But a country opening to international trade (undertaking trade liberalization) also faces considerable risk associated with the strong competition in international markets. On the one hand, it can be argued that international competition creates the necessary pressures to prevent economic and technological stagnation, to stimulate domestic producers to produce better goods, and to lower the costs of production. But on the other hand, there is a high risk that many national enterprises and even entire industries—those that are less competitive and adaptable—will be forced out of business. Unfortunately, in real life, the physical and human capital previously employed in these industries is not easily transferable to other, more productive uses for many reasons—the lack of additional investment, shortage of information on markets and new technologies, and others. Meanwhile, closing of enterprises and higher unemployment impoverish people and slow national economic growth. That explains why trade liberalization is so often opposed even in high income, better prepared countries.

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