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Economic Rewards and Coercion. International economic transactions . Have become critical components of modern life and of the welfare goals of governments. Governments seek access to markets and sources of supply to enhance their domestic economic growth.

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international economic transactions
International economic transactions
  • Have become critical components of modern life and of the welfare goals of governments.
  • Governments seek access to markets and sources of supply to enhance their domestic economic growth.
  • Only few states endowed with full range of natural resources, foods, and energy to sustain modern or modernizing economic establishments.
  • For others, trade, foreign investment, and sometimes foreign aid crucial for survival.
economic opportunities and transaction also create vulnerabilities
Economic opportunities and transaction also create vulnerabilities.
  • Disruptions of transaction flows can entail serious costs, even cripple economies.
  • Countries that export to only a few countries or rely heavily on single countries for supplies are particularly vulnerable.
  • Structure of economic relations in contemporary world is such that developing countries are more vulnerable.
  • Developed countries that rely on trade have trade profiles characterized by wide range of imports and exports, diversified markets and sources of supply.
1 tariffs
1.Tariffs
  • . Tariff structure can be used as inducement or punishment.
2 quotas
2. Quotas
  • Supplier allowed to sell only certain amount in a given time period. Shift in size of quota can assist or damage economies of suppliers
3 boycott
3. Boycott
  • Specific commodity or total range of exports. Normally enforced by licensing.
4 embargo
4. Embargo
  • Attempt to deprive a country of goods. Specific category (e.g. strategic materials) or total range of goods.
5 loans credits and currency manipulations
5.Loans, Credits, and Currency Manipulations.
  • Favourable tariff rates and quotas, granting loans, extending credits, manipulating currency rates.
6 blacklists
6. Blacklists
  • Effective way of controlling exchanges of particular types of goods without risks and costs of general boycotts and embargoes
8 freezing assets
8. Freezing Assets
  • In open world economy, companies, governments, and individuals often maintain assets abroad. Assets become hostages.
comparative costs and risks dependence is bilateral
Comparative costs and risks: dependence is bilateral.
  • Purely symbolic acts may be good for feelings of rectitude or for propaganda, and cost little.
  • Sanctions like boycotts or embargoes may lead to massive unemployment at home, or may be ineffective if target can obtain alternative supplies.