Protectionism: Definition, Advantages, Disadvantages & Examples
Protectionism in international trade
Protectionism is the imposition of certain restrictions on foreign trade to protect national production, it’s one of the ways of exchanging goods and services between countries in the world and is the opposite of the free market.
Contents
Arguments for protectionism
Economists who defend protectionism believe that restrictive decisions must be made because domestic production must be protected from foreign competition, such as tariffs and non-tariff barriers.
One of the arguments in favor of protectionism is that it protects employment and is based on the fact that when a country imports cheap goods and services, jobs are lost in the national industry because national producers are discouraged by the strong competition coming from the exports of these products, and it’s difficult for them to compete.
As they lose their jobs, these people become a burden on the national economy and spend less, this causes crises and even more jobs to be lost.
Arguments for free trade
The economists who are in favor of the Free Market affirm that it creates prosperity for the countries and conditions of fair competition and that it also brings benefits of comparative advantage.
Free trade also creates some jobs and its proponents claim that if it’s enforced, labor resources are shifted to higher value activities.
Conclusion
Protectionism can curb unemployment to the extent that it’s applied according to the specific circumstances of a given economy. The solution is about seeking a balance and pertinent application of policies of both types, free trade is considered the best policy for international trade and despite this, the countries of the world apply protectionism when they think it’s necessary.
See also