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In: Economics

For each condition listed below, indicate whether it will increase or decrease the likely success of...

For each condition listed below, indicate whether it will increase or decrease the likely success of a trade embargo. Briefly explain. (2 points each)

i. The group of countries imposing the embargo account for a small share of the targeted country’s trade.

ii. The targeted country is a major importer of goods from the imposing countries.

Solutions

Expert Solution

Trade embargo is a ban imposed by a country or group of countries on trade of some or all goods and services with target country. This may be politically motivated step.

i. If the trade of embargo imposing countries with target country is very small then the likely success of trade embargo decreases. This is because the needs of target country is fulfilled by other countries and embargo imposing countries have no adverse impact on the business of the target country.

ii. If the trade of embargo imposing countries with target country is very large (target country is large importer) then the likely success of trade embargo increases. This is because the target country is dependent on embargo imposing countries for fulfillment of its needs to a large extant. This increases the bargaining power of embargo imposing countries. Thus, embargo imposing countries can achieve for which they imposed trade embargo.

Rahul Sunny answered 2 months ago
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