When countries put up barriers to free trade, bad things tend to happen. That's a long-held tenet of economics: protectionism is harmful. You've heard it recently from economists on Planet Money, and now the message comes again, from the World Bank. Reuters reports on remarks by World Bank president Robert Zoellick, who spoke at a World Trade Organization conference.
"High-income countries have used subsidies for troubled industries, while low-income countries are using selective increases in border barriers," Zoellick said. "These trends could easily spin out of control in coming months as unemployment rises and one country feels compelled to respond tit-for-tat to the policies of another."
Zoellick compared the protectionist measures and counter-measures to "playing with fire" and said that when the economy picks up again, countries locked in by tariffs and other trade barriers will suffer longer. Countries committed to free trade will break out of the recession faster, he argued.
categories: Trade
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