What are the two main forms of protection used to shield domestic industries from foreign competition in an inward looking trade strategy?

Key Points

• Tariffs and quotas are the two main forms of protection used to shield domestic industries from foreign competition in an inward-looking trade strategy.
• Tariffs are taxes imposed on imported goods, making them more expensive and less attractive to consumers compared to domestic products.
• Quotas are limits on the quantity of a particular good that can be imported, restricting supply and protecting domestic producers from foreign competition.
• Both measures are designed to reduce the competitiveness of foreign goods and encourage the consumption of domestically produced items.

Additional Information

• Inward-looking trade strategies focus on developing and protecting domestic industries by reducing dependency on foreign imports.
• These strategies can help emerging economies build industrial capacity and achieve self-sufficiency.
• However, they can also lead to inefficiencies and higher prices for consumers if domestic industries lack competitiveness.
• Over time, many countries have shifted towards more outward-looking trade strategies, promoting free trade and global economic integration.