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International Business - Protectionism - Essay Example

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International Business - Protectionism

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. As a result these countries have gather power in the form of OPEC and other associations of Oil Producing countries which are mainly Arab Countries. USA should be concerned about their amassing of power since modern technology relies substantially on petrol and without it you cannot run even day-to-day affairs of a country. The USA should be concerned because oil producers are those countries which are against USA. If they stop supply oil to USA, they can blackmail USA or in other words can create Petro-Dictatorship which might be harmful for sovereignty of America and USA might plunge from being a super-power to an economically weak country. Although USA cannot do much to halt their amassing of power, however, what it can do is reduce their reliance on imported oil to reduce the power of oil producing nations. This will involve
USA to search for oil reserves in a bid to become self sufficient or finding alternative energy resources to reduce the pow ...Show more

Summary

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…
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International Business - Protectionism essay example
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