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Chapter: Business Science - International Business Management

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Protectionism and Trade Liberalisation

Protectionism means by which trade between countries is restricted in some way – normally through measures to reduce the number of imports coming into a country

Protectionism and Trade Liberalisation

 

Protectionism:


 

Protectionism means by which trade between countries is restricted in some way – normally through measures to reduce the number of imports coming into a country

 

Main means are:

 

Tariffs - A tax on a good coming into a country. increases the price of the good and makes it less competitive

 

     Quotas     -       Physical    restriction    on      the      number    of      goods

 

coming into a country.

Non-Tariff Barriers - Any methods not covered by a tariff, most usually:

 

            Rules

            Regulations

            Voluntary Export Restraints (VERs)

            Legislation

            Exacting Standards or Specifications

 

Trade Liberalisation

 

The removal of or reduction in the trade practices that thwart free flow of goods and services from one nation to another. It includes dismantling of tariff (such as duties, surcharges, and export subsidies) as well as nontariff barriers (such as licensing regulations, quotas, and arbitrary standards).

 

In economy and trade

 

Privatization, also spelled as privatization, may have several meanings. Primarily, it is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector (a government) to the private sector, either to a business that operates for a profit or to a nonprofit organization. It may also mean government outsourcing of services or functions to private firms, e.g. revenue collection, law enforcement, and prison management

 

Privatization has also been used to describe two unrelated transactions. The first is the buying of all outstanding shares of a publicly traded company by a single entity, making the company privately owned. This is often described as private equity. The second is a demutualization of a mutual organization or cooperative to form a joint-stock company..

 

Although economic liberalization is often associated with privatization, the two are distinct concepts. For example, the European Union has liberalized gas and electricity markets, instituting a competitive system, but some leading European energy companies such as France's EDF and Sweden's Vattenfall remain partially or completely in government ownership.

 

Liberalized and privatized public services may be dominated by just a few big companies particularly in sectors with high capital costs, or high water, gas, or electricity costs. In some cases they may remain legal monopolies, at least for some segments of the market (like small consumers).

 

Liberalization is one of three focal points (the others being privatization and stabilization) of the Washington Consensus's trinity strategy for economies in transition.

 

There is also a concept of hybrid liberalization as, for instance, in Ghana where cocoa crop can be sold to a variety of competing private companies, but there is a minimum price for which it can be sold and all exports are controlled by the state


 

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