The Travels of a T-Shirt - Government Subsidies Essay

The Travels of a T-Shirt - Government Subsidies - Essay Example In agreement with government subsidies, this form of government intervention reduces the cost of production and encourages the producers to increase output. Government intervention/producer subsidies are of various forms. An example is state subsidies. State subsidies are financed from general taxation or by borrowing (Schuster, 2006). Government subsidies cause various productive firm’s supply curve to shift to the right. The amount spent on subsidy by the government is equivalent to the subsidy per unit multiplied by total output (Day & Schoemaker, 2005). A direct subsidy commonly offered by a government to supplement consumer’s demands has the effect of boosting demand. This results in an outward shift of demand. Examples of subsidies include an input subsidy, bails, fiscal assistance (loans and grants), government grants to cover losses made by business and a guaranteed on the factor cost of a product. Subsidies make sense in various demand and supply situations of the economy. The travels of T-shirt in Global Economy represents some of the scenarios in which subsidies may play a crucial role in the examination of market forces, power and politics of world trade (Rivoli, 2015). The overall international trade topic is a very crucial topic to discuss in the abstract though when this topic is focused on a single product, it is easy to be dealt with (World Bank Group, 2011). Subsidies in the international trade in most cases dwell with specific products. Only in extreme cases in the world economy do subsidies deal with conglomerate products. Through the story of travels of T-shirt, globalization advocacy is portrayed critically as the major issue behind international trade and individual country’s economy development (Prono, 2006). The competitive economic markets and increased living standards at the expense of the maximum and minimum wage bills among different