BACKGROUND OF THE STUDY.
Protection in form of tariff and free trade have
economic theory and economic history. However , it is possible
precise relationship between trade barriers in form
of tariff or free trade
in the long run economic growth remains a difficult theoretical issue that is
being explored in a variety of ways.
Simithian and Ricardian conclusion reinforced by the Hercscher-ohlin theorem
recommend free trade
as the best
commercial partners. This doctrine
focused on improvement in the level of income is based on
framework that may limit the interpretation of the long run effect.
country. Tariff can
whether it is
developed (a developed
to lose) either big or
in sector receiving protection. Tariffs are imposed on imported goods and
used to refer
of duties applicable to a list of commodities
commodities imported or exported. These taxes could be assessed either as a percentage of volume of the commodity concerned (ad valorem), or on the
Tariffs rates vary according to the type of goods imported.
increase the cost of importers
price of imported goods in
the local markets, thus lowering
the quantity of goods imported. Tariffs
be imposed on export, and in
an economy with floating exchange rates,
export tariffs have similar effect as import tariffs .However, since export
perceived as helping local industries, export tariffs are seldom implemented (Meier,2000)
Protectionists believe that infant industries must be protected in order to allow them growth to a point where they can fairly compete with the larger matured industries established in foreign countries. They believe that without tariffs, infant industries will die before they reach a size of economies of scale, industrial infrastructure, and skill in manufacturing have progressed sufficiently to allow the industry to compete in the global market. They argue that government have a responsibility to protect their corporations through tariffs as well as their when putting its companies at a competitive disadvantage by enacting laws for social goods .They believe that these law
end up destroying domestic
but these laws were designed
Tariffs is always seen as a redress to social
and economic costs
as a way of enhancing
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