In a short essay, describe government intervention and explain the four main motives for government intervention in international trade and investment activities

What will be an ideal response?

Government intervention is often motivated by protectionism. Protectionism refers to national economic policies designed to restrict free trade and protect domestic industries from foreign competition. Protectionism often leads to two types of intervention: tariffs and nontariff barriers. A tariff is a tax imposed by government on imported products, effectively increasing cost of acquisition for the customer. A nontariff trade barrier, such as a quota, is a government policy, regulation, or procedure that impedes trade through means other than explicit tariffs.

In the broadest terms, there are four main motives for government intervention. First, tariffs and other forms of intervention can generate much revenue. For example, Ghana and Sierra Leone generate more than 25 percent of total government revenue from tariffs. Second, intervention can ensure the safety, security, and welfare of citizens. For example, governments may pass laws to ensure a safe food supply and prevent sales of products that threaten public safety. Third, intervention can help a government pursue broad-based economic, political, or social objectives. For example, a government may enact policies that aim to increase national employment or promote economic growth. Fourth, intervention can help better serve the interests of the nation's firms and industries. For example, a government may devise regulations to stimulate development of home-grown industries.