Tuesday, May 17, 2016

Market economy, Non-Market economy, Dumping

Market economy is defined as one where the government intervention is kept low with regard to pricing of goods and services, investment decisions and production decisions. This inlcude countries such as US, Canada and Mexico
Non-Market economy are those where government intervention is high and it controls prices, quota of production, currency rates, wages to workers and other parameters. This include China as an example.
Dumping is the practice whereby the exporting nation sells its goods and services at a price lower than the price at which the exporting nation sells the same goods and services within its domestic market. When such a practice is followed, importing countries have the liberty to impose anti-dumping duty on the imported products to save domestic producers.
Anti-dumping measure has been criticized on grounds that it inculcates culture of protectionism and hinders any effective technological development for reducing the cost of production in the importing country. Thus, overall, the exporting country as well as the citizens of the importing country are put to loss because of loss of market and buying goods and services at higher prices respectively.
However, anti-dumping measure can be hailed as a bonafide practice because exporting countries often seek to monopolize foreign markets with the view to increase the market. This causes harassment to the local producers who are still in developing stage and do not possess better technology as possessed by the exporting nation.
Thus, it can be said that anti-dumping as a measure has both positives and negatives and it should be the duty of countries to use this measure selectively to keep a balance between protectionism and competitiveness,

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