Bomabrdier: Canada vs Brazil
The likelihood that a government will continue to subsidize aircraft sales or regulate agriculture sales given a WTO ruling against them is not the same. In which case are managers more likely to receive continued government intervention? Why?The last question should be the focus of your write-up but answering it clearly requires an understanding and discussion of the previous questions: The problem in this write-up is forecasting government policy. There are arguments for such intervention and arguments against. What are the strengths of the arguments in favor of predicting continued government intervention and what are the arguments in favor of predicting government compliance with a WTO ruling? What conditions hold in aircraft manufacturing and agribusiness th
These subsidies in turn benefit the consumers (airline companies around the world) and in turn improve world welfare by the consumer advantage. - Media / Other Interest groups: If there is sufficient pressure from the media and other interest groups in favor of the ruling the government will probably abide by the WTO ruling. at make one set of arguments stronger than the other? In what industry would you expect the government to comply with a WTO ruling?A government is likely to abide by the WTO ruling in the following cases:- Retaliatory Tariffs: If the complaining government introduces retaliatory trade sanctions in the amount of the damages recognized by the WTO. A government is not likely to abide by the WTO ruling in the following cases:- Nature of the industry: If the industry is a source of pride for the nation with a galvanizing effect or is a politically sensitive industry and one which is a source of jobs, the government will probably continue with the subsidies. - Consumer Advantage: Subsidies cause an imperfect competition and to increase the rate of return on capital these industries (eg. In the case of Canada and Brazil and the aircraft industry, Canada is an industrialized country with plenty of physical and human capital whereas Brazil is a newly industrialized country with scarce physical capital but cheap human capital. This means that other industries will get drawn into the dispute; it also implies that the government must be willing to risk an escalation of a trade war. - Environment Concerns: In the case of GMOs, concerns and fears that it poses a danger to traditional crops, undermines local cultures, or cuts the value of biodiversity to indigenous communities. - Comparative Advantage: If a country has a comparative advantage in a particular industry it will probably subsidize that industry. aircraft manufacturers) try to capture a larger portion of the world wide market. - Political agenda / National Interest: The government is not likely to comply with the WTO ruling if it is one that matters to the government. The aircraft industry would probably continue to receive subsidies in this case. The Governments can protest the WTO rulings and postpone sanctions by asking for a review and conceal future subsidies to make it look like R&D subsidies instead of trade subsidies. Based in the above Pros and Cons, Governments are more likely to subsidize the aircraft industry.
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Acceptance Essays
