Development of less developed countries by transnational companies

International Development is the development of greater quality of life for humans. It therefore encompasses foreign aid, governance, healthcare, education, gender equality, disaster preparedness, infrastructure, economics, human rights, environment and issues associated with these. International development seeks to implement long-term solutions to problems by helping developing countries create the necessary capacity needed to provide such sustainable solutions to their problems.

The global gap between rich and poor is the important problem of international development. 5 billion people living on Earth today, perhaps 1 billion live in absolute poverty and barely vegetate from day to day. Population 40 poorest countries is 55% of the population on Earth, but they receive only 5% of world income.

Most less developed countries LDS’s are characterized by low GNP per capital and slow income growth. The most important problems of LDC’s are high birth rates, low rates of education, saving and investment, unsatisfied human needs (food, shelter, medical care). A lack of capital resources is also major barrier to growth. Most of the population lives at the subsistence level. Another problem is a lack of infrastructure. There are problems with roads, telephones, schools, hospitals, electricity. Many of the poorest LDC’s must choose between agricultural development and industrialization.

LDC’s need for foreign investment, loans and help aid. The most famous lending agency is the World Bank. A loan requires repayment. Debt servicing requires an LDC to increase its export potential in order to earn hard currency. International Development Association (IDA) is one of the greatest world helpers. It participates in global solutions about climate changes, education, health, agriculture, water, etc. There are other organizations, aid funds and associations used to help people in poor countries. Usually great countries such as US or Canada separately help others to combat starve, consequences of natural catastrophes.

The most effective way of economic growth for poor countries is becoming part of global production systems of transnational companies. Practice shows that TNCs make a significant contribution to the development of the third world. Multinational companies create jobs in countries with low wages or through direct investment in the economy of these countries, or finding their suppliers that manufacture products according to technical requirements of these companies.

LDC’s could greatly increase their growth with improved technology, capital and labor. All LDC’s could benefit from more foreign help aid and from use of foreign loans more efficiently.