6.2.1 Meaning of protectionism
Definition: Protectionism is the use of government policy to restrict imports of goods and services (or promote exports) to shield domestic producers from foreign competition. Free trade is trade between countries without any government restriction; trade liberalisation is the removal of barriers.
Example: India raised import duties on electronics, toys and solar panels to support domestic manufacturing under 'Make in India'.
Analysis chain (AO2): Import restrictions → imports become dearer or limited → domestic consumers switch to domestic producers → domestic output and employment rise, but consumers face higher prices and less choice.
Evaluation (AO3):
- Protection may provoke retaliation, harming the country's exporters.