Role Of A Nation 's Government Plays On International Competitiveness And Uses Theories Essay

1616 Words7 Pages
New trade theorist, Michael Porter, described the role of governments in international business as one of “catalyst and challenger” (Pettus & Hemls, 2008). A nation’s government has the capacity to control international business handling through the implementation of policies, actions and affairs. This essay aims to discuss the role a nation’s government plays in their international competitiveness and uses theories such as protectionism, neo-mercantilism and Porter’s Diamond, as well as real life examples to explore how governments generally increase the risk and the cost of doing international business. Paradoxically, it will consider the need for governments to play a significant role in creating international business effectiveness for their country. Governments have been known to create risk and cost to international business through the implementation of policies, laws and regulations. While the World Trade Organisation (WTO) has policies in place to discourage governments around the world from implementing protectionism, the growing need to have a trade surplus is seeing the theory again becoming favourable (Maier, 2008). The theory of protectionism refers to governments introducing tax on imports in order to shield a country 's domestic industries from foreign competition (Belianin, 2002). While a nation’s government can be credited for endeavouring to protect their domestic industries, they can also be blamed for increasing the cost of a nation doing international
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