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Free Trade vs. Protectionism

The document discusses the concepts of free trade and protectionism. Free trade refers to international exchange of goods and services without restrictions between countries. It provides benefits like specialization, efficient use of resources, and expanded markets. However, it can also lead to problems like dominance of infant industries and unemployment. Protectionism allows governments to promote domestic producers through tariffs and limits on foreign goods to protect local industries, but it can create monopolies and reduce competition. The document also provides an overview of Nepal's foreign trade, including its direction, composition and problems, as well as the status and challenges of foreign employment from Nepal.

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Prabin Khanal
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41 views18 pages

Free Trade vs. Protectionism

The document discusses the concepts of free trade and protectionism. Free trade refers to international exchange of goods and services without restrictions between countries. It provides benefits like specialization, efficient use of resources, and expanded markets. However, it can also lead to problems like dominance of infant industries and unemployment. Protectionism allows governments to promote domestic producers through tariffs and limits on foreign goods to protect local industries, but it can create monopolies and reduce competition. The document also provides an overview of Nepal's foreign trade, including its direction, composition and problems, as well as the status and challenges of foreign employment from Nepal.

Uploaded by

Prabin Khanal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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MEANING OF FREE TRADE

• The concept of free trade was developed by classical economists Adam Smith, Ricardo and
others. Free trade is the international exchange of goods and services without any restriction or
barriers. Free trade refers to that state in which there is unrestricted exchange of goods and
services among the various countries of the world. It is the policy of non-interference by the
government in foreign trade.
• According to Adam Smith, “the term free trade is used to denote that system of commercial
policy which draws no distinction between domestic and foreign commodities and, therefore
neither imposes additional burden on the latter nor grants any special favors to the former.
ARGUMENTS IN FAVOR OF FREE
TRADE/ADVANTAGES OF FREE TRADE

1. Benefit of specialization: Free trade permits to specialize in products which they can produce relatively efficiently.
2. Maximum utilization of resources: Free trade ensures proper and most efficient use of productive resources of the
country and of the world as a whole.
3. Expansion of market: Free trade widens the market for goods and services. Due to free trade, any market place in a
world can be a market for given goods.
4. Benefit to consumer: Free trade increases the choice of the consumer and provides quality goods at reasonable
price.
5. Economic development: Free trade promotes economic development by encouraging division of labor, and
specialization, widening the market size, stimulating healthy competition for promoting efficiency, etc.
6. International co-operation: Free trade promotes co-operation and mutual understanding among the nations
ARGUMENTS AGAINST FREE TRADE/DISADVANTAGE OF FREE
TRADE

1. Dominates infant industries


2. Unhealthy competition
3. Creates dependency
4. Possibility of unemployment
5. Harmful to underdeveloped countries
6. Trade of harmful products
PROTECTIONISM

Home Country: Export—Providing


facilities(Encouraging Export)
Import—Barrier/ Restriction Imposed
WHAT IS PROTECTIONISM?

Protectionism is the practice of following protectionist trade policies. A protectionist


trade policy allows the government of a country to promote domestic producers, and
thereby boost the domestic production of goods and services by imposing tariffs or
otherwise limiting foreign goods and services in the marketplace.
According to J.L Hanson, “ Protection means the imposition of duties on imports
inorder to protect home producer of these commodities by making foreign produced
goods and exempting native goods of a similar character with the intention of
preventing the market the country concerned.”
ARGUMENTS IN FAVOR/ADVANTAGES OF PROTECTION POLICY

1. Development of infant industries


2. Development of basic and large scale industries
3. Proper utilization of resources
4. Creates employment opportunities
5. Self sufficiency
6. Reduces supply of domestic currency
ARGUMENTS AGAINST OR DISADVANTAGES OF PROTECTION

1. Creation of monopolies
2. Loss to consumer
3. Decrease in competitive capacity
4. Unequal distribution income
5. Reduces foreign relation
COMPOSITION OF NEPALESE FOREIGN TRADE
DIRECTION OF NEPALESE TRADE
PROBLEMS OF FOREIGN TRADE (VVI)
Status of Foreign Employment
CHALLENGES/DEFECTS OF FOREIGN
EMPLOYMENT

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