By Keith Griffin (auth.)
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Extra info for International Inequality and National Poverty
Direct overseas investment by multinational corporations was not considered. Our argument was that the return on investment was higher in rich countries than in poor and that in consequence savings would tend to leave the underdeveloped countries in search of higher earnings elsewhere. The high return on investment, however, was due not to a shortage of capital in rich countries but to the presence there of a steady flow of new products and new techniques which creates investment opportunities.
2. Multinational corporations and basic needs development One of the most striking features of the international economy in the last quarter-century is the growth of the multinational corporation as the propelling force of world trade and production. The multinationals are not a new phenomenon, of course. Indeed, they were an important instrument of European penetration into Asia, Africa and the Americas during the 17th century and the early colonial period. In recent decades, however, the range of their operations has increased enormously, spreading rapidly from mineral and oil extraction and the production and marketing of plantation crops, where they were long dominant, to manufacturing and a broad range of service activities.
The income differential induces international migration, and this has the effect of reducing supplies of skilled personnel in countries where they are scarce and increasing supplies where already they are abundant. The United States alone attracts several thousand professionally qualified personnel a year from the underdeveloped countries, as the data in Table 2 indicate. Additional thousands are attracted to the major European nations: Germany, France and the United Kingdom. The outflow of professional manpower from poor to rich countries has several effects.