GMS 724 Chapter Notes - Chapter 6: Export Restriction, Ad Valorem Tax, Asteroid Family

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 724
• Professor: Lori Anne Heckbert

Document Summary

Despite free-trade benefits, governments intervene in trade to attain economic, social, or political objectives. Officials apply trade policies that they reason will have the best chance to benefit their nation and its citizens, and sometimes their personal political longevity. One difficulty with restricting imports to create jobs is that other countries, whose production may typically drop as a result, normally retaliate with their own restrictions. In deciding whether to restrict imports to create jobs, governments must face the difficult task of comparing the costs of limiting imports with the costs of unemployment from freer trade. Persistent unemployment pushes many groups to call for protectionism: unemployment is better dealt with through fiscal and monetary policies. It does not necessarily follow that those companies should receive governmental assistance: some segment of the economy must incur the higher cost when local production is still inefficient (ie: paying higher taxes)