Industry, Trade and Economic Development
This domain tests structural change, industrialisation and trade policy. You need to explain how economies move from primary production to higher-value activities and how trade rules shape that process.
Core concepts
- Structural change is the shift of output and employment from agriculture to industry and services.
- Value addition means processing raw materials before export, which can create jobs and higher export earnings.
- Linkages connect sectors: backward linkages supply inputs; forward linkages process outputs.
- Trade policy includes tariffs, quotas, export promotion and regional integration.
- Comparative advantage explains gains from specialisation, but static advantage can lock a country into low-value products.
Namibia exports minerals, fish and tourism services, and imports manufactured goods and fuel. SACU, SADC and the African Continental Free Trade Area shape its market access. Beneficiation of minerals is a recurring policy goal.
Worked example
A country exports raw copper at US$2,000 per tonne and imports processed copper products at much higher prices. Processing locally could raise export earnings and create jobs. But the reasoning must include constraints: capital, reliable electricity, skills, water and access to markets. If these are missing, a processing plant may be inefficient. A sensible strategy combines infrastructure, skills and regional trade rather than banning raw exports overnight.
Traps that cost marks
Assuming exports are always good and imports always bad; treating protection as costless; ignoring Dutch disease, where resource exports raise the exchange rate and hurt other tradable sectors; assuming comparative advantage never changes.