International Business: The New Realities, 5th Edition

The Nature of Government Intervention

1. 7.1 Understand the nature of government intervention.

Protectionism is perhaps the leading manifestation of government intervention in international business. Protectionism refers to national economic policies designed to restrict free trade and protect domestic industries from foreign competition. Protectionism typically arises in the form of tariffs, nontariff barriers such as quotas, and administrative rules designed to discourage imports. A tariff (also known as a duty) is a tax a government imposes on imported products, effectively increasing the cost of acquisition for the customer. A nontariff trade barrier is a government policy, regulation, or procedure that impedes trade through means other ...