INTERNATIONAL BUSINESS ENVIORNMENT political intervention is needed to protect the development of economy, sovereignty, and citizens of the state.

1. Indore Institute of Law, Indore
Subject: INTERNATIONAL BUSINESS ENVIORNMENT
Topic: “ROLE OF GOVERNMENT IN INTERNATIONAL TRADE”
Submitted by:
ANJALI MUKATY [B.B.A. LL.B. (HONS.)]
Session: 2020-21
Semester – VI

2. INDEX
S.NO. PARTICULAR PAGE NO.
01 Abstract Slide-03
GENERAL PURPOSE
02 The Role of the Government
03 Need to Encourage Foreign Investment
04 CRITICAL HIGHLIGHTS
05 CONCLUSION Pg-06

3. ABSTRACT
The role of government on politics and trade.
Political economy brings the production and
exchange of goods and services that are parallel
with the country’s law.
Thus, political intervention is needed to protect the
development of economy, sovereignty, and citizens
of the state.

4. GENERAL PURPOSE
 To maintain safety,
 Next is to regulate the trade to ensure it benefits the nation,
 And play a role in the market to facilitate positive trade
balances while promoting the sale of US products.
 It must protect intellectual property and patents, not to mention
defend from weaponized economic trade activity.
The purpose of it in broad strokes is first to-

5. The Role of the Government
1. opening up of the economy is needed for admission
into the WTO or the World Trade Organization,
2. Order to export to other countries, emerging and
developing market economies .
3. countries encourage foreign investment and allow
international businesses to setup operations in their
countries.
4. Governments continue the same policies or not
depends on a host of factors.

6. Need to Encourage Foreign Investment
The role of governments in deciding whether they would allow international businesses
to setup their operations and encourage them to grow and succeed.
The governments of many countries do not have a choice but to welcome international
businesses as they need the “hard cash” or the Dollars, as they are also known. For
instance, the difference between exports and imports is known as the Current Account
Deficit or CAD. Since many emerging markets (except China which has a positive CAD)
have deficits that need to be financed with Dollars. Then, the governments can either
borrow these Dollars at high rates or finance the deficit through FDI or Foreign Direct
Investment and Equity flows into the stock markets from FIIs or Foreign Institutional
Investors.

7. CRITICAL HIGHLIGHTS
1. Government uses tariffs to protect domestic industries
from foreign competition.
1. As a result of a tariff, domestic firms typically are able to charge a
higher price while also producing more output.
1. The supply curve SFT is the world supply of the good to the U.S.
market assuming free trade — no tariffs.

8. CONCLUSION
The basic principle is that governments should do what they can to facilitate trade
while ensuring that their own citizens are not harmed by it.
- collecting tariffs on foreign goods coming in is easy and invisible to
the general citizenry, so some trade must be encouraged.
+ Now there is an excess of supply in most every market imaginable and
that causes an incentive for nations to “cheat.”