The _____ theory advocates government intervention in highly capital-intensive,high entry-barrier industries in which domestic firms may have little chance without government assistance.
A) product life cycle
B) laissez faire
C) strategic trade
D) absolute advantage

Question

The _____ theory advocates government intervention in highly capital-intensive,high entry-barrier industries in which domestic firms may have little chance without government assistance.
A) product life cycle 
B) laissez faire 
C) strategic trade 
D) absolute advantage

Quizplus · Accepted Answer

The strategic trade theory advocates government intervention in industries where there are high levels of capital and entry barriers, and domestic firms may have limited opportunities without government support. The theory suggests that strategic government policies can create a comparative advantage for domestic firms, allowing them to compete in the global market. This intervention includes government subsidies, tax breaks, and other financial support for domestic firms to invest in research and development, innovation and technology in the long-term.

The _____ Theory Advocates Government Intervention in Highly Capital-Intensive,high Entry-Barrier