2. Types of Trade Protection

Question 1

What is a tariff?

Answer 1

A tax imposed on imported goods to protect domestic industries and raise government revenue.

Question 2

Define import quota.

Answer 2

A limit on the quantity or value of a good that can be imported into a country.

Question 3

What are subsidies?

Answer 3

Financial assistance given by governments to domestic producers to encourage exports.

Question 4

Explain administrative barriers in trade.

Answer 4

Regulatory measures, such as stringent standards and customs procedures, that make it difficult for imports to enter a country.

Question 5

Explain: Dependency on the Primary Sector

Answer 5

Over-reliance on primary products, such as raw materials, can hinder economic diversification and growth.

Example: In 2022, copper exports from Zambia accounted for 70% of their total exports, with primary products exceeding 90%, indicating over-specialization.

Question 6

Explain: Low-Income Elasticity of Demand for Primary Products

Answer 6

Primary products often have low-income elasticity of demand, meaning that as global incomes rise, the demand for these products increases less proportionally.

Question 7

Explain: Rising Income Inequality

Answer 7

Unequal income distribution can limit consumption, reducing aggregate demand and hindering economic growth.

Consequence: Economies with a smaller middle-income population may experience slower growth.

Question 8

Explain: Lack of Access to Infrastructure and Appropriate Technology

Answer 8

Inadequate infrastructure raises business costs and deters foreign investment.

Solution: Investments in infrastructure can unlock economic potential, as seen with China’s projects in Asia and Africa.

Question 9

Explain: Low Levels of Human Capital

Answer 9

Insufficient education and healthcare reduce workforce productivity.

Strategy: Investing in health and education enhances human capital, leading to increased productivity and economic growth.

Question 10

Explain: Geographic Challenges

Answer 10

Geographical features like being landlocked or having vast deserts can impede trade and economic activities.

Challenge: Landlocked countries face higher transportation costs for imports and exports.

Question 11

Explain: Tropical Climates and Endemic Diseases

Answer 11

Tropical regions may contend with diseases such as malaria, which can reduce workforce productivity.

Impact: Health challenges in these areas can limit economic growth.