The Development of the World Economy

This, however, does prove to be impossible as there are simply not enough economies of scale, not enough technological infrastructures and the overall manufacturing climate is poor. At this point, the dependency theory is viewed as an explanation for the underdeveloped nation’s state.

Andre pointed out that without studying the past conditions of underdeveloped states no further policies can be devised to improve their conditions. He states a very important fact that as many historians don’t focus on underdeveloped nation’s research the prevalent idea is that the current situation underdeveloped states are in is what all the developed countries also faced at one point. It is widely accepted that underdeveloped countries are in a stage and they will eventually progress on to become a developed country but Andre firmly argues this belief. According to him, the current developed nations were never underdeveloped although they may have been undeveloped at some point in time.

Underdevelopment is an inherent part of the global economy, as it is bred due to capitalism. Capitalist states are the major economies in the world right now and they will continue to exist and take advantage of the inexpensive labor and material available in underdeveloped countries. Underdevelopment is not due to a shortage of capital of incorrect policies a country has but rather it is because of the development of capitalism.

2. The flow of capital across borders has increased dramatically since the 1970s, so much that someday we are witnessing the “Financialization” of the global economy. Overall, has the explosion of global finance benefited or harmed developing countries? Why or why not? What can states do to better manage the power of finance? Use at least 2 other thinkers to explain the answer.
Financialization is a very controversial process that occurs in the global economy.