Why do developed countries want developing countries to liberalise their trade and investment?what do you think should the developing countries demand in return?
Answers
Developed countries want developing countries to liberalise their trade and investment because then the MNCs belonging to the developed countries can set up factories in less-expensive developing nations, and thereby increase profits, with lower manufacturing costs and the same sale price.
Solution:
Developed countries want developing countries to liberalise their trade and investment because then the MNCs belonging to the developed countries can set up factories in less-expensive developing nations, and thereby increase profits, with lower manufacturing costs and the same sale price. Suppose the Indian government puts a tax on imported goods, then the price of the goods will be higher for the consumer. As a result, the consumer will prefer to buy goods produced locally. Consequently, there will be no demand for imported goods and developed countries will not able to sell their goods in developing countries.
In return for liberalisation of trade laws, the producer in developing countries are demanding 'fair trade'. The developing countries should demand, in return, for some manner of protection of domestic producers against competition from imports. Also, charges should be levied on MNCs looking to set base in developing nations.MNC's setting up their bases in developing countries should also be compelled to work for the development of the country.