What is meant by Trade restrictions? Why is trade restriction important for the protection of infant industries?
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Since economists do not favor trade restrictions, and this is a course in Managerial Economics, make the case as an economist against trade restrictions for Infant Industries. Are there any arguments for trade restrictions that most economists would support
Economic theory says that trade without restrictions leads to higher standards of living for all. Ha-Joon Chang believes the infant industry strategy is better. Read Ha-Joon Chang: Protectionism the truth is on a $10 billS. Explain the infant industry argument. According to Chang how does trade protection lead to faster growth for developing countries?
The main explanation for why the cheap foreign labor argument is a poor reason for restriction international trade is that:
A) Workers who get paid less tend to have lower productivity than those who get paid more.
B) All firms and workers gain when there are no restrictions on international trade.
C) Infant industries such as steel automobiles need to be protected.
D) Specialization and free trade usually raise the prices of all traded goods, so that the workers get paid more.