Question

(Answer the following single prompt, but be comprehensive in your response clearly showing that you understand the concept and how it affects the world economy. Develop your response into paragraphs.) Do you feel that protectionism is good or bad for the world economy? Why?

Answer 1

Protectionism refers to a country imposing tariffs, taxes, and regulations on firms, belonging to other countries in order to protect its own companies. In a way, it acts as a hindrance to free trade and commerce between countries of the world. Some economist argues that domestic companies need protection from mighty foreign multinational. They argue that if domestic companies are not protected by way of protectionism, they will not be able to survive and the country will be on total mercy of big multinational. This situation can lead to widespread unemployment. But many leading economist are dead against protectionism. They support free trade and argue that gains from free trade outweigh any losses as free trade helps in creating more jobs than it destroys. They further argue that free trade allows a country in specializing in those manufacturing and service areas where it has a comparative advantage. According to a leading economist, the benefits of free trade outweigh the losses by as much as 100 to 1. So, there can be valid arguments for both in favor and against protectionism. But in this age of sophisticated technology, the idea of protectionism seems outdated. However, the government of the land can exercise it in some very special cases.