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What are the advantages and disadvantages of trade protectionism?

Asked anonymously on May 5th 2012 3:34 p.m.

1 Answer to this question...

Answered by Steven Hemmel on May 8th 2012 3:11 p.m.
Advantages: - Protect infant industries giving them time to grow and standalone to  - Geopolitical safety - less reliance on foreign imports means that in case of war or sanctions the country would be in a better position to be self sufficient - Environmental benefits - both in terms of generally less miles travelled to produce and deliver goods but also in legal factors - a factory at home will be subject to that country's environmental laws, whilst one abroad will not. - More stability - less reliant on global fluctuations in demand (and linked to this less structural unemployment) such as USA or China booming/busting    Disadvantage: - less likely to have increased efficiencies of production - can allow specialisation and scale  - consumers won;t can get cheaper prices linked to the above point - less economic growth - linked to cheaper prices and the ability to export more freely - reduced foreign exchange gains from selling abroad means less purchasing of foreign goods - weakens homegrown industry in the long term (few protected industries ever "grow up" to compete without subsisdies on a global level - they need competitoin earlier to be competative)