Describe five measures each which a government may take to: (a) restrict imports (b) promote exports.

Answer Details

(a) Five measures a government may take to restrict imports

• Imposition of high import duties (tariffs): Heavy customs duties raise the prices of imported goods, making them dearer and less attractive so that fewer are bought.
• Import quotas: The government fixes a maximum quantity or value of certain goods that may be imported within a period, thereby limiting the volume of imports.
• Import licence and prohibition: The government requires importers to obtain a licence before importing certain goods, or bans (prohibits) the importation of some goods altogether.
• Foreign exchange control: By restricting the amount of foreign currency made available to importers, the government limits their ability to pay for imports.
• Devaluation of the currency: Reducing the value of the local currency makes imports more expensive in local money terms, thereby discouraging them.

(b) Five measures a government may take to promote exports

• Payment of export subsidies: The government gives financial assistance to exporters so that they can sell their goods abroad at competitive prices.
• Grant of tax reliefs and incentives: Reducing or removing taxes and duties on export goods lowers the exporters' costs and encourages them to export more.
• Provision of export credit and finance: The government, through banks and export institutions, provides loans and credit guarantees to help exporters finance their trade.
• Devaluation of the currency: A lower value of the local currency makes the country's goods cheaper and more competitive in foreign markets, boosting exports.
• Provision of information and trade promotion: The government organises trade fairs and exhibitions and provides information on foreign markets to help exporters find buyers abroad.