<u>The cheap foreign labor could possibly disrupt the market of skilled and unskilled labor in the country that could lead to a high rate of unemployment.
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Further Explanation:
Protectionism:
When a government of a country make policies and takes actions to protect the domestic industries of the country which could be disrupted by the foreign companies. Counties use the protectionism theory to grow their domestic industries. Foreign companies can disrupt the local competition with unfair means such as high capital investment against small domestic businesses.
A government of the country should use the protectionism theory in order to converse the domestic economy. The government can use the following methods to protect the domestic industries: Tariffs, lower export duty, and higher import duty.
Cheap foreign labor argument for protectionism:
The decrease in the cost of the product is beneficial for the business as it will increase the profit of the company. Cheaper labor will lead to a higher profit for a company. Therefore, the company would prefer a cheap labor option. In the given case, the cheap foreign labor argument means that cheap foreign labor will disrupt the market for domestic labor. The domestic labor would be replaced by cheaper foreign labor and it will increase the unemployment in the country.
<u>Thus, cheap foreign labor could possibly disrupt the market of skilled and unskilled labor in the country that could lead to a high rate of unemployment.
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Learn more:
1. Learn more about the example of protectionist
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2. Learn more about the excise tax
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3. Learn more about the exercise clause
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Answer details:
Grade: Senior School
Subject: Economics
Chapter: National Income
Keywords: Domestic, saving, the cheap, foreign, labor, argument, for, protectionism, refers, too, income.
