Question

Venezuela is a socialist country where the average tariff rate on imports is 8.6%. This rate is fairly high. Non-tariff barriers restrict imports of cars and agricultural products. It may take several weeks to import goods. This limits the ability of businesses to import goods at a reasonable price.

Answer 1

Answer:

There are number of trade barriers that increases the cost of imported goods which an economy thinks is necessary for the protection of its local firms or developing firms. These restriction includes administration workload, import duties, quotas, embargoes, ban on import on certain products, subsidies provided to local firms to compete foreign companies, etc. These all restrictions from the government has decreased the chances of entry of foreign firms.

This also effects the local firms who have started exporting their products and this sufferings are all because they have no control on cost if they buy machineries that costs them higher. This makes their product less competitive in the international markets.