Imposing trade barriers to protect domestic businesses is called protectionism in international trade

1. PROTECTIONISM IN
INTERNATIONAL
TRADE
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INTERNATIONAL
BUSINESS

2. INTERNATIONALTRADE STRATEGIES
Outward
oriented
trade
strategy
Inward
oriented
trade
strategy
Trade and industrial policies do not
discriminate between production
for the domestic markets and
exports ,nor between the purchase
of domestic goods and foreign
goods
Bias of trade and industrial policies
in favour of domestic production
against foreign trade. Protection of
domestic industries form foreign
competition

3. ARGUMENTS FOR FREETRADE
▪ Leads to most economic utilisation of the productive resources of the
world
▪ Labour distribution on international scale leads to greater
specialisation , efficiency and economy in production
▪ Helps in breaking domestic monopolies and frees the consumer from
exploitation
▪ Due to high competition, consumers get wide variety of cheaper
goods

4. PROTECTIONISM
Proliferation of trade barriers in order to
protect domestic trade
Currency crisis, oil crisis, debt crisis, recession,
trade deficits, unemployment and similar
problems have led to growing protectionism.

5. ARGUMENTS FOR PROTECTION
PROTECTION
Infant Industry
Employment
Balance of
Payments
Key Industries
Diversification
Anti-Dumping
BetterTerms of
Trade
StrategicTrade
Policy
National
Defense

6. • To protect infant industry from
well established foreign player
Infant
Industry
• Stimulation of domestic
industry expands employment
opportunities
Employment
• Restricting imports improves
BOP disequilibrium
Balance of
Payment
• To establish key industries on
its own without depending on
the mercy of foreign suppliers
Key
Industries
• Resorted to prevent dumping and
thereby protect domestic industries
.
Anti-Dumping
• Protection helps to develop range
of industries which provide
strength and stability to the
country’s economy
Diversification
• Protectionism and government
support is necessary for gaining
competitive advantage
StrategicTrade
policy
• Protection may be necessary to
develop and other industries of
strategic importance
National
Defence

7. ARGUMENT AGAINST PRTECTIONISM
• Protection makes domestic producers less quality conscious.
• Protection discourages innovation and encourages the
survival of inefficient firms
• Protection leads to domestic monopolies
• Protection is harmful for consumers as it increases prices and
reduces variety
• Protection reduces the volume of international trade.
• Protection leads to inefficient utilisation of resources
• Protection encourages corruption.

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