4.3.3
Protectionism
Methods of Protectionism
Methods of Protectionism
Protectionism involves protecting a country's domestic industries, companies and jobs from foreign competition. Protectionism could take the form of tariffs, quotas or other barriers to trade.


Tariffs
Tariffs
- Tariffs are a tax imposed on a product when it is imported into a country, which increases the price of imports to reduce the competitiveness of the goods (promoting domestic goods and services in the process).
- Tariffs raise tax revenue for the importing country. These funds could even be used to subsidise domestic firms.
- Tariffs will probably increase the price of goods faced by domestic consumers.


Import quotas
Import quotas
- Quotas restrict the actual quantity of good imported.
- They can be a 'cap' on the number of goods which can be imported, reducing foreign supply.
- Quotas allow governments to have exact control over the quantity of goods imported but don't raise any tax revenue.
- Quotas will probably increase the price of goods faced by domestic consumers.


Non-tariff barriers
Non-tariff barriers
- Non-tariff barriers to trade can include import bans, rules of origin (e.g. having to prove a product did not come from a conflict zone), quality conditions imposed by the importing country on the exporting countries etc.
- Exchange rate manipulation: A government / central bank may intervene in the foreign exchange market to lower the value of its currency by selling its currency in the foreign exchange market. This will give its exports a price advantage abroad.


Subsidies to domestic producers
Subsidies to domestic producers
- Governments can give subsidies to domestic producers to help them to compete against other providers internationally.
- The EU limits the subsidies that nations are allowed to implement under 'EU State Aid' rules.
- A subsidy would reduce a firms' costs and make them more price competitive internationally.
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
Jump to other topics
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
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