International Business

691 words | 3 page(s)

International trade is a generally positive development for countries because it contributes to the creation of new jobs and speeds up economic growth due to the increased volumes of trade (J. J. Wild & K. J. Wild, 2015). Nevertheless, regardless of the benefits of international trade, in some instances, governments choose to intervene in trade relations between countries limiting the flow of goods and services from and into foreign states. This decision is commonly supported by political and economic motives.

The first group of motives behind governmental interventions in trade is labeled as political. The first motive in this group is the need for protecting jobs. As it has been mentioned above, international trade increases the volume of trade due to the increased range of services and goods available. However, in some cases, it results in higher rates of unemployment because nationally manufactured goods are replaced with imported ones, so the demand for the internally produced ones decreases, and no workers are needed to produce them (J. J. Wild & K. J. Wild, 2015). When unemployment rates are higher than acceptable, the governments choose to intervene in international trade to protect the welfare of its citizens.

puzzles puzzles
Your 20% discount here.

Use your promo and get a custom paper on
"International Business".

Order Now
Promocode: custom20

Another political motive is the preservation of national security. In this case, the government determines the list of products that can and cannot be imported or exported because they are directly connected to human, environmental, and economic security of the state (J. J. Wild & K.  J. Wild, 2015). For instance, some defense industry products cannot be exported in order to guarantee the national security of any country. On the other hand, imports of vehicles not complying with gas emission requirements may be restricted to enhance environmental security. One more political motive is the response to unfair trade – induce economic pressure on countries that protect their economic by prohibiting imports but require others to cooperate with them under the free trade principles. Finally, the desire to become more powerful and gain influence over smaller countries is also a political motive for trade interventions.

As for economic motives, in most instances, governments intervene in the international trade to protect infant industries against foreign competitors. It is extremely critical when businesses are in the development phase so the quality of offered goods may be poorer, while the price for them is higher compared to products offered by international rivals that already developed an operational and effective business and manufacturing model. Another economic motive is the desire to pursue strategic trade policy. This one is related to limit the number of companies operating in any industry with the aim of maximizing advantages of economies of scale, thus turning into first-mover businesses and eventually entering the foreign market.

Trade embargo is one of the instruments commonly used for trade restrictions characterized by a complete ban on trade with particular countries. The Cuban embargo is a proper example of this trade restriction instrument. It was initiated in 1960 as an instrument for overthrowing Castro’s socialist regime after Castro nationalized American assets for more than $1 billion. The U.S. wanted to induce pressure on Castro government by restricting economic, financial, and commercial relations between the two states. Keeping in mind tensions between the U.S. and the Soviet Union and the fact that Cuba was significantly impacted by the USSR, the embargo was politically motivated due to the desire to preserve the power in the region and guarantee the national security by avoiding cooperation with the socialist government. However, the embargo is still operational, so it is commonly questioned whether it should be continued or released.

For me, it should be released. The rationale for this opinion is not only the fact that the socialist government in Cuba has filed as history but also prospects of fruitful economic cooperation between the two states. Here, the focus is made on both trade and other business activities, such as the freedom of traveling and opening companies in Cuba. More than that, releasing the embargo would improve the international image of the U.S. because the international community criticizes the decision to continue it. All in all, by ending Cuban embargo, the United States could enjoy economic and political benefits.

puzzles puzzles
Attract Only the Top Grades

Have a team of vetted experts take you to the top, with professionally written papers in every area of study.

Order Now