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Advantages of Protectionism

Protectionism is an economic policy that restricts trade to promote domestic industries, offering advantages such as growth opportunities and enhanced national security. However, it can also lead to disadvantages like economic isolation, price increases, and stagnation in technological advancement. Excessive tariffs and quotas may hinder a country's global economic interactions, resulting in slower growth and lower living standards.

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16 views

Advantages of Protectionism

Protectionism is an economic policy that restricts trade to promote domestic industries, offering advantages such as growth opportunities and enhanced national security. However, it can also lead to disadvantages like economic isolation, price increases, and stagnation in technological advancement. Excessive tariffs and quotas may hinder a country's global economic interactions, resulting in slower growth and lower living standards.

Uploaded by

momonianightcore
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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i.

Advantages of Protectionism
Protectionism refers to the economic policy of restricting trade between countries through methods,
legal provisions, or practices, such as tariffs, that a country follows for the sake of promoting its own
domestic industries. There are several advantages associated with this approach.

Growth opportunities in the country


One important benefit of protectionism is the capability to shield domestic businesses and foster growth
in the country's manufacturing sector. Countries can enhance the competitiveness of their domestic
industries and protect jobs in key sectors by implementing tariffs and quotas on imported goods. For
instance, tariff and quotas measures have been put in place by the United States in sectors like steel and
agriculture, aiming to safeguard local producers from overseas rivalry (Kutlu, 2014). This preservation of
jobs has aided in ensuring the survival of these industries amidst global competition of imported goods
compared to domestic products which can be utilized to shield domestic industries from foreign
competition, thereby supporting the development of domestic industries and employment opportunities
(tutor2u, n.d.).

National security
Furthermore, the advantage of protectionism is the ability to promote national security. Nations
secure these important sectors like farming, innovation, and national security in order to decrease
dependence on international providers and secure a steady source of vital resources during
emergencies. During the COVID-19 pandemic, numerous countries implemented export limitations on
medical supplies to ensure they had enough for their own people.

ii. Disadvantages of Protectionism


Trade protectionism also led to many disadvantages due to the impost of tariff, and quotas.
Which could create economic isolation, price increases, and stagnation in technological processes.

Economic isolation
When the country imposes too many tariffs and quotas, it could lead to economic isolation because a
country limits its interactions with the global economy by reducing trade, investment, and financial
exchanges. As a result of deliberate government policies, such as sanctions or trade barriers, or self-
imposed isolation to protect domestic industries. It can result in slower economic growth, reduced
competitiveness, and a lower standard of living, which could affect global economic changes and long-
term prosperity. For instance, countries like North Korea get the harmful effects of strict economic
isolation, which has resulted in widespread poverty and limited development opportunities for their
citizens (Smith, 2020).

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