Answer to Question #214861 in Microeconomics for KOKETSO

Question

Critically discuss any four disadvantages that south Africa may encounter by being a member of African Continental Free Trade Area

Answer 1

Substantial Loss of Jobs 

      Numerous goods are becoming inexpensive to acquire out of the country than to manufacture locally in South Africa as trade barriers are essentially declining. Consequently, an augmented ratio in loss of jobs is experienced as contending industries fade away. 

Amplified Vulnerability 

      Free trade has the prospect of leaving South Africa susceptible to the gravity of political pressure if she grows reliant on another nation for vital products or services by instigating the death of actual trades. 

Tariff Predicaments 

      South Africa’s capacity to amass taxes from local firms can be hindered by free trade. The nation may witness transferrable businesses migrate away through permitting the free flow of capital outside of its geographical boundaries. 

 New Industries Can’t Develop

      Free trade in South Africa may inhibit the institution of tax breaks and protective tariffs. Consequently, emergent industries find it challenging to inaugurate themselves as they do not fundamentally profit from local policies that impact production.