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What do You Understand by Economic Protectionism - Essay Example

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A literal meaning of economic protectionism would be protectionism in economic matters related to firms and industries. Economic interpretation of the term refers to an economic policy through which protection is offered to domestic firms and industries by restricting trade. …
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What do You Understand by Economic Protectionism
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Download file to see previous pages Free trade is known to be more favorable to consumers and hence such protectionism hurts the consumers more (Lee, 2001). The reason for this is mostly consumers have to buy low quality goods at a higher price. The quality of goods obtained at this is far more inferior. They even have to pay higher taxes in order to help the government bear the burden of subsidies. They are of left with little choices since foreign products are lowered or eliminated by imposing restrictions. The case is worst when it comes to essential commodities like food grains, salt, and sugar. The political argument offered for such protection is to have a ‘fair’ trade. This means either the government is trying to make the domestic industries more competitive in international market or it wants to strike a balance between importing goods and maintaining domestic production. Although it is argued that producers are favored with this policy of protection but at the same time they are losing consumers on account of this. Not all industries and firms are receiving protection and subsidies. The ones deprived of such facilities are again diversely hit as they try to increase productivity (Lee, 2001). Economists have also favored free trade than such protection because trade carries the advantages of increased productivity and employment. However real life case examples will help to point out the implications of such protection. Japanese protection for rice production can be cited as an example. Japanese people had been worshipping rice as god and had been fighting to protect rice production. Japanese government has offered subsidies to rice farmers (Barlett, 2006). This and prevention of foreign rice imports has been adopted as strategies for protection. Previously heavy snowing has distorted rice...
These policies are adopted when the country is giving more importance to development of domestic industries rather than engaging in free trade. Economic Protectionism has tremendous influence on consumption as well as production. But the impact is more on the production side. Sometimes protection is offered to some scale industries who hardly show any incentive to grow and just wasting the opportunities and facilities offered by the government. Neither they have any incentive to innovate and produce better quality products. The country suffers a loss of revenue that it could have earned from trade. This is because other countries retaliate in a similar manner by imposing restrictions on the country’s exports. Government is worse off by losing revenue from trade. In some cases the government also offers subsidies to the industries for growth which is helpful only if the industry has the potential to compete with its foreign counterparts.
Moreover urban development demands more landscapes for which they are concentrating on acquisition of rice fields. This will make farmers lose their livelihood. So the government has stepped forward to protect rice farming. It restricts cheap imported rice from entering Japan and at the same time helps the farmers with a support price. Hence rice farming protection can be considered justified here. ...Download file to see next pagesRead More
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