Why Governments Intervene in Global Trade

Government intervention in global trade is a smart economical move. There are many reasons for it and they are all equally important. Without government intervention, many things could go wrong and a large sum of businesses would be affected. A lot of times people resent the government intervening in certain situations, but it seems that global trade is a widely accepted occurrence and it is considered necessary. It seems that the most dominant reasons for political trade involve politics as well as each nation's economic responsibilities.

The article, “Government Intervention International Trade Business Political Economic Motives” by Jesse Vorton touches on key points of why the government has to intercede in global trade, including politics, economics, and cultural reasons. It breaks down the article into understandable and an almost user-friendly guide to illustrate why intervening is such a necessity. The main idea behind the article seems to be the number of jobs that international trading provides for domestic workers and how it is a positive aspect of the trading industry to allow government to get involved.

Politically there are a number of reasons that a government would intervene in trade. The two most important motives for global intervention are security and the economic stimulation that trade provides. Security is a large part of why it’s essential for a government to have a guideline for what should and should not be done during trading. This is especially true when it comes to illegal activity, meaning trading illegal items or smuggling of any kind. When there is management involved in the trade, especially the strict re-enforcement of an actual government, it provides a safer aspect for both nations. It also provides a comfort level that both nations reach, in feeling that they are uniting and working together. This can be said for all trade in general because of all the benefits it provides, better articulated by McDonald (2004) “Trade promotes peace through communication and transnational ties that increase understanding among societies and the potential for cooperation” (p.547). Without the governments to articulate what each demands of the other, controversy would be bound to happen. In this case, the government is working almost as a mediator.

When the government is involved, there is more wiggle room for them to decide what is and is not favorable trade for them. When it comes to what countries demand and supply, it can lead to countries gaining or losing a lot of money, and the control over what they decide they do and do not want is essential in helping to fuel the economy. As Pelaez (2009) observed, “Government intervention is key in controlling the influence of globalization on a domestic level, and therefore determining its influence globally.” Globalization is a very broad topic, but trade is a major part of it. While the phenomenon of globalization is a controversial subject, it is an important part of what is going on in the world today. In fact it is what is going on in the world today, and without trade our world would be culturally much different.

Globalization when it comes to trading provides many jobs domestically, helping the economy significantly. As The Hindu (2007) suggests, even a short amount of time with a lack of trading products that are in demand from foreign companies can have a huge effect on productivity. Based on a global scale, if just one company is affected by the shutdown of a certain branch that is trading something in high demand, many other companies could be in a bind. The bigger problem is when the domestic workers decide that they no longer want to provide for the government, or they want a higher profit. Business Recorder (2011) makes the public aware of an exact situation involving cotton, where the owners of cotton, wanted more for what they were providing. This illustrates that trade comes at a price; it is deciding whether or not it’s worth that it.

References

Business Recorder. (2011, December 29). http://www.ft.com/home/us. Retrieved from http://go.galegroup.com/ps/i.do?id=GALE%7CA276019368&v=2.1&u=udenver&it=r&p

McDonald, P. (2004). Peace through Trade or Free Trade?. The Journal of Conflict Resolution, 48(4), 547-572. Retrieved from http://www.jstor.org/discover/

Pelaez, C. (n.d.). University of Denver Penrose Library. University of Denver Penrose Library. Retrieved from http://bianca.penlib.du.edu/record=b5531923

Staff Reporter. (2007). Trade Unions Demand Government Intervention. The Hindu, 0971(751), 1. Retrieved from http://0-global.factiva.com.bianca.penlib.du

Vorton, J. (2010, June 26). Government Intervention International Trade Business Political Economic Motives. by Jesse Vorton. Retrieved from http://www.insidebusiness360.com/index.php/government-intervention-international-trade-business-political-economic-motives-11209/