Advantages Of Protectionism

Question 6

Protection remains as a mechanism to reduce competition from foreigners, discuss the reasons why most countries adopt protectionism policies.

Protection is an economic policy that impede trade between the states (countries) through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to enable (by fans) fair competition between imports and goods and services produced in the country. This policy is different from free trade, where government barriers to trade are maintained at a minimum level. In recent years, it has become closely associated with the protection of the anti-globalization and anti-immigration. The term is mostly used in an economic context, in which the

Dumping is selling a product in the importing country at a price below prevailing in the exporting country. Dumping may be harmful or beneficial to the importing country, depending on the circumstances. Dumping beneficial to the importing country, if it has no domestic industry to compete with the products removed. While importing country has a domestic industry, the dumping helpful, because consumer surplus exceeds producer surplus. Dumping is a decrease in import prices. Predatory dumping hazardous. Some foreign companies preying on domestic producers. Foreign companies put the predator cut prices to compete with domestic industry of business and then raise prices. For example, if the rise in Thailand selling price is lower than Malaysia, it will be referred to as dumping rice in Malaysia. It will worsen the situation for producers of rice in Malaysia.

Third, the argument of domestic work. One of the most common arguments protections is to protect domestic jobs. Competition with foreign imports on domestic production. As far as domestic consumers to buy imports from domestic production, the decline in domestic production and employment in the state as well. And then those restrictions on imports prevent the reduction in domestic production and employment in the state. The key justification is provided by the resident production in the domestic economy, pay taxes and vote, rather than foreign

Infant industry argument, asserting that the new industrial corn, which has a potential comparative advantage, cannot be started in the country unless they are granted temporary protection against foreign competition. Protection provides local manufacturers time to improve their skills in the production, management and marketing. After a competitive strength is built, the protection will be left to free trade. It is not clear that infant industries need protection to begin with. Many new companies can compete successfully with well-established local company. International competition is no different. If the long-term prospects are promising infant industry, there will be local entrepreneurs who are willing to invest in the industry. If there are no local operators, so the drug is not protected, but the company or foreign investment. It is most difficult for the government to identify the industries which require the protection of infant industries. Search requires careful study. In the light of historical experience, the probability of error is very high. One example is the US industrial wool / wool is. Beginning in the early years of the United States as an infant industry, he still needs to be protected from foreign competition. Another example, Malaysia wants to develop the domestic automobile industry to protect Proton and Perodua, Malaysia has to impose high import tariffs or quotas imposed on foreign-made