4.3 - Reason Governments Restrict Free Trade

Question 1

Reasons for protectionism

Answer 1

• To protect new industries
• ELDC strat for building up secondary sector
• Declining industry
• Unemployment
• Revenue
• To deal with balance of payments current account defecit
• anti-dumping
• unfair competition
• health and safety standards
• environmental standards
• strategic reasons
• retaliation

Question 2

Benefits of protectionism

Answer 2

• Can improve and protect standards
• Allows country to develop industrial base
• Tariff revenue
• Reduces dumping and unfair comp
• Reduces the speed of industrial decline
• protects employment

Question 3

Cost of protectionism

Answer 3

• Higher import prices
• welfare loss for consumers
• increased import cost for bsunesses
• welfare loss and inefficiency
• reduced consumer choice
• cost of managemnt
• retaliaation