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why implement protectionism decline this ② if a...

why implement protectionism decline this ② if a large sunset industry is in due to being outcompeted by foreign alternatives will lead to large scale structural unemployment -gor int to slow or prevent this ② protecting infant industries fill they have Eas to be competitive with foreign production unlikely capital markets in developed countries where access to make efficiency achievable from the outset ③ to avoid risk of overspecialization , Government may protect some industries to ensure econom's diversity # anti-dumping measures 8 raise you revenue (especially to counter purchase of cheap de-merit imports) WHY NOT ? · ↓ consumer producer less choice of + pricing a comp , inefficiency which hinders innovation - - - - - Economic Integration process by which countries reduce or eliminate trade barriers to - increase economic interdependence and efficiency stages ⑳ ⑧ ① ⑧ g Free union common marketmonetarye union' full integration " trade custom Preferential trade area , I Union Deep integration ea monetary/ForgoMonetary member nations elimi-FTA + Common Custom + I agreements " ! ente thriftsan e bloc that reduces external free movement unified trading but certain not all of resources policy+ tariffs on , maintain individual barriers goods trade policies with Ceg: labor) others I shared currency ! Bloc : of countries joined to increase trade Trading a group monetary union advantages : Disadvantages : for Economic & controlled so cannot use monetary policy within common market) IR centrally (f trade · · no XR fluctuation needs to speculation change (currency) domestic competitiveness · not as prone · no altering Xi to affect import/export transaction costs · no cost , efficiency and increasing output Trade creation : production shift from high to low improving WTO py 34/35 Rates&f look The depth Exchange Systems Fixed against other currency ,. 1 XR value of currency to by the central bank peg intervention downwards Devaluation : Re-pegged ↳ Revolution : repegged upwards. market forces versa. 2 Floating - determined by falls appreciation ! Vice or t in demand - purchasing power , ↳ Depreciation ↑ : in supply of country IR Remittance (out import demand , , Factors of demand: Speculation , Supply A supply demand diagram. 3 intervention to keep price of currency within stipulated band government  Fixed Need for constant · sells for - f Malaysian C B.. USD another priceM monitoring : USD currency to increase supply - S USD the market it means SusD , * In current account surplus , undervalued. Exports are is currency profit off & too cheap and they could 21 XR. - other countries may see artificially low XR and a protection ---- - ⑳ · · ez Pegging & & IUSD : 3 8. RM I I constraint domestic inflation - upon · I ↳ imported costs don't fluctuate & PusD no speculation · , DUSD need for sufficient reserves I · ↓ · intervention has other impact NAD (contractionara a eg : ↑IR to peg BUT az QuSD · IN CR for current will have account to be devalued deficit , XR Managed of guar price USD floating in Syvan · current account should be Syran balanced as it will self-correct ↓ - current account defect P - - - - ↳ Chinese CB sell Q ND for currency as Exports, ND for imports yuar reserves p ---- ger ② XRN to increase I ③ ExportMy correction via price I I supply $ import mechanism · totirnstoon I I I I doesn't always self correct ! I ! · cost push imported inflation ① Y, O2 Dyvan Pof yuan higher XR/strong currency Low / weal currency · less expensive imports - for exports downward inflation by · good demanded domestically on pressure · to be more · imports $$ so more goods · pushes domestic firms more employment efficient to stay comp ↳ imports$$ so ↑COP and cost-push inflation to ↳ damage export industries when importing eg : China owns many us bonds andN sell and deplete the * Economis leverage price so the , us won'ta tariffs So much.  How do intervene ? governments Reserves : increase demand : use foreign currency reserves to buy own currency , reducing supply and AD increase currencies using own ↑S supply : buy other Interest Rates : investment ND for own currency attract foreign = ↑ IR = ↓ IR = Vice versa ↑S payments. international Balance of Record of transactions + income. Current Account : trade in gls 1 credit) (debit) in goods (visible , tangible) - export - import a) Balance of trade (invisible intangible) - export import - services b) Balance of trade in , income (profit interest , dividends) c) investment Income/net , changes hands. made between countries when no g/s transfers-remittances payments d) current - ↳ people receiving money Put no work in for it account-transfer ownership of capital goods capital of. The 2 debt forgiveness leaving : gained or lost by migrants entering or eg a) capital transfers - goods and assets = debit land , rights to resources , patents etc financial assets b) produced - nor nor , financial domestic financial assets. 3 The account-net change in foreign ownership of another investor has significant mterm assets in economy 9) Direct purchase - Investment : of of interest/influence over foreign entity degree. in financial instruments like stocks bonds, short-term investments b) Portfolio Investment : to make a return without direct control 2) and foreign currencies Reserve assets : gold and omissions + financial net error current account = Capital it balance ? why must be spent hold SED which can or goods then foreigners import) Export , invest. from St or Deficits plus underutilized resources protectionist measures · Depletion of reserves · comp from countries with defects · harm export foreign debt · · inflationary pressure due to appreciation · reduce investor confidence (depreciation)  consequences of an imbalance (current acc deficit) becomes too great it can effect Sovereignty · if foreign ownership , investors out currency will depreciate sharply ↳If pull , attract foreign · if imports > exports , to keep currency from depreciating NIR , to investment BUT lending is expensive , effective D + @ ↓ AD , The interest to · Endebtedness : chinn boys US Bonds. us must pay cost High level of debt = downgrade in credit ratings large opportunity · China creating but can cause inflationary pressure · VIR to depreciate currency surplus or deficit How to observe magnitude of 1. look at value (in usp) of nation's GDP 2. percentage account defect current Reducing - a o AD ↓ economic growth (x-m) o · · Boost domestic employment dom consumption promote limited to by the NO > - be protectionism may 2 Expenditure Switching : comparative advantage. distortion of Neg : retaliation , inefficiency , Exchange rate policy marginal propensity to impo an. 2 Expenditurereducingthe sizeof teal depends the on. 3 prices FDI and then because attract ↳ would backfire through ↑IR appreciate Currency A > - imports. 4 supply-side policies current acc defect, With country's international competitiveness. a #Solution increase a plus AD that they have comparable advantage -help export a. in a good they should specialize Learner Condition The Marshall deficit current ac how successful a depreciation in XR will be improving in a fells us PED exports + RED imports >1 it will if : better deficit before if gets Even after depreciation : the may get worse after a depreciation , the deficit deepens Xt y ac = Jcurve current + inelastic in D - as Q contract bound positionBalance ~ both in LR X M become -MICMET + with time Y-2 s expireandia entireless : , plastic as time following depreciation W · ML