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The ways of the protection of the home market from the foreign competitors

The methods, which are used by the countries for the regulation of the international trade, can be divided into tariffs, which are based on the usage of customs tariff, and non-tariffs, such as quotas, licences, subsidies, antidumping duty, technical barriers etc.

The tariff methods of regulation. The most spread type of the trade restriction is import duty. It is the state levy, which is held under the control of custom organs from the international goods, which are brought into the country.

In contrary to the tariff methods the non-tariff methods of the regulation of the international trade become more and more spread in the modern conditions.

The countries with the developed market economy are using the non-tariff instruments very actively.

Licensing – is the method of regulation of the foreign economic activity that is based on the delivery of the permission (license) by the plenipotentiary organ for the realization of the foreign economic operations with the goods that are licensing.

Quantitative regulation is the restriction in quantitative and valuable form of goods volume that is permitted for the import (import quota) or for the export (export quota). As usual, the fixing a quota for the foreign trade is made by its licensing when, with the help of the plenipotentiary organs, the country gives the license for import or export of limited volume of the products and simultaneously forbids the non-license trade.

The situation when the exporter sells his products on the foreign market at the price which is lower than normal is fixed by dumping. Dumping can be accomplished by his own resources of companies-exporters or with the help of the country as the export subsidies.

 

29. International Trade Efficiency

All of the economic theories of international trade suggest that it enhances efficiency. Some of the efficiency is due to comparative advantage, as in the Ricardo and Heckscher-Ohlin theories. In addition, some efficiency comes from taking advantage of increasing returns.

Trade based on comparative advantage should tend to benefit small countries more than large countries. That is because the benefits of comparative advantage are proportional to the difference between the relative prices in world markets and the relative prices that would prevail in home markets without trade. If that difference is large, then a country earns a large advantage from trade. If that difference is small, then there is only a small advantage from trade. Small countries are more likely than large countries to find that relative prices in the world market differ significantly from what would prevail in their home markets.

Another benefit from trade is that it promotes dynamism and innovation within an economy. Improvements in manufacturing quality and productivity in the United States in recent decades have been credited, in part, to the pressure of competition from Japan and elsewhere.

An economy that is closed to trade is one in which inefficient industries and laggard firms are well protected. In fact, studies suggest that barriers to trade are a major cause of extreme underdevelopment. The countries that are most closed to trade tend to be the poorest in the world. Countries that have reduced trade barriers and increased the share of imports and exports in their economies tend to be among the fastest-growing nations.



 


Date: 2015-12-17; view: 867


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