Senin, 23 Maret 2009

Government influence on Business Activity part 2 : International Trade

International Trade
Date : Monday, 23 March 2009
Summarized by : Anang P.Setiawan

Government will also able to influence the firms in the international market.
The ability of firms to trade and change currency is influenced by government policy.

We are unable to depend on from domestic producers for the goods and services we need to maintain our standard of living.
Manufacturers need to buy raw materials, semi-manufactured goods and services from abroad. Similarly consumer and producers from other countries by products from our country.
The measurement of the value of these flows of trade forms the balance of payments.

The balance of payments is the difference between the value of all our exports (goods and services sell to the international market) and imports (internationally goods and services purchased by the home market)

Trade in raw materials and manufactured goods is known as visible trade
Trade in services such as tourism, banking and insurance is known as invisible trade
The UK tends to have a trade surplus in invisibles ( sells more exports than buys imports)
The UK Trades defisit in visibles ( more imports than exports)

If a country imports more in total than it exports we have a balance of payment deficit. When this occurs, the government may intervene because :
-Industry will suffer as more imports are bought, employment levels will fall.
-The country will be losing strategically important industries such as shipbuilding and defence.
-New industries such as electronic or light engineering firms will not be able to establish themselves.

In order to help domestic industries the government may introduce controls on imports, such as :
-Tariffs – a tax on the imported goods. The tax makes the import more expensive so that home residents will be discouraged from buying it.

-Quotas – This sets a limit on the number of imports that can be allowed into the country.

-Trade embargos – This is where there is a ban on trade with a particular country or a particular good or service. It can be because of either political or social reasons.


End of Doc.

2 komentar:

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