Economics 9708/42 — May/June 2023
Cambridge A-Level · A Level Data Response and Essays · worked solutions for every part, with the mark scheme
Topics Economic Growth and Sustainability · Economic Development and Living Standards · Characteristics of Countries at Different Levels of Development · Externalities, Social Costs and Benefits · Government Policies to Correct Market Failure · Costs of Production · +5 more
Pakistan and the Belt and Roads Initiative (BRI)
The BRI is a strategy initiated by China in 2013 that seeks to connect Asia with Africa and Europe via land and sea networks. Its aim is to improve regional integration, increase trade and stimulate economic growth. It involves major investment in infrastructure projects. Under the BRI China is looking for markets with growth potential for their exports, in particular openings for profitable infrastructure and industrial investment. Profits in China are falling and over-capacity is widespread.
Better direct transport links will encourage growth for China’s inland provinces, for example, the China-Pakistan Economic Corridor (CPEC). This is a US$50 billion road building scheme linking an inland province in western China to a newly developed Pakistani port on the Arabian Sea. The development offers a shorter and cheaper route for China’s exports to Africa, the Middle East and Europe. Additionally, the port development includes plans for investment in Pakistan’s railways and industrial zones.
Other projects are focused on energy supply including coal-fired and nuclear-powered electricity generation and the development of Pakistan’s electricity grid. Pakistan’s economy is affected by power cuts which lead to many firms having their own inefficient diesel generators that increase their costs of production. The generators are also highly polluting. A more reliable electricity supply will also benefit households as cooking can be done without using unhealthy solid fuels, such as straw, and students can study for longer in the evening.
The construction machinery used for these infrastructure projects is supplied mainly by China and the projects are supervised by Chinese managers. To pay for these projects Pakistan takes loans provided by Chinese banks and institutions. Pakistan already has outstanding foreign debt of approximately 25% of gross domestic product (GDP).
Table 1.1 Selected Comparative Data for China and Pakistan
| GDP per capita adjusted for purchasing power parity (US$) | Unemployment Rate (%) | Gini Coefficient | ||||
|---|---|---|---|---|---|---|
| 2014 | 2018 | 2014 | 2018 | 2014 | 2018 | |
| China | 11 917 | 15 243 | 4.1 | 3.8 | 43.7 | 38.5 |
| Pakistan | 4171 | 4740 | 5.8 | 5.5 | 29.8 | 33.5 |
Explain what is meant by purchasing power parity (PPP).
Explain, with the help of a diagram, the likely impact of the BRI on both the potential economic growth and the actual economic growth of Pakistan.
Consider, with reference to Table 1.1, the change in the standard of living in Pakistan and China between 2014 and 2018.
Evaluate, using the article, the likely impact of the BRI on the economies of Pakistan and China in the long run.
The rest of this paper
4 more questions- Q2Externalities, Social Costs and Benefits · Government Policies to Correct Market Failure20M
- Q3Costs of Production · Market Structures20M
- Q4Exchange Rate Systems · Economic Growth and Sustainability20M
- Q5Money and Banking · Macroeconomic Objectives and Policy Conflicts · Effectiveness of Macroeconomic Policies20M