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MyNameIsE
on FreezingBlue Flashcards.
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Protectionism
Methods of restraining international trade in order to help protect local businesses from foreign competition.
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Tariffs
This is a tax on imports.
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Quotas
This is a physical limits on the quantity of imports
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Embargoes
This is a total ban on a good, this may be done to stop dangerous substances
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Subsidies
If a governmentt subsidises domestic production this gives them an unfair advantage over competitors.
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Administrative barriers
Making it more difficult to trade, e.g. imposing minimum environmental standards.
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Currency value
Can cut the value of the currency to make it more competitive
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Benefits of Protectionism
- Infant industry argument – protect new industries
- Diversify the economy – help develop new industries to give more diversity to economy
- Raise revenue
- Protect certain key industries from international competition to try and safeguard jobs.
- Protect domestic jobs which are threatened by rise of imports.
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Drawbacks
- Other countries may retaliate by imposing their own import tariffs thus making it harder to export
- Countries may be specialising in a good that don't have a comparative advantage thus may be innefficient
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