How liberalisation reduces employment opportunities?
Answers
Removing Barriers to International Investing
Investing in emerging market countries can sometimes be an impossible task if the country you're investing in has several barriers to entry. These barriers can include tax laws, foreign investment restrictions, legal issues and accounting regulations, all of which make it difficult or impossible to gain access to the country. The economic liberalization process begins by relaxing these barriers and relinquishing some control over the direction of the economy to the private sector. This often involves some form of deregulation and privatization of companies. (For related reading, see: The Risks of Investing In Emerging Markets.)
Unrestricted Flow of Capital
The primary goals of economic liberalization are the free flow of capital between nations and the efficient allocation of resources and competitive advantages. This is usually done by reducing protectionist policies such as tariffs, trade laws and other trade barriers. One of the main effects of this increased flow of capital into the country is it makes it cheaper for companies to access capital from investors. A lower cost of capital allows companies to undertake profitable projects they may not have been able to with a higher cost of capital pre-liberalization, leading to higher growth rates.