Question:
What is the problem with opening local markets to foreign companies?
Answer:
The standard argument of organizations like the IMF and the World Trade Organisation, is that protectionist economic policies undermine competition in the market, and that markets should be open to everyone, so that prices will be more competitive and industry will have to be more innovative and efficient because there are more challenges for them to acquire market share.
That theory is fine on paper; but in the real world, opening domestic markets to foreign competitors has the opposite effect.
It is all well and good to talk about establishing a level playing field, but you cannot ignore that all the players on the field are not equal.
When you open your markets to multinationals, you are not actually increasing competition, you are reducing it. You are opening the door to monopolization in the market by much more powerful companies which can overwhelm local competitors. You are not increasing diversity of goods and services, you are moving in the path towards homogenization as major international brands flood the market.
You are, essentially, allowing a heavyweight boxer to fight a featherweight.
The outcome is a foregone conclusion.
The effect of this is the exact opposite of what Free Market advocates promise. Wages go down, prices go up, local industry is subjugated, and revenues flow out of the country. You are, essentially economically vanquished.