Topic: Essay Topic No. 1Political, economic and cultural motives behind government intervention in tradeIntroductionThe World War 11 highly affected the relations of the countries that were involved and this led to the implementation of trade barriers. Before the war started, many countries encouraged free trade but the emergence of the war changed the relations between the fighting countries. This was the reason why the barriers were put in place. After the war, peace prevailed. Many countries have made an effort to lighten up the barriers by either dropping them completely or changing the terms.
Some of the reasons that prompted countries into reducing their barriers are to provide market for their products. Many countries highly depend on exports as the highest revenue generating activity. It is for the search of market for the products especially agricultural products that led the countries to drop some barrier. International trade would also lead to an increase in the economy of countries that give room for it through the introduction of new products and new technology in to the country (Wild, 2012). Despite the reduction of barriers, countries have also maintained some of the barriers in order to restrict trade.
Governments are driven by different aspects in putting this restriction which include political, cultural and economic motives. This paper critically discusses the driving forces for the government to intervene in the business sectors and to have control over them. Economic Effect of Trade BarriersThe economy of a country highly depends on the trading activities in the country in terms of how they are done, who does them and the benefits and shortcomings of the industries. Industries in a country are basically the initial source of income to the country and for that reason, the government should intervene in order to boost and also protect them.
The government therefore uses trade barriers to protect the economy of its country both internally and externally. This is driven by different motives that the government intends to achieve (Amaa, 2000). Governments have retained trade barriers in their countries in order to protect their own industries. If competition is high from both internally and externally, emerging industries will not be competitive enough and may lose their market since they lack efficiency.
The government must therefore intervene in order to protect these industries from unhealthy competition until they can stand on their own by maintaining their trade barriers. This is because other countries may take advantage of this policy to dump products that lack markets in their own countries. These products may be sold at a cheaper price than those that are produced internally. Consumers will opt for these cheaper products leaving the home made products unused. This will lead to a fall of the industries.
In order to prevent this, the government will intervene to protect its own companies (Himmelberg, 1994). According to Peláez & Peláez (2008), trade barriers limiting the number of companies in a given industries will enable the companies to enjoy their privilege of being the best in the country. These companies earns lots of profit being the best established and having a concrete market for their products. This also gives the company the ability to survive even in harsh economic moments of the country even the other competing industries.
Some countries use trade barriers as a mode of raising revenues. Methods of trade barriers such as tariffs imposed on imports and exports give the country a high portion of revenue and at the same time restricting free trade by other countries. Tariffs are imposed on products to make them more expensive thus lowering the profits earned from their trade. This makes the trade a bit hard and thus a better way of implementing trade barriers and restricting trade with other countries (Crane & Larrabee, 2007).