Political Economy Economic Systems Questions
Protectionism and free trade are two contrasting approaches to international trade.
Protectionism refers to the economic policy of imposing restrictions, such as tariffs, quotas, and subsidies, on imports in order to protect domestic industries from foreign competition. The main objective of protectionism is to shield domestic industries from foreign competition, promote domestic production, and safeguard employment opportunities within the country. Protectionist measures are often implemented to protect infant industries, maintain national security, or address trade imbalances.
On the other hand, free trade is an economic policy that advocates for minimal or no restrictions on international trade. It promotes the exchange of goods and services between countries without barriers such as tariffs, quotas, or subsidies. Free trade aims to maximize economic efficiency, enhance consumer choice, and foster global economic integration. It is based on the principle of comparative advantage, where countries specialize in producing goods and services in which they have a lower opportunity cost, leading to overall economic growth and welfare.
In summary, the key difference between protectionism and free trade lies in their approach to international trade. Protectionism emphasizes the use of trade barriers to protect domestic industries, while free trade advocates for the removal of barriers to promote global economic cooperation and efficiency.