Essays on Government Intervention in Trade Assignment

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The paper "Government Intervention in Trade" is a great example of a business assignment. Governments in both developed and developing countries intervene in trade in order to attain certain objectives. These objectives can be motivated by political, economic or cultural circumstances and their impact can be short-term or long-term (Escaith & Gonguet, 2009). Governments often intervene in trade by offering subsidies or by imposing tariffs and other trade barriers. Subsidies can be offered in the form of affordable and long term interest loans, cash payments, tax breaks and product price support and are primarily used to enable domestic producers to compete effectively with established foreign producers in the international markets.

Governments can also intervene in trade by imposing restrictions on the number of goods and services that can be produced and sold in the international market during a particular period of time. Such restrictions are called quotas and play a crucial role in stabilizing supplies in the domestic and international market (Hamilton & Stiegert, 2002). Some governments offer export financing to domestic companies that are engaged in export business. Export financing makes domestic firms products cheap hence more competitive in the international markets.

Other governments have established foreign trade zones with their trading partners. These zones allow certain goods and services to pass through specified geographic zones under minimum or low custom procedures. Because of the high competitiveness of international markets, other countries have established trading agencies to promote domestic products and services. Such agencies help organize trips for domestic producers and local trade officials to foreign countries for the purpose of promoting export products (Kreinin, 1995). A government can also intervene in trade by directly discouraging the importation or exportation of certain goods.

This intervention can be in the form of strict bureaucratic rules and administrative delays. In some cases, a government can impose restrictions on the importation of currency to restrict the importation of certain commodities (Hamilton & Stiegert, 2002).

References

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Brander J.A., (2005). “Strategic trade policy”, National Bureau of Economic Research Working Paper No. 5020.

Bown, C. P. (2009). “Protectionism continues its climb: A Monitoring Update to the Global Antidumping Database”. Brandeis University and The Brookings Institution. Mimeo.

Borchert, I. and A. Mattoo (2009), “The Crisis-Resilience of Services Trade”, Policy Research Working Paper 4917, The World Bank, April.

Dhar, B., (2006). “Modelling the Doha Round outcome: A critical view. ARTNeT Working Paper Series, No. 6.

Dong, F., T. Marsh, and K. Stiegert, (2006). “State trading enterprises in a differentiated environment: The case of global malting barley markets”, American Journal of Agricultural Economics, 88(1), pp. 90-103.

Escaith, H. and F. Gonguet (2009). “International Trade and Real Transmission Channels of Financial Shocks in Globalized Production Networks”, WTO Working Papers ERSD- 2009- 06, May.

Hamilton, S.F. and K. Stiegert, (2002). “An empirical test of the rent-shifting hypothesis: The case of state trading enterprises”, in Journal of International Economics, vol. 58, issue 1, pp. 135-157.

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Kreinin, M. E. (1995). International Economics: A Policy Approach. New York, N.Y: Harcourt Brace Jovanovich, Inc.

Krugman, P.R., (2000). Rethinking International Trade. Cambridge, MA: The MIT Press.

Newman, M., T. Fulton, and L. Glaser. (2003). A Comparison of Agriculture in the United States and the European Community. Economic Research Service, United States Department of Agriculture, Washington, D.C.

Reimer, J.J. and K. Stiegert, (2006). “Imperfect competition and strategic trade theory: Evidence for international food and agricultural markets”, in Journal of Agricultural and Food Industrial Organization, 4(6), pp. 56-78.

Stolper, W. and P.A. Samuelson, (2001). “Protection and real wages”, in Readings in the Theory of International Trade, American Economic Association.

Sally, R. (2008). Trade Policy, New Century: The WTO, FTAs and Asia Rising. London: Institute of Economic Affairs.

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