Even though the move to liberalize trade had positive implications, there is always clear uneasiness and worries among the public. The essay discusses the reasons for the disquiet among the public. It will also research on the comparative advantage that arises in such situations. When countries engage in free trade, the local industries suffer immensely because of lack of raw materials and government support.
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Most economies export raw materials to foreign agencies which offer better prices than the local industries. Consequently, the economy of such a country becomes poor regardless of the foreign financial gain it receives. Economists such as Friedrich List argued that free trade only allows an economy to dwell on the interests of other economies while neglecting its local industries. Besides, free trade in most occasions only benefit large firms and the wealthy trade players.
Since large corporations have more capital and better facilities than small enterprises, most foreign firms only option to trade with the established corporations which offer huge benefits as opposed to the developing local firms.
This system causes instability within the national economy because only a how much is edubirdie few individuals and corporations control the entire industry. The consequence of this practice is a political mess where the disadvantaged groups resort to boycotts and demonstrations to resolve the economic imbalance. This scenario causes public disquiet.
Some economists argue that the public is unhappy with a liberalized market because it lowers the local labor supply. Since free trade allows firms to produce products without regulations, some resort to undertake their productions in countries that offer cheap labor. Although the practice increases the financial well-being of a firm, it promotes a reduction in employment opportunities locally leading to poverty.
The promotion of a liberal foreign trade disregards the benefits of comparative advantage. A comparative advantage offers firms the chance to charge their products at lower prices than the other corporations do with the intention of maximizing on sales. Considering this market manipulation, most firms reduce prices of products which influence the level of sales. More sales result in more revenue for the firms.
Despite the huge revenue that firms receive, other industries offering normal prices suffer losses. Under a free market, firms have the opportunity to practice a comparative advantage than in a market of regulations and trade laws. Heckscher-Ohlin model cites that the global exchange of capital and labor only favors the giant economies while killing the small economies.
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