State-Led Development vs. Foreign Investment

Paper Summary:

This paper argues that Third World states should pursue state-led economic development over development achieved through foreign investment. The paper states that Third World states that are indebted to other states and organizations will be susceptible to conditional loans and to the withholding of needed aid. The paper relates that countries that insist upon state-led development instead of upon foreign aid/investment are in a better-position to maintain appropriate working standards for domestic workers and to distribute resources to indigenous sectors that will spark economic growth and diversification. The paper then compares Malaysia, a country that tries to avoid reliance upon foreign investment to Uganda, a nation that is heavily dependent upon foreign investment. The paper concludes that Malaysia's approach works better.

From the Paper:

"Supporters of foreign investment as a tool for national economic development may be in the minority, but they keep returning to the fact that struggling countries in need of funds have little recourse but to turn to international lending bodies for assistance. They point to the fact that the IMF sanctioned a much-needed three-year, low-interest Enhanced Structural Adjustment Facility worth nearly $180 million in Special Drawing Rights for Uganda. The World Bank, in the period 1989-90, also approved additional supplements totaling nearly $300 million."

Sample of Sources Used:

• Bigsten, Arne, & Steve Kayizzi-Mugerwa. Is Uganda an Emerging Economy? A Report for the OECD Project, Emerging Africa. Uppsala: Nordic African Institute, 2001.
• Boon Kheng, Cheah. Malaysia: Making of a Nation. Singapore: Institute of Southeast Asian Studies, 2002.
• Crouch, Harold. Government and Society in Malaysia. Ithaca, NY: Cornell University Press, 1996.
• Dodgson, Mark. "Innovation Policies in East Asia." Science, Technology, and Innovation Policy: Opportunities and Challenges for the Knowledge Economy. Eds. Pedro Conceicaao, David V. Gibson, Manuel V. Heitor, and Syed Shariq. Westport, CT: Quorum Books, 2000. 399-414.
• Goh, Innie, & Jomo, K.S. "Efficiency and Consumer Welfare." Privatizing Malaysia: Rents, Rhetoric, Realities. Ed. K.S. Jomo. Boulder, CO: Westview Press, 1995. 154-171.

More papers on State-Led Development vs. Foreign Investment:

• Persuasive Essay # 133993 : "State-Led Economic Development for Developing Countries"
• Term Paper # 120921 : "Foreign Investment in the U.S. Economy"
• Comparison Essay # 102312 : "Direct Foreign Investment"

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