Question

In: Economics

In your reasoned opinion, is the current economic and regulatory environment in the United States conducive...

In your reasoned opinion, is the current economic and regulatory environment in the United States conducive to small business growth and entrepreneurship? Why or why not?

Solutions

Expert Solution

Presently the United States is abiding by a protectionist stance in the global economy. Such a stance is fruitful for domestic entrepreneur and small business as they are saved from cut throat price competition prevailing world wide. Farmers are one who would benefit from such a trade restrictions. In short run, domestic producers and entrepreneurs gain in terms of enhance production and less price fluctuations caused by world prices.

However in the long run such a policy could cause loss to economic prosperity because trade allows nations to enjoy export of goods or services where comparative advantage is enjoyed. Whereas import services and goods where there is a comparative disadvantage. Trade barriers could hinder the free flow of market and cause production loss. Since the immigration policy is also skewed there could also be a loss of human capital particularly in the arena of information technology.

The United States has witnesses a growth of 2-2.5% of GDP in the past year due to protectionist stance. But this kind of growth won't be sustainable in nature. Rather United States needs to focus on domestic reforms instead of trade restrictions.


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