Essays on World Economy Assignment

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Political, economic and cultural motives behind government intervention in tradeIntroduction After the end of the world war, the world economic power houses led by the US came together in Bretton New Hampshire to establish new monetary system to replace the Gold standard system which had collapsed during the great depression of the 1930s. The driving idea behind the revising the monetary system was the need to enable expansion in money supply through international trade and to revive the world economies that had been devastated by the war (Triffin, 1957, p. 124, Bordo, 1993, 98).

Bretton woods agreement lead to the creation of the International Bank for Reconstruction and Development (IBRD) now known as the World Bank. The bank was to provide the struggling and underdeveloped world nations with capital for reconstruction and development (Bordo, 1993, 99, Eichengreen, 2008, 213). International monetary fund was set up to among other things help nations correct imbalances in trade deficits and surpluses. Despite all these efforts to promote world trade and remove structural barriers to world trade, the objectives of achieving balanced trade and economic development in the world have failed partly due to vested interests in governments all over the world (Subedi, 2003, p. 154, Bagwell & Staiger, 2004, p 120-123).

Government motives in world trade range from political, economic and cultural, all of which have considerable implications to their citizens. Kerr & Gaisford, (2012, p 56) contend that in as much as governments want to commit to promoting international trade among nations, they are driven by self interests of the domestic environment in which they are directly accountable for the actions they take unlike in the international arena where governments actions are just to foster relations and show goodwill.

This paper seeks to exhaustively analyze factors behind governments interventions in world trade under the sub topics; economic, political, and socio-cultural. Political motivesGovernments all over the world are entrusted by their citizenry to provide employment and favorable environment for businesses to thrive. According to Kerr & Gaisford (2008, p 187) this can only be achieved if the economy is able to utilize the available factors of production to produce goods and services of value to be traded and in turn provide the much needed employment to the masses.

Rising levels of unemployment are a concern to every government that wants to survive through its time in office. Having a huge section of the population that is not employed is a recipe for political instability and unrests that may overthrow the government. Governments will majorly seek to increase the volumes of what is produced or manufactured in their country and reduce what is being imported. While it is not realistic to have a nation exporting to only be exporting to its trading partners and importing nothing, it is the idealistic target.

If a country exports more and invests less, then the local businesses will thrive and employment will be achieved as well as full utilization of economic potential. The result will be a government that is having a smooth stay in office with little unrests from the citizenry and therefore increasing its chances of staying in office (Schnabel, 2010, p. 237).

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