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

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

Sample Answer
In recent years, there has been considerable debate regarding whether developing countries should impose high tariffs to protect and nurture local industries. After recent years, there has been a hot topic of discussion on the question of whether developing countries need high tariffs to be imposed and maintained in order to protect local businesses. Although an argument can be made with this suggestion, on balance, this approach is almost never the right one for achieving long-term sustainable economic growth.

On the one hand, high tariffs may offer a short-term respite to some industries which are still at a very low stage in their development. Such local firms can expand and improve their productivity without corresponding foreign imports on cheaper goods intended to flood the market. Take as an example Vietnam, where foreign electronics and automobiles are subject to tariffs. This has allowed local manufacturers to upgrade with new technology and offer thousands of jobs to the local working population. In such situations, tariffs do serve as a defensive tool, enabling domestic industries to develop and subsequently become competitive in the international stage over time.

On the other hand, unfortunately enough, high tariffs do do lead some damaging prices to be paid by the consumers with some core industries suffering in the process. In an economy where a large part of the population suffers from low-paying jobs, imposing tariffs can increase the cost of essential goods and further widen the gap of inequality. For instance, in some SoutheastAsian nations, farmers are unable to access modern machinery as high tariffs on imported agricultural equipment make it pricier, thus restricting their productivity and income. Moreover, if certain hi-tech industries are sheltered from competition for an excessive period, they are unlikely to develop or upgrade their products and services due to lack of competition from more efficient international companies. This, in turn, leads to the emergence of many uncompetitive industries that do not meet international standards. In India, despite the high tariffs placed on foreign rice, the local rice industry has shown sluggish growth and inability to modernize and compete with other rice-exporting countries such as Vietnam and Thailand.

Thus, although high tariffs have the potential to assist developing countries in the short-term strategies, I think they must be done with caution and in the context of long-term planning. An effective long-term policy would be aimed at enhancing the global competitiveness of the country.