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FREE TRADE VS. PROTECTION

Dr. Yogita Beri

Assistant Professor,

Department of Economics,

Vasanta College for Women,

Rajghat Fort (B.H.U),

Varanasi- 221001.

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ARGUMENTS FOR FREE TRADE

  • Maximisation of world output
  • Optimum use of resources
  • Large factor incomes
  • Optimisation of consumption
  • Enlargement of market
  • Check on monopolies
  • Educative effects
  • Accelerated development

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ARGUMENTS AGAINST FREE TRADE

  • Absence of pre-requisites of free trade
  • Cut-throat competition
  • Lop-sided development
  • Excessive foreign dependence
  • International transmission
  • Import of harmful products
  • Emergence of monopolies
  • Detrimental for development

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PROTECTION

ARGUMENTS FOR PROTECTION

  1. Economic arguments
  2. Infant industry argument
  3. Elimination of distortion argument
  4. Key industries argument
  5. Diversification of industries argument
  6. External economies argument
  7. Employment argument
  8. Anti dumping argument
  9. BOP argument
  10. TOT argument

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  • Foreign capital inflow argument
  • Strategic argument
  • Revenue argument
  • Factor redistribution argument
  • Bargaining or retaliation argument
  • Keeping money at home argument
  • Conservation of national resources argument
  • Economic recovery

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II. NON ECONOMIC ARGUMENT

  • National defence argument
  • Special interest argument

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PROTECTION AND LESS DEVELOPED COUNTRIES

  • Growth of infant industries
  • Diversification of industries
  • Greater domestic capital formation
  • Inflow of foreign capital
  • Increase in government revenues
  • Improvement in TOT
  • Redistribution of factors
  • Creation of external economies
  • Enlargement of market
  • Off-setting of BOP deficit