How Politicians can Improve the Economy by Trading Overseas?

Today’s economy is challenging for many businesses and industries. For politicians, the best way to help the economy is by actively trading overseas. By opening new markets and increasing exports, politicians can encourage economic growth in their region or country.

At first glance, it may not appear like exporting will help an economy. After all, it means sending something away so that others will give you something in exchange.

Here are three ways that politicians can use international trade to improve the local or national economy;

Decrease Unemployment and Foster Economic Growth

One of the best ways that politicians can improve the economy is by reducing unemployment. There are many different ways to measure unemployment, but the most common is the unemployment rate.

This tells you what percentage of the workforce is currently unemployed.

When there are more people employed, the economy is stronger. Many politicians encourage employers to hire and create more jobs. But one of the best things that can be done for the economy is for the government to create an environment of open trade.

Help Local Businesses

Another way that governments can help local businesses is by reducing taxes. Remember that exports are the number of goods or services that a country sends abroad compared to the number of imports that they receive. 

Taxes on imports or exports are designed to promote certain industries. When there is a trade surplus, it means that the country imports more than they export.

Trade surpluses are usually negative for the economy if they are large enough. It usually indicates that the country is not competitive enough in the world economy. By imposing taxes on imports and subsidies on exports, a government can promote certain industries. But it can also help the economy overall.

Encourage Innovation and Investment

Countries that are open to trade foster innovation and investment. This leads to better products for consumers and more jobs for the people who work in the industry. When businesses and investors have access to more customers through trade, they are more likely to create new products, services, and invest in research and development. When a country has more exports and imports, it is called an open economy.

If politicians want to perform a different type of trading like stocks, that is possible too. They can partner with fidelcrest prop firm for traders and put it on their lists of the other ways to trade.

History Of Political Economy

You can say that political economy emerged with mercantilism in the 16th century. This doctrine posited that countries became richer as they accumulated the greater amount of precious stones.

Political economy in the 17th to 20th century

Towards the end of the 17th century, Physiocracy was born. This, in response to mercantilism, claimed that nature, especially agriculture, was the source of wealth.

Later, in the 18th century, Adam Smith emerged, who focused on human labor as a source of wealth. His general recommendation was that the state let the agents pursue their own economic interests individually.

Then, in the 19th century, came Karl Marx and Friedrich Engels, who focused on the distribution of economic surpluses. Marx specifically refers to a surplus appropriated by the capitalists and generated by the workers.

Finally, one can say that there is a neoclassical political economy that emerged between the late 19th century and the early 20th century.

Role of Political Economy

Political economy has become progressively prominent in both political science and economics over the past 50 years.

Knowing the roles of political economy

It makes use of the tools of economics in order to study politics.
It evaluates how the economy can have an impact on politics. Macroeconomic trends can ruin or boost the chances of an incumbent.
It examines how political forces have an influence on the economy. Interest groups and voters have a powerful influence on almost every possible economic standard. Political economists struggle to classify how political organizations affect their influence on policy.