The Consequences of Free Trade: Big Companies vs. Developing Countries

1. Introduction

The purpose of this paper is to investigate the confrontations between big companies and free trade. I will explore how mergers and acquisitions in the food industry have led to the rise of global corporations that operate within a system perspective. I will also discuss how consumer and state concern over the global food crisis has been exploited by these corporations. Finally, I will examine how the exploitation of developing countries by global food corporations has led to famine and other forms of social injustice.

2. Mergers and Acquisitions in the Food Industry

The globalization of the food industry has been driven by mergers and acquisitions (M&A). These M&A activities have resulted in the rise of global corporations that operate within a system perspective. The systems perspective views the world as a set of interrelated systems, each with its own objectives and rules. The food industry is a global system that is governed by the laws of supply and demand. The M&A activity in the food industry has led to the consolidation of the industry into a few large corporations. These corporations have used their economic power to influence government policies in developed countries. The most notable example is the North American Free Trade Agreement (NAFTA), which was negotiated between the United States, Canada, and Mexico. NAFTA was designed to lower barriers to trade and investment between the three countries. However, it has had negative consequences for Mexican farmers, who have been unable to compete with subsidized agricultural products from the United States.

3. The System’s Perspective

The system’s perspective views the world as a set of interrelated systems, each with its own objectives and rules. The food industry is a global system that is governed by the laws of supply and demand. The M&A activity in the food industry has led to the consolidation of the industry into a few large corporations. These corporations have used their economic power to influence government policies in developed countries. The most notable example is the North American Free Trade Agreement (NAFTA), which was negotiated between the United States, Canada, and Mexico. NAFTA was designed to lower barriers to trade and investment between the three countries. However, it has had negative consequences for Mexican farmers, who have been unable to compete with subsidized agricultural products from the United States.

4. Consumer and State Concern

The globalization of the food industry has led to concerns about the safety of food products. These concerns are heightened by media reports of food-borne illness outbreaks, such as those caused by contaminated eggs from China or meat from Brazil. In addition, there is concern about the environmental effects of large-scale agriculture, such as deforestation and water pollution. Some developed countries have responded to these concerns by imposing restrictions on imports of food products from developing countries. For example, Europe has strict standards for imported foods, including standards for genetically modified organisms (GMOs). As a result, many developing countries are unable to export their products to developed countries. This hurts their economies and creates social injustice.

5. The Global Food Crisis

The global food crisis refers to a situation in which there is not enough food to meet the needs of everyone in the world. This can happen because of bad weather conditions, economic problems, or political instability. When there is a global food crisis, prices for basic food staples often rise sharply, which makes it difficult for people who live on low incomes to afford enough to eat. The global food crisis of 2008 was caused by a combination of factors, including high oil prices, droughts in Australia and the United States, and the financial crisis. This led to sharp increases in the prices of wheat, corn, and rice. As a result, many people in the developing world were unable to afford enough to eat, and there was an increase in the number of people who were suffering from hunger.

6. Famine

Famines are often caused by a combination of factors, including bad weather conditions, economic problems, and political instability. When there is a famine, prices for basic food staples often rise sharply, which makes it difficult for people who live on low incomes to afford enough to eat. The most recent famine occurred in Ethiopia in 1984. This famine was caused by a combination of factors, including drought, floods, and the policies of the Ethiopian government. As a result, many people in Ethiopia were unable to afford enough to eat, and there was an increase in the number of people who were suffering from hunger.

7. Exploitation of Developing Countries by Global Food Corporations

The globalization of the food industry has led to the rise of global food corporations that exploit developing countries for their own profit. These corporations source their products from developing countries where labour is cheap and environmental regulations are weak. They then sell these products in developed countries at high prices. This practice leads to social injustice because it keeps people in developing countries in poverty while making people in developed countries richer.

8. Conclusion

The confrontations between big companies and free trade have led to the exploitation of developing countries by global corporations. These corporations have used their economic power to influence government policies in developed countries. As a result, many developing countries are unable to export their products to developed countries. This hurts their economies and creates social injustice.

FAQ

Free trade allows big companies to tap into new markets and expand their customer base, which can lead to increased profits. Additionally, free trade can help big companies save money on production costs by taking advantage of lower-cost labor and materials in other countries.

Free trade promotes economic growth by increasing the overall level of trade and investment, which leads to more jobs and higher incomes. Additionally, free trade encourages competition and innovation, which can spur productivity gains and make businesses more efficient.

The drawbacks of protectionism for big companies include higher costs for inputs (due to tariffs), reduced access to foreign markets, and decreased competitiveness in global markets. Additionally, protectionist measures can lead to retaliation from other countries, which can further hurt big companies' bottom lines.

Tariffs and other barriers to trade affect big companies by making it more difficult and expensive for them to do business in foreign markets. These barriers can also lead to retaliatory measures from other countries, which can further hurt big companies' bottom lines.

The confrontation between big companies and advocates of free trade often arises because big companies tend to benefit from protectionist measures, while free trade generally benefits consumers and the overall economy. Additionally, big companies may be more likely to lobby for protectionist measures than smaller businesses or individuals.

Some solutions that have been proposed to address this issue include increasing transparency in lobbying efforts, reforming the WTO's dispute settlement process, and creating a global level playing field by eliminating subsidies and other distortive practices.