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☆☆☆☆☆Underdeveloped countries don't have the productive capacities necessary to take advantage of increasing international trade.
Environmental-protection laws can be bad for the economy because they may increase unemployment.
An improved climate for foreign investment
Its main purpose is to promote development, not make profits.
Interconnections among the people and economies of the world
The colonizers used the resources of their colonies to grow their own economies.
Lower production costs help lure foreign investment.
Free-trade policies
When they can produce it at a lower opportunity cost than other countries.
Free-trade policies
Increased prices are not a hazard of globalization.
many countries are too underdeveloped to take advantage of the oppurtunities presented by increasing international rate.
Competition with lower wages and jobs leaving the country are some of the major drawbacks of globalization.
Think that you're country A, wanting to buy pen and paper.
Country B produces 1 million pen and 1 BILLION paper
Country C produces 1 BILLION pen and 1 million paper
Or, country B has the absolute advantage over production of paper while
country C has the absolute advantage over production of pen.
Coming back our theory of economy of scale, we know that to a certain point, increased production would lead to lower average cost and thus, lower price.
This would mean that paper from country B is cheaper than country C whereas pen from country C is cheaper than country B.
Therefore, you would choose to trade paper with country B while trading pen with country C.
And this is why it is important to making economic choices.
Higher prices for consumers
the migration of workers
by bringing wage reductions
1.Vendor lock in: a company say a wide range of product can be used with its products but this is not true.
- Price fixing: a group of companies agree that all of them will charge the same price.
3.Predatory pricing: a large company charges a price below production cost in order to eliminate small competitors.
