IB MYP Individuals and Societies – Trade, Aid and Exchange Revision Notes

These are condensed notes for the final weeks. For full explanations and worked examples, read the trade, aid and exchange study guide first.

The notes are for IB MYP Individuals and Societies and follow the International Baccalaureate Organization, Middle Years Programme Subject Brief – Individuals and societies, from 2014. They cover trade, aid and exchange, a topic the brief lists for the individuals and societies on-screen examinations, and suit MYP years 4 and 5. There is no SL/HL split in MYP, and the notes are written for the on-screen examinations at the end of MYP year 5. MYP has no prescribed content list – schools design their own units – so check the depth of your own unit with your teacher, who will share the task-specific clarifications.

Course links: MYP Individuals and Societies hub · printable checklist · practice questions for this unit · how MYP Individuals and Societies is assessed · criteria in practice revision notes · related units: superpowers, empires and alliances and economic agents, measurements and trends.

Where this sits in the course

• The brief lists “trade, aid and exchange” among the topics explored in the on-screen examinations.
• The on-screen examination has three tasks: Investigating (26 marks, criteria A and B), Communicating (18 marks, criteria A and C) and Thinking critically (36 marks, criteria A, C and D).
• Each criterion has eight achievement levels (1–8) in four bands.
• Useful related concepts from the brief: globalization, sustainability, causality. Useful global contexts: fairness and development, globalization and sustainability.

Key definitions

Term	Meaning
Export / import	Good or service sold to / bought from another country
Visible / invisible trade	Trade in goods / trade in services
Balance of trade	Exports − imports
Trade surplus / deficit	Positive / negative balance of trade
Primary product	Raw material (crops, minerals, fuel)
Absolute advantage	Makes more of a good than another country with the same resources
Comparative advantage	Makes a good at a lower opportunity cost
Opportunity cost	What you give up to get something else
Free trade	Trade with no government barriers
Protectionism	Barriers to shield domestic producers
Tariff / quota / subsidy	Tax on imports / limit on import quantity / payment to domestic producers
Trade bloc	Group of countries that cut trade barriers between themselves
Fair trade	Trading system giving producers a minimum price, a premium and set standards
Aid	Transfer of money, goods, skills or services to help another country
ODA	Official development assistance: aid from governments
Tied aid	Aid that must be spent on the donor’s goods or services

Formulas

What	Formula
Balance of trade	exports − imports
Percentage change	(new − old) ÷ old × 100
Opportunity cost of 1 unit of good X	amount of Y given up ÷ amount of X gained
Price after a tariff of t%	price × (1 + t ÷ 100)
Aid as % of GNI	aid ÷ GNI × 100
Share of retail price	amount received ÷ retail price × 100

Method in steps: comparative advantage

1. Put output per worker (or per unit of resource) in a table: two countries, two goods.
2. Absolute advantage: for each good, which country makes more?
3. Opportunity cost: for each country, divide to find the cost of one unit of each good in terms of the other.
4. Comparative advantage: the country with the lower opportunity cost for a good specialises in it.
5. A swap rate that helps both lies between the two countries’ opportunity costs.

Worked reminder. Worker in Arlen: 12 coffee or 6 textiles. Worker in Belmar: 4 coffee or 4 textiles.

• Arlen: 1 textile costs 2 coffee; 1 coffee costs 0.5 textiles.
• Belmar: 1 textile costs 1 coffee; 1 coffee costs 1 textile.
• Arlen has the absolute advantage in both goods, but Belmar has the comparative advantage in textiles (1 < 2) and Arlen in coffee (0.5 < 1).

Method in steps: a data question

1. Read the title, units and years. Note whether figures are totals or percentages.
2. Calculate what is asked, showing each line, and keep signs (−90 is a deficit).
3. Describe with at least two figures: start, end and any turning point.
4. Explain with a reason linked to the topic, not just “it went up”.

Trade blocs: levels of integration

Level	Adds	Example
Free trade area	No tariffs inside	USMCA (replaced NAFTA, 2020); AfCFTA (trading began 2021)
Customs union	+ common external tariff	Mercosur (1991), with many exceptions
Common market	+ free movement of labour and capital	EU single market
Economic union	+ shared economic policy, maybe a single currency	Euro area

Benefits: larger market, cheaper inputs, investment. Costs: more competition, trade diverted from cheaper outsiders, less national control over trade policy.

The WTO (from 1995, taking over from the 1947 GATT) sets trade rules for members and settles disputes.

Fair trade in five points

• A minimum price protects growers when world prices fall.
• A Fairtrade Premium is spent on projects the producer group chooses.
• Standards cover working conditions, child labour and the environment.
• For: stable income, community projects, consumer awareness.
• Against: small share of world trade, certification costs, may keep farmers in a low-value crop.

Aid: types and debate

Type	Key point
Bilateral	Government to government; may be tied
Multilateral	Via the World Bank or UN agencies; less linked to donor interests
Voluntary (NGO)	Charities; often small, bottom-up projects
Short-term (emergency)	Disaster relief: food, shelter, medicine
Long-term (development)	Schools, clinics, farming, infrastructure
Top-down / bottom-up	Large government projects / small projects with local people

• UN target (1970): donors to give 0.7% of GNI as aid.
• Marshall Plan (1948–1952): US aid for rebuilding Western Europe after the Second World War.
• HIPC Initiative (1996): IMF and World Bank scheme to reduce the debts of the poorest countries.
• For aid: saves lives, builds health and education, can reduce poverty.
• Against aid: dependency, corruption, tied aid serving donors, loans adding to debt, conditions forcing cuts.
• “Trade, not aid” vs “aid builds what trade needs”: give both sides.

Exchange in history

• Silk Roads: routes linking China with the Middle East and the Mediterranean; moved silk, spices, religions (such as Buddhism) and disease.
• Columbian Exchange (after 1492): maize, potatoes, tomatoes and cacao went from the Americas to Afro-Eurasia; horses, cattle, wheat and sugar cane went to the Americas; smallpox and measles killed very large numbers of Indigenous people.

Must-know distinctions

• Absolute vs comparative advantage: “makes more” vs “gives up less”.
• Free trade area vs customs union: only the customs union has a common external tariff.
• Bilateral vs multilateral aid: direct from one government vs pooled through an international body.
• Aid vs trade: a transfer vs an exchange in which both sides give something.
• Fair trade vs free trade: fair trade adds rules on price and conditions; free trade removes barriers.
• Surplus vs deficit: exports greater than imports vs imports greater than exports.

Quick self-test

1. Define “tied aid”.
2. A country exports 36 bn and imports 30 bn. State its balance of trade and whether it is a surplus or deficit.
3. A worker can make 8 phones or 2 cars. What is the opportunity cost of one car?
4. Which level of trade bloc first adds a common external tariff?
5. A 20% tariff is charged on an import priced at 50. What is the new price?
6. Give one difference between bilateral and multilateral aid.
7. A donor has a GNI of 2,000 bn and gives 0.25% as aid. How much aid is that?
8. What is the Fairtrade Premium?
9. Exports rise from 250 m to 300 m. Calculate the percentage change.
10. Name one crop that moved from the Americas to Europe in the Columbian Exchange.
11. Give one argument that aid can create dependency.
12. Name the organisation that took over from GATT in 1995.

Answers

1. Aid that must be spent on goods or services from the donor country.
2. 36 − 30 = +6 bn, a surplus.
3. 8 ÷ 2 = 4 phones.
4. A customs union.
5. 50 × 1.2 = 60.
6. Bilateral goes directly from one government to another; multilateral is pooled through an international body such as the World Bank.
7. 2,000 × 0.0025 = 5 bn.
8. An extra sum paid on top of the price, spent on projects the producer group chooses.
9. (300 − 250) ÷ 250 × 100 = 20%.
10. Any one: maize, potatoes, tomatoes, cacao.
11. If a government relies on donors for its budget, it may have less reason to raise its own taxes or build its own industries.
12. The World Trade Organization (WTO).

Where marks are usually lost

• Calculating imports − exports and calling a deficit a surplus.
• Dropping the minus sign on a trade balance.
• Choosing specialisation by absolute advantage instead of comparative advantage.
• Opportunity cost upside down: always “given up ÷ gained”.
• Describing a trade table with no figures, or with figures but no units.
• Calling a free trade area a customs union.
• Treating fair trade as charity rather than a trading arrangement with rules.
• Listing aid types without an example of each.
• One-sided answers on aid with no counter-argument and no final judgement.
• Source questions that ignore the origin and purpose of the source.

Official syllabus

These notes are aligned to the International Baccalaureate Organization, Middle Years Programme Subject Brief – Individuals and societies, from 2014. The brief lists “trade, aid and exchange” among the topics explored in the individuals and societies on-screen examinations. The full subject guide is available to schools through the IB.