GMS 724 Lecture 6: Chapter 6

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 724
• Professor: Howard Lin

Document Summary

The role of stakeholders: all countries seek to influence trade, and each has economic, social, and political objectives: Economic rationales for government intervention: why governments intervene in trade, this table shows the reasons for government intervention in trade. Notice that there are both economic and noneconomic reasons for intervention. Protecti(cid:374)g (cid:862)i(cid:374)fa(cid:374)t-i(cid:374)dustries(cid:863: the infant-industry argument for protection holds that government prevention of import competition is necessary to help certain industries move from high-cost to low-cost production. Improving the balance of payments: raising prices to foreign consumers, gaining fair access to foreign markets, preventing foreign monopoly prices, assuring that domestic consumers get low prices. In protecting essential industries, countries must: determine which ones are essential, consider costs and alternatives, consider political consequences. Pre(cid:448)e(cid:374)ti(cid:374)g hip(cid:373)e(cid:374)ts to (cid:862)u(cid:374)frie(cid:374)dly(cid:863) cou(cid:374)tries: considerable governmental interference in international trade is motivated by, political rather than economic concerns, maintaining domestic supplies of essential goods, preventing potential enemies from gaining goods that would help them achieve their objectives.