Arguments for protectionism?

Advantages and disadvantages to protectionism?

Asked on June 27, 2017 in Politics.
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8 Answer(s)

Higher prices. Tariffs push up the prices for consumers and insulate inefficient sectors from genuine competition. They penalise foreign producers and encourage an inefficient allocation of resources both domestically and globally.

con

Answered on August 17, 2017.
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Protects new business. Infant industries in the early stages of development require protection from foreign exporters. This ensures local industries who benefit the local population are given enough time to mature into viable businesses.

pro

Answered on August 17, 2017.
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Employment. For goods that are produced globally, high tariffs and other barriers on imports act as a tax on exports, damaging economies, and jobs, rather than protecting them.

con

Answered on August 17, 2017.
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Global supply and demand. If one nation imposes trade restrictions on another a snowball effect occurs negatively throughout the global trade network. The decrease in trade means a decrease in trade with other nationsĀ  creating a depression in the global circular flow of income.

con

Answered on August 17, 2017.
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Diversified industry. Without protection there is an unbalanced economy as a result of excessive specialisation which in turn leads to over-dependence of a country on other countries. This is dangerous politically and economically. Protectionism promotes manufacturing internally pushing nations to become more self sufficient in all industries.

pro

Answered on August 17, 2017.
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Inefficiency. Firms that are protected from competition have little incentive to reduce their production costs leading to X-inefficiency and higher average costs.

con

Answered on August 17, 2017.
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Market access for producers. Export subsidies depress world prices and damage output, profits, investment and jobs in many lower-income and developing countries that rely on exporting primary and manufactured goods for their economic growth.

con

Answered on August 17, 2017.
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Cyclical unemployment. The imposition of tariffs and other duties helps expand employment and incomes. Tariffs restricts certain imports so that money is saved in the domestic economy which will be spent upon the purchase of the products of protected home industries. As these industries expand so does employment and then the economy.

pro

Answered on August 17, 2017.
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