Protectionism v Deregulation

A potential de-globalization policy which could accompany the economic crisis presents itself as a worrisome phenomenon. As citizens lose jobs and unemployment rates increase, governments might take measures to increase domestic employment, and foster domestic industries to boost the economy. In other words, governments might resort to protectionist measures because of the appeal they have from a political standpoint. More worrisome is the fact that a move towards protectionism will be strongly supported by the general public owing to dwindling domestic industries in  times of the economic crisis , giving governments all the more reasons to enforce them.

As such it may be fair to assume that the upcoming budget may enforce protectionist measures as a means to shield the domestic industry and enforce upon popular belief. In any case it needs to be understood that protectionist measures are good politics but bad economics. Largely, these measures might end up doing more harm than good. Perhaps the focus should be on deregulation rather than protectionism. Entrepreneurs have time and again stressed on the regulatory barriers faced by them. Moreover, the assessment of why domestic industries cannot obtain competitive advantage over foreign industries must be done before we announce any form of protectionist intervention. In the face of the crisis, populist agenda that do very little to change the circumstance and sustain the economy must be avoided at all costs.

Yatindra KC

Yatindra KC is a researcher at Samriddhi Foundation. His background in law gives him a sophisticated grasp of the many legal aspects associated with the political and economic development of the nation. He engages himself in writing blogs and articles on contemporary economic and political issues.


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