How does protectionism impact emerging economies?

Protectionism can both hinder and promote growth in emerging economies, depending on the specific circumstances and policies implemented.

Protectionism refers to the economic policy of restraining trade between countries through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations. These policies are designed to protect domestic industries from international competition. For emerging economies, the impact of protectionism can be twofold.

On one hand, protectionism can promote growth in emerging economies by protecting nascent industries from international competition. This is often referred to as the 'infant industry' argument. By imposing tariffs or quotas on foreign goods, governments can help domestic industries to grow and become competitive. This can lead to job creation and economic growth within the country. For example, many East Asian countries used protectionist policies to develop their manufacturing sectors in the post-war period.

However, protectionism can also hinder growth in emerging economies. By protecting domestic industries from competition, governments can inadvertently encourage inefficiency. Without the pressure of competition, firms may have less incentive to innovate and improve productivity. This can lead to higher prices for consumers and a lower overall level of economic welfare.

Furthermore, protectionist policies can lead to trade wars and retaliation from other countries. If an emerging economy imposes tariffs on foreign goods, other countries may respond by imposing their own tariffs on the emerging economy's exports. This can harm the emerging economy's export sector and lead to job losses.

In addition, protectionism can make it more difficult for emerging economies to access foreign markets. Many emerging economies rely on exports as a key driver of growth. If other countries implement protectionist policies, it can make it more difficult for these countries to sell their goods abroad. This can hinder growth and development.

In conclusion, the impact of protectionism on emerging economies is complex and depends on a variety of factors. While protectionist policies can help to protect nascent industries and promote growth, they can also encourage inefficiency, lead to trade wars, and make it more difficult for emerging economies to access foreign markets. Therefore, it is crucial for policymakers in emerging economies to carefully consider the potential benefits and drawbacks of protectionism.