Archive for October 4, 2010

Free Trade vs. Protectionism

Satirical View of Protectionism

There are strong arguments from both opinions. However, I do think that an industry needs a protectionism in order to build up its capability to compete with international industries. There are many real world examples that support this idea of protectionism. Of course, it could be unfair for some of the countries that are trying to get in to the market, however, the country with inefficient, lack of technology on specific area will never get better just by initiating free trade with other countries, completely making the weak industry vulnerable to international siege of cheap… products.

There are many industries in East Asia that have benefited from protectionism. One of the most famous example would be South Korea. The country had set a quota, tariff and all methods of protectionism possible to grow one of the important industries. For example, the electronics industries have heavily benefited from the protectionism. From 1970-1990’s, the electronic companies such as Samsung or LG have had significant growth due to the protectionism. Thus, expanding economic growth within the country and lifting the standards of living of the South Korean people. If Korea did not use any kind of protectionism to bolster its core industries, they might be still suffering from poverty and low standards of living. This also includes Japanese, Taiwanese and other nation’s industries. These countries became wealthy by overcoming the lack of resources by protecting the important, lucrative industries.

It would be completely immoral for developed countries to impose and bully undeveloped countries to sign up for WTO and initiate free trade. These undeveloped countries will never have the chance to grow and develop their own industry and technology. It would be forcing a poor country to stay poor and never giving them a chance to have develop their own industry and raise the standards of living.

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Table of Types of Protectionism

Type of Protectionism Definition Real World Example + Link
Tariff It is the tax on imported goods, which could be imposed on specific products. Japan imposes tariff on imported rice.Article Link: Click Here
Quota It is a limit to the imports set by the government. The trading economy can only export maximum amount of goods to the economy that is imposing quota. European Union imposes quota on Japanese cars.Article Link: Click Here
Subsidy It is the sum of money given to the weak industry in order to maintain the job places that it provides. The Japanese government is giving subsidies to Japanese rice farmers.Article Link: Click Here



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