Political, Economic and Cultural Motives behind Government Intervention in Trade - Essay Example

Title Name Course Tutor Date Political, economic and cultural motives behind government intervention in trade Free trade is the activity by which countries export and import goods and services in the absence of trade barriers. The national governments have taken advantage of this and have intervened in the trade and services and goods. The governments impose restrictions to trade for the purpose of political, economic and cultural factors. The states set policies and strongly intervene in support of the domestic trade i.e. the exporting activities. When the nation’s economy is underperforming, there are charges imposed on interventions on the trade. The people have to depend on the government to come to aid when tough economic times arise. The workers and the businesspeople need to have their trading activities protected so as to enhance the export domestic trade. The essay is trying to look at the government involvement in the trade by examining the political, economic and the cultural motives for the intervention. Political motives Most of the governments in various countries discuss and make their decisions basing their policies on the political interest. This is evident as the politicians depend on voters who they please so as to get re-elected into the government again. There are various motives behind the intervention of the government. The politicians find it wise for the government to set trade policies basing their decision on the political views. The policies must protect the jobs of the people, Look into ways of preserving and maintaining the national security, responding and recovering other countries unfair trade practices and lastly gaining the influence over the other nations. (Meow-Chung, 2001) Protecting jobs: Despite the wars that the country may be involved in, the government can collapse at a very vast rate if the rate of unemployment is very high. This is the duty of the government to safe guard the workers of its state i.ie to ensure that the jobs are not threatened at the domestic level. The was a suggestion by the South American president, who aired her claims on a weekly radio talk show that the citizens should embrace buying of the local goods and buying the imported goods didn’t add nay value to the product but otherwise provoked the local business where many lost their jobs locally. She urged those who were importing goods from outside country not to overstock the country with the foreign products. (Siebrits, 2002) Preserving the national security The National security is an essential basic to any kind of business either locally or internationally. All industries and the business enterprises have to be offered with the government sponsored protection. There are some imports that the government has to strictly be involved to preserve the national security. The government sets agencies that are going to access to the domestic supply of goods such as the weapons, fuel, land and sea transportation and air. This is triggered by the effect of fear of eruption of wars that will affect the flow of business. America has been fond of searching for oils beyond their national borders to legitimate the national security (Bernard, 2003). Other countries have been protecting their agricultural sector in order to Sustain its people incase war erupts. The agricultural subsidies provided by the government are meant to give back a fair reward to the farmers. Many farmers practice the small scale farming and this is followed by high cost in the production and they have low profit returns. The government agencies are helping the farmers to get exposed to the agribusiness and they introduce new ways of farming with the use of the new technology. The international trade restrictions can bring some negative impacts to the country since when there is competition; the cost of continuing to produce might be very high compared to importing of the same project. (Bevan, 2004) There the policy enhancers should consider the impact of the policy at any level. There are those goods which have dual uses i.e. the industrial use and the military use. Governments need to impose a ban on the products since they pose threats to the national security. Terrorist threats are increasingly urging the governments to aid in forming policies that will contain special approvals from the Union of the countries. Response to “Unfair” Trade It is believed that all the nations must act fairly in trading activities. Therefore there is no need of a country practicing free trade and other countries are protecting their industries and businesses. The governments are forced to impose high tariffs on the goods coming from a country that has protective issues. For the countries which have coastlines they close their ports from being accessed by the nations imposing the restrictions in trade. Therefore if one country plays an unfair game from the perspective of restricting trade and therefore the same should be in incorporated to the same country. Gain influence The superior countries have the capability of influencing the inferior countries. Countries have to make sound deals with other countries. Countries such as Japan have shown proficiency in making deals with the Asian countries. Since the country has been has been faced with the financial crisis, it has to make the deals to help in its recovery. The united states have controllably introduced the free-trade initiatives. Economic Motives There are some economic motives which influence the intervention of the government into the trade. The motives are the protection of the young and uprising industries and also promoting the trade policies strategies. Protecting infant industries: A country needs to show its competitiveness to the international community and for the developing country they need to be protected from the international competition, since they have to adapt to the developing phase. The phase ensures that the country has been able to effectively compete with the other nations. Protecting the young industries is more important to the domestic organizations since they become more confident and are pleased with their innovations. The protection of these companies will see the consumers paying more for the goods that are produced locally since the industries need to compete with the outside market to position itself in a competitive map among all the countries. Countries like Japan have been seen on the limelight in the protection of the local industries by increasing cost of the imported goods in order to discourage importation. This is also done to support the small companies which need to be financed by the government for their rise in the market. The government will only fund companies which have the promising ventures in the market. (Chetty, 2003) Pursue strategic trade policy The policy makers believe that the government intervention into trade takes the merit of the economics of scale and it is supposed to be the first to be in the market to take that advantage. When the government pursue the strategic trade policy it will be able to enhance and improve the national income and they will use this to improve the living conditions of its people. The companies which have been protected by the government will be the first to enjoy the wider profit margins since they will be able to rigidly position themselves in the world market. An example is given of the Korean republic had a company that specialized in building ships, the government sponsored the project where they were supplied with low cost equipments of which the government regulatory bodies had subsidized. Through many years of strategic planning policy the Korean country had one of the largest industries which offered sea transport in the world. Although the strategic policy plan by the government may seem to be too significant, those involved may have some political interests and forget that one day they will be faced with crisis. The high support of the local industries will see the country facing high cost of living to its citizens and the goods they may be producing may be of low quality and this will deny the opportunity for the consumer’s right to purchase what satisfies their needs (Helm, 2006 ). . Cultural motives: Many countries have been noted to impose restrictions to some of the goods and services that they export and import basing their argument on that they need to meet some of their cultural aims. They claim to be identified with their nationality and hence the need to protect it arises and they are forced to abide to the restrictions. There is a great and deep relationship between culture and trade. This will effectively mean that trading activities are influenced by the cultural beliefs present. The governments are forced to close down on the importation of goods and services from a particular country due to the certain movements of vague cultural beliefs. This will cause more harm to the minority consumers since they will need to abide by the majority belief in that country. These therefore need the government to intervene and scrutinize the cultural beliefs whether its citizens should believe in or not. There are some of the cultures that cross the borders and affect the neighboring countries and these means the culture from another country will influence the advertisements of the imported goods. The effect of this is that people like welcoming new slangs as introduced to the society since they are not used to and advertisement of their products will overcome the locally produced goods. It has been observed in France the government preventing the use of English words in advertising of goods or services in the country. It was evident that they were some adverts that had taken the initiative of mixing the French language with the English language. The act was a way of invading the French culture of which the government could not have allowed it there are various forms of entertainment and they differ from one country to the other. This is due to the different cultures that are experienced in these states. Since the artists want to make money through the national and international trade, they do their level best to see they have sold out their culture and at the same time preventing other cultures from being invaded. It had to be the intervention of the governing body of Canada to prevent the dominance of the American culture in the music industry. The American music was so far much influential and they had to set policies which guided the way music was being aired in Canada. (Girma, 2008) They had to set a percent which was high of the music played by the media to support the local music. This was an advantage to those who were in the business venture but it affected the Consumers since they were limited to the types of music they were to listen to. We understand very well that the superpower countries have the capability of influencing other countries to their culture. A good example is the United States and it requires government intervention to prevent the influence of the culture to its trading activities. Conclusion The essay has explained critically the political, economic and cultural motives behind government intervention into trade. It is evident that governments have continuously exercised their powers to prevent the free trade. This has been affected for the government to achieve its objectives in trade. The objectives by the government are the social welfare satisfaction, socio economic satisfaction and many other objectives that the government cannot overlook. The intervention is done to promote the desire for the government desire to provide the basic needs of its citizens without being influenced by the state of other countries. Also the government wants to promote its trade to a level that it can be influential globally. There are risks that the government will be involved in if it allows the free trade into the country since it will expose its trading activities to high risk as the national defense will be weak at the same time since dangerous weapons will find a free market where they can be sold without much struggle of high tariffs. The government intervention is also a way of protecting the consumers from being exploited and the main aim is to promote the countries completion in trade. Bibliography Babiker. (2005). “Climate Change Policy, Market Structure, and Carbon Leakage. Journal of International Economics , 421-445. Bernard, E. J. (2003). Plants and Productivity in International Trade. American Economic Review , 1268-1290. Bevan, E. M. (2004). Foreign Investment Location and Institutional Development in Transition Economies. International Business Review , 43- 64. Chetty, C.-H. (2003). . Explosive International Growth and Problems of Success amongst Small to Medium-sized Firms. International Small Business Journal , 5-27. Girma, G. P. (2008). Exporting, linkages and productivity spillovers from foreign direct investment. . Canadian Journal of Economics , 320-240. Helm. (2006 ). ‘Regulatory Reform, Capture, and the Regulatory Burden’. Oxford Review of Economic Policy 2006 , 169-185. Meow-Chung. (2001). The 1997 Currency Crisis and Subsequent Policy Response. In Barlow, Modern Malaysia in the Global Economy: Political and Social Change into the 21st Century (pp. 45-58). Cheltenham: Edward Elgar Publishing Limited. Siebrits, C. &. (2002). Changes in the role of the government in the South African economy. . ABSA Economic Perspective, Second Quarter: , 15-22. Read More