Governments around the world have offered subsidies for a wide selection of reasons, including the aims of raising investments and occupations, especially those which are high-tech, stimulating economically depressed regions, supporting national agriculture, and preventing insolvency through "bail outs."
Subsidies now play an integral role in business location decisions, and influence their international competitiveness. Recipients of subsidies can offer their goods and services for sale at lower prices than would exist in the lack of subsidies. Foreign-based corporations may regard these lesser prices as unjust competition in international trade. Thus, international trade negotiations have come to concentrate as trade distortions that should be restricted by proper international arrangements on a lot of these subsidy programs.
Some states, especially the US, levy special countervail duties if their corporations are being hurt by foreign subsidies. With present and proposed decreases in trade barriers, subsidies will become comparatively more significant as a trade-determining process. However, subsidies are implemented to pursue an intergovernmental pact, and so specific societal objectives that limits subsidies may diminish, rather that improve, the wellbeing of signatories.
Subsidies Rationales and Trade and Investment Distortions case study solution
PUBLICATION DATE: June 06, 2011 PRODUCT #: W11279-PDF-ENG
This is just an excerpt. This case is about STRATEGY & EXECUTION
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