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Question

What Are the Advantages and Disadvantages of Liberalisation?


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Solution

The following are some of the advantages and disadvantages of liberalisation.

Advantages:

  1. Increase in foreign direct investment
  2. Abolishing of licensing system in the country
  3. Reducing the monopoly of public sector
  4. Increase in the employment opportunities
  5. Economic development of the nation
  6. Reduction in rates of interest and tariffs
  7. Development in technology due to use of foreign technology in industrial applications

Disadvantages:

  1. Due to liberalisation there will be an increased dependence on other nations for forex, technology etc.
  2. There will be economic instability as any changes in the currency in foreign markets will result in a significant impact on the economy.
  3. Due to the introduction of new technology, there will be less skilled workers who can implement the technology.
  4. The domestic sector will take a hit as industries will become dependent on cheap raw materials from foreign countries.

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