CFA® Level I Economics - Trade Restrictions (Tariffs, Quotas, VERs, Export Subsidies)
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- Опубликовано: 9 сен 2024
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Great video, very clear and useful! Thanks ☺️
Very nice explanation
Thanks for liking
Wouldn't that quota rent will go to the govt. Of imporing country if it takes license fees?
The model is perfectly sound. It's interpretation, and especially in framing policy, has serious flaws.
The assumption that consumer surplus remains constant after the market assumes a lower world price is woefully unrealistic.
The fact that producers would no longer be able to produce as much, to meet the level of demand it previously did, has implications for consumer surplus as well.
By producing less locally and importing the rest, GDP contracts and consumer surplus contracts with it.
Consumer surplus is a function of income and the marginal propensity to consume at varying levels of income.
With less being produced locally and importing the difference, jobs will be lost in the immediate industry and tributary industries and sectors.
This will have a ripple effect throughout the economy structurally and otherwise.
The prevailing theory is that the labor force would have to retool and redeploy. This is not as simple to do in reality.
This would include realities like age of the labor force; obligations like mortgages and everyday living expenses, retirement considerations, irreversible disruptions to lives and livelihoods.
There is also a national security dimension as well, where such a country would have lost productive capacity and now dependent on a foreign country for essential supplies. This situation renders a country vulnerable to economic attacks by the countries they depend on for important imports.
This blindspot is why proponents of a global economy consider protectionism a bad word.
The Brettonwoods vision of a global economy did not mean for this to be the case. It meant for independent economies to thrive in an international market for cooperation. Not blind commitments to a global vision at any cost.
That's so well thought