Link to Article:
http://www.managementstudyguide.com/role-of-governments-in-international-businesses.htm
The Role of Governments in Encouraging or Discouraging International Businesses!
This article tell us that Often times the
governments of many countries do not have a choice but to welcome international
businesses as they need the “hard cash” or the Dollars, as they are also known.
For instance, the difference between exports and imports is known as the
Current Account Deficit or CAD. Since many emerging markets (except China which
has a positive CAD) have deficits that need to be financed with Dollars. Apart
from this, the domestic industry might not have the capabilities to succeed in
a particular sector nor the expertise to develop that sector. Therefore, FDI
becomes necessary for the growth of that sector. Moreover, opening up of the
economy is needed for admission into the WTO or the World Trade Organization,
which means that in order to export to other countries, emerging and developing
market economies have to open up. The key aspect here is that many governments
of the emerging economies often welcome the international businesses with open
arms because of the reasons listed above. However, midway through the process,
some of them develop cold feet because of policy paralysis. It needs to be
understood that allowing international businesses to enter into the emerging
economies must be bipartisan. Finally, On the other hand, the examples of India
and Russia are the other way around as these countries opened up their
economies due to compulsions and then with open arms but failed to keep up the
momentum. This means that the integration into the global economy would happen
only when the reforms process is done wholeheartedly and without pauses or
U-turns.
Question: Do you think that based on this
article that the government encourages or discourages business?
