The Effects of Protectionist Policies in Romania

Abstract

Protectionism is an economic doctrine that consists of protecting the national economy by limiting or prohibiting the import of foreign products. A country can filter foreign exchange through various protectionist, tariff (involves the use of customs barriers) and non-tariff (using barriers such as quotas, technical rules, administrative formalities, etc.). Governments resort to trade policy measures in a wide variety of situations: to balance the balance of payments, for a better allocation of resources (by promoting certain industries or sectors considered promising), to redistribute the national income, etc. Most commonly, however, they are used when domestic industries cannot cope with external competition. The main cause is their lack of competitiveness concerning foreign producers. For this reason, states often prefer to protect their domestic industries through trade policy measures, despite the negative effects they have on the economy as a whole. This paper outlines some issues specific to protectionist theories in foreign trade and their impact on a small country like Romania also protectionist theories, trade policies, and arguments in support of and against protectionism.