Exporting unemployment
Exporting unemployment: the woolly idea that domestic economic activity can be raised, and employment thereby increased, if the flow of imports is stemmed in some way. In other words, proponents of this idea hold that it is possible to transfer the unemployment burden to some other country and protect and increase employment at home through keeping imports at bay. Generally, the more acceptable term of import substitution is used for this practice. Such policies may work in the short term, but only at the expense of lower competitiveness of the domestic industry. Factors to consider in the imposition of import substitution policies are that many imported products are inputs into the production process. Raising their prices raises the costs of domestic producers. Increased costs are a disincentive to purchasers, and this may lead to a dampening of economic activity. The aim of exporting unemployment can therefore lead to increased unemployment. See also beggar-thy-neighbour policies, local content rules and optimal-tariff argument.
Source: http://ctrc.sice.oas.org/trc/WTO/Documents/Dictionary%20of%20trade%20%20policy%20terms.pdf
Web site to visit: http://ctrc.sice.oas.org
Author of the text: W. Goode
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