Question

Why might a country seek to protect an industry, even when the benefits are greatly outweighed by the cost ?

Answer 1

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Answer :

A country seeks protection to the industry despite knowing its pitfalls,due to many reasons.

The first reason is that it's government has made electoral promises during elections that it will stop cheap imports and save jobs while protecting the industries from imports coming from overseas nations.It makes them win votes and later on, they fulfill this populist demand at the cost of other industries.When Mr.Trump raised taxes against chinese imports in certain categories,renegotiated the NAFTA deals and asserted with EU, then he was trying to fulfill the promises made in the election the second reason is the short term relief it provides to the employees of these protected industries .It helps them get some time to become efficient,adapt latest technology and ready build presence in international market.The third reason is the strategic relationship with the nations whose exports are coming to the country.It become important to hurt that country using sanctions and trade barriers at the cost incurred to their own economy.