RISE IN GLOBAL PROTECTIONISM
28 Jul 2021
The renowned economist, Walter Block once said, "Protectionism is a misnomer."
Protectionism is an economic strategy in which the government creates policies to
restrict imports from other countries. Walter Block also stated, "The only people
protected by tariffs, quotas, and trade restrictions are those engaged in the non
economic and wasteful activity. Free trade is the only philosophy compatible with
international peace and prosperity." While each country is struggling to increase its
economy, global trade is declining.
Alan Greenspan once said, "Protectionism will do little to create jobs and if foreigners
retaliate we will surely lose jobs." Protectionism helps both industries, from the ones
which have just started to the ones which are declining. If the industry is saved, we will
save its workers from getting unemployed. These industries will generate income and
pay taxes, which will create a source of government revenue. It is because of all these
reasons that the country's economy will flourish.
Due to protectionism, there is economic distortion and loss of economic efficiency. The
prices of imported items get high and it adversely affects consumers which leads to less
consumption of the product, which, in turn, harms the producers and the workers in the
export sector. This may affect the relationships shared by the countries and also lead to
India has a policy for the same, which is known as the Foreign Trade Policy. The
Foreign Trade Policy is the rules and regulations made by the Indian government
designed to increase net exports by promoting exports or restricting imports. Such as
tariffs, which is a tax, import quota, which is a type of trade restriction that sets a
physical limit on the quantity of a good that can be imported into a country in a given
period, and Export subsidy, which is a government policy to encourage export of goods
and discourage the sale of goods on the domestic market. This is done through direct
payments, low-cost loans, tax relief for exporters, or government-financed international
advertising. There are two major objectives of the trade policy: to double the percentage
share of global merchandise trade within the next five years and to act as an effective
instrument of economic growth by giving a thrust to employment generation. Many
campaigns are going on. An article in Economic Times says, "Focusing on the growth of
India's participation in international trade is reflective of the Atmanirbhar Bharat vision.
Earning foreign exchange helps reduce the trade deficit and has a direct impact on the
GDP. This has a positive impact the economic growth."
India is a developing country. Not all the population in India is literate, so, many small
industries are getting affected. Due to protectionism, the relations between two
countries have an adverse effect. Free trade, in my opinion, is a better choice because I
believe in 'Vasudhaiva Kutumbakam,' which means that the world is one family, I want
nations to be unified and live in harmony. They should have a give-and-take relationship
which will be ensured by free trade.