Are Protectionist Policies Beneficiak to Business?
Street−Street: Taking Sides: Clashing Views in Management, Third Edition
IV. Environmental and International Management Issues
18. Are Protectionist © The McGraw−Hill Taking Sides: Clashing Views in Management, Third Edition Policies Beneficial to Companies, 2010 Business?
101
ISSUE 18
Are Protectionist Policies Beneficial to Business?
YES: Ha-Joon Chang, from “Protecting the Global Poor,” Prospect Magazine ( July 2007) NO: Robert Krol, from “Trade, Protectionism, and the US Economy: Examining the Evidence” in Trade Briefing Paper No. 28, The Cato Institute (September 16, 2008) ISSUE SUMMARY YES: In support of the idea that protectionist policies help business, Ha-Joon Chang focuses attention on developing industries in poor countries. Further, he describes and advocates historical protectionist policies from around the world. NO: In the “No” selection, Robert Krol describes the findings of various economic studies of international trade. The areas that he surveys include the effect of trade on employment and wages as well of the costs of trade restrictions. He concludes that overall the benefits from protectionist policies are overshadowed by their negative effects.
t is understandable that a country would want to take care of its own citizens first. To this end, many countries adopt policies that prop up domestic industries and limit foreign organizations from engaging in business in their country. Generally speaking, such policies are typically labeled “protectionism.” A formal definition of protectionism is the “National economic policies designed to restrict free trade and protect domestic industries from foreign competition” (S. Tamer Cavusgil, Gary Knight, and John R. Riesenberger, International Business. 2008. Pearson, p. 620). Protectionist policies include governmental actions such as tariffs (taxes on imported goods), quotas (limits on the amount of goods that can be imported), subsidies (government support of certain domestic businesses or
IV. Environmental and International Management Issues
18. Are Protectionist © The McGraw−Hill Taking Sides: Clashing Views in Management, Third Edition Policies Beneficial to Companies, 2010 Business?
101
ISSUE 18
Are Protectionist Policies Beneficial to Business?
YES: Ha-Joon Chang, from “Protecting the Global Poor,” Prospect Magazine ( July 2007) NO: Robert Krol, from “Trade, Protectionism, and the US Economy: Examining the Evidence” in Trade Briefing Paper No. 28, The Cato Institute (September 16, 2008) ISSUE SUMMARY YES: In support of the idea that protectionist policies help business, Ha-Joon Chang focuses attention on developing industries in poor countries. Further, he describes and advocates historical protectionist policies from around the world. NO: In the “No” selection, Robert Krol describes the findings of various economic studies of international trade. The areas that he surveys include the effect of trade on employment and wages as well of the costs of trade restrictions. He concludes that overall the benefits from protectionist policies are overshadowed by their negative effects.
t is understandable that a country would want to take care of its own citizens first. To this end, many countries adopt policies that prop up domestic industries and limit foreign organizations from engaging in business in their country. Generally speaking, such policies are typically labeled “protectionism.” A formal definition of protectionism is the “National economic policies designed to restrict free trade and protect domestic industries from foreign competition” (S. Tamer Cavusgil, Gary Knight, and John R. Riesenberger, International Business. 2008. Pearson, p. 620). Protectionist policies include governmental actions such as tariffs (taxes on imported goods), quotas (limits on the amount of goods that can be imported), subsidies (government support of certain domestic businesses or