Examples of positive sanctions
A sanction is a penalty or punishment, It is defined as a formal punishment that they get after disobeying the rules and regulations. A positive sanction is a form of gift given to a person for following the norms. They are mainly used to build good working connection and association with countries and their purpose is to protect a nation from external threats.

Examples of positive sanctions.

Preferential tariffs.

Tariff schedules in a way that one or more nations make an agreement to be charged a lower rate than the MFN rate. They are made in a way that helps the trade policy-makers, business-operators and policy-makers to gain comprehension on how to negotiate the preferential trade agreements. Many countries particularly the more evolved nations give this to countries that are less evolved. One of the substantial program is the Generalized system of preference (GSP). Countries that export goods may have access to numerous preferential program from a given country that imports a given product.

Effects of tariffs

They discourage other nations from exporting their goods to other countries. The tariffs make the trade less competitive and more expensive. It also leads to lower consumers and high prices on the goods and can also lead to the decrease in the quality of goods. The main advantage of tariffs is that they are more transparent and are easy to use than quotas.

Subsidies

A subsidy is an amount of cash given by the administration to help manufacturers and traders to keep the price of a consumer good or service low. An example of a subsidy is the gas subsidy that was started by the Australian government and WTO. These subsidies start at a cost effective estimate of several billions a year and might have a bleak socioeconomic and environmental effects on the country. The subsidies help industries and businesses to produce more goods and services. This rises the overall stock of the goods in question hence the rise in demand which leads to the lowered prices of goods and services.

Employment subsidy

The types of subsidies given by various government include;

Production subsidy

It is given to enable manufacturers to generate more goods. They chip in to reduce the expenses used and increase the number of products being produced.

Consumption subsidy

It Involves the government reducing the price of the consumer goods like food and water.

Export subsidy

The government goes ahead and reduces the cost of the exportation goods to encourage exportation. Some people always end up abusing this by raising the prices on the goods for them to earn more.

Employment subsidy

Advantages of foreign aid

It is given to industries and businesses by the government to create more job opportunities for its people.

Advantages.

They accommodate growing industries, gives rise to more supply of goods and services and also they decrease the cost on goods and control inflation.

Disadvantages.

It can lead to scarcity of goods because of increase in demand due to increased prices. Another disadvantage is that the authorities would have to raise the taxes for the subsidies to be there.

Foreign aid.

This is the capital that one country gives to another country inform of a gift, grant or a loan. It helps the country in various ways including military, economic or emergency humanitarian. The main purpose of foreign aid is for security and It is also used to help a country achieve its diplomatic goals. This makes it to be well known and gain support from foreign administration for its position.

Advantages of foreign aid

Disadvantages

It saves peoples life, provided medicine for them, encourages development in countries, rebuild livelihood, aids agriculture and taps natural resources.

Disadvantages

They increase dependency, increases the risk of corruption, there are more expensive commodities, small scale farmers are overlooked and it benefits employers.

Investments guarantees.

These guarantees help investors protect foreign direct investments against different risks such as, political and non-commercial risk in developing countries. Benefits of this investment guarantees include; risk management, loss prevention, financing and indemnification. Its mission in various countries include: enhancing home country economic performance, filling gaps in private sector cover, promoting developments of host economy and realizing diplomatic objectives.

Advantages

It gives room for diversity, they give a fund the purchasing power, It is managed by professionals, they are liquefied, and they are convenient.

Disadvantages.



They have more risks, for example, payment risk, liquidity risk, reinvestment risk and others. When price changes it will affect the mutual fund, there is risk of bankruptcy and some investments are callable.

Preferential taxation of foreign investment

The government comes up with a policy requires an investor to invest in a certain period of time. If the period elapses, the taxation would be higher that the required one hence encourages the investors to invest early. These type of sanction is beneficial because it generates jobs, brings in new technologies and promote growth and employment.

Quotas

It is a trade restriction given to a nation on the number of goods that can be imported in the country or exported. This is done to make sure that nations can regulate the number of goods that gets in and out. It is mostly done to encourage domestic industries to increase the production of their goods, however it can lead to consumers spending more on domestic goods than the imported ones.

A quota is different from a tariff, it focuses on how to minimize the number of goods being imported and exported. Tariffs on the other hand places tax on the goods, the limit on goods can be represented by the number of goods sold or by the percentage.

Advantages of quotas

They are used to protecting growing industries increasing their production, long-lasting even when the industries have grown to their peak and lastly they are more protective than tariffs.

Disadvantages

Their would be less importation of goods in the concerned nations, high prices on all consumer goods produced, and they are cumbersome since they require a lot of paperwork to know the exact number of goods to be imported.

Conclusion

Sanctions, whether positive or negative they really help the economies of our countries to grow. It also helps small scale business to grow and produce more goods. The only problem lies on how to make them successful, if this is tackled they would change our nations economy.

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