Colonialism Economic Broadly

Colonialism Economic Broadly

Colonialism (Economic), broadly the theory that trading relationships with under-developed countries have benefited only the advanced countries. An extreme version is that international trade has hindered growth in the under-developed countries by emphasizing the division in their economies into an export sector developing with trade and commerce and a large subsistence sector which continues to stagnate.

It is difficult to show that the under-developed countries have grown more slowly because of their trading contacts with the advanced nations, but the association may have brought them less gains than might have been expected. The chief interest of foreign investors in these countries is in the production and export of raw materials, oil and tropical food products. Often foreign companies have controlled and organized production and export, employing few local workers and then only in unskilled capacities. There has been little interest in developing production for the hone markets and little spread of 'western' capital and 'know-how' into the interior. Dependence on trade with the advanced countries has grown and invites description as a 'colonial' pattern of trade such as that between Britain and the American colonies under the Mercantilist system in the eighteenth century. It is also argued that a long-term fail in their export prices compared with their import prices has robbed the under-developed countries of much of the benefits of trade. There is some truth in these assertions, but these countries are likely to need all the foreign exchange earnings they can get by exports to pay for imports of the capital goods, technical knowledge and general education they require to develop their internal economies. Even more they may need to learn or import entrepreneurial faculties and judgment in recognizing and running risks and in allowing for uncertainties that basically underlie western economic development.

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