Question

Without tariffs and protectionism, would the increase in competition ultimately benefit our industries? Would it force industries to evolve or would the work simply move abroad?

Answer 1

Tariffs, quotas etc are forms of protecting domestic industries from competition. Thus this sort of protectionism is needed for a country which is developing in nature and has many infant industries. However if the government does not play a crucial role asking for these infant industries to become self sufficient in a stipulated time period then it would result in a problematic situation for the developing country. Thus at some later point of the industries growing and developing, if the protectionism is cut slack then this would result in greater competition among industries.

Cutting down of protectionism at the later stage of the country when developing industries start becoming efficient in exporting its goods can make the countries evolve better. An example of South Korea can be given which followed Easy Substitution Industrialisation (ESI) which helped it to become competitive in the international market in a reasonable period of time. However state capacity is a very important aspect to be taken account of in order to make the country competitive gradually.