IB Diploma Programme Economics HL, Unit 4 The global economy (first assessment 2022). This topic covers syllabus sections 4.1–4.10 in full: the benefits of international trade, types of trade protection, the arguments for and against trade control, economic integration, exchange rates, the balance of payments, sustainable development, measuring development, barriers to growth and development, and development strategies. The trade model reuses the shared curves ($Q_d = 140 - 2P$, $Q_s = 20 + 4P$) at a world price of 12, and the exchange model sits at 5 domestic per foreign currency — every number cross-checks against the earlier drives.

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The benefits of trade (4.1): SPECIALISATION according to comparative advantage 比较优势 — lowest opportunity cost, not most output (Country A makes 4 wheat or 2 cloth per hour, Country B 1 or 1: A has absolute advantage in both, but one cloth costs A two wheat and B only one, so A specialises in wheat, B in cloth, and any trade ratio between 1 and 2 wheat per cloth lets both consume beyond their frontiers) — greater choice, lower prices, economies of scale and the gains from variety. Types of trade protection 贸易保护 (4.2): tariffs 关税 (import taxes), quotas 配额 (quantity limits), SUBSIDIES to domestic producers, and administrative/technical barriers. The tariff on the shared model: at the world price 12 imports are $116 - 68 = 48$; a tariff of 4 raises the domestic price to 16, imports fall to $108 - 84 = 24$, the government collects $4 \times 24 = 96$ and the deadweight loss is $32 + 16 = 48$.

The arguments (4.3): FOR protection — infant industries, protection of domestic employment, anti-dumping, national security, revenue for developing states, diversification; AGAINST — higher consumer prices, retaliation and trade wars, inefficiency behind the wall, rent-seeking. The IB evaluation always weighs short-run protection against long-run comparative advantage. Economic integration 经济一体化 (4.4) deepens in stages — free-trade area, customs union, common market, economic and monetary union — trading trade creation against trade diversion; the WTO polices the multilateral rules.

The exchange rate 汇率 (4.5) is the price of one currency in another, set by demand and supply: interest rates, speculation, and the imports/exports of goods and services. The model: demand meets supply at 5 domestic per foreign currency; import-demand growth shifts demand right and the rate moves to 6.5 — a depreciation 贬值 (import prices rise, export prices abroad fall; the current account improves only if the Marshall–Lerner condition holds — export plus import demand elasticities exceed one — and the HL J-curve records the short-run worsening before volumes adjust). Fixed systems revalue or devalue by policy; floating systems appreciate or depreciate by the market.

The balance of payments 国际收支 (4.6) records all transactions with the rest of the world: the CURRENT ACCOUNT (goods and services, primary and secondary income) and the CAPITAL AND FINANCIAL ACCOUNTS; the accounts balance overall, so a current-account deficit is matched by net financial inflows. HL adds the terms of trade 贸易条件 — the ratio of export to import price indices: $ToT = \tfrac{100}{100}$ at base; with exports at 128.9 and imports at 117.1 (the Tanzania data), $ToT = \tfrac{128.9}{117.1} \times 100 = 110.1$, a 10.1% improvement — long-run deteriorating terms of trade for primary-product exporters is a standard development barrier.

Sustainable development 可持续发展 (4.7) meets present needs without compromising future generations — the intergenerational equity that GDP ignores and the key concept sustainability frames. MEASURING DEVELOPMENT (4.8): GDP per head (Purchasing Power Parity adjusted), the Human Development Index (education, health and income in one geometric mean), and complements such as health, education and gender measures; each indicator hides distribution. BARRIERS (4.9): the savings gap (the Harrod–Domar condition), primary-product dependency, debt, capital flight, corruption and poor governance, geographical isolation, and the HL additions of the poverty trap (low savings → low investment → low growth) and the basic needs conflict. STRATEGIES (4.10): trade liberalisation and export promotion, FDI and multinational investment, aid and debt relief, microfinance, human-capital development and infrastructure — each evaluated for dependency, sustainability and equity; the IB pairs every strategy with the barriers it targets.

• Comparative advantage with the 4/2 vs 1/1 table and the trade ratio between 1 and 2 wheat per cloth; absolute vs comparative (4.1).
• Tariffs, quotas, subsidies, administrative barriers; the tariff arithmetic (48 → 24, 96, 48) (4.2).
• The protection arguments both ways; integration's four stages with trade creation vs diversion; the WTO (4.3–4.4).
• Exchange-rate determination at 5; depreciation to 6.5; Marshall–Lerner and the J-curve; revaluation vs appreciation (4.5).
• Balance of payments structure; current vs capital/financial accounts; the terms of trade with the Tanzania 110.1 calculation and the primary-product deterioration (4.6).
• Sustainable development and intergenerational equity (4.7).
• Measuring development: PPP GDP per head, HDI's three components, the complements (4.8).
• Barriers: savings gap (Harrod–Domar), primary-product dependency, debt, capital flight, governance, geography, the poverty trap (4.9).
• Strategies: liberalisation, FDI, aid, debt relief, microfinance, human capital, infrastructure — each with the barriers it targets (4.10).

Boundary notes: HL Paper 3 quantifies the tariff, exchange-rate and terms of trade arithmetic above; Paper 1's 25-mark essays want the labelled diagram, the mechanism, and evaluation against the key concepts (interdependence, sustainability, equity, intervention). All worked numbers are original on the shared models.