Protectionist Measures/Instrument Used

February 5th, 2009 Comments off
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A protectionist policy is a policy adopted by a country in which certain trade barriers are imposed on international trade for some specific reasons.

The following are some of the ways/mode/instruments used when a country practiced protectionist policy:-

TARIFF

  • Is a tax imposed on imported goods.
  • Main form of protection to protect local industries plus acting as a source of governement revenue.
  • Impact of such tariff results in higher price of imported goods hoping that local demand will decrease.
  • The degree of success of tariff protection strongly depends on the elasticity of demand for imported goods re: higher the elasticity the more effective the use of tariff measure

QUOTA

  • Is a limit on the quantity of imports.
  • Used to protect local industries as well as for political reason.
  • Unlike tariff protection, imposing quota will not affect the price of imported goods hence not going to increase the government revenue.

EMBARGO

  • Physical control to ban the imports of certain goods like drugs, pornographic materials,etc.
  • Imposed for economic, social and political reasons

EXCHANGE CONTROL

  • Use to restrict or control the amount of foreign curriences that can be bought by importers.
  • Purpose is to restrict the ability to import.

VOLUNTARY EXPORT RESTRICTION

  • By using persuasion to ask another country to place a limit on its exports.
  • Example, like country A persuade country B to limits its car exports to relieve the competitive pressure on country A’s domestic car producers

 

 

 

 

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