The essence of the policy of protectionism and free trade

Historically, there are various forms of state protection of national interests in the struggle for world markets, which determine trade policies of individual countries. The most well known policy of protectionism (defense) and free trade (complete freedom of trade).

With a light hand of Adam Smith protectionism XVI-XVIII centuries. became known as mercantilism. Although today there are two different concepts - protectionism and mercantilism, but economic historians regard to the era of XVII-XVIII centuries. put an equal sign between them. A historian P. Bayroh said that since the 1840s. Mercantilism was called protectionism.

In the XVIII century. Protectionism was the dominant doctrine, recognized by leading European countries: Great Britain, Prussia, Austria and Sweden. In the XIX century. replaced protectionism came doctrine of free trade, was initiated by the United Kingdom.

The widespread shift to a policy of protectionism began in continental Europe in the late XIX century., After a protracted economic depression 1870s-1880s. After that depression is over, and in all countries that conducted this policy has been a rapid industrial growth. In the U.S., protectionism most actively carried out in the period between the end of the Civil War (1865) and the end of the Second World War (1945), but implicitly continued until the end of 1960.

In Western Europe the widespread transition to a rigid protectionist policy took place at the beginning of the Great Depression (1929-1930 gg.). This policy continued until the end of 1960., When, in accordance with the decisions of the so-called "Kennedy round" the United States and Western European countries have implemented a coordinated liberalize its foreign trade

Protectionism - the policy of protecting the domestic market from foreign competition through certain restrictions: import and export tariffs, subsidies and other measures. On the one hand, such a policy contributes to the development of national production.

Protectionism is seen as a policy that encourages economic growth in general, as well as industrial growth and welfare of the country, conducting such a policy.

The theory of protectionism, argues that the greatest effect is achieved by:

1) when the uniformity of application of import and export duties, subsidies and taxes in relation to all subjects, with no exceptions;

2) with an increase in fees and subsidies as the depth of processing and the complete abolition of duties on imported raw materials;

3) for the continuous import duty of all goods and products, either already produced in the country, or those whose production is, in principle, it makes sense to develop (usually at a rate of at least 25-30%, but not at a level that is prohibitive for any competing imports);

4) failure of customs taxation of imports of goods whose production is impossible or impractical (eg bananas in northern Europe).

Types of protection:

selective protectionism - the protection of a particular product, or against a particular state;

industry protectionism - protecting a particular industry;

collective protection - mutual defense alliance into a united country;

hidden protectionism - protectionism by non-customs practices;

local protectionism - protectionism products and services of local companies;

green protectionism - protectionism by environmental law.

The task of protectionist policies - encouraging the development of national economy and its protection from foreign competition by imposing high tariffs on goods imported into the country or restrictions (bans) import products.

Advocates of protectionism claim that the countries of Europe and North America were able to hold its industrialization in the XVIII-XIX centuries. mainly due to protectionist policies. They point out that all the periods of rapid industrial growth in these countries coincided with periods of protectionism, including a new breakthrough in economic development that occurred in the West in the middle of the XX century. (Creation of a "welfare state"). In addition, they claim, like the mercantilists XVII-XVIII centuries. That protectionism promotes a higher birth rate and a more rapid natural growth of the population.

In economic theory, the protectionist doctrine is the opposite doctrine of free trade - free trade, the dispute between the two doctrines continued since Adam Smith. Proponents of protectionism criticize the doctrine of free trade from the standpoint of growth of national output, employment and population dynamics. Opponents criticized him protectionism in terms of freedom of enterprise and consumer protection.

Critics of protectionism usually indicate that customs duties raise the cost of imported goods in the country, from which consumers can suffer. In addition, an important argument against protectionism is a danger of monopolization: protection from foreign competition may help monopolists to establish full control over the domestic market. An example is the rapid monopolization of the industry in Germany and Russia in the late XIX - early XX centuries., Which occurred in the conditions of their protectionist policies.

Free trade (English free trade - free trade) - the direction in economics, politics, and business practices that proclaims the freedom of trade and non-interference of the state in the sphere of private life of the community.

In practice, free trade usually means no high export and import duties, as well as non-monetary barriers to trade, such as quotas for the import of certain goods and subsidies for local producers of certain products. Proponents of free trade are the liberal parties and trends; the opponents are many left-wing parties and movements (socialists and communists), the defenders of human rights and the environment, as well as trade unions.

The main promise of "free trade" was originated in the XVIII century, the need for distribution of excess capital imported into the economy developed countries (England, France, then the United States) in order to avoid the depreciation of money, inflation, and also to export goods produced in member countries and colonies.

The arguments in favor of protectionism are economic (trade hurts the economy) and moral (the effects of trade could help the economy, but they have other harmful effects on regions) aspects, but the general argument against free trade is that it is a disguised colonialism and imperialism.

Moral category in the broad sense to include the problem of income inequality, environmental degradation, child labor and poor working conditions, the race to the bottom, wage slavery, the increase in poverty in poor countries, damage to national defense and forced cultural change. Rational choice theory assumes that people often consider only the costs that they bear in decision-making, rather than costs, which can carry more.

Some economists try to work out a neutral view on protectionism and free trade, considering their impact on the growth of national wealth through the analysis of gains and losses.

In their view, the benefits of the use of export and import duties may be contrasted production and consumer losses arising from distortion motives of both producers and consumers.

However, such an event is possible, and when the benefits from improved terms of trade after the introduction of foreign tax exceeds the loss of her.

The main prerequisite for improving the terms of trade from the introduction of fees - the presence of the country's market power, ie, the ability of one or a group of sellers (buyers) in the country to influence the

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