There has been a lot of buzz lately about the soon-to-become President of the USA, Barack Obama, and his views on “protectionism”. Protectionism has been by the republicans labeled as ‘dangerous’, and most people believe this has a negative effect on developing countries. I decided to do some research on the subject and this is the small amount of information I came up with!
Protectionism is a political set of measures put in place to protect one’s countries companies and farmers from competition. It is also a general view on how trade with developing countries work and how it affects domestic economy. That’s a shortened and pretty basic explanation, but it is generally what protectionism is about.
Why would one want to limit export from other countries? Developing countries can cheaply produce food and commodities, therefore exporting it at a highly competitive price. This can prove lethal to domestic factories and farmers whom rely on being able to sell their products at a higher price.
Take the European farmers as an example. They are subsidized by the European Union (EU) to produce meat and dairy products. They overproduce, sell it to European countries at extreme prices, earning a lot of money. The surplus products are sold at dumped prices to the developing countries, again resulting in great profits to Europe.
Protectionism claims that if we introduced competition into the European market it would drain the farmers, eventually killing them all (not literarily speaking). So by setting up trade barriers (often in the form of tariffs) and limiting developing countries possibilities to export to us, we keep farming (and extreme pricing) alive.
This is what a lot of people are worried about when it comes to Barack Obama’s, as well as the Democrats, politics. I hope this short article gave you a slight insight into the matter, as it definitely gave me a lot to research about it!