Chapter 20: Q. 16 (page 490)
Why would countries promote protectionist laws, while also negotiate for freer trade internationally?
Short Answer
To take benefits of exports but limit imports to protect domestic players.
Learning Materials
EXAM TYPES
Features
Discover
Chapter 20: Q. 16 (page 490)
Why would countries promote protectionist laws, while also negotiate for freer trade internationally?
To take benefits of exports but limit imports to protect domestic players.
With the increased globalization, protectionist policies are necessary. Protectionism essentially means the reduction in the volume of foreign trade and putting a cap and check on it.
Free trade refers to import export across the global borders without any severe restrictions.
This primarily benefits local domestic players engaged in export business, as they now have an access to even larger market with increased demand for their products. Thus, they can expand and take benefits of economies of scale and hence earn higher profits. From an economy's point of view, more exports flood the foreign exchange reserves.
Hence, they negotiate for freer international trade.
But, international trade also comprises of cheap imports which might be of better standards and quality, thereby pushing domestic manufacturers and players out of business. To protect them, cut down imports and hence protect forex reserves and promote self reliance, they promote protectionist policies and laws.
Unlock Step-by-Step Solutions & Ace Your Exams!
Get detailed explanations and key concepts
Al flashcards, explanations, exams and more...
To over 500 millions flashcards
We refund you if you fail your exam.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for freeWhat might account for the dramatic increase in international trade over the past 50 years?
If opening up to free trade would benefit a nation, then why do nations not just eliminate their trade barriers, and not bother with international trade negotiations?
Why is the national security argument not convincing?
How is international trade, taken as a whole, likely to affect the average level of wages?
Why do you think labor standards and working conditions are lower in the low-income countries of the world than in countries like the United States?
What do you think about this solution?
We value your feedback to improve our textbook solutions.