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global business > chapter 6 > Flashcards

chapter 6 Flashcards

1
Q

define protectionism

A

an economic policy or set of measures implemented by a government to shield domestic industries, businesses, and workers from foreign competition

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2
Q

reasons for protectionism

A
  1. protecting worker’s jobs
  2. protecting infant industries
  3. protecting national security
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3
Q

how does protectionism protect worker’s jobs?

A

Trade barriers like tariffs and quotas are implemented to safeguard domestic industries and jobs from foreign competition

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4
Q

how does protectionism protect infant industries?

A

Governments may intervene in trade to shield nascent or developing industries from international competition, allowing them time to grow and become competitive. this promotes industrialization and economic growth

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5
Q

how does protectionism protect national security?

A

Embargoes are imposed to isolate or restrict trade with specific countries for reasons linked to national security concerns

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6
Q

examples of countries subjected to embargoes

A

North Korea
Iran
Syria
Sudan
Cuba
due to geopolitical tensions or international disputes.

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7
Q

Economic Rationales for Government Intervention

A
  1. fighting unemployment
  2. protecting infant industries
  3. promote industrialization
  4. improving comparative position
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8
Q

how can government intervention in fighting unemployment have a negative effect

A

other countries may retaliate,impacting export jobs due to
increased component prices: import restrictions can increase prices for components, which can raise production costs for domestic industries
reduced incomes abroad: due to tariffs and import restrictions, demand decreases for goods due to higher prices, and businesses and workers in exporting countries might experience lower incomes or earnings

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9
Q

Non-economic Rationales for Government Intervention

A
  1. maintaining essential industries
  2. promoting acceptable practices abroad
  3. Maintaining or Extending Spheres of Influence
  4. Preserving National Culture
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10
Q

why do governments want to maintain essential industries?

A

Governments protect critical industries (like steel, energy, and technology) during wartime for national defense.

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11
Q

why do governments want to promote acceptable practices abroad?

A

to pressure foreign governments to change policies on human rights or environmental protection

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12
Q

why do governments want to Maintain or extend Spheres of Influence?

A

encourage imports from allied nations, aligning trade policies with political interests, which can lead to favorable trade terms

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13
Q

why do governments want to preserve national culture?

A

to protect cultural heritage and national identity.

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14
Q

types of barriers

A
  1. tariffs
  2. subsidies
  3. import quota
  4. embargoes
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15
Q

what are tariffs

A

taxes imposed on imported goods, making them more expensive than domestically produced goods.

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16
Q

types of tariffs

A

export tariffs
import tariffs
transit tariffs

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17
Q

what are export tariffs?

A

imposed on goods leaving the country.

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18
Q

what are import tariffs

A

imposed on goods entering a country

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19
Q

what are transit tariffs?

A

Imposed on goods passing through a country

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20
Q

basis of tariffs

A

per unit basis
value basis

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21
Q

what is per unit basis

A

Calculated based on the quantity or volume of goods

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22
Q

what is value basis?

A

Calculated based on the value or price of the goods

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23
Q

purpose of basis of tariffs

A

They raise the cost of imported products, making them less competitive compared to local alternatives

24
Q

what are subsidies

A

financial aids or grants provided by the government to support domestic industries, reduce production costs, or encourage exports

25
Q

purpose of subsidies

A

help domestic industries compete by lowering production costs and enabling them to offer goods at competitive prices

26
Q

what are import quotas?

A

setting limits on the quantity or value of specific goods that can be imported during a specified period.

27
Q

purpose of import quotas

A

control the volume of imports entering a country, limiting foreign competition and protecting domestic industries from being overwhelmed by cheaper imports

28
Q

what are embargoes

A

complete bans or restrictions on trade (imports or exports) with one or more countries.

29
Q

purpose of embargoes

A

typically used for political reasons, such as isolating a country due to human rights violations, security concerns, or political conflicts

30
Q

examples of nontariff barriers/direct price influencers

A
  1. subsidies
  2. aids and loans
  3. customs valuation
  4. special fees and requirements
31
Q

define voluntary export restraints

A

When exporting countries voluntarily agree to limit the quantity of specific goods or services they export to another country

32
Q

define Licensing Requirements

A

Requiring importers or exporters to obtain government permission or licenses before engaging in trade activities

33
Q

define Standards and Regulations

A

setting specific technical standards, labeling, or testing requirements that products must meet before they can be sold in a particular market. This includes safety, health, and environmental standards.

34
Q

define Administrative Delays

A

Delays in customs procedures or inefficient administrative processes that can cause problems for the smooth flow of goods across borders

35
Q

define Local Content Requirements

A

setting a specific percentage of domestic content in goods or services. This could limit the use of foreign inputs and favor domestic production

36
Q

define Import Licensing

A

Requiring authorization or permits for importing certain goods, making it more difficult or expensive to bring those goods into the country

37
Q

define Sanitary and Phytosanitary Measures (SPS):

A

Regulations related to food safety, animal health, and plant health standards that can be used as barriers to trade

38
Q

define Local Legislation

A

Laws or regulations favoring domestically made goods in government purchases or setting a percentage of domestic content

39
Q

define arbitrary standards

A

Regulations or standards set by governments that may obstruct foreign-made products from entering the market

40
Q

define Licensing Arrangements

A

Requirements needed for importers or exporters to obtain government permission or licenses before engaging in trade

41
Q

define Reciprocal Requirements

A

Conditions imposed by importing countries where exporters must take merchandise or buy services instead of receiving a cash payment

42
Q

define Countertrade

A

Government requirements in the importing country for the exporter to provide additional economic benefits as part of the transaction

43
Q

example of protecting infant industries

A

Brazil supported its automobile industry through protectionist measures

44
Q

example of promoting industrialization

A

Countries like South Korea and Taiwan achieved rapid growth through export-led industrialization

45
Q

example of improving comparative positioning

A

China’s policies, aimed at boosting its manufacturing sector, transformed it into a global manufacturing hub

46
Q

example of preserving national culture

A

Canada maintains strict policies to safeguard its cultural sovereignty

47
Q

why did North Korea face embargoes

A

Following the Korean War, various countries have imposed embargoes on North Korea due to its nuclear program and human rights violations.

48
Q

why did Sudan face embargoes?

A

due to human rights abuses, conflicts in Darfur, and accusations of supporting terrorism

49
Q

what is direct assistance?

A

Financial support provided by governments to specific industries or companies to enhance their competitiveness

50
Q

what are agricultural subsidies?

A

Financial aid is given to agricultural producers to help them compete or overcome market fluctuations.

51
Q

what is overcoming market imperfections

A

Subsidies can address market failures by assisting industries affected by imperfect market conditions.

52
Q

what is the valuation problem?

A

Challenges in accurately valuing goods and services due to subsidies

53
Q

what is tied aid

A

Foreign aid provided by donor countries with conditions attached, such as requiring the recipient country to purchase goods or services from the donor country

54
Q

what is untied aid?

A

Foreign assistance without conditions, allowing the recipient to spend it according to its priorities.

55
Q
A

global business (4 decks)

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