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Protectionism

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Protectionism
Protectionism is defined as the government actions and policies that restrict or retain international trade, often done with the intent of protecting local business and jobs from foreign competition. Typical methods of protectionism are:
● import tariffs - import taxes.
● quotas - quantitative limits on the level of imports allowed.
● export subsidies - a payment to encourage domestic production by lowering their costs.
● Import licensing - governments grants importers the license to import goods.
● Exchange controls - limiting the amount of foreign exchange that can move between countries.
● cuts to local businesses.
Quotas, embargoes, export subsidies and exchange controls are all examples of non-tariff barriers to international trade.
There is significant debate surrounding the merits of protectionism. Critics argue that, over the long term, protectionism often ends up hurting the people it is intended to protect and often promotes free trade as a superior alternative to protectionism. Tariffs, non-tariff barriers and other forms of protection serve as a tax on domestic consumers. Moreover, they are very often a regressive form of taxation, hurting the poorest consumers far more than the better off.
Protectionism is frequently criticized by mainstream economists as harming the people it is meant to help. Most mainstream economist instead support free trade. Economic theory, under the principle of comparative advantage, shows that the gains from free trade outweigh any losses as free trade creates more jobs than it destroys because it allows countries to specialize in the production of goods and services in which they have a comparative advantage.

Comparative Advantage
Comparative advantage refers to a country's ability to produce a particular good with a lower opportunity cost than another country.
Protectionists believe that there...

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