There are particular trade theories which provide a space for economic ground that will encourage its growth through different international policies. The goals of these policies make the operation under the economies possible by some actions such as reduction in the cost of provision of goods. The world demand will only support a few active firms in the economy with the presence of this theory. One of the fundamental principles in international trade is Porter’s theory of national competitive advantage that explains how the nations can achieve international success through four attributes namely, factor endowments, rivalry; demand conditions is supporting industries firm strategy and structure. The purpose of these two theories justifies how limited intervention by the government to improves the exported business.
One of the key consideration is the initial advantage where the international firms entered the industry; nations can enjoy an economic and strategic advantage which results from free and conducive environment favoring product promotion. There are also experienced manufacturers in the industry which give an extra benefit. Therefore, the government policies should encourage the building of national competitive advantage. It can be achieved through adoption policies that support a deployment of highly qualified staff, spend on government research, and development policies. Tax reduction on the exported goods should be the other policy as that favors the development of a capital market that area.
It can be noted that government intervention is essential because it creates a moderate basis for a comparative market in the country hence these policies are at variance from free trade philosophy. In turn, this will lead to new inventions and specialization on the manufacturing of one product with the greatest output and increased technological know-how.
In conclusion, it can be summarized that the government policies can usually assist in protecting the domestic industries, and thus they limit the global competitiveness. Business firms should also work together to encourage governmental policies like advanced transportation infrastructure and standardized products that support free trade and boosting the economic stability.
Work Cited
Charles, H. W. (2009). Global BusinessToday. Retrieved from Emu.Ede: .fbemoodle.emu.edu.tr/mod/resource/view.php?id=9790.2009.6e
