Free Business Dissertations - 2:1definition Of Least Developing Countries: Although The World-bank And The
2:1Definition of least developing countries:
Although the World-Bank and the United Nations do not provide definition of LDCs, I tried to define these countries by showing the common problems that they share, LDCs: are countries that have low-income level, low gross domestic product, low level of infrastructure and they are not able to develop themselves neither by depending on their governments nor by foreign direct investment.
The number of the least developed countries according to the United Nations is 49, Least development countries report(1999).
Least developed countries are mostly concentrated in Africa.
2:2IMF, World Bank and WTO reforms:
The IMF, World Bank, and the WTO have pursued least developing countries to follow stringent economic reforms and structural adjustment programmes in order to build a suitable investment atmosphere able to encourage foreign direct investment and private entrepreneurship.
The programmes aimed to divert foreign investments towards investing in infrastructure rather than investing in natural resources in order to provide the necessary tools for further development.
This assignment will discuss the failure of LDCs in integrating their economy in the globalisation process in the context of the IMF-World Bank-WTO policies since most of tariff removals and financial deregulation were pushed by these international bodies.
2:3We will discuss the failure of the following policies:
A- Privatisation:
Generally, Foreign direct investments are responsible for most of the investments in infrastructure in the developing countries, which have liberalised tariffs and entered into free trade agreements.
Foreign direct investments have participated in huge investments in the following sectors: electricity, telecom, water/waste, transport, airport, seaports, rail and roads.
According to the World Bank, between 1990 and 1998, foreign direct investments have invested about 83% of the value of the infrastructure in open trade developing countries, Sader, F(2000)
Between 1990 and 1998, foreign investments in infrastructure accounted for 17% of the total FDIs, Sader, F (2000)
By depending on these facts, The IMF and the World Bank suggested LDCs to start privatising major public sector institutions in order to increase the efficiency of these institutions and bring technological advancements.
International institutions believed that privatisation would create more trade by diversifying the production of LDCs and providing the necessary infrastructure in order to make further economic growth and investments.
Privatising public sector institutions have attracted little attention from foreign investors and the reason for that belong to the fact that the market size in LDCs is very niche and there are no substantial financial rewards from it, Mistry, P & Olesen, N (2002).
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