For a long period, economic protectionism has been employed by various mainstream economies in a bid to protect their economies against harsh economic climate. In this case, countries have made efforts to shield their economies from recession by the use of this tool. Economic protectionism has been practised for a long period by countries in the West. Economic protectionism policies have certain advantages to the countries that have embraced the policies; however, they also have other implications that may not be good for the economy.
The policies of economic protectionism include the policies that protect domestic industries of a country from the impacts of competition from foreign competition. Increased globalization in this age has significantly affected business. This is because it has opened up markets, as well as ideas in such a way that has pushed a high increase in competition among producers in various countries.
The rise in competition has led to some countries producing items that would be cheaper in other foreign countries and vice-versa. This has led to the need for countries facing this kind of competition to shield their businesses from the impacts of competing foreign products. Different countries have taken various economic protectionism approaches, with the major approaches being subsidies, tariffs, imposition of quotas, as well as other restrictions such as licensing of foreign businesses. The most common economic protectionism approach that countries have embraced is the Government levied taxing system for imported items and products (Hartel, 2006).
The rationale behind why Governments engage in economic protectionism may not be fully exhausted, because different countries engage in protectionism for various purposes, In many of the cases, protectionism policies have served their purposes well in the local economies, though they often are associated with other challenges particularly with regard to affecting the trade relations between countries. A number of countries have had economic conflicts over the nature of economic protectionism that they have undertaken with their trade partners. The recent example is the trade conflict that is there between the United States and China.
France has stood out as one of the countries that have consistently maintained protectionism policies through putting up legal frameworks that protects its national companies from being owned by foreign companies of individuals. For instance, in the year 2005, France developed their version of the ‘Exon-Florio law’ that limit foreign take-overs in various areas of its economy. The areas included those of information technology security, gambling, bugging devices, and other technologies that are used for civilian and military purposes. This policy has worked well for the country (Grunzel, 2011).
China has also been found to take economic protectionism policies with regard to a number of trade sectors of its economy. Unlike other countries, China has had a rough ride with many countries that it trades with including the United States. As at now, countries such as Brazil, Russia, Indonesia alongside USA have raised complains of the approaches that China has taken on trade. China has been said to limit importation of agricultural products, it has also been accused of dumping of agricultural products to other countries. The recent accusation it faced was from Argentina, which has developed effective anti-dumping policies.
In overall, economic protectionism policies are a reality today even with the increasing number of trading blocks on regional basis. The paper has made it clear that as much as the economic protectionism policies have advantages to the local economies implementing them, they often have negative impacts to trade relations between countries. In its context, it has explored realistic examples from industrialised countries such as China, and the United States of America.