Presentation 7

Presentation 7 - 10/21/2010 1 CHAPTER 7 GOVERNMENT...

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Unformatted text preview: 10/21/2010 1 CHAPTER 7 GOVERNMENT INTERVENTION IN INTERNATIONAL BUSINESS IB200 Fall 2010 THE POLITICAL ECONOMY OF INTERNATIONAL TRADE: Political arguments for government intervention include: Protecting jobs Protecting industries deemed important for national security Retaliating to unfair foreign competition Protecting consumers from dangerous products Furthering the goals of foreign policy Protecting the human rights of individuals in exporting countries Economic Arguments for Intervention Protecting infant industry Pursue strategic trade policy Cultural Motives for Intervention Protect national identity Switzerland imposed trade barriers to preserve its long-established tradition in watch making. Japanese restrict the import of rice because it is central to the nations diet and food culture. U.S. opposed Japanese investors purchase of the Pebble Beach golf course in California, New Yorks Rockefeller Center, and the Seattle Mariners baseball team, all considered to be part of the national heritage. France does not allow significant foreign ownership of its TV stations because of concerns that foreign influences will taint French culture. Government intervention is an important dimension of country risk IB200 Fall 2010 10/21/2010 2 D EVELOPING A NATIONAL TRADE POLICY : F REE T RADE OR F AIR T RADE ? IB200 Fall 2010 Free trade implies minimal government influence on the exporting and importing decisions of private firms and individuals. Fair trade (also called managed trade ) suggests active intervention by the national government to ensure that exports receive an equitable share of foreign markets and that imports into the country are controlled to minimize losses of jobs and market share in specific industries. IB200 Fall 2010 10/21/2010 3 PROTECTIONISM Protectionism refers to national economic policies designed to restrict free trade and protect domestic industries from foreign competition. Defensive barriers safeguard industries, workers, special interest groups, protect infant industries and to promote national security (export controls). Offensive barriers pursue a strategic or public policy objective, such as increasing employment or generating taxes 2000s- The Bush administration imposed tariffs on the import of foreign steel into the U.S. because competition from foreign steel manufacturers had bankrupted several U.S. steel firms, and this was to give the U.S. steel industry time to restructure and revive itself. The steel tariffs were removed within two years. The U.S. government imposed a $50 per ton duty on the import of Mexican cement after U.S. cement makers lobbied the U.S. Congress....
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Presentation 7 - 10/21/2010 1 CHAPTER 7 GOVERNMENT...

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