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Developing countries should be encouraged to implement high tariffs to grow their local industries. To what extent do you agree or disagree?

 

It is said that growing nations ought to escalate tariffs for the betterment of their local industries. I strongly believe in this notion; however, the results can be detrimental for countries with poor economies. 

This essay is submitted by our student - Aryan, and it covers the 7.0 bands scenario.

To start with, introducing taxes on international products significantly affects their revenue. To be more precise, tariffs discourage global brands from having a larger market share, allowing local brands to position their products in the market. Such laws prevent international tycoons from establishing the monopoly and give the chair better control over the revenue. It may seem like a revenue loss in starting but, it uplifts the locals to be the boss of their own business and develop products that one can export.

Additionally, the authorities can lower these tariffs to allow global products to increase competition in the market. This strategy creates a competitive market to ensure the quality of goods. A similar strategy was successfully implemented in India in 1990 to stop globalisation by putting higher taxes on snacks, beverages and cars. This led to the emergence of global brands like Tata, Mahindra and Haldirams. Albeit, India lifted tariffs in 1998, 75% of the Indian market is still dominated by local brands. This policy placed India as the biggest goods manufacturer after China and the United States. 

However, such policies can have devastating consequences for those countries with extreme poor economies. Higher taxes can block foreign investments, halting infrastructure growth. Such policies can devoid them from global technology and foreign aid. For instance, Somalia introduced taxes on Chinese products. As a result, local bodies failed to reproduce the same goods at cheaper prices, causing an inclination of inflation. This proves that tariffs are not suitable until nations establish their manufacturing units. 

To conclude, I agree that supporting local brands with higher tariffs can be a groundbreaking strategy but countries should analyse the economic aspect of repercussions.

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