Arguments For and Against Trade Control: three questions to try now
Real questions, the answer key from the mark scheme, and the explanation that goes with it. No account needed to answer them.
Cross-board concept practice · originally a CIE 9708 question, used here because the concept is the same. It is not IB Economics past-paper material.
Question 1
The following are four conditions sometimes attached to IMF loans to developing countries. Which condition would conflict with the ‘infant industry’ argument?
Answer: A.
Explanation:
The infant industry argument is an economic rationale for protectionist trade policies to shield developing industries from international competition so they can grow and become competitive in the future. This argument suggests that without protection, these industries could be driven out of the market by more established competitors.
If a country is following the infant industry argument, it would typically want to impose trade barriers like tariffs or quotas to protect its domestic industries. Free trade, on the other hand, advocates for the removal of such barriers to promote international trade and specialisation in production, which could potentially put the infant industries at a disadvantage due to increased competition.
Therefore, the condition the need to allow free trade goes against the concept of protecting infant industries and promoting their growth, making it incompatible with the infant industry argument and potentially conflicting with the objectives of developing countries seeking to protect their domestic industries through trade restrictions.
Cross-board concept practice · originally a CIE 9708 question, used here because the concept is the same. It is not IB Economics past-paper material.
Question 2
Economists have proposed that the best policy to promote development is ‘trade not aid’.
What is implied by this proposal?
Answer: B.
Cross-board concept practice · originally a CIE 9708 question, used here because the concept is the same. It is not IB Economics past-paper material.
Question 3
Which policy would not be an argument for the use of import tariffs?
Answer: D.
The question asks which is not an argument for tariffs. Retaliation is the central argument against them: if one country imposes tariffs, its trading partners are likely to respond with tariffs of their own, so the first country's exporters lose market access. The initial gain to import-competing industries is offset by losses in export industries, and both countries end up with less trade and less specialisation than before.
Why the other options are arguments in favour:
- A, revenue raising, is a genuine advantage, especially for developing economies where goods crossing a border are easier to tax than incomes are.
- B, improving the current account, follows because tariffs reduce import volumes, cutting the import expenditure that drives a deficit.
- C, improving the terms of trade, works when a large importing country's tariff forces foreign suppliers to absorb part of the tax by lowering their prices. The importing country then pays less per unit imported relative to what it earns per unit exported.
What this practice covers
These questions are drawn from past Cambridge papers, mapped across to this topic because the concept is the same. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
What examiners see students get wrong here
These are the errors that cost marks on arguments for and against trade control, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Listing arguments without weighing them, which caps the evaluation marks.
- Treating the infant industry argument as automatically valid, when its weakness is that protection removes the very pressure that would force the industry to mature.
- Ignoring retaliation, which is the point that undermines most protectionist cases in practice.
- Forgetting who bears the cost: consumers pay higher prices, and the loss is spread thinly while the gain is concentrated, which is exactly why protection is politically attractive.
- Assuming the only losers are foreign. Downstream domestic industries using the protected input often lose more than the protected industry gains.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Arguments For and Against Trade Control revision notes.