Government Intervention And Its Effect On Foreign Markets Essay

1310 Words6 Pages
Doing business internationally had become easier, nowadays business is acknowledged to be international and there is a general expectation that this will continue for the foreseeable future. Before a company makes a decision to expand into foreign markets, careful considerations must be given to some keys factors such as the political and economic environment, costs, benefits and risks. The economic environment can alter from one country to another, this is why they are often divided into three different categories. The more developed, the less developed and the emerging economies. In addition to the level of development of the economy, countries are often classified as free market, where business activities are intervened minimally by the government; or centrally planned, where the government determines prices and production based on desired levels of supply and forecasts of demand. The main issue in economics is whether the government should intervene in the economy. Some argue that it should be strictly limited as government intervention may cause allocation of resource inefficiencies. However, others argue there are strong cases for government to intervene in different fields. In this paper, we aim at determining whether governments should intervene in international business. When an individual or a firm buys a good or service produced more cheaply abroad, both countries living standards increase. As stated by Abboushi (2010), “While trade is generally beneficial,
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