Arguments for Protection

Question 1

what are the 7 arguments for protection

Answer 1

1. anti dumping
2. infant industry
3. diversification
4. national security
5. increased employment
6. cheap foreign labour
7. favourable balance of trade

Question 2

1. anti dumping (what is it?)

Answer 2

dumping is when a company exports a product at a lower price than the price charged in domestic market or a firm with surplus goods sells it overseas for higher price

Question 3

2. infant industry

Answer 3

new industries need protection so they can develop international competitiveness and comp advantage

Question 4

3. diversification

Answer 4

rather than ‘placing all eggs in one baskt’ as defined by specialisation and comp advantage countries should diversify and protected those industries until they are competitive

Question 5

4. national security

Answer 5

protection for industries that are vital to the economy in case of war

Question 6

5. increased employment

Answer 6

protection shifts spending from foreign to domestic increasing employment in that protected industry

Question 7

6. cheap foreign labour

Answer 7

aus industries need protection from lower wage countries

Question 8

7. favourable balance of trade

Answer 8

trade deficit could be eliminated/reduced by restricting imports through protective measures