The Costs Associated with International Quotas and Other...

Economics in International Business What are the Costs Associated with International Quotas and other Trade Restrictions? Introduction There are many different policy tools that can be used to apply limitations on international trade. Countries engage in such polies for a wide array of different reasons or motivations. Generally the most common justification for instituting such a policy is to protect domestic producers in any business activity that is deemed appropriate to protect national interests. For example, if the domestic producer of military weapons is not competitive with other firms on the international market then a country might implement some form of trade restriction to protect the domestic industry from foreign competition. If no trade restriction is placed on the good, such as goods produced by military manufactures, then domestic firms might not be competitive in the international market and be dismantled. In the event of a national emergency not having a strong production base in a strategic industry could severely disadvantage a nation. Therefore countries often intervene in markets to protect w hatever they deem as their strategic interests. This may include defense items, food production, water resources, natural resources, and many others. However, though such interventions may come as result of some strategic goal, they also have significant economic consequences in regards to economic efficiency. This paper will examine some of the economicShow MoreRelatedNafta ( North American Free Trade Agreement1449 Words   |  6 PagesAmerican Free Trade Agreement) was formed in 1994 and created one of the world’s largest free trade zones which includes Mexico, United States and Canada. NAFTA is an example of a multilateral approach to free trade. The multilateral approach states that a country will bargain with its trading partners to remove trade restrictions while the other countries do the same. Another multilateral approach is GATT (General Agreement on Tariffs and Trade) which regulates international trade. GATT is comprisedRead MoreThe Impact Of International Busin ess On Business Environment Essay1633 Words   |  7 Pageswhich enter the international market, are ineffective at risk management, this is a risk in itself for Governments, as it can lead to economic inconsistencies. International business differs from domestic business for a variety of reasons, including as culture, labour and environmental standards, foreign exchange and political, economic and legal systems. The main reason for why there is such a significant difference between the two types of business is due to the increased risk associated with internationalRead MoreTariffs on Imports1681 Words   |  7 PagesIn simplest terms, a tariff is a tax. It adds to the cost of imported goods and is one of several trade policies that a country can enact. Tariffs are often created to protect infant industries and developing economies, but are also used by more advanced economies with developed industries. Here are five of the top reasons tariffs are used: Protecting Domestic Employment The levying of tariffs is often highly politicized. The possibility of increased competition from imported goods can threatenRead MoreIt Role in International Business1455 Words   |  6 PagesInformation technology is an important enabler of business success and innovation. International business International business is a term used to collectively describe all commercial transactions that take place between two or more nations. A multinational enterprise (MNE) is a company that has a worldwide approach to markets and production or one with operations in more than a country. Information technology’s role in international Business †¢ Information technology is everywhere in business †¢ Anyone involvedRead MoreA Study Of Business Activities That Cross National Boarders And The National Governments Essay1695 Words   |  7 Pagesâ€Å"International business is the study of business activities that cross national boarders†¦ and the national governments that regulate them† (Behrman Grosse, 1992, p. 93). As well as briefly defining international business the above quote highlights that it is severely impacted by policy makers. It is important to investigate the relationship between the government and firms which undertake business overseas, in order to understand how and why governments intervene in international business. In recentRead MoreFree Trade Agreements And The Trade Agreement909 Words   |  4 PagesFree trade agreements are established around the world by countries to limit restrictions on trade and investment in hope of benefiting both countries’ economies. A free trade agreement removes barriers to trade eliminating most quotas and removing tariffs on goods and services that can be exported or imported. Many free trade agreements also remove other barriers to trade, like property protection or restrictions on foreign service provider’s industry. China a growing superpower, has the largestRead MoreAmerica s Domestic Markets Against Foreign Traders1749 Words   |  7 PagesOccasionally both tariffs (tax that adds to the cost of imported goods) and import quotas (a restriction placed on the quantity of particular good that a country can import) are used to control the quantity of foreign products that can enter a country’s domestic markets. Several arguments have been raised regarding reasons for protecting domestic markets against foreign traders. Nonetheless, protectionism is characterized by several welfare consequences. The arguments for protectionism can be categorizedRead MoreEconomic Liberalisation Essay984 Words   |  4 Pagesrefers to fewer government regulations and restrictions in the economy, in exchange for greater participation of private entities. Thus, liberalisation in short, refers to the removal of controls, to encourage economic development. Forms of Economic Liberalization:   Liberalization policies include partial or full privatisation of government institutions and assets, greater  labour market flexibility, lower tax rates for businesses, less restriction on both domestic and foreign capital, openRead MoreEssay on Trade Protectionism Put to the Test1951 Words   |  8 PagesTrade Protectionism Put to the Test The idea behind trade protectionism as policy is that domestic industry cannot or should not have to compete with imports from foreign producers and that domestic workers’ jobs are at risk when trade is unrestricted. Most economists, and a large portion of the public would agree when looking at the big picture that free trade is positive for importers and exporters, as well as consumers. The very basic theories of comparative advantage, specialization andRead MoreIntroduction to International Trade1356 Words   |  6 PagesIntroduction to International trade International trade is the exchange of capital, goods, and services across international borders or territories or in other words is the process of import and export. international trade has been present throughout much of history its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced in technology transportation, globalization, multinational corporations, and outsourcing are all having a major impact