CRITICAL THINKING ASSIGNMENT #
The paper should answer the following questions in a critical thinking way:
1. Select a country of your choice and explain the role of government protectionism
in business activities and economic growth?
2. What are the different viewpoints about the government protectionism?
3. Include a discussion on the current increase of protectionist pressures in the
Your well-written paper should meet the following requirements:
4 pages in length (Abstract+body+Conclusion).
Support your analysis by referencing and citing at least three scholarly sources in
addition to embedding course material concepts and principles.
Selected Country: Australia
In this modern world of businesses, different rules and regulations have paved the way for governments to use protectionist policy with the sole purpose to boost and offer support to their local businesses. Government protectionism offers local business organization to produce and deliver various products and services within the boundaries of the country, whereas government either restrict foreign import or imposes taxes on imports as a way to reduce foreign imports and to boost local economy, as a result.
Many countries have decided to change their way of doing business both at local and international level, especially because of the developments within the process of globalization, leading towards new and emerging economies of the world (Commission, 2017). Therefore, the major purpose of this paper is to talk about the role of government protectionism in business activities and economic growth of Australia, whereas offering various viewpoints regarding government protectionism and discussing current increase of protectionist pressure in the global economy, as major part of this paper.
Role of Government protectionism in business activities and economic growth of Australia #
Government protectionism is playing vital role in business activities and economic growth of Australia. It is helping the country to promote its local industry to provide more employment opportunities to its public and to support the local industry to compete the international markets and brands.
The federal government of Australia is signing various free trade agreements but at the same time, it is restricting trade and limiting imports in the country. The Australian government is aggressively targeting steel and aluminum industry to make Australia a self-sufficient nation in these sectors (Rynne, 2018).
Australia is increasing anti-dumping investigations and a two-fold increase in this mission is seen in 2017. The Productivity Commission states that the primary intentions of these steps are to reduce the consumer purchase power by increasing costs and to reduce the competitive pressures at the same time. The country is trying to reduce the resource use in order to protect its core resources through these initiatives.
Likewise, the federal government of Australia is increasing tariffs to increase the costs of import goods in order to limit or restrict imports. Another intention behind massive increase in tariff is to disrupt international supply chains. It is good for the country but it is not good for consumers and other people because it would damage the stakes of producers, workers, and consumers collectively (Turnbull, 2018).
According to the latest report of The Productivity Commission, for every A$1 increase in tariff, there is an increase in costs of import goods and it adds pressure to the economy of the country. Likewise, the report states that economy of the country falls by A$0.64 by this increase.
In the same manner, it is effecting the GDP of the country in negative manner. The report states that GDP of Australia would face a decline of one percent each year if the same increase in tariff is observed over few years. It would reduce the purchase power of the public and if a person spends A$2,500 for goods and service fortnight, he may need to spend an extra A$100 fortnight to attain these facilities under the light of increased tariff.
Different viewpoints about the government protectionism in Australia #
The Productivity Commission of Australia considers government protectionism dangerous for Australian public, producers, and workers. The primary reason behind this fear is that increase in tariff on imports would increase the price of supply chain for producers.
The producers would not able to make goods at reduced or optimal rates. Therefore, they would increase the price of goods and services and an increase in prices would directly influence the purchase power of the public in negative manner.
Similarly, the salaries of the workers would not increase due to increased financial pressures on production organizations. In short, government protectionism would cause more harm than benefit to workers in Australia (Lieto, 2018)
On the other hand, the federal government of Australia believes that government protectionism would help to support the local industry and it would enable them to improve the quality of their goods and services to compete the international markets.
The global supply chains are not supporting government protectionism in Australia and they are considering it wrong strategy of the federal government of Australia to increase tariff at one hand and to talk about free trade agreements at the other hand.
Current increase of protectionist pressure in the global economy #
According to recent report conducted by the World Bank, it is claimed that global economy has gained a significant increase up to 3.1% in 2018. This increased economic growth, at global level, clearly shows increased level of investments, especially within the process of exporting goods and services and countries exporting heavily, through constant trade, investment recoveries, and process of manufacturing and delivering products in its place of accepting them or importing them through other countries (Desjardins, 2018).
Currently, within the global economy, protectionist pressure has forced many economies of the world to promote their local businesses with the purpose to decrease their export level and to produce more through local producers for export purposes. There are many countries who have been changed their economic outlook under protectionist pressure (Skolimowski, 2018). For instance, china constantly exporting various products and services to different regions of the world and boosting its economy, while limiting the import or imposing taxes on import items.
For last many years, for instance, Australia has made number of trade agreements with other nations and earned a great revenue. However, this process has reversed and now posing a threat to Australian economy. Government of Australia is now considering only those trade agreements that would be useful and supportive to its economy, under supervision of Australian commission.
From this paper, it becomes clearer that the notion of government protectionism plays a very significant and crucial role in business activities and economic growth, whereas managing local manufacturers to take part in improving national economic outlook. In every country, views about protectionism have gained different standpoints and considerations, because of their different economic outlooks and conditions. Australia, in this regard, has adopted the notion of protectionism because of the increased free trade of Australian government. However, now, Australia has now considered to take protectionist view as a way to further boost its economic outlook and to overcome the risks that may come in future. Currently, many nations have already adopted protectionist pressure such as china due to which china’s government is more likely to support its local producers so that export rate can be reduced.
Commission, A. G. (2017). Rising protectionism: challenges, threats and opportunities for Australia. Commonwealth of Australia.
Desjardins. (2018, 7 10). The Rise in Protectionism and the Prospect of a Global Trade War. Retrieved from Economic Studies: https://www.desjardins.com/ressources/pdf/pv180710-e.pdf
Lieto, G. D. (2018, February 20). theconversation.com. Retrieved from www.theconversation.com: https://theconversation.com/australia-may-be-engaging-in-free-trade-but-its-becoming-more-protectionist-too-92025
Rynne, B. (2018, April 3). home.kpmg. Retrieved from www.home.kpmg: https://home.kpmg/au/en/home/insights/2018/04/protectionism-consequences-for-australian-economy.html
Skolimowski, P. (2018, 12 27). ECB Says Trade Protectionism Will Crimp Global Growth Next Year. Retrieved from Bloomberg: https://www.bloomberg.com/news/articles/2018-12-27/ecb-says-trade-protectionism-will-crimp-global-growth-next-year
Turnbull, M. (2018, February 8). theguardian.com. Retrieved from www.theguardian.com: https://www.theguardian.com/australia-news/2017/feb/08/malcolm-turnbull-lambasts-protectionism-in-spirited-defence-of-free-trade