TRADE - REASONS FOR PROTECTIONISM

Question 1

if gov wants to reduce quanitty of imports into a country it can adopt

Answer 1

protectionist policies

Question 2

what is protectinism

Answer 2

implementing policies to protect an economy through restrictions on imports

Question 3

what is a tariff

Answer 3

tax on imported goods and services

Question 4

when we do a tariff leads to increases of

Answer 4

price of impports relative to domestic output

Question 5

incresing price of miports relative to domestic output shoudl lead to a

Answer 5

contration in demand

encourage a switch to domestic substitutes (evl only if they exost

Question 6

state the reasons for protecitonism

Answer 6

infant industry

sunset industry

protect against dumping

protect domestic employment

protect against low cost labour abroad (unfair)

protect product standards

raise gov rev (tariffs)

improve ca deficirt (weak due to retaliation risk)

avoid risk of overspecilisation

Question 7

define infnat industry

Answer 7

samll ddeveloping industy tha cannot yet beenfit from EOS (which may justofy protection)

Question 8

we protect industries till

Answer 8

they grow up and compete

Question 9

we protect infant industry but protection may mean what is incentive is removed

Answer 9

incentive to become iffieicnt

nfant may never grow up

Slows the rate of growing up down

Question 10

when infants get EOS what does this mean

hint leverage

Answer 10

got levergae to compete against big MNC

Question 11

dumping meanning

Answer 11

low cost producer dumps large Q of product on another countries market below COP

Question 12

dumoing canlead to a closure of

Answer 12

local firms

Question 13

why can dumping lead to a clsiure of local firms

Answer 13

cant compete with low cost producer

Question 14

dumping is seen as unfair buit it is hard to

Answer 14

imporve

Question 15

what can mean countries cna dump

Answer 15

excess subsidies leading to excess uspply

coutnries cna claim its the result of high levels of efficiency

Question 16

lets say we employ potectionism thinking dumping is taking place and its not what happens

Answer 16

strict retaliaiton

Question 17

whats the best way to solve dumoign

Answer 17

trade talks to solve dispute thats duping relaetd

Question 18

whats the idea of protecting against doestic employment

Answer 18

if industries go into decline massive structural unemployment if theyre ost to low cost producers overseas

( i think this crosses over with sunset industries

Question 19

whats the argument against protecting domestic emplyment

Answer 19

if industry already going into decline and losing out on comparative advantage ,

longing out a proces thats gonna happen

So allow natural disintegration of the industry and allow workers to move into other industries if porssiuble and acccept ST costs of unemp if they are gonna occur

Question 20

alos if we protect jobs how wil consumer loose out

+ what does comparative advantage their suggest

Answer 20

having to pay higher price for goods

jobs can be gained elsewheer if country specilisaies

Question 21

protecting against unfair low cost labour abroaf

Answer 21

if country feels cant compete due to lower cop abroad

protect against imports coming into those countries

this creates a level playing field to work with as cost advantgaes reduced

Question 22

explain protecting against poor product standards

Answer 22

Strict enviro and product safety standards to protect against poor quality g/s into country e.g contaminated or products that might be harmful to consumer

Question 23

expain protectionsim for raising gov revenue

Answer 23

• if impose tax can collect rev which cna be used to fund important things public goods- infrastructure merit - education healthcare

Question 24

protectionsim as a reason for raiseing gov rev is especially important in

Answer 24

developing countries

Question 25

why is protectionsim for gov rev important for developing econ

Answer 25

easy to collect , rather than claiming systems of tax common in developing countries

Question 26

explain protectionism for imporving CA deficit

Answer 26

If importing lots,

imposing protectionist restricts spending of imports

help improve CA deficit and maybe increase ECON GROWTH

as leads to increase in X-M bracket in AD]

Question 27

why is reducing CA defiict aerg for protectionism weak

Answer 27

if this is the main reason expect sever retaliation

Question 28

explain protectionsim as a reducing risk of overspecilisation

Answer 28

protecting yourself from imports abroad can allow you to delve into other industries and develop them to ensure if your major industry/ies

where you have an comparative advantage goes into decline or struggles to compete w foreign competition -

you have other industries outhere which an produce products, to sell, to avoid risk of overspecialization; relying purely on one industry for growth and export potential

Question 29

explain protectionism sunset industry argument

Answer 29

industries in LT decline may benefit

as allows to decline gradually rather than suden

minimising demand shocks that can plunge into a recession