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Which of the following is NOT a valid argument for advocating ‘free trade’ for a developing economy?
It results in more efficient allocation of resources internationally.
It improves competition and reduces domestic monopoly in goods and services.
It allows exporters to reap economies of scale.
It creates a level-playing field between developing and developed economies.
Since it allows specialization of production, (a) is correct. Option (b) is a natural consequence of more producers of the same product or service. Since exporters can tap domestic as well as foreign markets, they can produce more, reduce costs and thus reap economies of scale. So, (c) is also correct. Option (d) is not a valid argument out of the all four. Globalization along with free trade can adversely affect the economies of developing countries by not giving equal playing field by imposing conditions which are unfavourable. With the development of transport and communication systems goods and services can travel faster and farther than ever before. But free trade should not only let rich countries enter the markets, but allow the developed countries to keep their own markets protected from foreign products.
By: Pradeep Kumar ProfileResourcesReport error
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