Erwin has been linked with English Championship side Leeds United but Baraclough has told the Daily Mail that such a move may not only restrict his development as a footballer, but hinder his chances of representing Scotland.
Motherwell have offered Erwin a contract extension but Baraclough accepts he will lose his star forward ‘sooner rather than later’.
Referring to reports that the 21-year-old will soon be heading to Elland Road, the former Scunthorpe boss said: “It hasn’t been confirmed to me Lee is going to Leeds. But the reports are very strong and, for me, that would be disappointing.
“He is just starting to find his feet with regular first-team football. I can give him that chance in a great, competitive league. And I believe Lee could get a better move if he stayed for another six months or a year and played for our first team.
“He has plenty of time on his hands. He is playing for fans that love him, in front of a manager and coaching staff and with players who appreciate what he has done and I would like him to stay a little bit longer.”
Baraclough, who replaced Stuart McCall at Fir Park last December, understands the attraction of taking a big-money move south of the border, adding: “I’m sure, like any young player, he likes the trappings of being a footballer.
“I have spoken to his father on a couple of occasions and I know Lee has a sensible family. I think if he knuckles down and is dealt with in the right way, and keeps developing, he can go and play for his country. He can play for Scotland, without doubt.”
Baraclough says he also wants to offer a deal to former Celtic and Middlesbrough striker Scott McDonald who helped the club retain their Premiership status after joining them on a short-term contract from Millwall in February.
“We spoke to Scott before he went on holiday. He loves Motherwell and he will assess what options he has now. But if there is a chance of keeping him, I will look at every avenue to go and do that,” he said.