IB economics commentary (Section 5 - Development Economics) Essay

IB economics commentary (Section 5 - Development Economics) - Essay shellProtectionism is the practice of protecting domestic goods and service industries from foreign competition with tariff and non-tariff barriers (Answers). This economic commentary discusses the member Buy American feud exposes European double standards.During tough economic times it seems that countries become much conscious of the needs of its local industries. The European Union recently brought back its subsidies program to protect the soils dairy industry. A subsidy is a form of financial concern given to a business or industry by the government (Varian). It is considered the opposite of a tax. In Europe former(a) more subtle measures are occurring that are not good for free trade. Some European nations much(prenominal) as Greece are forcing developing nations which are beneficiaries of their aid programs to purchase goods and services from them (Polack). Despite the help Greece is providing the agreeme nts lose the economic growth of developing nations by limiting their options and increasing their be of doing business. The Greek fights being even to financial aid increases the costs of goods and services by 20%. This implies that actually value of the financial aid is deflated due to the loss of purchasing power as a consequence of inflated contract prices. Two of the factors that are causing the prices of these contracts to go are consultant fees and expensive materials. According to ActionAid the average costs of consultants working in developing nations is $1000 per day (Polack).Bilateral agreements are a common outside(a) occurrence that can have both positive and negative impacts on the nations involved in the treaties. A bilateral trade agreement is pact in which two countries in which the countries agree to lift approximately tariffs, quotas, and other trade barriers. The good thing about these agreements is that it promotes free trades which increases business activ ity between the nations.