Rethinking the Role of Foreign Investment and International Lenders in Developing Economies
Micah Holland
Abstract
While foreign capital penetration, pressure for repayment exerted by international lenders, and world systems prominence are often examined in development studies, few attempts have been made to discover their unified effects. The research below is intended to address the limitations of previous scholarship to include an examination of the combined effects of foreign capital penetration, austerity measures, and world system position on indicators of poverty and human capital development. Results indicate that social spending budgets are significantly constrained by involvement in structural adjustment programs and that reduced social spending tends to increase the percentage of the population living in poverty and depress levels of human development. Moreover, support is found for detrimental effects of foreign capital penetration on levels of poverty and human capital development, though it does not appear that IMF pressure significantly increases foreign capital penetration.
