(1)Critically assess the ways in which international trade can be Assignment

(1)Critically assess the ways in which international trade can be affected by governments interventions - Assignment Example The government intervention in international trade dictates the way the multinational companies operate. This paper is focused on different ways of government intervention in international trade and its influence on the nations and the firms. According to Poynter (2012) the government intervention can be described as the actions taken by the government in order to influence or interfere in the business activities of the private bodies or groups in terms of economic or social matters. The primary reason of the intervention is to protect the interest of the domestic firms from the predatory business activities of the large multinational firms. Warburton (2009) further added that the government policies regarding foreign trade offer both encouragement and restrictions to the multinational firms in a way that their business activities improve the economic condition of the host countries and at the same time do not impact the business operations of the smaller domestic firms. Thus the trade regulations set by the government act as a controlling authority that protects the interest of the domestic firms and looks after the social impact causing from the multinational firms. These regulations are important to ensure stability and growth of the domestic economy. Carbaugh, (2009) rightly pointed out that certain major multinational firms are so financially strong that their revenue is more than the GDP of certain small nations. Such firms have the necessary potential to control the business market of a developing nation if they diversify their business in that region. Therefore a regulatory policy has been set by the government so to limit the marketing activities of these firms. On the other hand, the internationalization of the multinational firms also improves the employment status of a nation. Therefore, the government of the developing countries often attract multinational firms within the national boundary to improve the social and