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Chapter 19: Q 27. (page 462)

Why might a low-income country put up barriers

to trade, such as tariffs on imports?

Short Answer

Expert verified

There may be various reasons for this move.

Step by step solution

01

Step 1. Definition

Trade barriers are government-induced restrictions on international trade. In accordance with the theory of comparative advantage, trade barriers are inimical to the world economy and decrease economic efficiency and effectiveness.

02

Step 2. Explanation

The reasons for tariff barriers are like:

Tariffs on imports protect domestic producers from competition.

It could also be done to avoid social unrest if there are a lot of small producers who would be dispelled of business if the local market were opened up to the foreign competition.

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