The normative approach to the trade policy of the US government emphasizes on the objective function that incorporates the issues of maximization of well being, optimization of resource allocation under the environment of perfect competition. The effective operation of such a system necessitates a type of government that itself functions perfectly and that is quite effective in handling the policies so as to accomplish the objectives of welfare maximization and efficiency objectives. (An Overview of the Modeling of the Choices and Consequences of U.S. Trade Policy).
However, in reality it is not necessary to examine in the normative modeling approach so as how a government is required to be organized and functioned to accomplish the conditions of first best world. On the theoretical framework at the minimum it is essential to assume that the government is fully aware of the economic indicators and functions so as to play the part of a beneficent dictator. However, what continues to be unclear in such circumstances is why governments will be originated initially and what should be the norms for guidance of their policy initiatives. The normative approach thus takes for granted the prevalence of perfect government and represents its part in policy making as an executing agency to implement the norms of normative approach for the benefit of the society. However, taking into account the prevailing structure of the U.S. government along the types and complexities of the concerned objectives it is apparent that an imaginary environment needs to be created so as to make the normative approach effective. .
However, these are regarded as flexible approaches since the normative approach is unable to explain as to why the government has selected the trade policies that they do particularly, when such policy choices are so rapidly at variance with first-best optimal criteria. The political economy approach is considered quite effective since it improves the awareness of the factors that moulds the choice and designs the trade policies.
Continue reading this essay Continue reading
Page 2 of 7