(a)[4]
- State the country in Table 1 that has the biggest deficit on its balance of trade in goods with Vietnam. [1]
- Identify the three additional components of the balance of payments that would enable you to calculate Vietnam’s current account balance with that country. [3]
(b)[4]
Explain any two factors that would determine the effect of China’s decision to devalue the yuan on Vietnam’s trade with China.
(c)[6]
Explain how subsidies for all Vietnamese goods and a boycott of Chinese goods are expected to help Vietnamese goods compete with Chinese goods. Use supply and demand diagrams to support your answer.
(d)[6]
Discuss whether the principle of comparative advantage would justify the Vietnamese government supporting the development of all industries in Vietnam or only those with the potential to compete.