Question

How does international trade affect working conditions of low-income countries?

Short answer

Positively with some Negatively

Step-by-step solution

Step1. Introduction

International trade refers to the exchange of goods and services between countries across the globe. This exchange is referred to as the imports and exports.

Step2. Explanation

Positive:
1. International trade provides more job opportunities to developing nations, the workers can learn skills and earn better wages than available presently.

2. Access to cheaper imported goods, access to goods unable to be produced within a country.

3. Firms that open in developing countries then create more money within the domestic circulation, which can help the community outside of the business itself.
Negative:

With increasing international trade, working conditions in the low-income group countries are adversely affected.

1. It is so because with increasing international trade, the competition is rising substantially. Not only do the producers compete domestically, but also globally.
2. Multinational corporations seek the lower costs of production with the aim to earn higher profits, this is partially achieved by lower standards of working conditions that otherwise shall be illegal in developed countries. They are also paid lower wages as compared to a developed economy.

3. The creation of a "race to the bottom" business looking for the cheapest labor options, then creates an incentive for countries to have the lowest labor regulations to protect their workers.

4. Jobs provided internationally may be deskilled, so they are not learning a skill set, but rather repeating a simple task. Additionally, the value created by the firm in the country may not entirely help the local community as much as firms will extract as much profit as possible.