Economics · 2017 · May · Paper 2 · HL · Question paper

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]. Economics Higher level Paper 2 9 pages Wednesday 3 May 2017 (morning) 1 hour 30 minutes © International Baccalaureate Organization 2017 M17/3/ECONO/HP2/ENG/TZ0/XX 2217 – 5104 Section A Answer one question from this section. 1. Study the extract below and answer the questions that follow. Relief as Kenya raises tariff for steel and iron imports  Steel manufacturers in Kenya are set to benefit as the government moves to protect the local manufacturing industry from cheap steel and iron imports.  In 2014 a government official announced an increased tariff on steel and iron imports. “Our steel mills are closing down due to unfair competition from cheaper imported iron and steel products,” he explained. “To protect and create more jobs in the iron and steel industries, tariffs on a wide range of imported iron and steel products will be increased from 0 % and 10 % to 25 %,” he said. The government official further stated that as well as protecting the local industries from cheaper imports, the protectionist measures would raise an additional 2.6 billion Kenyan shillings (Kenya’s currency) annually in government revenue and support economic growth.  The potential of local industries to expand and create jobs through trade has been held back by a number of administrative barriers. The government remains focused on improving the business environment. Over the past six months, the government has made it easier to register a company and trade across borders. The time taken to move goods out of the main harbour has fallen sharply; non-tariff barriers such as roadblocks have also been reduced. Importers of refined industrial sugar and wheat are also pleased after the government scrapped requirements to pay unnecessary administrative charges.  However, there is a belief among manufacturers that