International Trade & Globalisation · 4 question types
Past paper frequency (2018 to 2024)
This topic accounts for approximately 13% of your exam marks.
Comparative advantage, free trade benefits, and protectionist tools (tariff, quota, subsidy) appear regularly in Section B evaluate questions.
Protectionism is government policy that restricts imports to shelter domestic industries from foreign competition.
Even countries that publicly support free trade use some protectionism in practice, usually for politically sensitive sectors (agriculture, steel, certain manufactured goods). The IGCSE syllabus expects familiarity with the main tools and their effects.
1. Tariff (import duty).
A tariff is an import duty: a per-unit charge added to the price of foreign goods at the border, which makes domestic alternatives more attractive.
Effects:
A tariff is a tax, so it raises money for the government. This is one of its appeals.
2. Quota.
A quota is a physical limit on the quantity of a good that can be imported in a given period. For example, "no more than 100,000 cars from country X this year".
Effects:
3. Subsidy to domestic producers.
A government payment that lowers the cost of producing the good at home. The domestic price falls; domestic firms can compete with, or even undercut, imports.
Effects:
4. Embargo.
A complete ban on imports of a particular good from a particular country. Used in extreme cases (sanctions, war, public-health bans).
Effects:
5. Other tools.

On a market diagram, a tariff:
The net welfare effect is usually negative: consumer losses outweigh producer and government gains because some trade is choked off that would have benefited both sides.