The paper "Motives behind Government Intervention in Trade" is a perfect example of business coursework. The government establishes a set of rules aimed at influencing the trends in businesses and economic activities. Regulation comprises of different government actions undertaken to control trade. Some level of government intervention to trade is important for the functioning of the current market economies. Participants in trade should have confidence that the business contracts they enter are fully upheld, with clearly defined rule and regulations. Free trade is a trading pattern where there are the importation and exportation of goods and services.
National governments continue to intervene in trade by imposing restrictions, despite the advantages associated with free trade. Generally, government intervention is carried out due to political, economic, and cultural reasons. Governments involved in trade in order to support domestic companies to export goods and services. They could also intervene when the economy is performing poorly. During the time of economic hardships, the government comes in to control the imports that continue to drag the economy down (Business-government Trade Relations). This paper shall discuss the reasons why the government involves in trade by considering the political, economic, and cultural reasons. Officials in government usually make decisions that affect trade due to political reasons.
It is believed that for the politicians to survive politically, they have to please voters so as they could be re-elected to office. Making trade decisions that favor the citizens is one of the avenues to please them. In most cases, formulated trade policies that are based on political reasons serve the country well for a long time (Office of Free Trade, 2009). The political motives that lead the government to participate in trade include the need to protect the jobs of its citizens, maintaining national security, opposing unfair trading by business partners, and achieving superiority over other nations. Protecting citizens’ jobs is one of the political motives for government intervention in trade.
One of the reasons why a government is removed from power is due to high rates of unemployment. Governments become concerned when trade activities threaten the jobs of its citizens at home. A case in study is when the president of Gunaya, a state in Southern America, convinced his citizens not to import goods from other countries, but to use the locally produced goods.
He strongly discouraged importers from importing more goods to the country with the fear that they could hinder the selling of locally produced goods. The main reason for taking that position was to protect the jobs of the citizens, which could otherwise be interfered with by increased imports (Office of Free Trade, 2009). Sometimes the governments’ efforts to protect jobs may not be received well by the entire public.
This would happen when the biggest market for certain goods or services are dominated by foreign business activities. Such a trade scenario puts the government into a tight situation of deciding whether to apply protectionism or to support the company in question. Depending on the nature of the business, the government may be forced to consider her decisions. Fuji and Kodak photographic companies own the biggest market share in China and operate parallel to the state-owned Lucky film country (Business-government Trade Relations). When the state company’ s market share dropped to 7%, the nationals encouraged the government to support the company to grow.
The government had to prevent Kodak and Lucky from entering joint ventures for fear of the Chinese product from collapsing. The government put a ban on film companies to form joint ventures. It can be argued that the reason why the government of China intervened was to safeguard the interests of her citizens in terms of creating and protecting jobs.
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