Protectionism In International Trade

International trade, also known as free trade refers to the exchange of goods and services across international bounders. In order to foster and facilitate the flow of trade and investment between trading partners with the intention of achieving economic growth and development. Historically, Economists have long faced a conundrum on the significance of the benefits and downsides of free trade. Moreover, whether free trade would benefit the country more or if other measures such as protectionism can make a better case and should be implemented instead. This is important as trade not only moulds our economy but determines the kind of world we live in. This essay will assess whether a country should embrace free trade, considering the impact

TreeTop Walk in MacRitchie reservoir, Singapore (Author's photograph, August 2017)

On the contrary, some may argue that protectionism should be adopted instead of free trade. Protectionism refers to government action through its economic policies aimed at restricting a country's trade. Its main objective would be to protect workers and domestic business alike from foreign competition.

With reference to the aforementioned point, protectionism enables the country to protect domestic infant industry from competition for a certain amount of time. Predominantly by implementing subsidies and tariffs on imports, to ensure that the infant industry can compete initially. In hopes that in the future, the industry can eventually compete in the world market effectively and better develop the country's economy. Nevertheless, it is vital to bear in mind that although the initial intention may only be to offer temporary protection, it is politically difficult to remove once in place. Vested interests are created, and the industries concerned will inevitably resist any removal of trade

TreeTop Walk in MacRitchie reservoir, Singapore (Author's photograph, August 2017)

In conclusion, protectionism benefits an economy at the expense of another economy. This will prompt retaliatory actions, suggesting that the benefits of protectionism cannot be reaped in the long-term. Likewise, protectionism results in a deadweight loss. Economist Stephen P. Magee estimated that the benefits of free trade outweigh the losses as much as 100 to 1. Hence the economic justifications of protectionism are very limited. Therefore, given the negative impact on efficiency in the short term, and macro objectives in the long term, there is no compelling reason to engage in protectionism.

In comparison, free trade brings about benefits and drawbacks. Nevertheless, the long run advantages tend to offset the short run detriments it poses. Consumer welfare increases as consumers can obtain lower cost goods with better quality. Free trade also encourages FDI and technology transfer from multinational corporations, which contributes towards economic development and growth of the country. Thus, the country should embrace free trade as it is a more susceptible plan for the long