In his 1958 study, “Economic Development” T. K. Whitaker urged the Irish Government to stop sheltering ‘behind a protectionist blockade’ and to accept instead the challenge of free trade. (i) Describe two trade protectionist measures. (ii) Discuss the economic arguments for and against a government introducing trade protectionist measures to protect ‘infant industries’.

In his 1958 study, “Economic Development” T - Leaving Cert Economics - Question b - 2017

Question b

In his 1958 study, “Economic Development” T. K. Whitaker urged the Irish Government to stop sheltering ‘behind a protectionist blockade’ and to accept instead the ch... show full transcript

Worked Solution & Example Answer:In his 1958 study, “Economic Development” T - Leaving Cert Economics - Question b - 2017

Step 1

Describe two trade protectionist measures.

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Answer

Trade Protectionist Measures

Tariffs
Tariffs are taxes imposed on imports of goods, which raise the price paid by consumers. This increase makes imported goods less attractive in comparison to domestically produced alternatives. Consequently, tariffs can stimulate demand for local production. Additionally, tariffs generate revenue for the government which can be utilized for public services.
Quotas
Quotas are limits placed on the quantity of a particular good that can be imported. By restricting supply, they tend to drive up the price of these goods, benefiting domestic producers who can sell at higher prices without foreign competition. However, quotas can also lead to market distortions and reduce consumer choice.

Step 2

Discuss the economic arguments for and against a government introducing trade protectionist measures to protect ‘infant industries’.

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Answer

Economic Arguments for and Against Trade Protectionism

For Protectionism

New Businesses
Establishing new industries may require a sheltered environment where they can grow and learn to produce goods efficiently. Protectionist measures can give them the necessary time and space to become competitive without the threat from established foreign firms.
Support for Domestic Employment
Protecting infant industries can help maintain and create jobs within the country. As these industries grow and develop, they can provide employment opportunities that contribute positively to the economy.

Against Protectionism

Inefficiency of Protected Industries
Infant industries may lack the incentive to innovate or improve efficiency if they are shielded from competition. This can lead to complacency and stagnation.
Higher Prices for Consumers
Protectionist measures typically result in higher prices for consumers as domestic producers can charge more without facing foreign competition. This can reduce consumer welfare and limit choices available in the market.