1) Calls for protectionism are greater during share economic contraction than during boom periods as people want to protect jobs and unions meet with the management to see forth towards this issue. Also, when the economy is low a business would want the demand for their products to be high and will seek to face less competition, thus trade barriers are set up by governments to protect domestic business against the international market. Other ways to protect jobs or business would be a requirement for licensing or the absolute banning of import products in the countries.
2) This is so as since the World trade organization monitors the actions regarding trade laws in the countries, imposing of barriers may not be considered fair as per the
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For example, America provided subsidies to certain automobile industries. This step can be considered beneficial to company itself as they were able to compete with foreign markets and protect loss of jobs. However, this step would also mean that companies would use unethical ways of gaining subsidies such as shifting locations to places where resources are not available and the work process is not efficient. Further, the company can also use these subsidies to cover up on their bankruptcies and predict a false market reputation of being profitable when in fact they would be at the decline stage of the product life cycle. In other words, they might be on the verge of closing the business …show more content…
Other than this, business would look for help from the government in the form of subsidies. It is important for a business to be aware that subsidies are just a form of protection and should not be used by a business to hide its flaws or declining revenues. As with the changing economies and the emergence of new issues such as Health Care, the government would have to focus its financial need towards these and may not always be there to provide subsidies to each business. However, it would be advised that the government look at which business is going to be the most profitable in the coming years. The business that would be able to offer back to its community and be able to dominate the market, is the business that the government should grant the subsidies for