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CH 7

Terms in this set (20)

to achieve economic, social, and political goals
Why do governments intervene in Trade?
to balance conflicting objective and various interest groups (stakeholders)
What are issues with government intervention on trade?
-fight unemployment
-protecting infant industries
-promoting industrializations
-improving comparative position
What are the economic rationales in why the government would intervene in trade?
-maintaining essential industries
-promoting acceptable practices abroad
-maintaining or extending spheres of influences
-preserving national cultures.
What are non-economic rationales in why the government would intervene in trade?
Unemployed people
Which group are especially effective in helping government establishing import restriction?
government policies that restrict international trade to help domestic industries. Usually implemented to improve economic activity within a domestic economy but can also be implemented for safety or quality concerns.
What is Trade Protectionism?
-Retaliation by others
-Higher prices for consumers
-decreased export jobs
-unemployment
What are problems with restriction on imports?
party that has an interest in a company that can either affect or be affected by the business
Who are stakeholder?
investors, employees, customers, and suppliers
What are examples of stakeholders?
can impact the overall economies and circulation of cash flow.
Why would government want to favor stakeholder's interests?
limit imports, promote exports
How do government improve employment?
selling below cost or below home country prices, without good cause
What is the concept of dumping?
Japan sold consumers electronics at high prices in its own country, because
there is no foreign competition, but sells at a much lower price in US markets
to maintain market share.
What is an example of dumping?
reduce in imports promotes export-led development; countries become
self-sufficient and lower their dependence on developed nations. They do
this by developing their own industries so they can compete with other
countries that rely on exports. Export goods for which the nation has comparative
advantage in.
Describe what is meant by Export-led Development
new industries that need time to grow up and have sufficient sales volume to become competitive before big foreign companies come in
Understand the Infant Industries argument for intervention.
protect essential industries so the country is not dependent on foreign supplies during war. In doing so, countries must determine which industries are essential, consider costs, consider political consequences (such as international relations)
What is Essential Industries argument for intervention
taxes charged by customs authority on the importation of goods to a country ( tax on products entering a new land by foreign country)
What is import tariff?
tax imposed by a government of a country or of a supranational union on imports or exports of goods. (tax of product leaving homeland)
What is export tariff?
duty or tax imposed by a nation on merchandise crossing its territory en route from one country to another. (ex: US ship to China, transit it kenya, kenya charge 2%)
What is transit tariff?
Subsidies, Quotas, VER, standards and labels, administrative delays, and restrict trade and services.
What are non-tariff barrier?
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