Many argue that implementing high tariffs on local industries should be encouraged by developing countries that has the aim to grow their local economy. This essay agrees that the governments of developing countries have to fix high taxes for protecting their own economy.The following paragraph will discuss how that economic policy could help to increase the local wealth of developing countries and its impact on world trading.
A key point in favour of this view is that high tariffs could encourage the growth of local economy and in the like manner the wealth of its population. This is beacuse if industries are affected by high taxes, they will focus their business in local economy and in some cases this strategy can lead to a decrease of prices. As a long term consequence, lower prices are one of the factors that could increase the wealth in population.
For instance, If a Indian’s company produces bananas and export them to another country, the price for a banana in India could be high. But if the governments fix higher tariffs, the company would not ship the bananas to another country. In this case the business would be focus on local economy and more banans would be available for population. As a result, the supply of bananas increased in India, and due to the law of supply and demand prices will decrease.
In conclusion, that economic policy could encourage the development of local economy, and therefore it could increase the wealth of a country. For that reason i am conviced that developing countries should be encouraged to implement high taxes to grow their local industries.