Protectionism vs. Integration in International Trade
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1.5 Protection vs. Integration
Protectionism: The protection objective is to keep alive domestic production and to increase import prices. For this purpose, it uses different instruments:
- Tariffs: taxes on imported goods to protect the domestic industry. An external tariff is a 'tax' on foreign products introduced in the domestic market. The effect is that its price is higher and it is more difficult to compete with domestic products.
- Quotas on imports: is a limitation of the quantity of foreign products to be imported, regardless of the price. Quotas limit imports and increase domestic prices. The limited quantity is an obstacle for foreign products when international prices have decreased.
- Non-tariff barriers: are administrative regulations for