pursue policies to

attract foreign direct investment (FDI).

[25 marks]

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