Question

In the national interest argument. It is sometimes argued that nation should not depend too heavily on other countries for supplies of certain key products. This argument has been made for commodities that are important to the U.S. economy as a whole, like oil. Discuss some arguments economists may raise against this.

Answer 1

Answer: In the national interest argument. It is sometimes argued that nation should not depend too heavily on other countries for supplies of certain key products. This argument has been made for commodities that are important to the U.S. economy as a whole, like oil.

Some arguments economists may raise against this are as follows:

1.Economists argue that heavily dependency on imports from foreign country increases the risk of disruptions in domestic economic market.

Take the example of 1973 oil crisis which gave rise to condition of STAGFLATION in the most of delveloped countires including US.Period witnessed high prices coupled with hight higher unemployment.

2.Another argument given is too much dependency decrases the bargaining power in matters of Foreign policy issues.

Take the example of trade war betwee CHINA and USA where both economies are so much complexity interlinked with eachother that no simple conclusion can be obatined.

3.During crisis such dependency may be fatal at points.Example during covid crisis essential medicines supply curtailed from china to Europe and other parts.

India is expert in pharmaceutical products yet it also imports Active Pharmaceuticals Ingredients from China it self which also get stopped.

Hence all these arguments given by economists to save strategic industries, jobs etc and justify trade restrictions in matters of national interest.

Hope it helps.

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