Question

Randall Smithe-Jones believes that protectionism is the only way to save the United Kingdom from outside competitors. He has seen small businesses go bankrupt because cheaper foreign goods have been more popular. The cell-phone manufacturing industry has just started in U.K and Smithe-Jones' company is one of the first to try its hand at cell-phone manufacturing. Which of the following would probably be the argument that Smithe-Jones would use to persuade his government representatives that protectionism is still needed in the U.K.?

Answer 1

Randall Smithe-Jones would use the infant industry argument for protectionism to convince U.K. government representatives that his cell-phone manufacturing company needs temporary protection from international competition to develop and compete globally.

Step-by-step explanation:

Randall Smithe-Jones would likely argue for the infant industry argument for protectionism. This argues that new industries, like his cell-phone manufacturing company in the U.K., need to be shielded from international competition through protective tariffs or import quotas until they can develop the skills, management, technology, and economies of scale required to compete effectively in the global market. This form of protectionism provides a short-term indirect subsidy by allowing the infant industry to mature without the pressure of competing against more established foreign enterprises that can produce goods more cheaply.

While protectionism can save jobs within the protected industry, it also has potential costs, such as higher prices for consumers and potential job losses in unprotected sectors. These factors contribute to the ongoing debate about the merits of protectionism for national economic policy.