Background

Imagine that you work for the World Bank and you have been called to Ghana to aid the new president to come up with a new international trade strategy.

You are told that the new government is interested in moving away from agriculture and into manufacturing. To do so, the government wants to pursuit a policy of import substitution industrialization (ISI).

You are given a brief about Ghana highlighting the following points:

• About half of Ghana's population depends on agriculture, but Ghana still imports some of its food.
• The majority of Ghana's people live in rural areas and exist on a subsistence way of life.
• Ghana has one of the highest rates of income inequality in the world.
• Nearly half of the population is employed in agriculture.

QUESTION B.3

Marcia Anthony, the Trade Minister, argues that the country should not adopt ISI. She asks you to help her explain the benefits of trade with a diagram. Please draw this diagram and explain its intuition.

QUESTION B.4

The Minister for Labour, John Ring, argues that closing the country's borders to international trade will create employment. Use a diagram to explain this scenario.

QUESTION B.5

Kelly Stuart, an RMIT-trained economist at the Ministry of Labour argues that the policy change will ultimately hurt consumers. Use a diagram to explain her thinking.