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National Trade Restrictions (Advantages (Natural Monopoly, Profit shared…
National Trade Restrictions
Protectionism
an affirmative act taken by a country to block foreign countries entry to a domestic market
shielding and “protecting” the domestic market from larger multinational firms
Examples
Imposing tariffs on imported goods
Imposing quotas on quantity of imported goods
Advantages
Developing trust in the domestic market
Increased productivity from local firms
More opportunities for local firms
Competitive rivalry may spark productivity and economic efficiency
Disadvantages
Protectionism arm race
Short term gains
Geo-political tensions
Less competitiveness of international business
Less forgein direct investment
Resource Nationalism
Definition
occurs when a country decides to take all, or part of, its natural resources under state ownership
opposite of privatisation
Examples
Across Africa, governments have attempted to gain a larger share of the profits from mining
Mexican oil industry was nationalised
Case Study : America China Trade War
Advantages
Natural Monopoly
Profit shared with taxpayers
Positive Externalities
Welfare Issues
Government Investment
Disadvantages
Inefficiency
Government interference
Investment Issues
Case Study: Increases in Taxes on Mining in Ghana
Definition