Persistent in-flow of foreign aid and investment which ‘allegedly’ serves to improve the situations of developed and underdeveloped nations would, as argued by many, be detrimental to development as it would eventually lead to dependency. Developed by the members of the Dependency school, they assumed that underdevelopment is caused by the “dominant influence exercised by developed capitalist countries as a result of certain political and economic institutions which lock poor LDCs into a dependent relationship” (Colman and Nixson: 43). Braun agreed to this when he said that dependency will result in backwardness, misery and social marginality. This can be seen in several African countries like Somalia and Kenya who depended heavily on foreign aid.
Another hidden threat with dependency is that it is used by core (developed) countries, elites as well as large multinational corporations (also known as trans-national corporations or TNCs) to fulfil their political and economic agenda. This is evident in the dependency school’s theory when they mentioned that foreign controlled economies would strengthen the iron grip of ruling elites with the owners of foreign capital and eventually results in income inequality and economic stagnation . Some even argue that they do not care as much about the well being of the LDCs as counting their profit. Neo-colonialism is another phenomenon related to dependency, where western powers are able to re-establish their claim to world domination by asking the countries they allegedly ‘aided’ to cater to their demands e.g. The U.S. assisted Afghanistan to rebuild after the Taliban Regime was overthrown and helped install Hamid Karzai as their new leader on grounds that they adopt western policies and democracy. Another case is Pakistan, where they are now craving for more aid after the recent earthquake; and this can be used to the advantage of the Americans to solidify their grip on Pakistan, as Musharraf was long known to be a staunch ally of American interests.
Penetration of foreign investment, mostly by Multinational companies, also has its fair share of danger for the developing countries. Bornschier and Chase-Dunn concluded from their empirical studies that foreign capital penetration in 1967 had a negative effect on GNP of the host countries. From other studies done by pro-dependency scholars, it can be said that the “penetration of foreign capital promoted a host of negative effects on the penetrated economy” Often, multinational firms discouraged the local industries from growing, possessing the deadly capability to manipulate weak LDC governments towards their own advantage. In the Ivory Coast, European managers and heads of such corporations earn more than 20 times the locals while in Swaziland the ratio of income between Europeans and Africans are 12:1 respectively. The same situation can also be seen in Cameroon, where European domination is very much felt. As in Denny Braun’s words, Multinational interference in developing economies is a ‘recipe’ for financial disaster in the long run.
Another factor worth looking at is cultural values and how it can be detrimental to economic development. McClelland (1953, 1961) hypothesized that some societies gave less emphasis on economic achievement compared to others. This perhaps can explain the low economic development in both Africa and Latin America. To justify this, US scholars doing a study of Latin American underdevelopment have compared it with the development in the US and Western Europe, they agreed on the notion that “traditional attitudes and institutions stemming from the colonial past have proven to be serious, if not fatal, stumbling blocks to any indigenous effort to develop economically, social or politically.” And that “values of Catholicism, of large Indian populations, or of aristocratic rural elites have contributed to ‘irrational’ patterns of behaviour highly detrimental to modernization” . K.H Silvert, a leading authority on Latin America also agreed to this in his text on the impact of traditional values on their economy and politics when he stressed that “there is something in the quality of the Latin American man and his culture which has made it difficult for him to be truly modern” . Argentina is a good example where traditional sentiments reign supreme in halting economic progress where land ownership and labour are strongly based on traditional grounds . But then, cultural values alone is not the most integral explanation, where national stability is another deciding aspect
Wars, unrests, bloody protests and other forms of instability can also be a major contributing factor towards halting development. Civil wars in several third world countries like Rwanda, Somalia and Lebanon have severely affected any hopes for progress. Regarding protests, an article in Media Permata dated March 3rd, 2006 strongly reflects this where in Mexico, tens of thousands of miners and blacksmiths went out in protest due to allegations of unsafe working conditions. This, as reported, have weakened output in the country’s biggest mine and several factories, which in turn is unhealthy for development. In the present, Iraq is also on the verge of a civil war (some speculate that it has already started) which is between the Shiites and Sunnis; this has also greatly downplayed their hopes for economic development, where Iraq is known to have a substantial amount of oil reserves.
Lastly, let us briefly look at the reasons as to why several countries, though devoid of resources are able to achieve steady development by looking at the case of Japan. The reasons responsible for their outstanding performance are their productivity drive linked to their amazing technological progress, integration of industrial with foreign trade policies permitting constant industrial modernization vis-à-vis other highly advanced countries, harmonious cooperation between the private and public sector and also the absence of the burden of military expenditure. Coupled with high aspirations to succeed, strong commitment and dedication along with efficient governing and management, this is the scenario seen in many of the developed countries which remains the most vital link towards their success.
Thus, we now acknowledge the main factors responsible and how they operate to maintain the spatial inequality in terms of income between developed (core) countries and developing (peripheral) countries. Though hard for us to believe, these negative forces still emit a formidable aura that is strongly felt to this day. The good news is that steps are taken by world bodies such as the United Nations to tackle and reduce this global crisis, and hope for an egalitarian development where everyone in this world, regardless of their location, would taste the same amount of success and experience the same levels of development. But, the increasing levels of corruption, fresh occurrences of wars and bloodshed, the continuing instability of the world market and the ever-widening technological gap seem to tell us a different story, where inequality and injustice will persist. Unless we all join hands and work together at a global level to resolve these issues, the desire of achieving an egalitarian development will forever remain a distant dream.
