9 The Political Economy of Trade Policy 9.1 The Case for Free Trade 1) The efficiency case made for free trade is that as trade distortions such as tariffs are dismantled and removed, A) government tariff revenue will decrease, and therefore national economic welfare will decrease. B) government tariff revenue will decrease, and therefore national economic welfare will increase. C) deadweight losses for producers and consumers will decrease, hence increasing
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referenced) TableofContents: 1. Explain why governments may advocate free trade whilst at the same time resort to protectionism to protect their domestic industries 3 2. Explain what types of barriers may be used and what impact they have on consumers and producers 9 Part1:Explain why governments may advocate free trade whilst at the same time resort to protectionism to protect their domestic industries. Introduction Free trade has been growing the last three decades due to
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This chapter focuses on the political systems and tools of trade policy. The major objective of this chapter is to describe how political realities shape the international trading system. With an introduction to tariffs, subsidies, and the development of the world trading system, the chapter describes the evolution of the World Trade Organization and its impact on the global business environment. While in theory many countries adhere to the free trade ideal outlined
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sure that a country or firm does not take advantages over another in a negative way. Though free trade has grown rapidly since 1950 and has been extremely beneficial to various states, “trade has another and more controversial effect, and that is its cultural effect, its impact on values, ideas, and behavior of a society” (Gilpin 1987: 172). While most states tried to limit trade, Gilpin (1987) states that numerous economic nationalists or mercantilist writers consider trade as a negative concept
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Promoting Trade Subsidies Subsidies in Media and Entertainment Drawbacks of Subsidies Export Financing Foreign Trade Zones Special Government Agencies Methods of Restricting Trade Tariffs Protect Domestic Producers Generate Revenue Quotas Reason for Import Quotas Reasons for Export Quotas Voluntary Export Restraints Tariff-Quotas Embargoes Local Content Requirements Administrative Delays Currency Controls Global Trading System 1 General Agreement on Tariffs and Trade (GATT)
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Foreign Trade and Exchange International trade exists due to things produced in a particular country that individuals, firms and governments in foreign countries want to purchase. Trade provides a greater selection of goods and services to choose from, often at lower costs than at home. In order to prosper and profit, countries want to use their resources such as labour, land and capital, as efficiently as possible. However, the quantity, quality and cost of resources can differ substantially between
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do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. Another difference between domestic and international trade is that factors of production such as capital and labor are
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OAPEC (organisation of Arab petroleum exporting countries) have decided an oil embargo "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. The economic effect was immediate. The price of oil quadrupled by 1974 to US$12 per barrel (75 US$/m3). The most important effect was on the economy. Because of this embargo some countries couldn’t export or import their product in foreign country. This embargo put some countries in a big trouble concerning the oil supply
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countries. Exports are the goods and services which leave your country whereas imports are the ones which enter. Therefore export promotion includes incentives to produce exports, eg subsidies. Import substitu-tion is a policy which replaces imports with domestically produced goods eg by implementing tariffs and quotas on imports. Both strategies promote growth but they both have many advantages and disadvantages as explained throughout this essay. Import substitution industrialisation is a popular
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ON TRADE OBJECTIVES • To realize the rationales for government policies that enhance and restrict trade • To interpret the effects of pressure groups on trade policies • To understand the comparison of protectionist rationales used in high-income countries with those used in low-income countries’ economies • To comprehend the potential and actual effects of governmental intervention on the free flow of trade • To understand the major means by which trade is restricted and regulated •
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