The paper 'Protectionism is a Flawed Tactic' is a wonderful example of a Business Essay. International trade offers individuals and businesses immense opportunities for growth. For instance, businesses can achieve significantly higher sales volumes by marketing their products in foreign markets. In the same way, local markets can benefit from the increased options that come with international trade. Despite the acceptance of the benefits of international trade to the modern world, governments still feel like they have to intervene in international trade. The reasons for intervention can include economic, social, or political objectives (Cavusgil 2014).
This paper examines the main motives for these government interventions in international trade. In addition, the paper examines the defensive and offensive methods that governments use to intervene in international trade, as well as their positives and negatives. Motives for Government Intervention in Trade Infant Industry Protection According to Cavusgil (2014), one of the prominent reasons for intervention in trade is the desire to protect infant industries. Countries develop at different paces, and there are situations where a particular industry starts to emerge. This emerging industry might hold significant promise, and its success might give a country a competitive advantage in international trade.
Therefore, a government might deem it necessary to protect such emerging industries as they go through their learning curves. It is worth mentioning that the learning curve might subject the country to a lot of disadvantages. An appropriate example can be seen in the electronics industry where a country can tolerate low-quality electronics as it gives local manufacturers the opportunity to gain experience. Eventually, the country will get access to improved electronic devices that are cheap and locally made.
There is the further possibility that the infant electronics manufacturer will gain access to the international market, thereby benefiting the country through a vastly improved balance of trade. Industrialization Industrialization is one of the rationales for intervening in international trade. International trade often results in an environment where the most innovative firms prosper while the rest are shut down. This can lead to a lot of dependence on foreign producers which inhibits local industrialization. Governments intervene in international trade to allow their countries to industrialize (Cavusgil, 2014).
This allows local workers to get employment opportunities as a result of the desire to boost productivity and eliminate dependency on foreign goods. The intervention also allows a country to diversify. This might be critical for a country, say in Africa, which fully relies on agricultural produce that can be wiped out when there are extreme weather conditions. The intervention also fosters industrialization since foreign companies chose to invest in the country instead of missing out on its entire market. In turn, the local investment benefits the country through employment opportunities and improvements in infrastructure.
Other advantages of the local industrialization are enhancing living standards, developing rural areas, and improving the overall skills of the workforce. The government also benefits as industrialization attracts businesses that will pay considerable taxes in the long run. Foreign Policy goals As in the case of industrialization, different countries have different foreign policy goals. For instance, many European nations have a desire for eventual full integration into the European Union. In the same way, emerging countries like India, China, and Brazil want to increase their levels of cooperation in order to gain a bigger say in the global platform.
In contrast to these desires for more trade, trade between Cuba and America has been virtually non-existent as a result of foreign policy that views Cuba as a non-friendly country. These foreign policy goals influence the choice of the countries that will be given preferential treatment in trade and those with whom trade will be restricted. Preferential treatment amounts to intervention in international trade since factors like price and the quality of final products can be ignored. It is evident that foreign policy can be a key motivation for intervening in international trade.
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