FORMATIVE ACTIVITY $32$: PROTECTIONISM

Two hotly debated arguments for protectionism include:

$$Protectionism saves jobs$$; and

$$Protectionism penalises lax environmental standards$($e$.$g$.$ penalise countries who do not conform to the same environmental standards$).$

US $242910$ SO$2$ AC$3$; SO$4$ AC$3$

$[$Total: $30]$

$1.$ Argue for and against the above statements in the Southern African context.

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$2.$ Discuss the following statement using a South African example to support your argument: $$The industry will continue to decline, and protection will simply prolong the process.$$

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$3.$ Analyse the following statement: $$It is argued that industry needs to be protected against imports, until it achieves a size where it is able to compete on an equal footing $($e$.$g$.$ economies of cost and scale$).$

$(4)$

$4.$ Reflect critically on the following statement: $$In many developing countries it is difficult to collect taxes and so governments impose import taxes $($tariffs$)$ on products in order to raise revenue $($the IMF estimated that on average import duties accounted for approximately $15\%$ of total government revenue for developing countries$).$

$(2)$

$5.$ Discuss the validity of the following statement: $$Governments sometimes impose protectionist measures to attempt to reduce import expenditure and thus improve the current account deficit.$$

$(4)$

$6.$ Finally, reflect on the following statement: $$Protectionism distorts comparative advantage leading to the inefficient use of the world$$s resources.$$

$(4)$