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).
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