Trade Protectionism is government measures to protect domestic industries from foreign competition in order to market the local industry can grow healthily (Makroekonomi STPM,2010) This security policy is a step to national governments to protect domestic industries in order to increase trade in the country and increased the economic stability of a country. Protectionism represents any attempt to impose restrictions on trade in goods and services. The aim is to cushion domestic businesses and industries from overseas competition and prevent the outcome resulting from the inter-play of free market forces of supply and demand (Geoff Riley, 2012)
Important protectionism can come in many forms (Geoff Riley, 2012).there are few …show more content…
There are some reasons why most countries adopt protectionism policies. There is National defence, Protecting Young Industry, Dumping Policy against Foreigners, Optimum tariff argument and independent reason.
2.1 National defense.
One of the reasons why most countries adopt protectionism policies because of rice industry and the weapon industry should be protected by the government as crucial in emergencies, such as when the country was attacked by another country. Restrictions such as tariffs imposed to ensure these industries to thrive and be able to produce an adequate supply to the country. The national defense argument ignores possibility of purchases from friendly countries during the emergency (Cletus C, Alec K, Geoffrey E. 1988).
2.2 Protecting Young Industry.
Young industry is a new industry that is still growing. Compared with developed industry, the young industry has low competitiveness. Industrial output rose not comparable in terms of quality and price. Young industry still does not enjoy the economies of scale and cost of production was higher than import goods industry. Young industry still has not got the full confidence of the public. Market remains limited and its production capacity is still below the optimum level. Restrictions on the entry of imported goods such as import tariffs and quotas imposed to allow industry to develop local youth and the ability to compete with foreign