Advantages/merits of protectionism in an economy
- It protects domestic/infant industries; trade restrictive policies like quotas, import duties, etc. reduce on demand of imported products thereby reducing competition form the local products.
- Discourages dumping and foreign subsidies into the countries’ economy
- Improve balance of payment position by reducing the value of imports and increasing the value of exports
- It improve self-sustenance since it encourages consumption of local products
- It is a source of revenue to the government from import duties.
- Creation of employment opportunities from local firms
- Prevents importation of undesirable goods like tobacco and expired drugs
- It controls import inflatione. duties limits demand for imported expensive products.
- It encourages use of local natural resources
- It improves on the country’s terms of trade by encouraging exports over imports.
- National security. If a product is used in the manufacturing of military goods or other security sensitive products, it may not be wise to import it from another country.
- Higher GDP: Protectionist policies tend to boost the economy’s GDP due to a rise in domestic production
- Protects intellectual property; to encourage research and development.
- Source of government revenue:Tariffs form a good source of revenue for governments
CATEGORIES Economics
TAGS Dr. Bbosa Science
