In economic theory, government intervention in the markets for goods and services meets different perspectives and expectations. One of the forms of government intervention is protectionism. It is an economic policy aimed at temporarily restricting the import of imported goods and supporting the production of similar domestic goods and services. The goals of protectionism may be the growth of gross national income, the increase in employment, the improvement of social indicators.
In economic theory, the protectionist doctrine is the opposite of free trade. Proponents of protectionism criticize free trade from the point of the national productivity growth, employment of the population, and improvement of demographic indicators. Protectionism may use a combination of restrictive measures and resources to achieve economic goals. These can be customs duties, protection of intellectual property, government spending to support local producers and government purchases only from domestic producers, and so on. Opponents of protectionism criticize it from the standpoint of free enterprise and consumer protection, which infractions can slow down economic growth.
In such a situation, there is a risk that the mechanism of market regulation would not work under certain external factors. It may be environmental pollution, restoration of soil after mining, the general political situation in the world. Such failures suggest the need for additional administrative regulation of the economy to smooth out or eliminate the negative consequences of the market mechanism. However, the market may face the downside of external intervention in the form of the artificial creation of monopolies, the lack of product differentiation and conditions for creating new products.
In support of their opinion, economists cite many examples of industrialization and prosperity in countries that pursued protectionist policies. The more climatic and geographical shortcomings that reduce competitiveness in a country, the higher should be protectionist barriers to the development of the national industry. The spectrum of external factors influencing the market is significant due to its constant changes and refocus.