Trade policy Flashcards
(21 cards)
what are the four main economic rationales to intervene in trade
- fighting unemployment
- protecting infant industries
- developing an industrial base
- economic relationships with other countries
what are the four noneconomic rationales why governments intervene in trade
- maintaining essential industries
- promoting acceptable practices abroad
- maintaining or extending spheres of influence
- preserving national culture
what are the two types of trade control
- direct price influencers
- direct quantity limiters
two examples of direct price influencers
- tariffs
- subsidies
example of direct quantity limiters
quotas (nontariff barier)
what is protectionism
set of government policies that limit international trade to support domestic industries
fighting unemployment
Governments may restrict imports or encourage domestic production to protect local jobs and reduce unemployment.
protecting infant industries
Governments may restrict imports or provide subsidies to protect new or emerging industries from international competition. This allows these industries time to grow, become competitive, and achieve economies of scale.
stakeholders include
- workers
-owners
-suppliers
-local politicians
developing an industrial base
help to improve competitive positioning.
what trade controls can be used for
- improve balance of payments
-gain fair access to foreign markets
-bargaining tool - control prices
why do countries promote industrialization
-brings faster growth than agriculture
-brings in investment funds
-diversifies the economy
-creates growth in manufactured goods
-reduces imports and promotes exports
maintaining essential industries
protect essential industries so the country is not dependent on foreign supplies
what do countries must do to maintain essential industries
- determine which industries are essential ** but any product can be deemed as essential
- consider costs and alternatives
- consider political consequences
promoting acceptable practices abroad: what import trade controls can be used for
-promote changes in foreign countries’ political policies or capabilities
as a foreign policy weapon
to pressure governments to alter their stances on various issues ( human rights. environmental protection)
maintaining or extending spheres of influence
economic agreements while creating political benefits
preserving national culture
certain things we want to protect (ex: rice in Japan)
specific duty
per unit basis (amount)
ad valorem
a percentage
compound
dollar + percentage
