The correct option is 1 and 3 only.
Explanation
Protectionism refers to government policies that restrict international trade to help domestic industries. The primary tools used to implement such policies are tariffs (fiscal measures) and quotas (quantitative measures).
Statement 1 is Correct:
Tariffs are taxes or duties imposed on imported goods. By adding a tax component to the import, the final price of the good in the domestic market increases. This makes imported goods more expensive relative to domestic substitutes, thereby discouraging imports.
Statement 2 is Incorrect:
Quotas are quantitative restrictions on imports. They specify the maximum quantity of a good that can be imported during a given period. While quotas may indirectly influence prices by limiting supply, their primary function is to restrict the quantity of imports, not the price directly.
Statement 3 is Correct:
The policy of protectionism in developing nations (such as India during the pre-1991 planning era) was largely based on the Infant Industry Argument. This economic rationale posits that emerging industries in developing countries are not yet capable of competing with established, efficient industries in developed economies and require protection until they mature.
Key Takeaway:
Tariffs act as a price barrier (tax on imports), whereas Quotas act as a supply barrier (limit on quantity). Both aim to shield domestic producers from foreign competition.