GLOBAL FINANCING

Global Financing and Exchange Rate Mechanisms



Global Financing and Exchange Rate Mechanisms

The existence of discriminatory regulatory policy by governments is perhaps the largest single barrier to international trade in services, and can have an adverse impact on the ability of foreign entities to provide services in any country. Barriers to doing business overseas can include restrictive trade and investment rules, controls on the transfer of technology, government procurement policies, prejudicial tax structure, incompatible environmental and health policies, and more.

Trade Barriers

Barriers to trade in goods are fairly straightforward, and often begin and end at the border (with a tariff or quota, for example). "Trade barriers in services are often less visible to the international marketer since they can be embedded in complex domestic industry regulations, as well as in the overall business environment of that country" (Baldwin 1970).

The banking, insurance, telecommunications, and transportation industries have tended to have more regulatory barriers imposed on them than other services. Government monopoly and control of many basic services has also worked to create market distortions in the pricing and delivery of services that are difficult for foreign providers to supercede. In the past, many governments limited imports of certain kinds of services on the grounds that they were protecting their domestic consumers from foreigners that offered services of a differing technological standard, or of a lesser quality.

International Payments

"Service firms sometimes experience difficulty repatriating fees, royalties, and profits to their home office' (Cavisgil 1981). This may occur when foreign repatriation procedures are ambiguous or poorly publicized or when governments fail to comply with their own regulations, effectively limiting, delaying, or discouraging repatriation. Currency exchange controls are often a major consideration also

Access to Public Sector Markets

In certain countries, service sectors are still regulated by governments that restrict foreign firms from obtaining government contracts. In ...