Globalization vs. Protectionism

Running head : Globalization vs . Protectionism

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Introduction

Globalization refers to the internationalization of trade that focuses on markets throughout the world as opposed to trading with certain markets and regions . A company that produces for the global market would produce goods that are up to international standards and not those that are country or region specific . One of the characteristics of this model is the tendency to move towards any restrictions on trade . Thus globalization dispenses with tariffs quotas and price controls . Regional

blocs that promote preferential treatment are a hurdle to the attainment of a global market Consequently for the model to succeed all nations should embrace the policy of free markets that will promote the determination of price by the forces of demand and supply

Protectionism on the other hand works towards distorting the market prices by imposing tariffs , quotas , and price controls . Thus the market price tends to be higher than the global price for the good being sold This affects the demand and supply in the market depending on whether the country is importing or exporting the item . A number of countries that practice protectionism do so to give their local industries a comparative advantage . Most local industries are inefficient when compared to international markets and thus cannot compete against developed and established producers

In the global market the consumer always ends up winning as he gets the goods at the best possible price . This contrasts greatly with protectionism that forces up the price and thus disadvantages the consumer References

Gregory M (2003 ) Principles of Macroeconomics , Fourth Edition , Oxford Press

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