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International Business - Protectionism - Essay Example
Pages 3 (753 words)
Technological improvements in 18th century are attributed to the rise of globalization. Many historian correctly relate the development of steam rails as the major cause in the start of globalization. The reasoning they give is that the development of steal engine eased the transportation facilities for trade…
These price variations encourage people to trade and hence the cost advantages provided by production in different countries triggered the start of globalization.
Protectionism might be harmful for a company as many people think that it negatively affects companies which import raw-material from abroad. It raises the prices of raw-material and hence creates inflation in the country practicing protectionism. It also impedes economic efficiency as it reduces the consumption level below where MC = MR and results in production of goods at point higher than the lowest point in the average cost curve. As a result it also affects economic growth of the company negatively.
A country can promote trade surplus by providing export friendly policies to exporters such as tax-reduction and tax holidays. In order to create international competitiveness sometimes it becomes necessary for the country to give subsidies to local industries. Another way to promote trade surplus is by encourage exporting business to train worker and to use new technology to reduce costs and make country's exports internationally competitive.
Petro-Dictatorship is a form of dictatorship funded by petroleum exports. Since, Arab countries are major oil producers they are the ones who earn large amount of petro-dollars. ...
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