All of Mr Richards wider application points for this week.

mr richards should be here^

Nash, Von Neuman...icl thats the only people I recognise.... I hope no famous dude is in here and Ive forgotten what they look like. First week back, and already a nice abundent supply of application points. I've added a couple of extra details that may also be good figures/explanations to use in exams 

Productivity in the UK is terrible, but especially in the public sector. 

• public sector productivity has dropped by around 8.3% between Q1 2019 and Q4 2024,
• the private sector grew by about 4.7% over the same period. 
• This gap is costs the UK economy roughly £80bn per year in lost output. This is about 3% of GDP. and If current trends continue unchecked, losses could rise to 5% of GDP which is about around £170 billion annually, by 2030.

Recent US and UK trade deal. Breech of world trade by only keeping the deals between them two and not offering them to others. Reminder about what happened in the deal:

• Zero tariffs on UK steel and aluminium exports to the US.

• A 10% tariff on up to 100,000 UK car exports annually.

• UK removed tariffs on 1.4 billion liters of US ethanol, and established a 13,000-tonne tariff-free quota for US beef.

Trade allows acess to resources not available domesticlly:

1. Japan's selling of electronics to import oil and gas at a lower price 
2. Britan's financial sector

Export led growth:

• Germany, not too happy with the spanish economy thriving, as euro value increasing suffers germany by not being good for exports(they become less price competetive)

Mongolia and cattle grazing in the 1990s

• Privatisation in the 90s, and the mix of a thriving market with increasing lifestock made other countries and companies interested and want to set up camp in mongolia. This caused the depletion of natural resources.

Indonedia and export bans to protect their nickel industry

• Indonesia now controls over 61% of global refined nickel supply (up from just 6% in 2015), with projections that this may climb as high as 74% by 2028.

Prebisch singer, manufactured goods increase at a greater rate of price compared to the commodity price.

• Commodity prices (coffee, copper, bananas, etc....) rise more slowly (or even fall) in the long run. 
• Manufactured goods prices (cars, electronics, machinery.....) rise faster. 
• This means that developing countries that rely heavily on commodity exports need to export more and more raw materials just to afford the same amount of manufactured imports.

China has alot of wage suppresion reducing welfare and worsening its internal market

• China's labor income share plummeted from around 51% in 1995 to just 40% by 2007, only recovering to slightly over 50% by 2014. This is a level that remains significantly lower than in advanced economies.
• A similar trend occurred from 1997–2007, with labor’s share falling from 52.8% to 39.7%,.
• Though, it began rebounding post-2008 to around 57.6% by 2022 which is still 10–15 percent points below advanced nations.
  
  

Dutch disease:

• Specialisation can harm other industryes in the domestic economy. If the economy discoves a natural resources, loads of countries want to buy, so the value of the country's currency appreciates and hence other industries miss out,

• Netherlands (1960s): Gas exports → manufacturing decline.

• Nigeria & Angola: Oil booms led to manufacturing collapse, rising import dependence.

• Venezuela: Oil dependency crowded out other sectors, causing instability.

• Norway (exception): Avoided dutch disease by creating a sovereign wealth fund  (uk has a soverign wealth fund too...) to invest oil revenues abroad.

Gravity theory:

• Countries tend to be more drawn to trade with countrues that are close in proximity and of similiar size.
• UK trades most heavily with the EU even after Brexit, not the US or Australia.

"Money is coward" (avoiding risk)

• In Turkey (2018–2024), investor confidence collapsed due to unorthodox monetary policy and high inflation. Billions in capital left the country → currency depreciation.

• By contrast, during global uncertainty, capital often flows into US Treasury Bonds because they are seen as the safest assets.

Ireland is no longer selling/buying Israeli bonds:

• Change: As of September 2025, Israel moved EU bond approval from Ireland to Luxembourg. Ireland no longer approves these bonds.

• Reason: Political pressure, public protests, and criticism over Ireland facilitating bond sales amid the Israel–Palestine conflict.

• Central Bank: Legally required to approve compliant EU prospectuses; couldn’t refuse under current law.

• Impact: Bonds continue to be sold in the EU, but Ireland is no longer the approving authority.

Every 0.5% increase in interest rates means that 6bn extra in servicing debt interest costs

1. Government debt is pretty largely financed by bonds.

2. When I/R rise, newly issued bonds pay more interest.

3. Higher interest payments increase government expenditure, leaving less room for public services or investment.

Value of dollar transactions come from the global economy and trading the dollar rather than the currency moving within the country

• Even if the US domestic economy slows, the dollar may remain strong due to global demand for dollar-denominated trade and assets. Movements in the dollar often reflect international capital flows more than purely domestic factors.
• Developing countries are swapping US dollar-denominated debt to currencies with much lower interest rates compared to the US, such as the Chinese renminbi and Swiss franc, to avoid higher debt servicing costs

Hecklers-Ohlin-

• Builds on comparative advantage. Countries differ in factor endowments and goods differ in factor intensity 

•  A country will export goods that use its abundent factors intensively, and import goods that use factors intensively. Bangladesh- labour abundent: export tensiles, imports machines 

•  UK- capital abundant: export phara, imports textiles. Heckscher-Ohlin → predicts countries export goods using their abundant factor. Leontief’s finding → the U.S. (capital-rich) exported labor-intensive goods, a result known as the Leontief Paradox, which challenged the model.