Tuesday, March 24, 2009

the role of government (2)

governments attempted to control international trade with specific policies to maximize the likelihood of a positive trade balance and the resulting inflow of specie.Exports were subsidized and quotas and high tariffs were placed on imports of consumption goods .Tariffs on imports of raw materials that could be transformed by domestic labor into exportable were ,however ,low or nonexistent,since the raw materials imports could be "worked up" domestically and exported as high-value manufactured goods .Trade was fostered with the colonies,which were seen as low-cost sources of raw materials and agricultural products and as potential markets for exports of manufactures from the parent country .Navigation polices aimed to control international trade and to maximize the inflow(minimize the outflow) of specie for shipping services .the British navigation acts ,for example ,excluded foreign ships from engaging in coastal trade and from carrying merchandise to Britain or its colonies.(such policies have not disappeared-even today non-us .ships are prevented by law from carrying goods between U.S.ports.) Trade policy was consistently directed toward controlling the flow of commodities between countries and toward maximizing the inflow of specie that resulted from international trade.

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