Preview

Are Protectionist Policies Beneficiak to Business?

Good Essays
Open Document
Open Document
10943 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Are Protectionist Policies Beneficiak to Business?
Street−Street: Taking Sides: Clashing Views in Management, Third Edition

IV. Environmental and International Management Issues

18. Are Protectionist © The McGraw−Hill Taking Sides: Clashing Views in Management, Third Edition Policies Beneficial to Companies, 2010 Business?

101

ISSUE 18
Are Protectionist Policies Beneficial to Business?
YES: Ha-Joon Chang, from “Protecting the Global Poor,” Prospect Magazine ( July 2007) NO: Robert Krol, from “Trade, Protectionism, and the US Economy: Examining the Evidence” in Trade Briefing Paper No. 28, The Cato Institute (September 16, 2008) ISSUE SUMMARY YES: In support of the idea that protectionist policies help business, Ha-Joon Chang focuses attention on developing industries in poor countries. Further, he describes and advocates historical protectionist policies from around the world. NO: In the “No” selection, Robert Krol describes the findings of various economic studies of international trade. The areas that he surveys include the effect of trade on employment and wages as well of the costs of trade restrictions. He concludes that overall the benefits from protectionist policies are overshadowed by their negative effects.

t is understandable that a country would want to take care of its own citizens first. To this end, many countries adopt policies that prop up domestic industries and limit foreign organizations from engaging in business in their country. Generally speaking, such policies are typically labeled “protectionism.” A formal definition of protectionism is the “National economic policies designed to restrict free trade and protect domestic industries from foreign competition” (S. Tamer Cavusgil, Gary Knight, and John R. Riesenberger, International Business. 2008. Pearson, p. 620). Protectionist policies include governmental actions such as tariffs (taxes on imported goods), quotas (limits on the amount of goods that can be imported), subsidies (government support of certain domestic businesses or
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Good Essays

    Obama Protectionism Analysis
    • 1831 Words
    • 8 Pages

    Obama Protectionism Analysis

    As the last two sections have shown, contrary to popular takes on both the Obama Presidency and US trade politics, Obama’s inducing of protectionist measures into his trade policy does not constitute an overall breaking of the mould in US trade politics, rather it is merely a sustenance of the US executive succumbing to longstanding protectionist pressures domestically. In consideration of not only how protectionism is not a new development within US trade politics but also that Obama has been bound by the same domestic pressures as his predecessors, it may be considered surprising that Obama has been ascribed with a protectionist label that his predecessors often escaped. This consequently provides a new political puzzle that needs to be addressed…

    • 1831 Words
    • 8 Pages
    Good Essays
    Read More
  • Better Essays

    Discuss the effects of protectionist policies on the global economy
    • 1222 Words
    • 4 Pages

    Discuss the effects of protectionist policies on the global economy

    Protection refers to any action by a national government that gives domestic producers an advantage over foreign competitors. In general, the amount of protection between countries has been declining due to a range of factors such as trade agreements which allows countries to benefit from free trade. However, there are many policies that a country can adopt to increase protection of trade such as tariffs and quotas in order to protect the domestic producers. Since WWII, many international organizations and trading agreements have been established to try and breakdown the trading barriers between countries and reduce the amount of protection to increase trade in the global economy.…

    • 1222 Words
    • 4 Pages
    Better Essays
    Read More
  • Good Essays

    Economic Restriction Affecting The US Economy
    • 377 Words
    • 2 Pages

    Economic Restriction Affecting The US Economy

    Nowadays, we are living a world that countries no longer trade domestically in its own country. Instead of trading in domestic market, there is a increasing trend to trade worldwide in the international economy. We are not living in a world that contain only one country and one government. International trade means a collision of many countries’ economy, they have different perspectives on economy based on different countries’ benefits. In order to maximize their own countries’ interest or protect peace, government would like use tools such as economic sanctions, tariffs, quotas. This paper will explore what economic restriction is, how economic restriction affect the U.S economy, and how the government use it.…

    • 377 Words
    • 2 Pages
    Good Essays
    Read More
  • Better Essays

    Laissez-faire vs. Government Intervention
    • 1216 Words
    • 4 Pages

    Laissez-faire vs. Government Intervention

    Protectionism is a view that free trade is injurious and should be restricted. Protectionist policies are used in order to protect domestic industries. Protectionism is often criticized by the supporters of free trade as harming economies instead of assisting them (Frank and Bernanke). Tariff is an example of a protectionist measure which the supporters of Laissez-faire view as an obstacle to free trade among nations limiting their opportunities to benefit from exchanging goods and services with one another.…

    • 1216 Words
    • 4 Pages
    Better Essays
    Read More
  • Powerful Essays

    Commanding Heights
    • 15756 Words
    • 64 Pages

    Commanding Heights

    What happens when national governments restrict their domestic economies from open participation in (and dependence on) foreign trade?…

    • 15756 Words
    • 64 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    International Trade Policy Problems
    • 554 Words
    • 3 Pages

    International Trade Policy Problems

    Throughout the world, countries engage in international trade every day. The result of international trade is that it produces mutual benefits among the countries that are involved. However, when a country engages in trade protection, it hurts both the domestic consumers and foreign export industries. Three arguments that are used to promote trade barriers are the national security argument, the infant industry argument, and the dumping argument. Although these three arguments have their pros, such as protecting domestic industries from foreign competitors, they also have their flaws.…

    • 554 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Is Protectionism Ever Justified
    • 6208 Words
    • 18 Pages

    Is Protectionism Ever Justified

    Protectionism is said to be a “Government’s actions and policies that restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition…” (Investopedia, 2013) Basically means imposing some sort of trade restriction which would in turn benefit the domestic business and industries from overseas competition. A nation going through with protectionist measures today is definitely an argument which raises the question that, Is Protectionism ever justified? And if it is what are the examples we have that justify protectionism.…

    • 6208 Words
    • 18 Pages
    Powerful Essays
    Read More
  • Good Essays

    Protectionism vs. Free Trade
    • 534 Words
    • 3 Pages

    Protectionism vs. Free Trade

    Protectionism has several great arguments, some of them include: 1. The use of cheap labor in other countries can lower wages or threaten jobs at home. 2. A country can become too dependent on another country for important products possibly making them vulnerable. 3. Industries that make products related to national defense need to be protected. 4. Other countries might not have the same environmental or human rights standards. 5. Foreign competition will lower the demand for products made at home. 6. Companies at home must be protected from unfair foreign competition. All of these reasons are legitimate, but those against protectionism argue that the price of products could rise because of no other competition. I do not believe this is a valid concern, our elected officials, the United States government, can protect the American people by imposing their will on business and ensuring companies…

    • 534 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Examples of Protectionism
    • 692 Words
    • 3 Pages

    Examples of Protectionism

    A total of 78 trade restrictions, almost a third of all those enacted by Group of 20 countries, were imposed by Russian legislators last year, the study said.…

    • 692 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    Case
    • 922 Words
    • 4 Pages

    Case

    To illustrate how protectionist governmental policies can often hurt the very country they are designed to help.…

    • 922 Words
    • 4 Pages
    Powerful Essays
    Read More
  • Good Essays

    Evaluate the Case for and Against Protectionism
    • 556 Words
    • 3 Pages

    Evaluate the Case for and Against Protectionism

    Some countries consider free trade beneficial in the long run as it leads countries to become specialised and allows less economically developed countries to develop. However, other countries do not benefit from free trade as they are not internationally competitive; therefore they decide to introduce protectionist measures to prevent foreign competition from reducing domestic output. In this case there are some economic justifications for protectionism. Firstly, protectionism can be used to stop dumping. Dumping refers to foreign producers exporting goods at a lower price than it charges in its own country or at a lower price than the costs of production. This is illegal under World Trade Organisation regulations; however it is difficult to provide evidence against firms located in countries where production costs are low. Anti-dumping measures, which increase the price…

    • 556 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    International Trade and Comparative Advantage
    • 1234 Words
    • 5 Pages

    International Trade and Comparative Advantage

    In spite of the strong theoretical case that can be made for free international trade, every country in the world has erected at least some barriers to trade. Trade restrictions are typically undertaken in an effort to protect companies and workers in the home economy from competition by foreign firms. A protectionist policy is one in which a country restricts the importation of goods and services produced in foreign countries. The India, for example, uses protectionist policies to limit the quantity of foreign- produced sugar coming into country. In general, protectionist policies imposed for a particular good always reduce its supply, raise its price, and reduce the equilibrium quantity. Protection often takes the form of an import tax or a limit on the amount that can be imported, but it can also come in the form of voluntary export restrictions and other barriers. Tariff rates on dutiable imports have fallen dramatically over the course of history. A tariff is a tax on imported goods and services. A tariff raises the cost of selling imported goods. It thus shifts the supply curve for goods to the left. The price of the protected good rises and the quantity available to consumers falls. Protectionist policies reduce the quantities of foreign goods and services supplied to the country that imposes the restriction. As a result, such policies shift the supply curve to the left for the good or service whose imports are restricted. In the case shown, the supply curve shifts to S2, the equilibrium price rises to P2, and the equilibrium quantity falls to Q2. One of the most common protectionist measures now in use is the antidumping proceeding. A domestic firm, faced with competition by a foreign competitor, files charges with its government that the foreign firm is dumping, or charging an unfair price. Under rules spelled out in international negotiations that preceded approval of the World Trade Organization, an unfair price was defined as a price below production…

    • 1234 Words
    • 5 Pages
    Good Essays
    Read More
  • Good Essays

    international buisness
    • 412 Words
    • 2 Pages

    international buisness

    Recessions are a time of economic uncertainty and retrenchment. In the absence of a clear path to recovery and the cooperation of other states, countries turn inward and their governments pursue policies to ameliorate the effects of the economic downturn. One set of policy instruments mobilized during recessions is trade protectionism, or the raising of trade barriers that provide a defense against competition from foreign goods and that secure advantageous market access for domestic firms. This brief essay examines the link between protectionism and recessions, with particular attention to the current global recession and the role of international institutions, governments, and firms. One of the notable features of this particular recession is that that dreaded specter of protectionism did not materialize, and in this sense, the current global recession is different in its impact on trade policy and global trade more broadly. This essay also considers how future IPE scholarship, especially in the examination of policy substitutes and of firm-level preferences and behavior, may further advance our understanding of trade policy during economic…

    • 412 Words
    • 2 Pages
    Good Essays
    Read More
  • Powerful Essays

    Unclean Hands: America's Protectionist Policies
    • 4748 Words
    • 19 Pages

    Unclean Hands: America's Protectionist Policies

    by Stuart Anderson The author formerly was director of trade and immigration studies at the Cato Institute. American policymakers often justify trade barriers against other countries on the premise that the United States practices free trade while other countries erect trade barriers and engage in unfair trade practices. Claiming to favor "free but fair trade," they propose that America keep its markets open only to countries that dismantle their trade barriers. But in fact American policymakers often erect barriers and indulge in the kind of unfair practices that they are fond of denouncing. Russia's Ambassador to the United States, Yuri Vorontsov, at least was honest when his government increased its tariffs on American poultry. He delivered a forthright defense of protectionism, noting that "the cost is on the shoulders of the Russian consumer, as usual."1 He did not claim to be reacting to American protectionism. But if he follows the example of U.S. policymakers, he might well use this excuse in the future. American policymakers use a variety of practices, such as antidumping laws, to re-strict imports -- often in the name of "fair trade." Such restrictions usually are at the behest of American special interests seeking to restrict their competition. The first and foremost result of these practices is to harm American consumers. If the United States simply eliminated all tariffs and quantitative restrictions on imports, the net welfare gain to consumers would be $15.49 billion a year, according to a 1995 U.S. International Trade Commission report.2 (See Table 1.) That is probably a conservative estimate. Economists Gary Clyde Hufbauer and Kimberly Ann Elliot placed the total costs of protectionism in 1990 at $70 billion.3 American consumers, families, and particularly businesses that rely on imports as raw materials or components for production would benefit significantly if the United States unilaterally…

    • 4748 Words
    • 19 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    International Business Paper
    • 3871 Words
    • 16 Pages

    International Business Paper

    Recent examples of protectionism are typically motivated by the desire to protect the livelihoods of politically powerful groups, such as farmers in the United States and European Union, who in the absence of tariffs might be unable to compete with lower-cost foreign producers. In recent years, there has been a renewed discussion of protectionism due to offshore outsourcing. Most economists view this form of protectionism as a disguised transfer payment from consumers (who pay higher prices for food…

    • 3871 Words
    • 16 Pages
    Powerful Essays
    Read More

Related Topics