GMS 724 Lecture Notes - Lecture 6: Trade Restriction
Document Summary
To explain the rationales for governmental policies that enhance and restrict trade. To describe the potential and actual effects of governmental intervention on the free flow of trade. To illustrate the major means by which trade is restricted and regulated. All countries seek to influence trade, and each has economic, social, and political objectives: interest groups, conflicting objectives. There are 2 reasons why government intervenes in trade. Noneconomic rationales: fighting unemployment, protecting infant industries, promoting industrialization, improving comparative position, maintaining essential industries, promoting acceptable practices abroad, maintaining or extending spheres of influence, preserving national culture. Less likely retaliated against effectively by smaller economies. Less likely to be met with retaliation if implemented by small economies. May lead to retaliation by other countries. May decrease export jobs because of price increases for components. May decrease export jobs because of lower incomes abroad. Governmental prevention of import competition is necessary to help certain industries move from high- cost to low-cost production.