Argument for protections/advantages/ merits of protection:
Governments resort to some manner of protective measures to safeguard the national interests. When an industry is threatened by increasing global competition, Govt. takes the protactinium. There are some arguments for protection policy. These are as follows-
1. Infant industry: Industry which is in primary position is known as infant industry. This argument asserts that a new industry having a potential comparative advantage may not get started in a country. If it is not given temporary protection against foreign competition. An established industry is normally stronger than an infant one. Because of economic condition, experience, market power, resource position. So govt. needs to impose protection tools then those infant industries can get the opportunity to develop.
2. Diversification: An economy that depends on a very limited number of industries is subject to many risks. So it is necessary to have a diversified industrial structure for an economy to be strong and reasonably self-sufficient. Changes in political relations and international economics conditions may put the country into difficulties. In this case protection is necessary.
3. Improving balances of payment: This is very common ground for protection. By restricting imports, a country may try to improve its balance of payment position. Developing country may faces problem of foreign exchange shortage. It is necessary to control imports so that foreign exchange will be available and by increasing export the balance of payments can be improved.
4. Improving the terms of trade: it is argued that the terms of trade can be improved by imposing import duty or quota.
5. Anti-dumping arguments: sometimes foreign industries sell their products at a very low cost to capture the market. They do it to destroy the domestic industries market and monopoly business. It is called dumping. Because of protection they cannot sell their product at a lowest price. Their product price increase because of tariff and entered limited by quota.
6. Employment argument: because of protection the domestic industries get chance to develop themselves. They increase their investment and expand their business for that reasons new employment opportunity create. It is also increases the standard of livings.
7. Bargaining: protection helps the importer to bargain with the exporter about the price. The importer country impose high rate of tariff and quota for the product. If exporter country does not sell their product at reasonable price of if they want to impose unethical conditions. Govt. may stop import through the protection which help in bargaining.
8. Key industry: it is also argued that a country should develop its own key industries. Because the development of other industries and the economy depends a lot on the output of key industries. Protection helps to develop key industry.
9. Keeping money at home: when we buy manufacture goods abroad we get the goods and the foreigner gets money. When we buy the manufactured goods at home we get both goods and money.
10. National defiance
11. Economic stability
12. Expand the size of home market.
13. Equalization of costs of production.
Finally we can say that these are the arguments favorable for protection.
