Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

7. Patriotism Argument 
It is the national duty of every citizen to respect home 
industries by using and having goods manufactured by the home 
industries. A step to develop own industries through protection is 
essential. Dependence on the foreign producers keeps one away 
from being nationalist. 
8. Self-Sufficiency Argument 
This is one of the basic arguments voiced in the favour of 
Protectionism. A country must try to become self-sufficient in all the 
fields especially in the field of basic requirements. Protection is a 
policy for developing the home industries which could help the 
economy in becoming self-sufficient. 
9. The Revenue Argument 
Protection has been a good policy for revenue purposes, the 
imposition of protective import duties bring handsome revenue. 
India has been receiving a large amount of money since such 
duties were imposed. Here it is suggested that the revenue must be 
moderate and not burdensome. 
10. Fair Economic Life Argument 
Protection is necessary to check unfair cut-throat 
competition. It helps in bringing the atmosphere more healthy. 
 
13.4.2 Disadvantages of Protectionism: 
Theory of protectionism has been criticised by the supporters 
of the principle of Free-Trade. The criticism of the theory of 
Protectionism has been based on the following arguments: 
(i) Protection creates laziness among the home-industries. In the 
absence of foreign competition they do not fight hard to introduce 
innovations to the old pattern of production. Thus it creates 
lethargic atmosphere. 
(ii) Protection creates vested interests. Industries, which are 
granted protection, starts claiming it as their right in the future. The 
infants try to remain infants to use motherly protection. 
(iii) Thus utilise the special grant of Protection, industrialists start 
bribing the legislators. This was quite frequent in USA when the 
Principle of Protection was newly applied there. 
(iv) Monopolies are often created under the cover of Protrection. It 
is dangerous for the consumers. 
(v) There originates two-dimensional industrial policy and 
management. One for the Protected and other for the 'Unprotected 

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class' of industries. This harms the interests of consumers as well 
as unprotected class of industries. 
(vi) Protection leads to the centralisation of wealth and wide 
disparity in the income level of the people. 
(vii)International transactions become difficult and callous. 
(viii) Protection acts against the division of labour at the 
international level. 
In spite of these criticisms, the theory of Protection is far 
better than the theory of Free Trade; especially where we come to 
the practical points of view. Protectionism is the only principle for 
the poor and developing countries including our own big Indian 
Republic. 
While there will always be necessary adjustments to new 
and changing circumstances, free trade between nations ultimately 
benefits all who participate. Protectionism can only lead us down a 
road of impoverishment and international commercial tensions. To 
paraphrase the great 18th-century, free-market thinker, David 
Hume, when he criticized the protectionists of his time: Not only as 
a man, but as an American, I pray for the flourishing commerce of 
Germany, France, England and even Japan. Why? Because 
America's prosperity and economic future are dependent upon the 
economic prosperity of all of those with whom it trades in the 
international division of labor.