For more information
Call 1-800-351-0222
Call 1-800-351-0222
GOVT. INTERVENTION IN GLOBAL TRADE.
Term Paper ID:24071
Get This Paper Free! or
Essay Subject:
Need for, restrictions on, advantages & disadvantages of govt. involvement in trade & foreign investment.... More...
6 Pages / 1350 Words
8 sources, 8 Citations,
TURABIAN Format
$24.00
More Papers on This Topic
Paper Abstract:
Need for, restrictions on, advantages & disadvantages of govt. involvement in trade & foreign investment.
Paper Introduction:
Outline
I. Introduction
II. Corporate Policies
A. Increase in International Trade
B. Reasons for International Trade
1. Increased Domestic Competition
2. Attractiveness of Overseas Markets
3. Formerly Communist Markets
III. Government Intervention
A. Domestic Participation in Foreign Operations
B. Tariffs
C. Boycotts and Embargoes
D. Political Intervention
E. Local Government In
Text of the Paper:
The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper.
[2]"Sales Force One," The Economist, 12 April 1995, 54. In this way, companies cannot sell goods at artificiallylow prices in a foreign market merely to gain market share. Increase in International Trade B. The competition facing companiesdomestically is increasingly from foreign firms. Formerly Communist MarketsIII. Tariffs C. Similarly, China has opened the way forcompanies to enter that market, which is considered one of the mostlucrative in the long-term because of its population.[3] Government Intervention As mentioned previously, government intervention can take the form ofregulations requiring a certain percentage of domestic participation incompanies owned by foreign companies, or otherwise restricting ownership.A number of countries participate in this type of protectionism, includingMexico. By marketing to avariety of nations, a company is not so severely affected by a downturn inany one country's economy. Because the UnitedStates imposes fewer restrictions on imports from these nations, thecountries gain a competitive advantage at American companies' expense.[6] Government intervention does not always encompass merely economicevents. There are two primary reasons whythey do this: competition and markets. Government intervention in the form of subsidies to American companiesalso artificially lowers the price of goods and services to the Americanconsumer, but this is in the consumer's best interest, at least in theshort term. Inthese cases, such intervention can involve favorable tax credits as well aspresentations which emphasize the benefits of doing business not onlywithin the United States, but within a particular region.[8] Advantages of Government Intervention Government intervention provides some protection to American industrywhich, in theory, protects American jobs and helps maintain the status ofAmerican workers. They are found in most every country as lobbies ofone industry or another are successful at securing tariffs for theirprotection. Individual states, and even local communities can take an activerole in trying to attract business from overseas to their communities. Domestic Participation in Foreign Operations B. Americans, for example,purchase cars and electronics made in Japan, ham and golf carts from Polandand shoes from Brazil.[2] The other major reason that companies consider the internationaleconomy is the availability of markets. Recommendation At this point, it is highly unlikely that any nation would becompletely willing to cease all trade intervention because it is perceivedthat such a move would put the nation's companies and industries at adisadvantage. Boycotts and Embargoes D. As a result of revolutions incommunications and transportation, goods can travel more easily than at anyother time in history. Disadvantages of Government Intervention The most obvious disadvantage of any government intervention is thatit disrupts the free market influence on the economy and thus artificiallyinflates (or deflates) prices. There are domestic regulationsto consider, regulations in the destination country, the logistics ofmoving the product to the destination country and successfully building amarketing program there, and problems with foreign exchange.[1] Despite these difficulties, an increasing number of companies aremarketing on an international basis. Government Intervention A. [8]Jane Bussey, "Florida International Trade Experts Try to Get on theRight Track," Knight-Ridder/Tribune Business News, 28 May 1997, 528B 923. GATT is one attempt to accomplish this, and thosediscussions have been underway for decades. BibliographyBussey, Jane. Political changes are also an area of risk that companies face whenthey take on international marketing. Government intervention in trade also requires that politicians assumethe role of economists, and particularly talented economists. Trade patterns have changed as a result of thisfreedom of movement, and nations have taken up trade policy as a matter ofstrategic importance. [3]Department of State, "China Country Commercial Guide," Washington,DC: 1996, 2. In thisway, trade policy becomes a matter of foreign policy, and the relationshipbetween commerce and politics becomes blurred. Political Intervention E. This research considers the effects of corporatepolicy in the form of government intervention and whether or not thegovernment should adopt an interventionist stance with regard to trade andforeign direct investment. "Aide Says Clinton Stands Firm on China Trade-Rights Call." Journal of Commerce and Commercial, 9 June 1994, 2A."Sales Force One." The Economist, 12 August 1995, 54-55."Thoroughly Modern Mercantilists." The Economist, 1 February 1997, 21-23.----------------------- [1]"Thoroughly Modern Mercantilists," The Economist, 1 February 1997,21. Boycottsand embargoes have been used by governments for centuries in order toaccomplish political ends. Such government intervention is intended toachieve domestic political ends, although it can also be used to motivate aforeign country to change its ways. Bibliography Introduction International trade is now an economic fact of life as Canadianconsumers can purchase cars assembled in Mexico with parts made in SouthKorea by a manufacturer based in Japan. [4] One of the most common intervention strategies is the imposition oftariffs on imported goods. Tariffs are a hotly debated issue and a particularly difficult problemfor trade negotiators. Tariffs andsimilar financial barriers to trade artificially increase the price ofgoods to American consumers leaving the consumers essentially worse off.Blocking direct investment by companies located in nations whose politicsare not favorable to the United States probably results in less harm to theAmerican consumer (with notable exceptions such as oil). Attractiveness of Overseas Markets 3. Protection of American Industry B. Quotas andtariffs may limit the amount of foreign goods which enter the country, butthey reduce the number of goods available and increase the price of goodsto American consumers. "Florida International Trade Experts Try to Get on the Right Track." Knight-Ridder/Tribune Business News, 28 May 1997, 528B 923.Department of State, "China Country Commercial Guide," Washington, DC: 1996."Executive Summary." Business America, September 1996, 16-27.Harling, K. Reasons for International Trade 1. Local Government InterventionIV. President Clinton, for example, supports free trade withmembers of the Asia-Pacific Economic Cooperation (Pacific Rim countries),but these nations have a tradition of opposing imports. Recognizing this, thegovernment must continue to intervene in trade issues, but should do sowith a long-term plan in place which recognizes the economic effect thatthe government's actions have on the market. These are fees that are charged on specificproducts entering a market that go to the government. But government intervention extends well beyond merely requiringdomestic participation in foreign operations. In the long term, companies who benefit from such practicesare unlikely to develop effective methods of production; such companieswill suffer harm if the subsidies are eventually removed. OutlineI. [5]"Executive Summary," Business America, September 1996, 17. [7]James Maggs, "Aide Says Clinton Stands Firm on China Trade-RightsCall," Journal of Commerce and Commercial, 9 June 1994, 2A. Benefits to American ConsumersV. It remains to be seen whether anygovernment can pursue such a limited trade intervention policy, but this isthe best solution for an ostensibly free market in today's global economy. "Business Strategies as a Market Opens." Agribusiness, May- June 1994, 259-273.Kuttner, Robert. Market opportunity and growth iscertainly present in foreign countries, although purchasing power can varygreatly. Introducing and marketing products abroadincreases the company's overall market share, and is thus a competitivedecision that many companies are turning to. Even intoday's high technology environment, expanding into the internationalmarket comes with significant difficulty. RecommendationVII. Corporate Policies A. President Clinton encountered thisproblem when he considered whether or not to renew China's Most FavoredNation (MFN) trading status with the United States. Some analysts argue that tariffs can be imposed for thegreater good of the economy. F. IntroductionII. The issue then becomes what type of government intervention isappropriate, and there are different ways of measuring this. F. Disadvantages of Government Intervention A. The goal behindtariffs is to increase the price of goods entering the market so that theimported goods are priced at the same level or higher than domesticallyproduced goods. Heeventually permitted the status hoping that China will accomplish changethrough opening of its markets and increased interaction with Westerninfluences.[7] Government intervention is not limited to the federal government,however. [6]Robert Kuttner. Confusion Between Politics and EconomicsVI. For example, tariff reform programs that areboth welfare improving and revenue enhancing can be effectivelyimplemented, according to some analysts. However, trade negotiations havereplaced traditional warfare (in some situations) and nations throughoutthe world, including those which pride themselves on operating in acapitalist and free market, still maintain interventionist policies. Taking short-term action toachieve political ends, for example, should be avoided, and industrieswhich may well be obsolete in the world market should be phased out ratherthan simply protected at all costs. For many products and services, companies are turning to thediversification that international marketing brings. Advantages of Government Intervention A. Corporate Policies International trade is possible because companies are willing to takeon the expense and difficulties associated with the process. In theseinstances, the issue becomes whether there is a ready supply of substitutegoods available. For example, American and Britishoil companies operating in Iran faced high losses when that countrynationalized the oil industry. The Soviet Union and the People's Republic of Chinaprovide two examples of such marketing efforts. There was muchopposition to this because of the human rights violations that occur inChina, and the president was faced with deciding whether or not thewithholding of the designation would encourage increased human rights. Although the Soviet Unionno longer exists in its former configuration, the individual member stateshave become increasingly attractive markets for a number of American andWestern European companies. Sometimes, governments prevent domestic companies from exportingto certain countries for political reasons. If the rest of the world participated in a free economyand did not take protectionist measures, it would make sense for the UnitedStates to adopt this same stance. "The Pacific Rim: Why Clinton Is at Sea,"Business Week, 13 December 1993, 22. [4]K. Harling, "Business Strategies as a Market Opens,"Agribusiness, May-June 1994, 259-273. These investigators conclude thattariffs which are over their revenue maximizing levels should be reduced,while those whose subsidy effect is to increase revenue should beraised.[5] The debate over how open markets should be continues to plaguepoliticians. If this werepossible (and there are companies that continue this practice), domesticcompanies would be at risk; once the domestic competition is eliminated,the foreign importer would be free to raise prices to consumers. For example, during the ColdWar, Western countries generally placed limits on the type of hightechnology equipment that could be exported to Eastern Europe. Disruption of Free Market Practices B. "The Pacific Rim: Why Clinton Is at Sea." Business Week, 13 December 1993, 22.Maggs, James. If foreign companies are encouraged toparticipate in the American economy through favorable tax status, forexample, that is most likely to the detriment of American companies locatedin different regions who do not have the same cost advantages. Increased Domestic Competition 2. Sincegovernment intervention requires constant adjustment as the conditions ofthe market change, any type of government intrusion must be kept in placefor a long period of time and continually refined and modified. In recent years, there has been an increasing move toward marketing tocommunist countries.
If this paper is not what you are looking for, you can search again:
or
We can write a Custom Essay just for you.
Browse Essays by Subject