Protectionist measures are policies enacted to safeguard domestic industries from competition with foreign firms. They are executed by introducing subsidies, trade tariffs, import quotas, and other trade barriers on imports from foreign business competitors. Remarkably, nearly all typical economists concur that free trade is essential for the thriving of the global economy. Nevertheless, numerous countries have been coerced by various circumstances to implement protectionist policies. Notably, the actions have turned out to be beneficial or detrimental to their economies and bilateral trade relations.
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Beneficial Circumstances for Protectionist Measures
A nation may opt for adopting the measures to protect the infant industries, guard local employment and diversification of the economy, prevent dumping, inhibit labor exploitation, earn government revenue, and safeguard strategic industries. For instance, the Korean regime targeted, promoted, and monopolized infant industries dealing in petrochemicals, steel, cement, and fertilizer between the 1960s and 1970s (Glick and Moreno 22). Since the 1980s, Singapore and Taiwan governments have been rendering technological support, preferential loans, and management assistance to specific strategic industries in manufacturing, which is labor-intensive.
Undesirable Circumstances for Protectionist Policies
It will be ill-advised for any country to enact trade policies based on retaliatory moves or settling political scores. In most instances, whenever government adopts plans due to prevailing external pressures, it tends to settle on poor fiscal policies. This results in subsidizing the unfeasible loss-making industries rather than investing in the viable, productive sectors. For example, the Taiwan government supported the automobile industry for two decades but never made a single export (Glick and Moreno 23). In the same regard, the “Buy China” slogan caused distress to the government of the United States. The administration reacted by banning the Chinese from exporting some of their products in US territories. In reaction, the Chinese government banned the dumping of any US product in its jurisdiction. Consequently, every state ought to be considerate while enacting any protectionist measure.
Glick, Reuven, and Ramon Moreno. “The East Asian Miracle: Growth Because of Government Intervention and Protectionism or In Spite of It?.” Business Economics, vol. 32, no. 2, 2020, pp. 20-25.