Economic trade Assignment Example | Topics and Well Written Essays - 500 words

Economic trade - Assignment Example Nations restrict international trade is the need to protect the infant domestic industries from unfair trade practices and ensure the newly developing industries grow in order to become competitive. The governments may impose quotas on imported products in certain industries and issue subsidies to the domestic industries in order to facilitate their growth and attain competitiveness in the international markets (Boudreaux, 2008, p 62). The nations also restrict international trade in order to safeguard the local jobs from ‘cheap labor abroad’ through supporting the establishment of domestic industries that will create jobs for the population. For instance, the US government has outlined initiatives that reward companies that create jobs for US industries rather than shipping jobs to least expensive manufacturing countries. The US motor industry is an example where the government has undertaken measures in order to ensure the firms establish manufacturing and assembly plants within the country borders in order to create jobs. The restrictions also shield downgrade of the domestic wages due to influx of cheap labor from the developing countries (Grimwade, 2006, p 72). According to Grimwade (2006), nations will restrict international trade if the national security is at stake (p 71). For instance, nations protect the national defense industries and associated industries such as oil industry. For instance, the US government has embarked on attaining fuel efficiency through investing in low emission and sustainable energy sources in order to stop reliance on imported oils. Boudreaux (2008) asserts that nations may restrict international trade in order to control their trade deficit through use of tariffs in order to control the volumes of imports in to the economy (p 58). Another reason why governments restrict international trade is to gain revenues from the high tariffs and taxes that are