Multinational Corporations and Third World Capitalism
The principal conclusion of this article is that the direct investments of US multinationals have had a powerfully benign effect on Third World countries, promoting extraordinarily high rates of economic growth wherever they were allowed to do so. Of course, internal policies in the poorer countries help to determine how fast and how widely prosperity is dispersed and shared throughout their populations. But the significant fact is that foreign direct investment has been critical in creating large increases in per capita output, and without that it would be only the poverty that could be shared. A related conclusion suggested by this analysis is that foreign direct investment has been a far more important promoter of growth than has foreign economic aid. To be sure, some forms of aid were not meant to promote economic expansion, but simply humanitarian relief from hunger or disease. Even so, much aid has been explicitly intended to stimulate development, and sometimes with considerable fanfare. Investment is more effective than aid in another strategic respect. The former actively encourages capitalist enterprise, both directly and indirectly. It does so by example, and through enlisting a portion of the local population in its activities. It does so, also,more » through the higher incomes it generates for consumers and the business it activates among local suppliers, processors, and others.« less