class notes on 15/03/17

BARRIERS:

Freedom beyond a limit is not required. Freedom has to be restricted in some cases (situations).Every country has the right to protect itself through “protectionism”.

Globalization is through:

• ·         Market
• ·         Investment(production)

There are 3 moments in globalization:        

• ·         Goods & services
• ·         Money
• ·         Factors(this can be in the form of people)

There are five, six methods to protect investment. As we don’t have enough money and expertise we need FDI (foreign direct investment). FDI in retail is not allowed because, to run a small kirana store we don’t need expertise. Management expertise is shifting. Hence FDI is allowed but with some barriers, for example Walmart can be established but only in outskirts or in metropolitan cities.

INFANT INDUSTRY ARGUMENT:

According to this argument, many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with established industries in the developed countries.

TARIFF:

A tariff is a tax levied on imports or exports. They are categorized into two.

• ·         Specific tariffs are levied as a fixed charge for each unit of a good imported.
• ·         Ad valorem tariffs are levied as a proportion of the value of the imported good.

Any economy which is developing becomes costlier.

Subsidy is a government payment to a domestic producer. Subsidies come in various forms including direct (cash grants, interest-free loans) and indirect (tax breaks, insurance, low-interest loans, accelerated depreciation, rent rebates).

Non-tariff barriers to trade (NTBs) are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs. 

Shirisha Joshi

161239.

•