Suppose you can make a chocolate for 10 rs in
India. Now, suppose another country can make the same chocolate for 5 rs. They
agree to sell it for 7 rs in India. Obviously, all Indians want to buy this
cheaper chocolate.
You then go to the government
and tell them that this chocolate coming from outside India is hurting the
country because they will take all the money they make from sales outside India
– to their own country.
The government then tells them that if they want to
sell in India, they must pay the government 5 rs per chocolate as entry fees.
Now their chocolate also costs 10 rs, same as yours.
This is protectionism.
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