4.1.4 Protectionism

Question 1

What is Protectionism?

Answer 1

Protectionism is when a country takes action to protect its own industries by restricting trade with other countries

Question 2

What are some argumnets for Protectionism?

Answer 2

• Over-production in developed countries may be released into the markets of developing nations, which undercuts domestic prices and domestic producers may be forced to leave the market
• Young industries are unlikely to be able to compete against established MNC’s in developed countries, thus require protection, at least in the short term

Question 3

What are the 5 methods of Protectionism?

Answer 3

Tariffs
Import Quotas
Government Legislation
Domestic subsidies
Embargoes

Question 4

What are Import quotas?

Answer 4

A physical limit on the volume of imports entering a country

Implies that domestic businesses can meet demand
IF NOT then demand pull inflation

Question 5

What does government legislation do to effect Protectionism?

Answer 5

Countries might employ measures such as complex legal forms, health and safety inspections and specific product specifications

Question 6

How do Domestic subsidies help protect Protectionisum?

Answer 6

Government payments to domestic businesses to help reduce production costs and improve competitiveness

However:
Encourages over production (people want to make it to gt the subsidies)

Can make businesses reliant od subsidies

Question 7

What are embargos help Protectionisum?

Answer 7

A total ban on imported products

E.g The UK has imposed embargos on Syrian oil exports as a political measure