The paper "Motives for Government Intervention in Trade and Their Consequences" is a great example of business coursework. There are different reasons that make governments across the world to intervene in trade. For instance, governments can intervene in trade to helps protect local firms and jobs, to establish regulations for different aspects of the trade, to enact laws, to protect the cultural heritages that are helpful within their countries, and to create hurdles for some companies so as to limit investments by certain types of companies. The different motives for government intervention in trade can be grouped into three main groups.
These are political, cultural and economic motives. Therefore, this essay will discuss the three main motivations for government intervention in trade. While discussing these motives, the essay will also present the positive and negative consequences that are associated with each method that governments employ as part of their interventions in trade. Political motives By having political motives when they intervene in trade, governments have specific interests that they wish to attain. Political motives for governments getting involved in trade issues include protecting employment opportunities and protecting firms that are regarded as important for the country’ s security, among other interventions (Agrawal, 2001, p.
125). For instance, governments aim to protect their domestic companies and hence jobs when they intervene by protecting local and especially infant industries (Wild & Wild, 2015, p. 217). Since unemployment is a major issue for governments all over the world, governments will get concerned when trade threatens jobs in their nations. For instance, Chinese a state-owned company called Lucky Films faced near-collapse during the 2000s, forcing the government of China to form a partnership with the company’ s main rivals (Tian, 2007, p.
98). The reason for the intervention by the Chinese government was that Lucky Films had employed very many people; hence, if the company collapsed, it would leave very many people without employment. Thus, the intervention by the government not only helped to save the company from collapse but also helped protect the jobs that were being provided by the company. The positive consequence of government intervention in trade to protect domestic companies and jobs is that doing so helps sustain local employment.
In contrast, the negative consequence of such a move is that it can kill competition between the firms that are protected and other firms. This, in turn, can deny the population the wide variety of goods and services that would normally be found in an environment where there is high competition. Lack of competition may also result in high prices due to the limited number of goods and services that are available in the market. Governments also intervene in the trade as a way of preserving national security and thus ensuring that their citizens are protected.
Different countries may limit trade in some industries due to what they consider as security reasons. For example, in India, industries that are related to defence are listed under category A. This category is exclusively a preserve of the government sectors (Aswathappa, 2006, p. 170). What this means is that foreign companies or private Indian companies are not allowed to set up production units for defence-related goods or services. Thus, only the relevant government units are responsible for producing the goods or services in the specified categories as a security measure for India.
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