(1) The developing countries of Central and South America, Africa, and Asia once merely exported raw materials and cash crops in return for manufactured goods. People in these countries provided for most of their own needs through subsistence agriculture and small-scale crafts. In time, though, people in these countries grew increasingly dependent on the global economy, because local crafts could not compete with the cheap, factory-made exports of the developed countries, such as European nations, the United States, and Japan. To decrease their dependence, many developing countries sought to strengthen their economies by building factories, modern dams, and roads during the 1960 and 1970s. Government frequently made poor financial choices. However, infrastructure projects such as dams and highways were often too massive for local needs. Choices about industry were sometimes not based on the best interests of the country, and protection from competition frequently resulted in inferior goods. (2) As result, products could not compete on the global market with the higher-quality goods from the industrialized countries. Many developing countries then had little income to pay off debts incurred (招致) during their expansion.
A few developing economies succeeded in building prosperity through industrialization during the 20th century. The most notable of these were South Korea, Singapore, and Hong Kong S.A.R. Like Japan during the 19th century, they established tariffs and other barriers to protect local products from foreign competition and invested local wealth in industrial development. (3) Also like Japan, they focused on selling the products they manufactured to foreign consumers in order to bring wealth into the country. By the end of the 20th century some experts considered these economies to be developed, rather than developing, although many of South Korea’s economic successes were reversed in the financial crisis of 1997. (4) Following a similar path, China advanced economically through a rapid expansion of manufactured exports during the late 20th century.
Meanwhile, multinationals based in the economically developed world set up low-wage manufacturing facilities in some developing countries, particularly in Southeast Asia and in Central and South America. These factories typically generated few long-term benefits for the local economy. The profits flowed outside the country to the shareholders of the foreign multinationals. Also, the developing countries were forced to participate in a “race to the bottom” to attract multinational investment. (5) If a developing country or its people sought higher wages or enforced labor or environmental protections, multinationals often simply relocated production to a country with lower cost.
