Protectionism and Trading Blocs

Protectionism and Trading Blocs


  • Understand protectionism as a government policy aimed at restricting imports to protect domestic businesses.
  • Identify tariffs, quotas, and subsidies as key forms of protectionist measures.
  • Discuss the primary arguments for protectionism such as protecting infant industries, safeguarding employment, and preserving national security.
  • Critically view the negative impacts of protectionism including limited competition, possibility of trade wars, and low consumer welfare.
  • Recognize that protectionism influences global trade and leads to decreased levels of globalisation.

Trading Blocs:

  • Recognize a trading bloc as a type of intergovernmental agreement where barriers to trade (tariffs and others) are reduced or eliminated for the participating states.
  • Identify various types of trading blocs including free trade areas, customs unions, and common markets.
  • Understand the benefits of trading blocs: improved market access, increased competition, better economies of scale, and enhanced political cooperation.
  • Note the drawbacks and challenges of trading blocs: it can divert rather than create trade, conflicts between members, and issues related to sovereignty and national autonomy.
  • Appreciate that trading blocs alter global trade patterns and can foster regionalization over globalisation.

In-depth Studies:

  • Explore case studies of protectionist policies like US-China trade wars.
  • Examine trading bloc examples like the European Union (EU), North American Free Trade Agreement (NAFTA), and Association of Southeast Asian Nations (ASEAN).
  • Use these examples to understand how protectionism and trading blocs can alter business decisions, strategy, and overall operations.

Revision Exercise Questions:

  • Explain how protectionism could impact a business.
  • How does participating in a trading bloc benefit an enterprise?
  • Discuss the potential challenges that a firm could face in trading blocs.
  • Critically analyse the impact of the US-China trade wars on their economies.
  • Evaluate the advantages and disadvantages of the EU or ASEAN to its member countries.

By understanding these concepts regarding protectionism and trading blocs, you can gain a thorough understanding of how they influence globalisation and the world business environment. It’s important to add depth to your answers by applying this knowledge to real-world examples and case studies. Always remember to critically analyse and evaluate in your answers, which will reflect a higher level of understanding.