Topic 2 Flashcards
What are the 2 objectives to trade policies?
Protect domestic firms and promote exports.
What is the national defense argument for the industry level arguments to trade policies?
A country must be self-sufficient in critical raw materials, machinery, and technology or else be vulnerable to foreign threats. (ex missiles)
What is the infant industry argument for the industry level arguments to trade policies?
The imposition of tariffs to give domestic firms temporary protection from foreign competition until firms are fully established.
What is the maintenance of existing jobs for the industry level arguments to trade policies?
Jobs in high-wage threatened by imports from low-wage countries.
What is the strategic trade theory for the industry level argument to trade policies?
To adopt trade policies that improve the competitiveness of domestic firms in oligopolistic industries. game theory
What are the 4 industry level arguments to trade policies?
National defense, infant industry, maintenance of existing jobs and strategic trade.
What are the 3 national level trade arguments to trade policies?
Economic development programs, industrial policy and public choice analysis.
What are the 2 facets of economic development programs in national level trade policies?
Export promotion strategy and import subsitution strategy (protection of domestic producers by imposing a tariff on imports)
What is the industrial policy argument for national level trade policies?
Formulate programs to promote competitiveness of key domestic industries critical to the country’s future economic growth?
What is the public choice analysis argument for national-level trade policies?
Special interest groups are willing to work harder for the passage of laws favorable to their interests than the general public is willing to work for the defeat of laws unfavorable to its interests.
What are the 2 types of barriers to international trade?
Tariffs and non-tariffs barriers.
What are the 3 types of tariff barriers to international trade? Explain them.
Export tariffs, transit tariffs (charging tariffs to go through a country) and import tariffs (ad-valorem (%), specific ($), and compound (%+$)).
What are reasons to use tariffs?
Raise revenues for national governments and act as a barrier to trade.
What are the some of the nontarif barriers to international trade?
Quotas (restriction on Q of M), numerical export controls (restriction on Q of X), product and testing standards, restricted access to distribution networks, public-sector procurement policies, local-purchase requirements, regulatory controls, currency controls, investment controls.
What are ways to promote international trade?
Subsidies, foreign trade zones, export financing programs.
