Trade diversion
What Trade diversion means in Economics B A-Level, as defined for Pearson Edexcel.
Definitions of Trade diversion
Exam boards and our study guides word this term in slightly different ways. Learn the version your board uses.
Check what you remember
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Reference: Pearson Edexcel
The replacement of cheaper imports from the rest of the world with more expensive imports from a member state, as members must buy from less efficient bloc members due to external tariffs.
The shift from low-cost production outside a trading bloc to higher-cost production within it, due to a common external tariff.
Topics that use Trade diversion
- International trade (Pearson Edexcel A-Level)
- Trading blocs (Pearson Edexcel A-Level)
Related terms
- Trade creation
- Trading blocs
- Comparative advantage
- Economic interdependence
- Free trade area
- Macroeconomic shocks
- Opportunity cost
- Over-specialisation
Using Trade diversion in the exam
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