Consequences of Trade Restrictions and Tariffs
How does imposing trade restrictions affect a country's macro economic
Nowadays all countries need to trade between themselves. Countries
always lack of some type of good and the only way they can get them is by
importing them from other countries which do produce the desired goods. However,
countries many times import products they are able of producing and now, this
isn´t a matter of need; it´s a matter of taste in order to give the consumers
the possibility to choose.
Both imports and exports contribute, in different ways, to the
development of a certain economy, for example the Peruvian one. Nowadays, Peru
has an open economy which allows importing and exporting. When a country imports
any product it can be because it doesn´t produce it or because it want´s to give
greater variety to certain areas of the market. This last case should be like a
stimuli for national producers to produce more and with a better quality and to
find ways of having lower costs of production. This aims come to light because,
as foreign products enter the market, they may be of a better quality and even
cheaper than the national ones. Now, the consumers will have more possibilities
to choose from and, it is very probbable that they will choose the cheaper and
brand new products. So, if national producers don´t do anything in order to
improve thier products, then they will be in danger of going to bankruptcy. As a
result of this, the national products have to seek, as I said before, for
cheaper costs and better products.
When this occurrs, then national products are ready (or at least have
more possibilities) to compete in international markets. Supposedly, now they
should have a better quality, they should be cheaper and so, they are ready to
be exported. When products are sold at international markets, then this brings
more money into the peruvian economy; as exports are like the salary of a
country (the most important source of money), then this is very positive for the
peruvian economy because we can say that the national income has increased.
So, we have seen how having imports and exports are very benefitial for
any country. However, countries many times apply...