Government protectionism case study

Document Type:Case Study

Subject Area:Economics

Document 1

The import and export tariffs define the prices and of imported goods sold locally and the exported goods sold in the foreign countries. Governments have a great responsibility in ensuring that there is fairness in the way business is conducted in their countries and across border (Jones, 2012). Through negotiating on trade policies different countries can ensure that they benefit from each other as they allow fairness in the trade policies and terms between their nations. However, although international trade and agreements may allow free trade between nations, this may not work towards protecting a nation’s market and the growth of its economy. Free trade between a number of nations only makes the trading process between these nations easy and allows free movements of goods across the borders.

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This has helped the country gain economic power and even dominates the foreign markets. Before the United States economy began to raise, free trade between nations the economy of the country had received no progress and the influence of foreign trade had threatened to suffocate its economy. One of the methods used by the government of United States to show its support in its local business and economic growth is discouraging the importing of foreign goods through imposing high import duty (Bernitz & Ringe, 2010). This makes it very expensive for importers and exporters to do business to import foreign goods into the United States’ market. The locally produced goods then enjoy dominance in the local market and the general economy of the country is supported.

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This shows the role of government in putting the fate of its local business first and preventing influence from the foreign importation of goods which can really be produced locally. Through discouraging the free trade policy, the governments of the United States of America has played a role in protecting its local industries. Free trade which is supportive of free movement of goods between countries had a negative impact on the country’s economy. The country’s companies and business had received stiff competitions from the foreign markets. Through the government’s efforts of eliminating the free trade, the local business and industries grow very rapidly. A government can decide to prevent the importation of such goods to ensure that the health of its citizens is not put at risk.

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This is because the government might end up spending a lot of resources and money in treatment and health sector. The use of capital might lead to the government spending so much in one area and find it difficult to undertake other developmental projects. A healthy nation is a nation with energetic citizens who can work to support the country’s economic status and therefore the government might not allow the import of unsafe goods into its local market (Rössner, 2016). Globally the market trends are changing very significantly due to the changing market polices and exchange rates. Man power in a country determines the amount of skilled labor a country can get to work in its industries. Skilled labor ensures that there is adequate and quality production of goods and materials which are marketable.

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