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Arguments For Protectionism: Why Governments Protect Their Economies

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13 views5 pages

Arguments For Protectionism: Why Governments Protect Their Economies

Uploaded by

momsmiu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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arguments for

protectionism
why governments protect their economies
arguments for protectionism
• arguments for protectionism rest on two main points
– why is it that countries do not trade freely if it is good for all countries
involved?
– why is it that countries often protect their economies from imports?
• the arguments for protectionism
1. protecting domestic employment
2. protecting the economy from low-cost labor
3. protecting an infant (sunrise) industry
4. avoid the risks of over-specialization
5. strategic reasons
6. prevent dumping
7. protect product standards
8. raise government revenue
9. correct a balance of payments deficit

source: jocelyn blink


arguments for protectionism
• protecting domestic employment
– industries that are in decline because they cannot compete with foreign
competition—sunset industries
– judgment (evaluation) of argument…
• protecting the economy from low-cost labor
– lower cost of labor in exporting countries and the economy should be
protected
– judgment (evaluation) of argument…
• protecting an infant (sunrise) industry
– an industry that is just developing may not have the economies of scale
advantages that larger industries in other countries may enjoy
– judgment (evaluation) of argument…

source: jocelyn blink


arguments for protectionism
• to avoid the risks of over-specialization
– governments may want to limit overspecialization
– judgment (evaluation) of argument…
• strategic reasons
– certain industries need to be protected in case they are needed at times of
war, for example, agriculture, steel, or electricity
– judgment (evaluation) of argument…
• to prevent dumping
– definition: dumping is the selling of large quantities of a commodity by one
country, at a lower price than its production costs, in another country
– judgment (evaluation) of argument…

source: jocelyn blink


arguments for protectionism
• to protect product standards
– to impose safety, health, or environmental standards on goods being imported
into its domestic market
– judgment (evaluation) of argument…
• to raise government revenue
– in many developing countries, it is difficult to collect taxes and so government
impose import taxes or tariffs on products in order to raise revenue
– judgment (evaluation) of argument…
• to correct a balance of payments deficit
– governments sometimes impose protectionist measures to attempt to reduce
import expenditure and thus improve a current account deficit judgment
(evaluation) of argument…

source: jocelyn blink

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