Case: Automobile parts The beginning of 1991 marked nine years since Japan began its “voluntary” limitation of automobile exports to the United States. Had Japan not voluntarily limited the exports through negotiations with the United States, the United States would certainly have imposed even more restrictive sanctions. Different groups have disagreed whether the Japanese...
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Introduction to Government Influence on Trade The preceding case shows why and how automobile imports into the United States were restricted. This is not an atypical situation: No country in the world permits an unregulated flow of goods and services across its borders. Restrictions commonly are placed on imports and occasionally on exports. Direct...
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THE RATIONALE FOR GOVERNMENTAL INTERVENTION Unemployment Pressure groups are a real challenge to governmental policymakers and businesspeople. There is probably no more effective pressure group than the un- employed because no other group has the time and incentive to write letters in volume to congressional representatives or to picket, One problem with restricting imports...
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Infant-Industry Argument One of the oldest arguments for protection from imports was presented as early as 1792 by Alexander Hamilton. The logic of the infant-industry argument for protection is that although the initial output costs for an industry in a given country may be so high as to make it noncompetitive in world markets,...
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In recent years many countries have sought protection to increase their level Gf industrialization. Their reasons are: 1. An emphasis on industrialization will increase output more than an emphasis on agriculture. 2. Inflows of foreign investment in the industrial area will promote growth. 3. Diversification away from traditional agricultural products or raw mate- rials...
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