The paper "Impact of Government Intervention in International Trade " is an outstanding example of a business essay. International trade refers to the sharing of goods and services between countries. Companies engage in international trade to benefit from low-cost advantage and greater market access. International trade also fosters better technological access to countries. Governments across various economies take part in the trade process owing to factors concerning the economy. The factors include improving the trade deficit, protecting local industries from foreign players, protecting against dumping, protecting local jobs, and also supplementing government revenue.
Government intervention is required depending on the status of the economy. Economies which are highly dependent on imports and exports are subject to high-risk exposure. The import-dependent country would require more foreign exchange to pay for their imports. Excess demand for imports will lead to demand for foreign exchange that will lead to exchange rate fluctuations which will increase the import bill leading to inflationary pressure. Government intervention is observed when such externalities affect the economy as a whole. Reasons for the Government’ s intervention in international tradeGovernment intervenes in international trade to remove the macroeconomic imbalances that affect a country.
Lack of government intervention or complete deregulation would result in monopoly and increased level of prices of goods and services that are traded across the national boundaries (Goldstein, 2009). The following are the significant factors that justify the government’ s intervention in international trade: • Protecting domestic jobs – Availability of cheap labor will incentivize companies to move out and shift their production facilities to such countries. This will lead to job cuts and unemployment. The employment rate drops as well as the per capita income of the economy.
This will lead to a lack of demand for goods and services as the income level of the local country has dropped. The GDP growth rate also falls. Since 2009, US exports have supported more than 1.6 million jobs in the private sector. The marginal increase in exports by billion-dollar results in approximately 5600 US jobs on average.
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