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barriers and protectionism. Companies may restrict imports from overseas
(Ricardo’s theory) for different political, social and ethical reasons. The

most significant reasons are:

• To protect a country’s infant industry: A less developed country
seeking to reduce its dependence on primary produce by nurturing an

industry sector might have to protect it from foreign competition while
it gets established. On the other hand, a less developed country will
need to open up to the overseas markets to export and import

because such a country lacks technology, hard currency and so on.

• To protect domestic industries from unfair foreign competition:
A form of unfair competition, known as ‘dumping’, is when companies

will sell a product to overseas markets at a lower price than home
markets can sell. Some authors see this as nothing more than a

commercial policy of price discrimination, designed to reflect the
different national markets – a perfectly rational practice for profit-
seeking firms to engage in. Others disagree.

For health reasons. Firearms, drugs and all such products are typically
subject to restrictions that have nothing to do with economics.

3.7 Protectionism

According to Doole and Lowe (2008) the aims of General Agreement on
Tariffs and Trade (GATT) is to reduce tariffs on goods and eliminate other

non-tariff barriers to trade in goods, as well as prohibiting restrictions on
the quantities of goods that could be traded. The GATT objectives were to

be achieved by a range of measures, as follows:

• Non-discrimination: That is, to ensure that there was no
discrimination between nations, and that all nations were treated

equally.

• Open markets: Any form of protection that would work toward
reducing tariffs, and keep them fixed unless the country suffers from

serious balance of payment.