Arguments For Protection

Question 1

Infant industry

Answer 1

Requiring assistant until they mature enough to take advantage of the economics of scale
-> Overtime, they’ll become internationally competitive

Question 2

Diversification argument

Answer 2

Allows countries to specialise in a range of products (diversifying its industrial base)

-> When industry improves, protection is reduced

Question 3

Anti-dumping

Answer 3

“Dumping” - when a country sells a product to another country below its cost of production

They do this when they have large surplus or want to get rid of the good (could be ban, damaging to health or illegal)

Question 4

Tariff

Answer 4

Tax on imports - benefit for domestic consumer, raises government revenue

Question 5

Subsidy

Answer 5

Grants or payments made by the government to the domestic producer (no direct adverse affect on consumer)

Enables a domestic producer to sell their product at a lower price to compete against imports

Question 6

Quota

Answer 6

Restriction on a quantity of a good (whether it’s imported or exported).

Question 7

Cheap foreign labour argument

Answer 7

some say Australian industries need to be protected from countries when wages are much lower.

argument can turn around saying less developed countries need protection from countries like Australia since they have superior capital equipment and technology.