4.1.4 protectionism Flashcards Preview

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Flashcards in 4.1.4 protectionism Deck (13):
1

what is protectionism

Protectionism is when a country takes action to protect its own industries by restricting trade with other countries

Through countries having a comparative advantage and empirical data it is clear that there are strong economic reasons for international trade to occur

2

Arguments in favour of protectionism include

Infant industries
dumping
Domestic employment
Externalities
balance of payments

3

describe infant industries

Young industries are unlikely to be able to compete against established MNC’s in developed countries, thus require protection, at least in the short term

4

describe dumping

Over-production in developed countries may be released into the markets of developing nations, which undercuts domestic prices and domestic producers may be forced to leave the market

5

describe domestic employment

Protectionist measures might help to protect domestic jobs if infant industries are allowed to grow or local businesses aren’t undercut by MNC’s from developed countries

6

describe Externalities

Some goods, such as illegal drugs and weapons may be considered to have significant harmful effects on society, and should be blocked from domestic markets

7

describe balance of payments

Placing restrictions on imports may help to reduce a balance of payments deficit on current account

8

what are the protectionist measures

tariffs
import quotas
Government legislation
Domestic subsidies
Embargoes

9

describe tariffs

Taxes placed on imported goods that are not applied to domestic goods
Consumers face a higher price
However, domestic industries are protected from overseas competition

10

describe import quotas

A physical limit on the volume of imports entering a country
For example, Thailand has imposed a quota of 54,440 tonnes of corn on China

11

describe government legislation

Countries might employ measures such as complex legal forms, health and safety inspections and specific product specifications
These will discourage imports by raising costs

12

describe domestic subsidies

Government payments to domestic businesses to help reduce production costs and improve competitiveness

13

describe embargoes

A total ban on imported products
The UK has imposed embargos on Syrian oil exports as a political measure