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