Government Intervention In Australia

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Government intervention is all around us. The government if heavily focused on the economy so much so they try and predict the future through budgeting. Intervention by the government is necessary in order to expand the performance of the economy, correct market failure and try and accomplish an equitable distribution of wealth and income (Eckstein, 1994). The Australian government has built and maintained almost all roads are the government, schools both public and private are either run or subsidized by the government and lastly the government has a large role the international investment and trade with other countries (Karagiannis, 2001). The government has to make powerful decisions regarding the producers and customers in the economy.…show more content…
Trade can be defined as an economic process whereby parties participate in negotiation and exchange goods and services for the desired goods and services that other parties possess (Cole & Obstfeld, 1991). Nations produce products that they have a competitive advantage in. Competitive advantage is the ability of a nation, organization or individuals to produce goods and services at a cheaper price than other nations, organizations or individuals and have stronger sales margins. It is important for the nations, organizations or individuals to capitalize on the opportunities that a competitive advantage may have because it makes producers products mare favorable overseas leading to higher sales and higher exports of goods and services. The consumer will also benefit from this as nations, organizations or individuals are utilizing the competitive advantage goods and services will be cheaper (Hedgebeth & Mason, 2007). A free trade agreement is a treaty between two or more countries discussing the terms such as goods and services moving freely without tariffs or hindrances (Fuller & Geide-Stevenson, 2003). The free trade agreements such as the free trade with China allows will increase the efficiency of goods and services made in Australia leading to lower prices enabling consumers to get the goods and services they require cheaper, this means that producers will have to become more efficient to complete with the countries that have free trade agreements (Baier, & Bergstrand, 2007). Free trade agreements are a commitment for counties and an important international investment that a country can make for the long run. It can lead to major improvements in the economy of the counties that are a part of a free trade agreement, this is because of the removal of tariffs on products meaning that products for overseas are cheaper. Thus the products from overseas are cheaper benefiting both the producers because of cheaper inputs and consumers

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