Economics is the social science that analyzes the production, distribution, and consumption of goods and services.

Monday, 5 December 2011

Reasons of protectionism

Reasons of protectionism

a.                   To protect infant industries
Trade barrier intend to protect new industry. Most of new industry still not capable to compete phased global. These new industries not yet get operating efficiently of production at lower costs. This trade barrier enable new industry together with industry have developed.

Example: Malaysian government put high taxes on imported car to protect national car like PROTON.

b.                  Expand national economy
Most developing country practice traditional economy/ low agricultural and low income activities.

Effort diversify nation's economy, especially develop manufacturing industry, aimed reduce country's dependence in certain import and exports, increase productivity and national income, and stabilize the country's economy.

To achieve effort diversify nation's economy, government implemented policy check goods import which competed with local produce such as impose import tariff or import quota, and policy promote exports to raise goods competitive force country's export in international market.

c.                   Increase Employment
Local development of industries especially manufacturing industry can create many job opportunities.
Inside unemployment rate one country could be reduced.