World Bank cautions against protectionism:

World Bank cautions against protectionism:

• The World Bank has cautioned that a rise in protectionism and policy uncertainty could derail the fragile recovery of global economy.

What is Protectionism?

• Protectionism refers to government actions and policies that restrict or restrain international trade
• Protectionism is often done with the intent of protecting local businesses and jobs from foreign competition.
• The primary objective of protectionism is to make local businesses or industries more competitive by increasing the price or restricting the quantity of imports entering the country.

What are the ways through which Protectionism is implemented?

Protectionist policies can be implemented in four ways:

• Taxation with Tariffs
• Import Quotas
• Product Standards
• Government Subsidies

What are the advantages of Protectionism?

• Protectionism temporarily creates jobs for domestic workers. The protection of tariffs, quotas or subsidies allows domestic companies to hire locally.
• If a country is trying to grow strong in a new industry, tariffs will protect it from foreign competitors.

What are the disadvantages of Protectionism?

• Trade protectionism weakens the industry in long-term.
• Consumers in the domestic market may also have to pay a premium for a better-produced import or be denied the ability to acquire it at all.

Weak investment

• He expressed concern that risks such as a rise in protectionism, policy uncertainty or possible financial market turbulence could derail this fragile recovery.
• Forced displacement

Globalisation vs Protectionism

• Globalization means expanding the trade internationally and protectionism means protecting domestic industries from foreign competition.
• Supporters of globalization argue that it has the potential to make this world a better place to live in and solve some of the deep-seated problems like unemployment and poverty.
• Free trade is supposed to reduce barriers such as tariffs, value-added taxes, subsidies, and other barriers between nations. This is not true. There are still many barriers to free trade. The Washington Post story says “the problem is that the big G20 countries added more than 1,200 restrictive export and import measures since 2008. The proponents say globalization represents free trade which promotes global economic growth; creates jobs, makes companies more competitive, and lowers prices for consumers.
• Furthermore, the sharing of technology with developing nations will help them progress. True for small countries but stealing our technologies and IP have become a big problem with our larger competitors like China.
• In the case for protectionism, if a country is trying to grow strong in a new industry, tariffs will protect it from foreign competitors. That gives the new industry’s companies time to develop their own competitive advantages. However, domestic industries and markets can only grow so much until they must embark on global trade, otherwise, they won’t be able to meet growing supply and demand.
• Protectionism does temporarily create jobs for domestic workers. The protection of tariffs, quotas or subsidies allows domestic companies to hire locally, but again, if a company in a protectionist state wants to expand, they won’t be able to.