Question

Recently there have been violent protests against the World Bank and the World Trade Organization. The protesters argue that these institutions promote free trade and also encourage corporations in rich countries to invest in poor countries. The protesters contend that these practices make rich countries richer and poor coun- tries poorer. How would economists feel about these protesters' views? a. They would disagree with the protesters because these practices will help make both rich and poor countries richer. b. They would disagree with the protesters about free trade, but would agree with the protest- ers about corporate investment. They would disagree with the protesters about corporate investment, but would agree with the protesters about free trade. d. They would disagree with the protesters about free trade and corporations, but would agree that these institutions are not necessary. 0TER c.

Answer 1

A) They would disagree with the protesters because these practices will help make both rich and poor countries richer.

Step-by-step explanation:

Free trade and foreign direct investments should make increase the wealth of both poor countries and rich countries. This rarely happens due to one main problem, corruption in poor countries. A lot of people are angry at foreign multinational corporations that have excessive powers on poor countries and they also earn extremely high profits, but it is not only the fault of the multinationals, it is also the fault of the poor countries' leaders.

No corporation can simply go to another country and claim everything for themselves, ti doesn't work like that. Generally corporations have very deep pockets and they simply bribe a president, a secretary of something, a few more people including congressmen and magically they purchase the purchase assets at below market prices. This repeats again and again everywhere around the world, with a very few exceptions.

For example, Ireland was extremely poor and when it joined the European Union it decided to host several multinationals and it has turned into a developed country since then. Chile is another successful story, and it was a dictator that opened Chilean economy to foreign investment.

The problem with most poor countries is that their corrupt leaders benefit themselves and not the country.