Critically Analyse the Theoretical Conflicts Between Capital Exporting Essay

Critically Analyse the Theoretical Conflicts Between Capital Exporting Countries and Capital Importing Countries - Essay Example The end of the colonialism resulted in letting loose forces with regard to nationalism. After breaking free from the fetters of colonialism, the freshly self-governing states got restless to put an end to the economic supremacy of the previous colonial authorities present in their own respective states. It was also followed by a further restlessness with regard to a world regulation which was thought to allow them increased possibility for the regulation of their respective economies along with providing the right of entry to the international markets. The Cold War among the then existing super-supremacies gave rise to ideological disputes regarding the law. The various theories that were triggered in relation to foreign investment would be further discussed1. Theories The Classical Theory on Foreign Investment The classical theory regarding the foreign investment states that the notion of foreign investment proves to be completely advantageous for the ‘host economy’. .. . This rerouting of the capital would prove beneficial for the public of the state. The introduction of a foreign investor would typically bring in fresh technology which would have no chances of being available with respect to the host country. This scenario or aspect paves way towards technology distribution in the economy of the host country. This gives rise to fresh employment needs and without the presence of foreign investment, such employment prospects would not be triggered2. Dependency Theory The theory of dependency surfaced in the period of 1950s to be a serious response with respect to the conservative approaches towards the economic progress that materialised in the repercussion of the Second World War2. The consequences of foreign funds along with the multinational corporations (MNCs) on the host states could be drawn from the writings which were laid down by the â€Å"dependency school†. Dominant works done by this particular school entails the ontology regarding dependency like the theory of Karl Marx on development as well as underdevelopment, study conducted by Andre Gunder regarding the development as well as underdevelopment, study conducted by Paul Baran regarding the economic growth and backwardness and also the writings by Samir Amin on the subject of unequal growth4. Different countries took up the viewpoints of the dependency theory during that period like the Latin American and the East Asian countries. Among these, quite some countries agreed to the plan of import replacement and posed an aggressive approach towards the idea of foreign investment. These specific policies were noted to have damaging consequences on the economies of such countries. In the period of