Question

ISC201 – “ PROTECTIONISM

Answer 1

PROTECTIONISM

Protectionism is defined as the economic policies of Government of a country that restrict international trade or free trade to protect the local jobs and business. Protectionism is a government action taken with an intention to save the trade within the country and protect it from foreign competition. The objective of protectionism is to protect local industries, local goods, protect and create employment within the country.

It includes govt. policies such as:

Tariffs: it is charged by govt. by raise the prices of imported goods which are either equal or more than local goods prices.

Subsidies to local producers: Govt. gives subsidies to local producers to reduce the cost of production.

Import quotas: It is impose to restrict the supply of particular goods so that local industries can fulfill the demand.

These policies will helps to by allowing domestic producers to hire within the country. The motive of such policies is to promote fair competition and to protect the emerging domestic business. There is a disadvantage of protectionism too, it will reduce the choices for consumers and also there is a chance of similar attack from the foreign countries.

It is believes that in a long term, protectionism can not helps a country to protect the local industries as without competition, industries will stop their innovations and it will end up by decline product quality.