In economics, "dumping" can refer to any kind of
predatory pricing. However, the word is now generally used only in the context of
international trade law, where dumping is defined as the act of a manufacturer in one country exporting a product to another country at a price which is either below the price it charges in its home market or is below its
costs of production. The term has a negative connotation, but advocates of
free markets see "dumping" as beneficial for consumers and believe that protectionism to prevent it would have net negative consequences. Advocates for workers and laborers however, believe that safeguarding businesses against predatory practices, such as dumping, help alleviate some of the harsher consequences of free trade between economies at different stages of development (see
protectionism). The
Bolkestein directive, for example, was accused in Europe of being a form of "social dumping," as it favored competition between workers, as exemplified by the
Polish Plumber stereotype.
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This is the process whereby manufacturers close down factories in high-wage areas and set them up in areas where labour is cheap. This cuts costs and boosts company profits, but often at the expense of creating unemployment in Europe.
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