Government Intervention In Australia

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One particular measure of government intervention that does indeed attempt to protect the interests of producers at the expense of consumers is the management of trade for political reasons. Through tools such as tariffs, governments can lift the price of cheap imported goods, thus helping local producers’ goods become more competitive, and ensure the government maintains trust and good relations with firms and unions (Pitlik & Kouba, 2015). For example, cars can be manufactured in Japan for a much lower cost compared to those made in Australia, which naturally leads to a significant price gap in favour of the Japanese vehicle. Given Australian consumers would have significant incentive to opt for the Japanese vehicle over the locally made alternative, government intervention through import taxes/tariffs closes the price gap in order to benefit the Australian manufacturer by making their product more competitive. Consequentially, however, consumers then don’t have the option of purchasing the…show more content…
One of the greatest issues that are tied with foreign direct investment is that of the distribution of income, and typically FDI has seen the wealth gaps widen and worsen over time. As highlighted by Franco and Gerussi (2013), FDI’s introduction requires upgrading processes by the undeveloped host country in order to meet the requirements of higher technological export production. Consequentially, this creates a significant chasm with the amount of skilled workers and unskilled workers, which naturally correlates with income distribution. As such, it is the responsibility of individual governments to play their part in promoting equal distribution of the wealth created though FDI, which they can influence through labour laws along with attracting FDI from businesses in different industries, ensuring a wide rage of skills in the workforce (Aghion & Commander,

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