Open trade v Protectionism

• What is open trade?


  economic policy of not discriminating against imports from and exports to other countries
• what are the key benefits to open trade


  -comparative advantage

  -achieve better economies of scale -encourages competition and economic efficiency

  -allows businesses to grow
• What is protectionism?


  involves any attempt by a country to impose restrictions on trade in goods and services
• what are the 3 main types of protectionism?


  -import quotas

  -tariffs

  -domestic and export subsidies
• advantages for protectionism


  -infant industry protection

  -protection of strategic industries

  -protection against import dumping
• disadvantages for protectionism


  -higher prices for consumers

  -retaliation from other countries

  -extra costs for exporters