Examples of Economic Protectionism

The protectionism or economic protectionism refers to policies designed to protect products manufactured in a country from those manufactured abroad, usually through the imposition of limitations or tariffs on the supply of the latter, making them less profitable. For example: Venezuelan exchange control.

In this sense it is a doctrine opposed to economic liberalism, which defends free competition as a factor of healthy self-regulation of product prices. However, in certain situations of economic crisis, war or social and political conflict, protection mechanisms are usually implemented without regard, as a way to avoid the collapse of the productive sectors.

Types of protectionist measures

Usually the protectionist measures They consist of the application of taxes and tariffs to the imported product, either by quantity or by value, although in many cases the import of products belonging to weak sectors of the local economy (“protected” sectors) is even limited in quantity, preventing its massive entrance to the local market.

In regimes of type more interventionistProducts from protected areas are usually even prevented outright from entering the country, so that there is no competition between those made inside and outside the country.

Advantages and disadvantages of protectionism

Protectionism is a mechanism debated among economists and analysts of different tendencies, since some consider it detrimental in the maturation of the economy, since they generate an artificial demand that enriches the sector without it having to compete to win the favor of its clientele. Once protection is removed, the sheltered sector will be unable to meet the needs on its own.

On the other hand, many advocate the need for a strong state that prevents unfair competition and defends local sectors, which pay taxes and make social and political life in the country, from the rapacity of large transnational companies and international capital, whose global expansion pays little or no attention to health economy of poor or developing countries. After all, business competition, especially for small and medium-sized entrepreneurs, does not always take place in terms of equal opportunities.

Examples of economic protectionism

1. Common Agricultural Policy of the European Union and the United States. This is the name given to the agreement to protect the agriculture of these developed countries from those of the Third World. The idea is to prevent labor costs and cheaper prices from forcing the European and North American agricultural sectors to compete freely and lower their prices. This measure is under discussion in the World Trade Organization (WTO), since it prevents the equitable development of the poorest agricultural countries.
2. Venezuelan exchange control. The economic model imposed in Venezuela by the so-called Bolivarian Revolution led by the late leader Hugo Chávez, imposed on the importing sectors a currency rationing that forced them to request state permission to buy abroad. This model was intended to protect national production, but in the face of the collapse of the private company in that country as a result of the numerous expropriations and price regulations, the exchange rate became a model of gradual asphyxiation of the Venezuelan economy, considered at the beginning of the 21st century among the worst in the world.
3. The North American economy. The US economy is considered the most heavily protected in the world, despite its worldwide preach in favor of liberalism. This tradition comes from the nineteenth century, in fact Abraham Lincoln is commonly cited advocating the purchase of North American jackets over the British, because “… the United States kept the money.”
4. Export tariffs in Argentina. During the years of government of the Front for Victory (Kirchnerism) in Argentina in the first decades of the 21st century, a tariff was imposed on local meat exports (among the best in the world) that made the leakage of the product more expensive to protect now not to the large cattle ranchers, but to local meat consumers, unable to cope with international market prices.
5. Vietnamese production protection. This Southeast Asian country has protected, according to the Global Trade Alert (GTA) a total of 946 product lines, which constitutes a world record in protectionism.