Globalization and Free Trade

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In the actual free trade context in the globalized nation, it is referring to a freedom for businesses to trade between countries at no barrier from government intervention which includes imposing tax on the products and services, subsidies, import and export quota limitation, as well as imposing trade legislation. However, this cannot be realized in today’s world (White, 2008) due to the fact that each country needs to protect and balance between the three major aspects which is the social, economy and politic domestically in order to compete in the competitive world and at the same time contribute to peace of the world. This is especially true for the developing countries such as Malaysia, China, India and et cetera as compared to the…show more content…
The finished goods will then be imported back to the country and the domestic consumer will have to fork out more money to afford the product where the initial raw material came from them. This directly affected the increase in cost of living at the developing country to purchase the imported goods at a higher price due to the fact that the research and development, technology and knowledge were not as good as the developed countries. A significant example would be the Malaysia rubber being the highest quality rubber in the world. One of the most famous brands in condom industry named DUREX is made from high quality rubber from Malaysia (Sheridan, 2006). After manufacturing the condom in Thailand which offers cheaper labors, they will market the product throughout the nation which includes Malaysia. Since Malaysia does not have the expertise in manufacture condom given the high quality local rubber, the local consumer has to purchase the imported condoms which is of higher price.

As the demand increases for the raw material, it was exported out from the developing countries and this will eventually lead to scarcity of resource as raw material is finite. When the supply of raw material can no longer satisfy the need of demand, the large corporation will look for other substitution material in other countries. Therefore, the developing country that relies on the income from the sale of raw
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