c hapter 9. formulation of national trade policies. Chapter Objectives 1. Present the major arguments in favor of and against governmental intervention in international trade Identify the advantages and disadvantages of adopting an industrial policy
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formulation of national trade policies
Maintenance of Existing Jobs
Strategic trade theory suggests that a national government can make its country better off if it adopts trade policies that improve the competitiveness of its domestic firms in such oligopolistic industries.
Economic Development Programs
Public Choice Analysis
When industrial policy is pursued, the national government identifies key domestic industries critical to the country’s future economic growth and then formulates programs that promote their competitiveness.
Special interest groups are willing to work harder for the passage of laws favorable to their interests than the general public is willing to work for the defeat of laws unfavorable to its interests.
A tariff rate quota imposes high tariff rates on imports above the threshold level.
Foreign Trade Zones
Export Financing Programs