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Should government assist business - Essay Example

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Should government assist business

Therefore, the purpose of this essay is to illuminate the benefits of this assistance provided by the US government to business on economy and also about the burden it implies on the government and its policies and then come to a point to decide as to should government assist small businesses in their effort to be a part of internationalization by entering into export market.
Encouraging exports is a primary concern of most governments. In the United States, the Department of Commerce has many programs devoted to the development and nurturing of beginning exporters. Substantial resources are devoted to export promotion programs designed to increase the propensity of small companies to export.
However, while useful politically throwing monetary resources at a problem can be very wasteful. In the era of government budgetary problems and fiscal frugality, program accountability is part of every politician and administrator's agenda. In the export promotions sector, the need to spend money wisely has emerged as a key concern.
Government assistance refers to the policies that a government puts forth to help the exporter conduct international business. Studies have shown that governments can either help or hinder the export process. Typically, they help by providing information, sale leads, tax incentives, insurance, and financing programs. Czinkota and Ricks (1981) and Reid (1984) found that government assistance could stimulate export activity by providing relevant information. Governments can also hinder export decisions via their foreign exchange rate policy. Bauerschmidt, Sullivan, and Gillespie (1985) found that a high U.S. dollar relative to foreign currency was the most important barrier to international activity for U.S. exporters.
Traditionally, small and medium-sized firms have played an important role in local economies. However, the role of small and medium-sized firms in international trade is changing. A report by Birch (1988) noted that U.S. firms most likely to be exporters are small, not large firms. More than half of all exporters have fewer than 100 employees.
According to information from the U.S. Department of Commerce, it is mainly smaller firms that do not export and were thus targets of export promotion activities (Czinkota and Johnston 1981). Bilkey (1978) has suggested that for maximum success export stimulation programs should be tailored to the export development position of the firms to be stimulated. He argues that if export assistance programs are formulated in terms of the export internationalization process, then: (1) experienced exporters would be stimulated to increase exports by devaluating the currency and by removing perceived obstacles to exporting; (2) non-exporters would be stimulated to begin exporting by being provided with export orders (perhaps by developing Japanese-type trading companies) and with managerial assistance (such as export extension programs and export consulting services); (3) firms that have not attempted to export would be stimulated to explore the feasibility of exporting by programs promoting the attractiveness of exporting (trade ...Show more


Government assistance in business is provided through many ways in every country. In United States, the government has constantly been engaged in providing assistance to small business to enable them to stand and work on their own. This assistance provided to small businesses, has its own great benefits to the overall economy, but that too, is not free of burden on the government and its policies.
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