Hello! Thanks for reading my first article and your feedback. Some of you raised interesting questions (I appreciate your email. It is also possible to post comments on my blog directly) and I'm combining them here so I can respond to them all at once:
Q: It is possible to gain from protectionism if the shrinkage in the total size of the pie is more than offset by the gain by your percentage gain, is it not?
A: If you're talking about boosting GDP, it's possible but that's more of a short run boost. One driver of economic growth is innovation, which is discouraged under protectionism. Even in the short run, you'll be battling inflation.
Q: What will happen to Canada?
A: Given that the U.S. is our largest trade partner, we'll be in for a rough ride if they start discouraging imports. Our lumber export's already suffering as is. From a global perspective, I can see that trading blocks will boycot each other. What I mean is, NAFTA members will engage in trade with its own members, the EU will engage in trade with its own members, etc.
Q: If a company is protected, should I invest in it? Government support makes it a safe investment.
A: A company (or industry) needs protection because it can't survive otherwise.
Posts
No Responses to “Response to questions on protectionism”
Leave a Reply