Introduction And Meaning Of Protectionism
Protectionism is a government's economic policy of restricting or limiting the import of foreign goods or services to protect domestic industries. Different methods such as tariff, import quota, subsidies to domestic producers, standardization etc. are used to discourage import of foreign products. It helps to protect infant industries in the country, creates employment opportunities and protects country's economic interests.
Objectives Of Protectionism
Importance or objectives of protectionism can be highlighted as follows:
1. To Protect Domestic Producers
Protectionism creates barriers for foreign companies to enter the market that provides protection to the domestic industries. Therefore, it helps in industrial development of the country
2. To Generate Employment Opportunity
Import barriers and restrictions promotes industrial growth and development in the country. It helps to create employment opportunity. Therefore, protectionism plays a vital tole to reduce the unemployment problem.
3. To Provide Protection Against Dumping
Another objective of protectionism is that it provides protection against dumping. Big foreign companies try to ruin domestic firms by supplying goods and services at lower price (dumping). In this situation, protectionism can be use as anti-dumping measure to restrict foreign goods.
4. To Discourage Economic Dependency
Protectionism discourages economic dependency with other countries and promotes diversified industrial structure in the country. Therefore, it encourages self-sufficiency of the nation.
5. To Restrict The Import Of Harmful Products
It discourages the import of harmful and dangerous products by imposing restrictions and barriers. Government may ban certain products such as drugs, weapons, unhealthy goods etc. to protect its people.
6. To Preserve Natural Resources
It controls the over exhaustion of natural resources by restricting the export. Therefore, it is helpful to prevent the country's natural resources.
7. To Improve Balance Of Payments
Protectionism helps to improve balance of payments position by discouraging foreign imports and promoting exports.
