Impact of Reduced Protection on the Global Economy Essay Example
Impact of Reduced Protection on the Global Economy
Protection is essentially defined as any action by national governments that will give an artificial competitive advantage to domestic producers over foreign producers. The opposite of protection is free trade, which occurs when there are no limitations to the free movement of goods and services between different economies. The main reasons for nations to reduce protection is to increase efficiency and productivity levels, but in reducing protection also comes with international competitiveness. Globalisation which is a process of intercontinental trade and investment supported by information technology all leading to the creation of a global economy (http://www.BoredofStudies.org). This process cannot be fully materialised if there are policies that are implemented that restrict the artificial advantage that governments give to their domestic industries. These policies are called protectionist policies or rather macroeconomic trade protection. There are a many different types of protection, including embargoes, subsidies or financial backing, quotas; export incentive, voluntary export restraints; although the most important form of protection is the tariff.
International specialisation is a type of specialisation refers to the more efficient allocation of the world’s resources in relation to the law of comparative advantage. Different countries have resources that vary in both quantity and quality they may also vary the suitable factor endowments to have their desired goods produced. Countries need to trade because they need to obtain goods which they are unable to produce for themselves or it is produced more efficiently by other globalising countries. By concentrating on a specific range of goods and services producers can improve the techniques and efficiency. A good example would be Germany’s reputation for cars (e.g. BMWs, Audi) and Japan’s reputation for technology products (e.g. Sony LCD TVs, Toshiba
Protection is essentially defined as any action by national governments that will give an artificial competitive advantage to domestic producers over foreign producers. The opposite of protection is free trade, which occurs when there are no limitations to the free movement of goods and services between different economies. The main reasons for nations to reduce protection is to increase efficiency and productivity levels, but in reducing protection also comes with international competitiveness. Globalisation which is a process of intercontinental trade and investment supported by information technology all leading to the creation of a global economy (http://www.BoredofStudies.org). This process cannot be fully materialised if there are policies that are implemented that restrict the artificial advantage that governments give to their domestic industries. These policies are called protectionist policies or rather macroeconomic trade protection. There are a many different types of protection, including embargoes, subsidies or financial backing, quotas; export incentive, voluntary export restraints; although the most important form of protection is the tariff.
International specialisation is a type of specialisation refers to the more efficient allocation of the world’s resources in relation to the law of comparative advantage. Different countries have resources that vary in both quantity and quality they may also vary the suitable factor endowments to have their desired goods produced. Countries need to trade because they need to obtain goods which they are unable to produce for themselves or it is produced more efficiently by other globalising countries. By concentrating on a specific range of goods and services producers can improve the techniques and efficiency. A good example would be Germany’s reputation for cars (e.g. BMWs, Audi) and Japan’s reputation for technology products (e.g. Sony LCD TVs, Toshiba