2 disadvantages of free trade are that it allows wealthy companies to out-compete local businesses in less developed countries & that many people lose their ____________ to outsourcing.

Question

jobs
homes

Answer 1

1. Disadvantage of free trade: Wealthy companies out-competing local businesses in less developed countries
Free trade can lead to a scenario where wealthy multinational companies, often based in developed countries, can take advantage of lower labor costs and less stringent regulations in less developed countries. This can result in the outsourcing of production to these countries, leading to the displacement and closure of local businesses. The foreign companies can produce goods or services at lower prices due to economies of scale, advanced technology, or cheaper labor, which can make it difficult for smaller local businesses to compete and survive.

2. Disadvantage of free trade: Job loss due to outsourcing
Free trade can also result in job loss, particularly in developed countries, as companies seek to outsource production to countries with lower labor costs. This can lead to factory closures, layoffs, and downsizing in the domestic labor market. The jobs that are outsourced typically involve low-skilled or semi-skilled work, such as manufacturing or customer service roles. This can have a significant impact on affected individuals and communities, as finding new employment opportunities might be challenging, leading to socioeconomic hardships.