4.1.4. Protectionism

Question 1

Protectionism

Answer 1

Giving preference to domestic producers by making it harder for foreign companies to export to your country

Question 2

Tariffs

Answer 2

-Tax imposed on an imported product to allow it to enter a country
Reasons to use tariffs:
-Protect a declining industry
-Protect new industries and help them survive but might harm competitiveness

Question 3

Quotas

Answer 3

Quota is physical unit on vol. of products that can be imported in a year. Once it is used up only domestically produced goods are available
-Designed to protect and encourage domestic producers

-Less competition, prevents unemployment reduces gov spending but now tax rev gained by governments

Question 4

Government legislation

Answer 4

For consumer/ environmental protection
Documents making it harder to impory

Question 5

Domestic subsidies

Answer 5

Payment made by government to a business producing certain product or located in a particular area government wishes to support

-Helps stimulate demand for struggling business, has a +ve effect on balance of payments by reducing imports and boosting exports

-Increases taxation, inflating profit margins of inefficient businesses can prevent them pushing for efficiency gains that would allow them to compete without subsidies