6.1 Microeconomics
Title of the Article | LED Streetlights Bring Cost Savings, And Headaches, To Colorado Cities |
Source of the extract | Colorado Public Radio online site |
Date of the extract | 15 September 2016 |
Date of the commentary | 17 March 2017 |
Word count | 792 words |
Unit | Microeconomics |
WISE ChoICE Concept | Efficiency |
LED Streetlights Bring Cost Savings, And Headaches, To Colorado Cities
Denver’s LED Overhaul
Denver is in the midst of a $2 million project to update the lighting along its iconic 16th Street Mall. The 30-year-old high-pressure sodium lights, which emitted an orange hue, are being replaced by modern white LEDs. Heather Burke, spokeswoman for Denver Public Works, explained the rationale behind the change: “Technology changes, and it was time to change with it.”
This project also marks a return to a part of Denver’s lighting history. Designers have restored the "twinkle rings," decorative halos of light that had been inoperable for decades due to earlier bulb changes. Burke noted that these enhancements will create a brighter, more inviting atmosphere for pedestrians, blending aesthetic charm with improved functionality.
The project aligns with new guidelines from the American Medical Association (AMA), issued in June, which call for LEDs with a color temperature of 3000 Kelvin or below. These lights produce a warmer glow, reducing the risks associated with blue light, which can suppress melatonin production and contribute to health issues like insomnia, depression, and diabetes.
The Nationwide LED Movement
The move to LEDs is part of a broader trend across the United States, where over 10% of outdoor lighting has already transitioned to this energy-saving technology. LEDs can cut energy consumption by up to 50%, making them an appealing option for cost-conscious cities. However, the AMA has warned that poorly designed LED systems can create unintended consequences, such as glare and light pollution.
To address these issues, the AMA’s guidelines recommend that cities not only use warmer-colored LEDs but also shield lights to reduce glare and install dimmable systems to adapt lighting to specific needs. Dr. Mario Motta, a member of the AMA’s Council on Science and Public Health, emphasized that cities now have access to LED technology that balances efficiency with community well-being. "There's absolutely no reason to put in bad lighting," he said. "You can put in good lighting."
Smarter Lighting Technology
Beyond energy savings, LED technology offers cities new capabilities. Lighting designer Nancy Clanton of Boulder-based Clanton & Associates has spearheaded projects in San Diego, Anchorage, and San Jose, incorporating innovations like dimmable lighting. In San Jose, streetlights are brightened before bars close to encourage patrons to leave and dimmed afterward to conserve energy.
Colorado is also adopting smart lighting systems. Dimming features will soon be integrated into lights managed by the Colorado Department of Transportation. Similarly, the 16th Street Mall’s new lighting design includes dimmable LEDs, giving Denver flexibility to adjust brightness as needed.
Early Adopters and Their Lessons
Cities that transitioned to LEDs before these technologies matured have faced unique challenges. Ouray, a small town on Colorado’s Western Slope, was one of the first in the state to adopt LED streetlights in 2009. While the switch helped preserve the area’s dark skies—allowing residents to see the Milky Way—the narrower light pattern of early LEDs created dark patches in residential neighborhoods. This posed safety concerns, especially as bears began frequenting poorly lit side streets.
Despite these hiccups, Ouray’s City Administrator Patrick Rondinelli expressed no regrets. “We’ve had some lessons learned along the way, but there’s no regret,” he said. The city has seen significant cost savings and positive feedback from residents, proving that even early adopters can reap the benefits of LED technology.
A Cautious Approach in Fort Collins
Other cities are taking a more measured approach. Fort Collins plans to replace about one-third of its streetlights with LEDs in 2017 and 2018, using a mix of 3000 and 4000 Kelvin lights. The city’s Engineering Manager, Kraig Bader, explained that brightness levels will vary based on street size and activity, and the results will be carefully studied before further upgrades. “In essence, we’re going slow to go fast later on,” he said, emphasizing the importance of thoughtful planning.
Balancing Progress and Practicality
The transition to LED streetlights is a balancing act. On one hand, the energy efficiency and cost savings make LEDs an attractive choice for municipalities. On the other, cities must navigate design challenges, health considerations, and evolving community needs. Denver’s restoration of its iconic twinkle lights and Fort Collins’ phased implementation plan highlight the importance of tailoring LED upgrades to each city’s unique circumstances.
As LED technology continues to evolve, cities across Colorado are finding ways to leverage its benefits while mitigating its challenges. Whether restoring decorative features, adopting dimmable systems, or preserving dark skies, these projects demonstrate how thoughtful planning can illuminate not just streets but also the path forward for smarter, safer urban lighting.
Commentary
(Introduction)
The article discusses Denver's $2 million LED lighting upgrade on 16th Street Mall, replacing outdated sodium lights with energy-efficient LEDs and restoring decorative "twinkle rings." The economic evaluation and provision of public goods, such as streetlights, often present significant challenges. To ensure allocative efficiency in the installation of LED streetlights, communities must aim to maximize social surplus by aligning marginal social cost (MSC) with marginal social benefit (MSB).
(Overview)
Streetlights are categorized as public goods because they are both non-rivalrous and non-excludable. These characteristics complicate the analysis of their benefits, as illustrated in Figure 1.
Figure :1 Cost/benefit model for sodium and LED streetlights
(Overview)
The MSC1 curve represents the supply curve for sodium streetlights. Since streetlights are public goods, the marginal private benefit (MPB) or demand curve does not intersect with the MSC curve. This reflects the free rider problem, where individuals avoid paying for the good, expecting others to cover the cost. To address this issue, the city government must finance streetlights, as their marginal social benefit (MSB) is substantial. Prior to the adoption of LED technology, the optimal or efficient output of sodium streetlights was Q1, determined where the MSB curve intersects the MSC1 curve.
(Analysis)
Although the article states that LED streetlights "cost the same" to implement initially, the MSC2 curve for LEDs lies below MSC1. This reduction is due to lower private costs and significant energy savings—up to 50%—which drastically decrease the long-run operational costs of LED streetlights.
As a result, the MSC curve drops, leading to an increase in the efficient quantity of streetlights from Q1 to Q2. This shift enables the city to install more streetlights at reduced costs. Additionally, surplus LED lights can be stored for future replacements, reducing the need for additional budget allocations for replacements in subsequent years.
(Evaluation)
However, the implementation of LED streetlights is not without drawbacks. They present health-related external costs, such as potential disruptions to melatonin production, representing a negative external cost of consumption (Figure 2). These health concerns must be carefully considered alongside the economic benefits to ensure a balanced approach to public welfare.
Figure 2: Negative Consumption Externality of LED streetlights
Because streetlights are public goods, the D (MPB) curve is nearly irrelevant in analyzing their provision. Instead, the negative externalities associated with LEDs—such as health implications linked to "increased diabetes and depression"—are represented in the model by the downward shift of the MSB1 curve to MSB2. This shift reflects the marginal external cost, which quantifies the per-unit negative impact of these health issues on society.
The diagram suggests that the efficient quantity of LED streetlights is not the initially predicted QP, but rather the lower quantity QA, where the MSB2 curve intersects with the MSC curve. It also indicates that the efficient "price" for LEDs at QA should not be determined by cost/benefit2 (where MSB2 = MSC), but rather by cost/benefit3, which accounts for the external costs.
This reasoning supports Fort Collins' decision to replace only a portion of its streetlights with LEDs. While LEDs are more "cost-efficient", the presence of negative externalities necessitates a cautious approach. Fort Collins plans to "swap one third of its streetlights to LEDs" and use 3000 and 4000 Kelvin lights with varying brightness, followed by studying the results before expanding the implementation. This demonstrates how cities can use economic models to evaluate public goods while considering societal well-being and striving for allocative efficiency.
Despite their utility, the models presented have several limitations. First, they are static and do not account for the rapid development of LED technology. Innovations aimed at reducing harmful blue light and lowering costs are already in progress. As noted in the article, cities are mitigating negative impacts by adopting warmer lights, using shielding, and implementing dimming technology.
Second, the models overlook additional variables. For example, LEDs provide positive externalities, such as preserving darker night skies, which can enhance environmental and aesthetic value. Conversely, narrow light patterns from LEDs have introduced safety concerns, such as the risk of bear attacks in poorly lit areas. These complexities emphasize the need for cities to balance their budgets with the broader benefits and challenges that LEDs present as public goods.
Lastly, the models rely on qualitative curves and directional shifts rather than precise monetary values. While useful for identifying trends, these models cannot accurately quantify the costs of negative and positive externalities, making it challenging to implement exact corrective measures.
(Conclusion)
The analysis suggests that replacing some streetlights with LEDs can reduce costs while minimizing negative externalities, making it a viable option for cities like Fort Collins. However, achieving allocative efficiency requires ongoing monitoring of societal impacts and citizen feedback. By basing decisions on real-world outcomes rather than abstract models, city governments can better balance the economic, environmental, and social dimensions of public goods like LED streetlights.
Marking Criteria
Criterion A [3/3]:
The commentary includes two diagrams, both appropriately labeled with relevant titles. It effectively switches the horizontal axis from "Quantity of Streetlights" to "Quantity of LED Lights" for the second diagram. The explanations provided are clear and correct.
Criterion B [2/2]:
Precise and appropriate economic terminology is used. Concise definition of the relevant term "public good" and a correct understanding of the other terms e.g external cost of consumption is shown by the way they are used.
Criterion C: Application [3/3]
Cost-benefit analysis is used appropriately and correctly linked to the article. The first diagram contains a demand curve to the left of the optimum, representing the small number of consumers who might be willing and able to pay the commercial price for street lights. This being the situation in the real world rather than the zero consumers prepared to pay this price in pure public good theory. Situations where the candidate goes beyond the textbook should be rewarded.
Criterion D: Analysis [3/3]
There is recognition that the key concept of efficiency is difficult to calculate and legislate for, given the external costs associated with LED streetlights, Nonetheless it is seen as necessary for governments to try to move closer to achieving efficiency.
Criterion E: Evaluation [4/4]
There is comprehensive evaluation included in the commentary and the candidate presents a balance of strengths and weaknesses in the commentary. A short summary conclusion is included.
6.2 Macroeconomics
Title of the extract | “Inflation returns to Japan for the first time in more than a year” |
Source of the extract | The Guardian |
Date of the extract | 3 March 2017 |
Date of the commentary | 12 October 2017 |
Word count | 793 words |
Unit | Microeconomics |
WISE ChoICE Concept | Choice |
Inflation Returns to Japan After Over a Year
Japan's core consumer prices have risen for the first time in over a year, driven by higher energy costs. This marks a rare success in the government's ongoing fight against deflation, but a 1.2% slump in household spending compared to the previous year underscores the persistent challenges in achieving sustained economic growth and inflation.
Economic Challenges and Risks
Japan's third-largest economy faces additional threats from rising protectionism in the United States, which could discourage companies from raising wages—a critical factor for long-term growth. Analysts warn that without higher wages, the Bank of Japan's (BOJ) goal of reaching a 2% inflation target will remain elusive.
The core consumer price index (CPI), which includes oil products but excludes fresh food prices, increased 0.1% in January from the previous year, the first rise since December 2015. This modest growth, following a 0.2% decline in December, slightly exceeded market expectations for no change.
Outlook for Inflation
Analysts predict that core consumer prices could approach 1% later this year, helped by the strengthening US dollar, which weakens the yen.
"Inflation will accelerate this year due to a rebound in energy costs and the weak-yen effect," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute. However, he noted that without a significant increase in wages to spur spending, inflation is unlikely to gain further momentum. Shinke emphasized that the BOJ’s ultra-loose monetary policy is likely to continue given the significant gap to the 2% target.
Stagnant Wage Growth and Consumer Spending
Japan’s tight labor market, with unemployment at a 20-year low of 3% in January, has not translated into stronger wage growth. This has weighed on consumer spending, which accounts for over half of Japan’s GDP. Despite favorable labor conditions, wage stagnation continues to limit household purchasing power.
Factory Output and Economic Fragility
In another troubling sign, factory output unexpectedly fell in January, marking the first decline in six months and signaling ongoing challenges for Japan’s economy. This highlights the fragility of Tokyo’s efforts to boost growth and inflation.
Government and BOJ Efforts
Japan has been locked in a years-long battle to escape deflation, which has led to falling prices and subdued economic performance. Yoshihide Suga, the government’s top spokesman, reaffirmed the commitment to overcoming deflation, saying, "The government is teaming up with the Bank of Japan to keep working toward getting out of deflation."
While policies such as massive monetary easing, government spending, and regulatory reforms have weakened the yen, boosted corporate profits, and sparked a stock market rally, they have yet to deliver robust and sustained growth across the broader economy.
Commentary
(Introduction)
The Bank of Japan (BOJ), and the Japanese government are trying to stop deflation, the sustained decrease in the consumer price index (CPI). It may seem that an economy is better off choosing deflation, rather than its opposite inflation. But deflation in Japan has been accompanied by falling and even negative growth rates of real GDP. Therefore, they have made the choice of promoting inflation, aiming for 2% per annum. In addition to the government making policy choices, firms are choosing whether or not to invest, and households have difficult choices to make about consumption and wages.
(Overview)
One reason why Japan has difficulty in preventing deflation is the protectionist policies that are being used by the United States to limit foreign firms' imports. These policies make it difficult for Japanese firms to export their goods, which in turn makes firms less likely to raise their wages. Therefore, consumption spending has actually fallen by 1.2% over the last year.
Figure 1: AD/AS showing impact of decreased consumer spending and investment
(Analysis)
This poses a significant challenge because aggregate demand (AD), as shown in the diagram to the right, is the sum of consumption, investment, government expenditure, and net exports. Since household consumption has decreased, AD also decreases, illustrated by the shift from AD1 to AD2. This shift results in a new intersection with the aggregate supply curve, causing both price levels to fall from P1 to P2 and real GDP to decline from Q1 to Q2. This decrease in the consumer price index (CPI) indicates deflation, which can further reduce real GDP.
Deflation presents a significant obstacle for a country aiming to promote growth. Although it might seem that lower prices would increase consumer spending, Japanese consumers, anticipating further deflation, tend to delay purchases—especially of durable goods like cars and washing machines—waiting for even lower prices. This preference for future satisfaction over present satisfaction reduces consumer spending further, leading to additional decreases in price levels and GDP.
While consumers may benefit from lower prices, firms experience the opposite effect. Although the final prices of goods decrease, the costs of production, including raw materials and other inputs, remain unchanged. As a result, the relative cost of production increases, and profits decline. This discourages investment by firms, and since investment is a component of AD, it causes a further shift from AD1 to AD2, exacerbating the decline in real GDP.
Figure 2: Labour Market showing the impact of tight labour markets on the real wage rates in Japan
(Evaluation)
Japan’s labor market is described as tight, meaning the economy is near full employment. In such conditions, the portion of the labor force that is unemployed is small, making available workers scarce. In the diagram on the left, if the demand for labor is at D1 and wages are at R1, there is excess demand between Qs and Qd, which typically places upward pressure on wages to rise to R2.
However, despite these conditions, wages in Japan have remained stagnant. This stagnation is linked to deflation, as slow wage growth reduces disposable incomes, making consumers less inclined to spend more. As shown in the earlier AD-AS diagram, this decreases AD, perpetuates deflation, and hinders economic growth.
Another possibility is that workers prioritize job security over higher wages, opting for stability in anticipation of future uncertainty. To counteract this, the government, through the BOJ, has implemented ultra-loose (expansionary) monetary policy. This involves maintaining very low interest rates and increasing the money supply to encourage investment and consumption. Lower borrowing costs aim to shift AD to the right, while a weaker yen makes exports cheaper.
Despite the BOJ’s policies, there are risks and opportunity costs. The depreciation of the yen increases import costs, which could harm consumers. Additionally, prolonged monetary expansion could lead to hyperinflation in the future. Savers are penalized by low interest rates, reducing their returns.
(Conclusion)
The choices made by Japanese consumers, labor, firms, and the government significantly impact the economy’s trajectory and well-being. Although some progress has been made, such as minor successes in boosting AD, the economy remains fragile. The uncertainty of outcomes underscores the complexity of balancing policy and economic realities in the fight against deflation.
Marking Criteria
Criterion A [2/3]:
The two different diagrams provided are relevant and contain a suitable title and are correctly labeled. The explanations are generally good, but the Labor Force and Demand curves require more explanation in diagram two.
Criterion B [2/2]:
The appropriate macroeconomic terminology is used correctly throughout.
Criterion C: Application [2/2]
The commentary uses an AD/AS diagram to analyse the article and this was applied effectively. The commentary also included a suitable discussion on expansionary monetary policies.
Criterion D: Analysis [3/3]
The key concept of choice was used appropriately throughout the commentary. The way that choice is related to opportunity cost was stated explicitly.
Criterion E: Evaluation [3/4]
Judgments were provided with appropriate reasoning, but the expansionary monetary policies required a fuller evaluation.
6.3 The Global Economy
Title of the extract | E.U. and Japan Finalize Landmark Free Trade Agreement |
Source of the extract | The New York Times |
Date of the extract | 8 December 2017 |
Date of the commentary | 5 March 2018 |
Word count | 800 words |
Unit | The Global Economy |
WISE ChoICE Concept | Interdependence |
E.U. and Japan Finalize Landmark Free Trade Agreement
The E.U.-Japan Free Trade Agreement
The European Union and Japan have finalized a sweeping free trade agreement, creating an economic partnership that spans more than a quarter of the world’s economy. The deal, announced Friday, counters the rising tide of protectionism in Western nations and is set to become one of the largest free trade pacts in history.
Strategic and Economic Significance
Leaders from both sides emphasized the agreement’s strategic and economic significance. The announcement came just hours after progress in Brexit negotiations between Britain and the European Union, adding to the symbolic weight of the pact. In a joint statement, Japanese Prime Minister Shinzo Abe and European Commission President Jean-Claude Juncker declared, “This agreement demonstrates the powerful political will of Japan and the E.U. to continue to keep the flag of free trade waving high.”
Ratification and Commitment to Global Values
The agreement, which requires ratification from lawmakers in Europe and Japan, is expected to deliver sustainable and inclusive economic growth while spurring job creation. Both parties also reaffirmed their dedication to the Paris climate accord, from which the United States has announced its withdrawal.
Trade Talks and Shift in Japan’s Trade Policy
The leaders added, “It sends a clear signal to the world that the E.U. and Japan are committed to keeping the world economy working on the basis of free, open, and fair markets with clear and transparent rules, fully respecting and enhancing our values.”
Trade talks between Japan and the E.U. began in 2013, but momentum picked up after President Trump’s decision in January 2017 to withdraw the United States from the Trans-Pacific Partnership (TPP). Japan prioritized the E.U. deal and has also worked to revive the TPP without U.S. participation.
This marks a shift for Japan, traditionally cautious about trade deals despite its prowess in exporting cars, electronics, and other goods. Prime Minister Abe has made trade liberalization a cornerstone of his economic agenda. This change is partly attributed to the declining influence of Japan’s farm lobby, which had long resisted reducing tariffs on imported agricultural goods. With Japan’s rural population aging and shrinking, trade concessions on agriculture are now less politically contentious.
Economic Impact and Key Beneficiaries
The agreement establishes a trading area with a combined annual economic output of $20 trillion, comparable to the North American Free Trade Agreement (NAFTA). Key beneficiaries include:
•
European food and beverage producers, who will gain greater access to the Japanese market, where tariffs on goods like cheese, beef, and wine can reach 40%.
•
European industries such as pharmaceuticals, medical equipment, and train manufacturers, which will benefit from reduced trade barriers.
•
Japanese carmakers, including Toyota, who will find it easier to compete in the European market, where they currently hold only a 13% market share, compared to 40% in the U.S..
However, Japanese automakers already have significant manufacturing operations in Europe, indicating that their limited market share is also influenced by a lack of models suited to European consumer preferences.
Challenges and Limitations
Despite optimism from both parties, the deal faces hurdles. National and regional legislatures in Europe must approve the agreement, a process that previously threatened the E.U.-Canada trade deal. Additionally, the overall economic impact is expected to be modest.
Angel Talavera, senior eurozone economist at Oxford Economics, noted, “Japan represents only around 2 percent of total exports for the eurozone. I don’t think this is a game changer.”
The E.U.-Japan trade agreement is a bold step in favor of free trade, emphasizing collaboration in an increasingly protectionist world. While the pact offers significant benefits to specific industries, such as agriculture in Europe and automobiles in Japan, its broader economic impact may be limited. Nonetheless, the deal sends a strong message about the importance of open markets and shared global values.
Commentary
(Introduction)
Interdependence within domestic sectors and between global economies often leads to conflicts when trade is liberalized, particularly in the case of declining industries. The Economic Partnership Agreement (EPA), a free trade agreement (FTA) between the European Union (EU) and Japan, highlights the benefits of free trade but also raises concerns about protecting struggling industries and managing the flow of trade across various economies.
(Overview)
An FTA aims to reduce or eliminate trade barriers among member countries while permitting them to maintain their own barriers against non-member nations. Under the EPA, tariffs will be reduced on Japanese cars entering the EU and on European goods like cheese, beef, and wine being exported to Japan. Prior to this agreement, Japan imposed tariffs as high as 40% on these imports.
Figure 1: Japan's tariffs on European imports of gouda cheese
(Analysis)
Before the Economic Partnership Agreement (EPA), the price of imported cheese in Japan was Pw + Tariff (40%), with the quantity of imports from the EU being 2Q. Once the tariff is removed and the price falls to Pw, the quantity of domestically produced cheese will decrease from Q2 to Q, as some Japanese dairy farmers may reduce their production or even exit the market due to lower prices. Their revenue will drop from Pw + Tariff × Q2 to Pw × Q1. Consequently, the quantity of imported cheese will rise to Q to Q4, as more efficient EU producers meet the increased demand. This eliminates the welfare losses represented by areas a and b in the trade model. However, the Japanese government will lose the tariff revenue it previously collected, shown by the area GOV.
A similar scenario applies to the removal of tariffs on Japanese cars exported to the EU. Currently, Japanese carmakers, such as Toyota, hold only a 13% share of the European auto market, suggesting that EU import tariffs have hindered Japanese exports. However, this limited market share could also be attributed to a mismatch between Japanese cars and European consumer preferences, a non-price factor affecting demand. Additionally, the tariff reduction will not impact Japanese cars already manufactured within Europe, as these are not subject to import tariffs.
(Evaluation)
On the other hand, the EPA poses challenges for Japanese farmers, a long-protected and declining industry. For years, Japan's farm lobby resisted concessions on agricultural tariffs, but its influence has waned due to the aging rural population. As a result, concessions on agriculture are no longer seen as politically damaging. While the political effects of tariff removal may now be minimal, there could still be economic losses for Japanese farmers, who will struggle to compete with more efficient foreign producers.
Figure 2: Japan's production possibility frontier (PPF) for the production of agricultural and manufactured goods
The reduction or elimination of tariffs on European agricultural products competing with Japanese goods is expected to reduce domestic production of agricultural goods from Qa1 to Qa2, as less efficient Japanese farmers are replaced by European producers. However, this shift will likely result in only a marginal increase in the production of manufactured goods, from Qm to Qm2. This is largely due to the low mobility of Japan’s aging rural population, many of whom have been farmers their entire lives and may find it difficult to transition into new industries.
As a result, the EPA could potentially reduce Japan’s real GDP. With a decline in total output, Japan may face increased frictional and, more concerning, structural unemployment. Although the growth in car exports may boost manufacturing, it could inadvertently diminish the economic vitality of rural areas, highlighting unexpected interdependencies between industries like car manufacturing and farming. Additionally, infant industries, such as Japan’s wine production, may struggle to compete with larger, established overseas firms that benefit from economies of scale.
Figure 3: Korean cars being imported at a lower tariff to the EU through Japan
The FTA between the EU and Japan brings both opportunities and challenges. On one hand, trade liberalization increases competition and provides incentives for firms to improve efficiency. Consumers will benefit from a wider variety of goods at lower prices, as reduced tariffs lower import costs. Globally, allocative efficiency is likely to improve as economies specialize based on comparative advantage, leading to trade creation.
(Conclusion)
However, governments within and outside the EPA must remain vigilant to ensure that imports from non-member countries are not rerouted through low-tariff economies to enter high-tariff markets within the FTA. This phenomenon, known as trade diversion, highlights the intricate interdependence of global economies, not just those directly involved in a given FTA.
Marking Criteria
Criterion A [3/3]:
Diagrams used effectively with appropriate titles and each is relevantly labeled. The second and third diagrams are rather innovative and the explanations provided are clear and focused.
Criterion B [2/2]:
Terminology is used correctly and precise e.g. making the distinction between trade creation and trade diversion. An accurate definition of crucial terms, such as FTA, are provided.
Criterion C: Application [3/3]
The commentary uses economic models and theories correctly to effectively explain the implications of statements made in the article.
Criterion D: Analysis [2/3]
The key concept of interdependence is used to discuss how different sectors (farming and car manufacturing) have an impact on each other and on how economies are interdependent globally.
Criterion E: Evaluation [4/4]
Relevant evaluation is included throughout the article. The approach is balanced and considers the theoretical benefits of freer trade against the impact on Japanese farmers and rural areas. The commentary also questions whether the benefits e.g. to Japanese car sales are really as significant as economics theory suggests.