Explain why economic growth might be higher in a country with well-established property rights and a stable political system compared with a country where property rights are uncertain and the government is unstable.

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Explain why economic growth might be higher in a country with well-established property rights and a stable political system compared with a country where property rights are uncertain and the government is unstable.

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Explain why economic growth might be higher in a country with well-established property rights and a stable political system compared with a country where property rights are uncertain and the government is unstable.

Answer & Explanation (1)

Explanation
Even though free trade is considered beneficial for a nation as a whole, it hurts a few people in the economy. For instance, domestic producers facing high competition from cheap foreign products. Such people face the destruction of their businesses or lose their jobs due to globalization and should be compensated by the government.

The government can undertake trade adjustment assistance programs where it may provide unemployment benefits, loans, concessions, retraining programs, and other aids to workers and firms hurt by trade. Income support can be provided as well in the form of unemployment insurance and income tax credit.

Verified Answer
The unemployment insurance and income tax credit are the policies to save the losers. Also, trade adjustment assistance programs must be undertaken by the government. The government of Country U can adopt those policies that will ensure the losers to help them cover the losses because of globalization

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