Explain four types of economics dependence. Are these types of economics dependence remain relevant to explain economic growth and development of developing countries.
There are four types of economic dependence such as direct economic dependence, trade dependence, financial dependence and technical or technology dependence. The element links to economic relationship between industrial countries to developing countries. The element also has constructed new socio-economic in developing countries like Malaysia and Indonesia. However, are the types of economic dependence still relevant to explain economic growth and development of developing countries?.
Direct Economic Dependence.
Direct economic dependence is foreign ownership or control of various sector and economic institution in a country. It is mean direct control of firm or industry. It enables foreigners to have direct power of decision making over vital matter. Last time, the sectors which first came under foreign control were corporate agriculture, mining, commerce and trade. Usually, sectors which were developed under colonial rule which produced the raw material needed for export and use in developed countries industries.
Nowadays, direct economic dependence is not too relevant to explain growth and development of developing countries. It is because most of developing counties have their own industries. There is more bad effect than good effect for direct economic dependence. If we refer history, direct economic dependence is more reliant to primary sector that is raw material like mining, agriculture and logging. The effect is economy are vulnerable to market price volatility because of the inelastic of demand and supply in the commodity market. Furthermore, there are disadvantageous in balance of trade. It is mean import is greater than export. It can happen when the country export the raw material and import the finished goods. So, the ownership of the sectors must be hold to develop their own countries.