Question

What are the COUNTER arguments against free TRADE? Explain

Answer 1

The counter arguments against free trade are-

1) Infant industry argument-If developing countries have new industries, then the new industries have to struggle against international competition.

2) To diversify economy-Many of the developing countries stick to produce primary products so that they can have a comparitive advantage. However, sticking on agricultural products has many disadvantages.

Goods may have a low income elasticity of demand and hence economic growth will increase a little.

Due to environmental factors, price can fluctuate.

3) Raise revenue for government-A small amount of money, basically important taxes can be used to raise money for the government.

4)Cultural identity-Some countries want to protect their countries from what they see like Americanisation or commercialisation of their countries.

5) Help the Balance of Payments-Current account can be restricted by reducing imports. But in long term, this lead to retailiation and also less exports and prove counte-prodyctive.

Hope this resolves your doubt.

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