Economics · 2018 · November · Paper 2 · HL · Question paper

Economics Higher level Paper 2 9 pages Thursday 1 November 2018 (morning) 1 hour 30 minutes Instructions to candidates y Do not open this examination paper until instructed to do so. y You are not permitted access to any calculator for this paper. y Section A: answer one question. y Section B: answer one question. y Use fully labelled diagrams and references to the text/data where appropriate. y The maximum mark for this examination paper is [40 marks]. © International Baccalaureate Organization 2018 N18/3/ECONO/ HP2/ENG/TZ0/XX 8818 – 5104 Section A Answer one question from this section. 1. Study the following extract and data and answer the questions that follow. South Sudan joins the East African Community  The East African Community (EAC) is the most integrated trading bloc in Africa. In 2005, the members established a customs union, and then in 2010 it became a common market. There are ambitious plans to establish a monetary union by 2024.  According to a recent report, the region is wealthier and more peaceful as a result of the increased integration. Economic models suggest that bilateral trade between member countries was 213 % higher in 2011 than it would have been without the integration. This is despite the fact that progress on fully eliminating trade barriers has been rather slow and there are still a large number of non-tariff barriers.  Until recently the customs union was made up of Burundi, Kenya, Rwanda, Tanzania and Uganda. Very recently, South Sudan joined the bloc. This presents a tremendous opportunity for South Sudan, which was recently recognized as an independent country.  South Sudan is one of many developing countries that are dependent on oil exports for the majority of its export revenues and oil prices have been falling due to increased supply of oil in the market. The deteriorating terms of trade have resulted in a worsening of the current account and lower government revenues. Regional economic integration might help South Sudan to diversify its economy.  Agriculture is one potential area that South Sudan could focus on to diversify its economy. According to some estimates, 70 % of land is suitable for