Protectionism is when governments put rules in place to limit international trade in order to support local businesses. These policies are often aimed at boosting the economy at home, but they can also be used to address safety or quality issues.
Learn more about Protectionism
Protectionist measures usually target imports, but they can also touch on various elements of international trade, including product regulations and government financial support.
The advantages of protectionism spark intense discussions. Detractors claim that, in the long run, these policies can backfire on the very groups they aim to shield, leading to slower economic growth and higher prices, which makes free trade seem like a more favorable option. On the other hand, supporters believe that protectionist strategies can boost local employment, enhance GDP, and strengthen a country’s competitiveness on the global stage.
Some Types
- Tariffs
- Import Quotas
- Product Standards
- Government Subsidies
The Example
Some typical examples of protectionism, which refers to measures taken to support local industries, include tariffs, quotas, and subsidies. These strategies aim to help domestic businesses by increasing the cost or limiting the availability of foreign products.
Conclusion
Governments often use protectionist measures like quotas and tariffs to shield local businesses from international competition. Although this can benefit domestic companies, it may result in higher prices for consumers. Additionally, it can create strained political relationships between countries.