International Business Environment Essay Example | Topics and Well Written Essays - 1500 words

International Business Environment - Essay ExampleThis paper will examine the European Unions agricultural subsidy whether it does more harm than good.According to Myers and Kent, there are several reasons why countries subsidizes agriculture first is that governments consider it a prime responsibility to keep their citizens fed, so there is the perceived duty to support farmers and double crop production secondly, farmers mankindwide have often been include in the poorest sector of society so policymakers feel that they deserve help.(2, p. 40) All in all, the rationale behind agriculture subsidies is to ensure that there are commensurate food supplies, the prices for farm products remain stable and to help the farming sector more competitive and in the process help the poor and develop bucolic communities.In the European Union, agricultural subsidies rake billions of dollars of expenditures each year, constituting nearly three-quarters of the annual total budget of the EU. (1, p. 339) Support for agriculture is handled by a Common verdant Policy or CAP. Here, the policy uses a variable levy to bring the world price of an agricultural import up to the domestic price direct as well as subsidizes exports of its surplus commodities on world markets, driving down prices for other potential exporters. The diagram below demonstrates thisAgricultural subsidies such as those of the EUs have devastating effects on the international market, especially on the poor countries. Subsidies lead to over-production that is dumped on the world market, depressing world prices and these subsidized imports enter developing countries markets with lower tariffs as a result of the AoA and IMF and World Bank conditionalities. (4) It is impossible for farmers from poor economies to compete with the low prices of agricultural products and commonly go out of business. Unfortunately, this destroys local and rural production as imported and considerably cheaper agricultural