International Trade is a core part of GCSE Economics. Revise the key concepts and common mistakes below, then lock them in with the free games.
Key concepts
Imports and exportsImports are goods/services purchased from abroad; exports are sold abroad; difference is trade balance.
Comparative advantageRicardo (1817): countries gain from trade by specialising in goods of lowest opportunity cost.
Free tradeTrade without tariffs, quotas or other barriers; promoted by WTO rules.
ProtectionismRestricting imports via tariffs (taxes), quotas (limits) or subsidies to domestic producers.
TariffTax on imported goods, raising their price and reducing demand for them.
GlobalisationGrowing economic interdependence via trade, investment and technology; UK trade-to-GDP ratio around 64% (2023).
Trade balanceExports minus imports of goods/services.
SurplusExports exceed imports.
DeficitImports exceed exports.
AppreciationCurrency rises in value vs others.
DepreciationCurrency falls in value vs others.
QuotaNumerical limit on imports of a good.
SubsidyGovernment payment to lower production costs.
Current accountBalance of trade plus net income/transfers.
Common mistakes to avoid
Questions where students often pick the tempting wrong answer — make sure you know the right one:
Are imports always bad for an economy?✗ Yes, imports always harm a country. ✓ No — trade lets countries specialise and gives consumers choice.
What does dependency theory argue about development?✗ Dependency theory means poor countries are simply lazy. ✓ Poorer 'periphery' countries are kept underdeveloped by their economic relationships with rich 'core' countries — through unequal trade, debt and historical colonialism. It challenges the view that integration with rich economies automatically helps.
Which is a benefit of international trade?✗ Job losses in declining industries ✓ Wider consumer choice and lower prices
Practise International Trade — free games
Test yourself with these quick revision games for this topic:
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