Higher protectionism policies: are you in favor or against?

We know that protectionism policies are used by countries for different reasons, one of them is said to protect local industries, and this is a good measure as far as carefully used.

But what happens when the local companies you are trying to protect start to be negatively affected? What happens when raw materials or imported elements that are needed in order to develop local products are also affected by these policies? What happens when local buyers can’t afford paying for the extra costs that the increase on prices represent due to protectionism (and not talking about luxury but yes about normal products)?

Are all these measures really accomplishing what they were used for?

Let see – for example, the Argentinean case – where the government decided to apply protectionism policies over almost everything that is imported into the country, as a consequence local producers and consumers are affected in a negative way. Some elements become scarce and their prices rise in a fast way.

Now, what happens when this measure affects products that are not even locally produced? The results are even worse.

On the other hand countries face the “answer” of the foreign communities that start taxing your local products when it comes the time to export them

So and coming back to my original question:  Higher protectionism policies: are you in favor or against?

Till my next post!

Best regards

Prof. Lic. Fernando Julio Silva

March 2012