What is International economics about?
● International economics deals with economic interactions that occur between independent
nations.
● Yet the study of international economics has never been as important as it is now. In the early 21st
century, nations are more closely linked than ever before through trade in goods and services, flows of
money, and investment in each other’s economies.
● The role of governments in regulating international trade and investment is substantial.
● Free trade means that there are no limitations to imports and exports. A trade policy that does not restrict
imports or exports. Free trade, also called laissez-faire, is a policy by which a government does not
discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to
exports).
● Import tariffs are probably the most common way in which governments intervene in
international trade. An import tariff is a very specific tax that is placed on certain imported goods,
thus causing these imported goods to cost more and disrupting the balance of international trade.
● Apart from tariffs, most governments also implement bans and restrictions on certain products.
In the UK, bans and tariffs are quite minimal when compared to stricter companies. But it should
be noted that you cannot import weapons, illicit drugs, rough diamonds and a few other products
listed on the banned and restricted goods list.
● On August 23, 2022, the Sri Lankan government temporarily suspended the import of 26
agricultural products. The Imports and Exports (Control) Regulations No. 13 (2022) is a
quantitative import restrictive measure. The Sri Lankan government is ordering the
temporary suspension of the import of 300 non-essential items, 26 items of which are
food and agricultural products. Agricultural commodities subject to import suspension
include condensed milk, yogurt, chocolate, and other food preparations containing cocoa,
oats, liquid coconut milk, beverages made of vegetables, milk, cereal, and tree nuts, and
coconut-base arrack (distilled spirit).
Some of the reasons that governments around the world intervene in international trade include:
Protecting infant industries
● Tariffs and other forms of government intervention are often used to protect newly founded, local
businesses from an already established international competition that may be selling similar
products for lower prices.
● These tariffs encourage customers to support local businesses and give new businesses the time
and opportunity to get their business off the ground. Without tariffs on international goods, many
startups in the UK would fail entirely, and unemployment would surely increase.
National defense
● Whether it’s a time of peace or a time of war, most governments make an effort to protect their
own sectors of the economy that provide services critical to national defense and security. A
government may impose heavy tariffs in an effort to protect and secure their own domestic
production of these products and services. Some obvious examples would include weapons,
advanced electronics, aerospace, and strategic minerals.
● National security experts argue that a country should be completely self-reliant when it comes to
its defense and security. Still, a smart move would be to stockpile weapons and resources in
times of peace when they are cheaper.
, Employment rates
● No country wants to see its unemployment rates rise as it will raise levels of crime as well as
general dissatisfaction. Governments should focus on creating an environment that maintains
high levels of employment, as well as new employment opportunities being offered all the time.
This keeps the economy healthy and promotes economic growth.
● If the domestic economy is struggling to compete with international competitors, a government
may impose certain tariffs to direct consumer attention back to local businesses and therefore
insulate and protect their own economy from outside competition.
Environmental concerns
● Certain governments may implement tariffs on certain products that they feel are harmful to the
environment or do not adhere to specific environmental standards. Imports, in general, may be
subject to some sort of environmental tariff because of the environmentally unfriendly nature of
importing and exporting goods (petrol, jet fuel, excessive packaging etc.).
Aggressive trade
● There are many cases in which international competitors may use highly aggressive trade tactics
such as flooding the market. This may cause domestic traders to run out of business as
international traders will get a foothold in the market share. Aggressive trade practices can
happen quite unexpectedly and without warning. Governments need to put barriers in place to
protect their economies from this sort of aggressive trade practice.
Emotional argument
● Within certain countries, a purely emotional or sentimental argument is used for certain trade
tariffs and barriers. A good example of this would be in China and Japan. Both countries have a
strong cultural connection towards rice and believe that rice grown outside of their home
countries is not right for the palates of its citizens. While this may not make logical sense to many,
this argument is seen as acceptable to many.
● Throughout the world, many other countries use emotional arguments for bans on certain items
or services. Canada places limits on international publishing, TV and bookselling, while India
does not allow for outside investments in print media. And these are just a few examples.
Consumer safety
● When you look at the list of banned and restricted imported goods of any country, you should
notice that most of the items listed are considered dangerous, such as guns, knives, and other
weapons. Certain animal products, as well as products, made from endangered animals (such as
ivory jewelry etc.), are usually also banned in an effort to prevent consumers from being a part of
unwholesome consumption.
● There is also the concern of some animal products being diseased, and importing them runs the
risk of having an outbreak. This is something that we need to be incredibly careful of in 2021.
Medical drugs
● Each and every country will have their own list of what medical drugs require a doctor’s
prescription and which can be bought over the counter. These lists will differ from country to
● International economics deals with economic interactions that occur between independent
nations.
● Yet the study of international economics has never been as important as it is now. In the early 21st
century, nations are more closely linked than ever before through trade in goods and services, flows of
money, and investment in each other’s economies.
● The role of governments in regulating international trade and investment is substantial.
● Free trade means that there are no limitations to imports and exports. A trade policy that does not restrict
imports or exports. Free trade, also called laissez-faire, is a policy by which a government does not
discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to
exports).
● Import tariffs are probably the most common way in which governments intervene in
international trade. An import tariff is a very specific tax that is placed on certain imported goods,
thus causing these imported goods to cost more and disrupting the balance of international trade.
● Apart from tariffs, most governments also implement bans and restrictions on certain products.
In the UK, bans and tariffs are quite minimal when compared to stricter companies. But it should
be noted that you cannot import weapons, illicit drugs, rough diamonds and a few other products
listed on the banned and restricted goods list.
● On August 23, 2022, the Sri Lankan government temporarily suspended the import of 26
agricultural products. The Imports and Exports (Control) Regulations No. 13 (2022) is a
quantitative import restrictive measure. The Sri Lankan government is ordering the
temporary suspension of the import of 300 non-essential items, 26 items of which are
food and agricultural products. Agricultural commodities subject to import suspension
include condensed milk, yogurt, chocolate, and other food preparations containing cocoa,
oats, liquid coconut milk, beverages made of vegetables, milk, cereal, and tree nuts, and
coconut-base arrack (distilled spirit).
Some of the reasons that governments around the world intervene in international trade include:
Protecting infant industries
● Tariffs and other forms of government intervention are often used to protect newly founded, local
businesses from an already established international competition that may be selling similar
products for lower prices.
● These tariffs encourage customers to support local businesses and give new businesses the time
and opportunity to get their business off the ground. Without tariffs on international goods, many
startups in the UK would fail entirely, and unemployment would surely increase.
National defense
● Whether it’s a time of peace or a time of war, most governments make an effort to protect their
own sectors of the economy that provide services critical to national defense and security. A
government may impose heavy tariffs in an effort to protect and secure their own domestic
production of these products and services. Some obvious examples would include weapons,
advanced electronics, aerospace, and strategic minerals.
● National security experts argue that a country should be completely self-reliant when it comes to
its defense and security. Still, a smart move would be to stockpile weapons and resources in
times of peace when they are cheaper.
, Employment rates
● No country wants to see its unemployment rates rise as it will raise levels of crime as well as
general dissatisfaction. Governments should focus on creating an environment that maintains
high levels of employment, as well as new employment opportunities being offered all the time.
This keeps the economy healthy and promotes economic growth.
● If the domestic economy is struggling to compete with international competitors, a government
may impose certain tariffs to direct consumer attention back to local businesses and therefore
insulate and protect their own economy from outside competition.
Environmental concerns
● Certain governments may implement tariffs on certain products that they feel are harmful to the
environment or do not adhere to specific environmental standards. Imports, in general, may be
subject to some sort of environmental tariff because of the environmentally unfriendly nature of
importing and exporting goods (petrol, jet fuel, excessive packaging etc.).
Aggressive trade
● There are many cases in which international competitors may use highly aggressive trade tactics
such as flooding the market. This may cause domestic traders to run out of business as
international traders will get a foothold in the market share. Aggressive trade practices can
happen quite unexpectedly and without warning. Governments need to put barriers in place to
protect their economies from this sort of aggressive trade practice.
Emotional argument
● Within certain countries, a purely emotional or sentimental argument is used for certain trade
tariffs and barriers. A good example of this would be in China and Japan. Both countries have a
strong cultural connection towards rice and believe that rice grown outside of their home
countries is not right for the palates of its citizens. While this may not make logical sense to many,
this argument is seen as acceptable to many.
● Throughout the world, many other countries use emotional arguments for bans on certain items
or services. Canada places limits on international publishing, TV and bookselling, while India
does not allow for outside investments in print media. And these are just a few examples.
Consumer safety
● When you look at the list of banned and restricted imported goods of any country, you should
notice that most of the items listed are considered dangerous, such as guns, knives, and other
weapons. Certain animal products, as well as products, made from endangered animals (such as
ivory jewelry etc.), are usually also banned in an effort to prevent consumers from being a part of
unwholesome consumption.
● There is also the concern of some animal products being diseased, and importing them runs the
risk of having an outbreak. This is something that we need to be incredibly careful of in 2021.
Medical drugs
● Each and every country will have their own list of what medical drugs require a doctor’s
prescription and which can be bought over the counter. These lists will differ from country to
