Explanations of Underdevelopment Essay Example | Topics and Well Written Essays - 1000 words

Explanations of Underdevelopment - Essay ExampleMultinational corporations or MNC cease broadly be defined as the business corporations that operate across the world and have operation units in different countries. They are not only equipped with abundant financial resources moreover they also have significant abilities to transfer knowledge across the internationalistic market. Underdeveloped nations, on the other hand are not financially or otherwise equipped to exploit their own resources. Thus, they become highly attractive business propositions for multinational companies as they can exploit the commodious market potential of the region. But that is not the whole truth. MNCs bring their knowledge and use their financial expertise to not only exploit host surface areas resources but they also contribute extensively to their socio-economic development.Theory of dependency primarily relies on financial aids to the underdeveloped nations from developed countries or internation al aid agencies that are much misused or used in areas other than infrastructural development. These aids are often in the form of soft loans but they still increase the debt liability of the already poor countries. The money is frequently misused or not used on areas infrastructure development, education, health etc which could make headway the society on long term. The inability of the government to appropriately go for financial resources results in vicious debt trap. Isbister emphatically claims that they are waylaid by the debt crisis (2003 180). ... The money is frequently misused or not used on areas infrastructure development, education, health etc which could benefit the society on long term. The inability of the government to appropriately utilize financial resources results in vicious debt trap. Isbister emphatically claims that they are waylaid by the debt crisis (2003 180). Third world countries like Ghana, Botswana etc are prime examples where vast disparity of inco me is highly visible. condescension massive international aid, the common man is still reeling under abject poverty. other important fact is that financial aids are often able to conditions which are either not practical for poor nations or they fail to instill necessary discipline amongst the policy makers for its effective utilization so that it can filter down to the common man. At the same time, it also provides huge power to the donor which is often exploited by them for their own benefits vis-a-vis poor wages to local persons, exploitation of natural resources at low cost etc. MNCs in such scenario may justifiably become the scapegoat for vested interests. Another important aspect of dependency theory is that third world countries get used to the foreign aid because most of them are characterized by unstable socio-political environment. This helps the vested interests in the higher hierarchy of politics and bureaucracy to divert fund for their own interests. Thus, socio-ec onomic growth of the underdeveloped nations remains a dream. Modernization theory, on the other hand, focuses on capitalist principles of market and exhorts underdeveloped economies for more liberal market based policies to facilitate foreign investment. It also makes underdeveloped countries more attractive for MNCs who can