The majority of economist believe in the comparative cost principle, which proposes that all nations will raise their living standards and real income if they specialize in the production of those goods and services in which they have the highest relative productivity. Nations may have an absolute or a comparative advantage in producing goods or services because of factors of production ,climate,division of labor,economics of scale and so forth.
However, the economist who recommend free trade do not face elections every four or five years.Democratic governments do ,which often encourages them to impose tariffs and quotas in order to protect what they see as strategic industries-notably agriculture-with out which the country would be in danger if there was a war as well as other jobs.Abandoning all sector in which a country does not have a comparative advantages is likely to lead to structural unemployment in the short term.
others reason for imposing tariffs include the following:
- to make imports more expensive than home-produced substitutes, and thereby reduce a balance of payments deficit;
- as a protection against dumping .
- to retaliate against restrictions imposed by other countries;
- to protect 'infant industries' until they are large enough to achieve economies of scale and strong enough to compete internationally.
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