IB Economics Topic 4.3.2 Arguments Against Trade Protection Revision Notes (SL/HL)

IB Economics Topic 4.3.2 Arguments Against Trade Protection Revision Notes (SL/HL) | RevisionDojo

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Definition

Trade Protection

When the government intervenes in international trade by imposing restrictions to reduce free imports.

Trade protection may offer short-term benefits to some stakeholders while leading to losses for others.
Regardless, it leads to inefficiencies and negative outcomes in the long run for the economy.

Hence, there are many arguments against trade protection in order to encourage free trade amongst nations.

Arguments Against Trade Restrictions

Misallocation of Resources

Trade protection leads to an increase in inefficient production from domestic firms, causing a welfare loss as it leads to a waste of scarce resources.
Therefore, there is a misallocation of resources.

Retaliation

Trade protection can trigger retaliatory measures from other economies (countries), escalating into a chain reaction of protectionism policies being imposed, leading to trade wars.
This can harm multiple industries in both economies and reduce overall economic welfare by causing the misallocation of resources to exponentially increase.

Increased Costs

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Definition

Paywall

(on a website) an arrangement whereby access is restricted to users who have paid to subscribe to the site.

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Duis aute irure dolor in reprehenderit

Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

Note

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam quis nostrud exercitation.

Excepteur sint occaecat cupidatat non proident

Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione voluptatem sequi nesciunt. Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit.

Tip

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris.
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum.

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Definition

Trade Protection

When the government intervenes in international trade by imposing restrictions to reduce free imports.

Trade protection may offer short-term benefits to some stakeholders while leading to losses for others.
Regardless, it leads to inefficiencies and negative outcomes in the long run for the economy.

Hence, there are many arguments against trade protection in order to encourage free trade amongst nations.

Arguments Against Trade Restrictions

Misallocation of Resources

Trade protection leads to an increase in inefficient production from domestic firms, causing a welfare loss as it leads to a waste of scarce resources.
Therefore, there is a misallocation of resources.

Retaliation

Trade protection can trigger retaliatory measures from other economies (countries), escalating into a chain reaction of protectionism policies being imposed, leading to trade wars.
This can harm multiple industries in both economies and reduce overall economic welfare by causing the misallocation of resources to exponentially increase.

Increased Costs

Definition

Paywall

(on a website) an arrangement whereby access is restricted to users who have paid to subscribe to the site.

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Note

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam quis nostrud exercitation.

Excepteur sint occaecat cupidatat non proident

Tip

Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris.
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum.

1. Introduction to Economics2 subtopics

2. Microeconomics12 subtopics

3. Macroeconomics7 subtopics

4. The Global Economy10 subtopics

IB Economics 4.3.2 Arguments Against Trade Protection Notes

1. Introduction to Economics2 subtopics

2. Microeconomics12 subtopics

3. Macroeconomics7 subtopics

4. The Global Economy10 subtopics

Arguments Against Trade Restrictions

Misallocation of Resources

Retaliation

Increased Costs

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Excepteur sint occaecat cupidatat non proident

Unlock the rest of this chapter with a free account

Arguments Against Trade Restrictions

Misallocation of Resources

Retaliation

Increased Costs

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Excepteur sint occaecat cupidatat non proident

Unlock the rest of this chapter with a free account