When governments amongst nations conduct in international business, it exposes them to increased risks and costs through unfair trade and bribery in order to obtain a competitive advantage or power. Mercantilism explains why the government intervention of international business increases the chances of these risks. Mercantilism is the theory that explains, the government will maintain their economy and trade to promote their own domestic industry at the cost of the other country leading to unfair. Traditional approaches like charities, social programs and government assistance are conductors to reduce poverty levels. However, Mohammed Yunus proposes to reform the financial system and increase social awareness due to the escalating gap between the wealthy and poor.
Essay on Government Intervention - Words
Explanation of why government intervention to try and correct market failure may result in government failure. Market failure is a socially inefficient allocation of resources in a free market. Market failure can occur for various reasons. Government failure occurs when government intervention results in a more inefficient and wasteful allocation of resources. Government failure can occur due to:.
Essay On Government Intervention
These actions can be found easily when there is an economic slump, such as the financial crisis happened in , which causes a lot of countries to take action in order to stabilize their economy. The economy seems get stabilized now, but is it the effect brought about by the government policies? The Hong Kong government believes in the self-regulating mechanism of the market. However, even if the government policies is not focusing on the market, there may still have some effect towards the economy.
The purpose of this report is to exemplify the role of government with the focus on the developing countries by answering the proposed question of Why do we need government intervention? The first part of this report illustrates the essential roles of government in social, business, and the future of country aspects. Then, Thailand was chosen as an example of a country entering into the new economy, while using the other countries in East Asia to illustrate the successful government action in transferring the countries to new economy.