ECO102H1 Chapter Notes - Chapter 34: Infant Industry Argument, Export Restriction, Import Quota
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ECO102H1 Full Course Notes
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Document Summary
Trade policy: a government"s policy involving restrictions placed on international trade. Protectionism: any government policy that interferes with free trade in order to protect domestic firms and workers from foreign competition. Tariff: a tax applied on imports of goods or services (purposely designed to raise the price of imported goods. Non-tariff barriers (ntbs): restrictions other than tariffs designed to reduce imports: i. e. import quotas and customs procedures that are deliberately more cumbersome than necessary. Free trade encourages all countries to specialize in producing products in which they have a comparative advantage: this specialization maximizes world production and hence maximizes average world living standards (measured by the world"s per capita. Free trade makes the country as a whole better off, even though it may not make every individual in the country better off. Firms that do no continuously innovate will fall behind foreign competitors and will succumb to the foreign competition sooner or later.
