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- National Security Argument. National security protectionist arguments pertain to the risk of dependency upon other nations for economic sustainability. learning objectives.
- Infant Industry Argument. Economic markets are inherently competitive and newer economies are vulnerable to their more developed counterparts in other countries.
- Unfair Competition Argument. One of the strongest arguments for trade protectionism is unfair competition emerging due to differences in policy and enforcement ability.
- Jobs Argument. Many policy makers who are proponents of trade protectionism argue that limiting imports will create or save more jobs at home. learning objectives.
- Protectionism Definition
- Protectionism Methods
- Protectionism vs. Free Trade
- Protectionism Pros and Cons
- Sources and Further Reading
Protectionism is a defensive, often politically-motivated, policy intended to shield a country’s businesses, industries, and workers from foreign competition through the imposition of trade barriers such as tariffs and quotason imported goods and services, along with other government regulations. Protectionism is considered to be the opposite of fr...
Traditionally, governments employ four main methods of implementing protectionist policies: import tariffs, import quotas, product standards, and subsidies.
Free trade—the opposite of protectionism—is a policy of completely unrestricted trade between countries. Devoid of protectionist restrictions like tariffs or quotas, free trade allows goods to move freely across borders. While both total protectionism and free trade have been tried in the past, the results were usually harmful. As a result, multila...
In poor or emerging countries, strict protectionist policies like high tariffs and embargoes on imports can help their new industries grow by protecting them from foreign competition. Protectionist policies also help create new jobs for local workers. Protected by tariffs and quotas, and bolstered by government subsidies, domestic industries are ab...
Irwin, Douglas (2017), "Peddling Protectionism: Smoot-Hawley and the Great Depression," Princeton University Press.Irwin, Douglas A., "Tariffs and Growth in Late Nineteenth-Century America." World Economy. (2001-01-01). ISSN 1467-9701.Hufbauer, Gary C., and Kimberly A. Elliott. "Measuring the Costs of Protectionism in the United States." Institute for International Economics, 1994.C. Feenstra, Robert; M. Taylor, Alan. "Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century." National Bureau of Economic Research. ISBN: 978-0-226-03075-3- Robert Longley
One of the strongest arguments for some degree of trade protectionism is the tendency for unfair competition to emerge, particularly in developing markets without the infrastructure to monitor their businesses and enforce penalties.
A discussion of the political economy of trade policy can usefully begin by placing the subject in the framework established by Bergson and Samuelson for analyzing social welfare.
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The arguments for protectionism are divided into two groups. Domestic rationales focus on the desired effects of protection on attaining various objectives within the home country. These objectives may be economic, such as addressing domestic market failures, or non-economic, such as promoting national security.
The most important of these counterarguments include the potential for retaliation, the theory of the second best, the likelihood of incomplete or imperfect information, and the presence of lobbying in a democratic system. What remains today is a modern, sophisticated argument in support of free trade among nations.
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Does trade protectionism exist?
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What is protectionism & how does it work?
One of the strongest arguments for free trade was made by classical economist David Ricardo in his analysis of comparative advantage explains how trade will benefit both parties (countries, regions, or individuals) if they have different opportunity costs of production.
