The case against protectionism
The case against protectionism
Exam Boards: Edexcel, AQA, WJEC, CIE, OCR Level: AS/A LEVELS/IB/IAL
Why should countries not protect their domestic industries?
Higher prices and less choice
Due to increased trade diversion countries will now be purchasing from high-cost producers rather than low-cost producers for the same products.
Lack of efficiency
Demand for local products will increase as they are protected from high import tariffs placed on external countries suppliers. This will make their products more competitive.
Conflict with WTO’s role
The WTO aims to remove trade barriers between countries and help promote globalisation. Any increases in trade barriers will negatively impact their work.
Conflicts with the theory of comparative advantage.
Countries should produce goods in which they have a comparative advantage. Protectionism will cause trade diversion and countries to purchase from high cost and less efficient producers.
Questions
Analyse the case against protectionism in a developed or developing country of your choice? (20 Marks)
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