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The Global Financial Crisis And Protectionism

678 words - 3 pages

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The Global Financial Crisis and Protectionism
QUESTION 1: Why do you think calls for protectionism are greater during sharp economic contractions than during boom periods?
* Protection of their own economic industries and to curb job losses
* Interdependent economy to lessen the impact of economic loss on food, fuel and property prices
* To protect job losses at national producers and possible bankruptcy
* Developing countries were concerned about safety rules and environmental concerns.
* In an emerging economy, a barrier to trade and blocking of imported goods due to safety and environmental reasons could spark ...view middle of the document...

QUESTION 3: During 2008-2009 many developed nations gave subsidies to their automobile producers. How might this have distorted international trade? Was this a reasonable thing to do given the circumstances?
* Yes – it gave the developed country an advantage over other unsubsidised countries
* Keeps finances in house and supports local business and local communities
* WTO doesn’t monitor the subsidies with such scrutiny like they monitor trade barriers / tariffs
* Yes, reasonable thing to do, otherwise automobile sector would have collapsed.
* Assisted sector to stay afloat.

“Protectionist measures, whether domestically oriented, like subsidies for auto manufacturers or financial firms, or internationally focused, like tariffs, quotas, trade-related safety or environmental regulations, or "Buy American" provisions, are likely to slow economic adjustment, increase costs to both consumers and producers, lower economic efficiency, and prolong the recession or even lead to a permanent slowdown of economic growth and prosperity.” (http://www.heritage.org/research/reports/2009/09/global-trade-liberalization-continues-but-risks-abound)

QUESTION 4: What might occur if a renewed economic slowdown triggered a wave of protectionist measures...

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