Unit 4.4 · Economic Integration
Trade Creation (HL only)
AO3HL
Syllabus Requirement
Trade creation occurs when the formation of a trading bloc leads to the replacement of higher-cost domestic production with lower-cost imports from member countries, increasing overall efficiency and welfare.
Assessment Objectives
AO3Synthesis and Evaluation
HLThis topic is assessed at Higher Level only.
Summary
Trade creation refers to the increase in trade that occurs when economic integration allows trade to shift from higher-cost producers outside a trading bloc to lower-cost producers within it. This process is significant in IB Economics as it illustrates the benefits of trading blocs, including enhanced market access, economies of scale, and improved employment opportunities.