Protectionism (Government legislation, Domestic Subsidies and Embargoes) - 4.1.4
Protectionism - is any attempt by a country, trade bloc or region to impose restrictions on the import of goods and services.
Government legislation - legislation imposed by the government in order to both protect consumers and restrict imports. This might be complex legal forms, health and safety inspections and specific product specifications.
Benefits of government legislation is that it allows domestic firms to flourish in the market, but it may provoke retaliation from another country is the ban is seen as unfair.
Domestic subsidies - are payments to encourage domestic production by lowering their production costs and improve competitiveness.
Low or no interest loans can be used to fund the dumping of products in overseas markets. Well-known subsidies include the Common Agricultural Policy in the EU, or cotton subsidies for US farmers and farm subsidies introduced by countries such as Russia.
Advantages of subsidies include;
Benefits of government legislation is that it allows domestic firms to flourish in the market, but it may provoke retaliation from another country is the ban is seen as unfair.
Government legislation - legislation imposed by the government in order to both protect consumers and restrict imports. This might be complex legal forms, health and safety inspections and specific product specifications.
Benefits of government legislation is that it allows domestic firms to flourish in the market, but it may provoke retaliation from another country is the ban is seen as unfair.
Domestic subsidies - are payments to encourage domestic production by lowering their production costs and improve competitiveness.
Low or no interest loans can be used to fund the dumping of products in overseas markets. Well-known subsidies include the Common Agricultural Policy in the EU, or cotton subsidies for US farmers and farm subsidies introduced by countries such as Russia.
Advantages of subsidies include;
- The protection of local jobs and industries
- The reduction of costs to make businesses more competitive in the global market.
- Subsidies encourage inefficiency
- May result in retaliation due to it being seen as a protectionist policy.
Benefits of government legislation is that it allows domestic firms to flourish in the market, but it may provoke retaliation from another country is the ban is seen as unfair.
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