• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

European governments have a policy of supporting farm incomes with artificially high prices for certain foodstuffs. What are the economic effects of this on Europe and the rest of the world.

Extracts from this document...

Introduction

European governments have a policy of supporting farm incomes with artificially high prices for certain foodstuffs. What are the economic effects of this on Europe and the rest of the world. (20) The government uses a large number of methods of regulation as a means of controlling a market. Legal and other methods are used to control the quality and the quantity of goods and services that are produced and consumed. Other methods of regulation may include the requirement of an individual to purchase an insurance policy, age restrictions and the payments of social insurance contributions. But regulation may not apply to the quantity and quality of goods and services but may also refer to the process. Examples of price controls include minimum wage legislation, maximum price and rent controls. Maximum price controls dictate how governments impose this policy in markets and how in agricultural markets price stabilization policies can be applied. ...read more.

Middle

A producer's association or a government backed marketing board regulates supply by releasing stocks on to the market at times of shortage or by purchasing excess stocks at times of surplus production, price can be established at a predetermined level. Although theoretically simple in terms of their economic logic, such policies are often criticized as they do not promote efficiency and tend to protect farmers from the full force of competition in world markets. England, France, Germany and Denmark, all members of the European Union are obvious examples of European governments that have a policy of supporting farm incomes with artificially high prices for certain foodstuffs. Accounting primarily for European governments' flagrant economic support would be protectionism. The government bids to protect interests of their own industry while safeguarding employment in the home economy. Vote bank, an important contributing factor comes into play because the government has to keep them happy, supporting them, or else they will loose extensive number of votes from the farming sector. ...read more.

Conclusion

Protectionism blocs trade. Within the European Union trade is supposed to become easier. Termed as an Economic Union, the crucial feature is that members agree to erect a common external tariff on trade with non-members. Characteristically, removal of tariffs and quota on internal trade, common tariff on trade with non-members and centralization of economic policies, though in practice duties or levies prevent it from functioning as one, almost defeats the purpose of the EU. The effects on the rest of the world are immediate as it takes shape in the form of complete restrictions on international trade where farming produce is considered. Trade Wars take place, where for example Europe will not accept US beef, or Argentinean chilies. This encourages a hostile trading atmosphere where trade is perhaps dormant for a period of time. The possibility of trading through comparative advantage and absolute advantage have to be ruled out, as it leaves to room for trade whatsoever. 1 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. International entrepreneurship in Europe

    Results show that these three dimensions of the institutional profile, as well as economic factors, play distinct roles in promoting entrepreneurial activity in a country. Cognitive institutions explained the prevalence of small firms in a country, as well as the number of new companies listed on the country's stock exchange.

  2. Compare and contrast the levels of economic development in the regions of Europe and ...

    While Africa has a number of great river systems such as those of the Nile, Niger, Congo, and Zambezi, it is not nearly as well-linked rivers as are other areas such as Europe. Moreover, many of the rivers are blocked by rapids and cataracts that require vast development projects if they are to be bypassed.

  1. Where does the World Trade Organisation fit in the overall scheme of international public ...

    This includes virtually all least-developed countries. These happen to be countries that have liberalised less, although they suffer too from other intractable problems, such as poor climate and geography, rampant disease, civil war and chronically corrupt, predatory governments and ruling elites.26 Globalisation, then, is growth promoting.

  2. If you want to feed the people of the third world eat chocolate - ...

    chocolate history; John Cadbury was the first person to produce solid eating chocolate through the development of fondant chocolate in 1842 and Henri Nestle created the first milk chocolate by adding milk in 1875. Both companies now dominate the chocolate industry internationally.

  1. Will trading fairly reduce world poverty?

    Colonialism is simply, exploitation by a stronger country of weaker one; Colonizing nations generally dominate the resources, labour, and markets of the colonial territory, and may also impose socio-cultural, religious and linguistic structures on the conquered population (see also cultural imperialism)..

  2. International Accounting Harmonization

    Overall, the goal is that better economic decisions may be made within the EU and the global economy. Advantages Having a set of harmonized standards in place is beneficial when preparing and auditing financial statements for intercontinental businesses. Those who report and audit internationally will become more efficient as well.

  1. By the mid nineteenth century, Britain had been the world's strongest economic power for ...

    Aldcroft argued that "Britain's relatively poor economic performance could be attributed largely to the failure of British entrepreneurs to respond to the challenge of changed conditions".10 A brief summary of Aldcroft's influential article, was that he believed that many British firms had failed to adopt the most efficient and best available techniques of production.

  2. trading blocs

    For example, African countries are not among the trade blocs' members. When there is a trade bloc, priority is given to the imports coming from the member states of the trade bloc. Consequently, the market is not easy to accede for a non member state.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work