Question

economic argument for government intervention in the international trade.

Answer 1

Arguments for government intervention:

Political arguments are worried about protecting the interests of certain groups within a nation (producers), often at the expense of other groups that are consumers.

Economic arguments are naturally anxious with improving the overall wealth of a nation to the benefit of both producers and consumers.

Political arguments for government intervention include:

Ø safeguarding jobs

Ø safeguarding industries deemed important for national security

Ø retaliating to unfair foreign competition

Ø safeguarding consumers from dangerous products

Ø furthering the goals of foreign policy

Ø safeguarding the human rights of individuals in exporting countries.

> Safeguarding jobs and industries are the most common political reason for trade restrictions. generally, this occurs from political pressures by industries that are threatened by more efficient foreign producers, and have more political power than the consumers will definitely pay the costs.

>Industries such as aerospace, electronics are often protected because they are the most important for national security.

>When governments is forced to take some specific actions, other countries may remove trade barriers, If threatened governments don’t back down, tensions can circulate and new trade barriers may be passed.

>Governments may intervene in markets to safeguard consumers.

>Foreign policy objectives can be maintained through trade policy, Preferential trade terms can be approved to countries that a government wants to build strong relations. They can also punish states not following laws and norm.

Economic arguments for government intervention include:

> strategic trade policy

>infant industry argument

The infant industry argument advises that an industry should be sheltered until it can develop and be feasible and competitive internationally. The infant industry argument has been accepted as an explanation for temporary trade limits under the WTO, it can be hard to scale when an industry has grown up. Some people argue that if a country has the potential to grow a feasible competitive position its firms should be capable of raising essential funds without extra support from the government.

Strategic trade policy proposes that in situations where there may be significant first-mover advantages, governments can help firms from their countries attain these benefits. Strategic trade policy also advises that governments can help firms to overcome obstacles to entry into industries where foreign organization have an initial advantage