Commercial policy is the part a country’s economic policy, that is related with measures and instruments that influence exports and imports, either through quantities, prices or which goods will be traded or not. Commercial policy consists of tariffs and other restrictions on international trade.
Governments can impose restrictions on trade:
- to protect local employment
- to protect local industries
- to reduce commercial deficit
- because of political pressure
Foreign Direct Investment is the investment of funds by people or companies of a country, in real assets of another country, with the purpose of obtaining profits in the future.
Foreign direct investment entails active management of foreign companies. It can also lead to technology and knowledge transfers, usually from the parent company to the subsidiary.
Competitiveness is the capability a country or company has to achieve profitability in the market in relation to its competitors.
Competitiveness depends on the relationship between the value and quantity of the outputs offered and the inputs needed to obtain profitability (productivity), as well as the productivity of the other bidders that exist in the market. The concept of competitiveness can be applied to both a company and a country.