📚 Learning Guide
Dependency Theory and Global Trade
hard

How do multinational corporations exemplify Dependency Theory in the context of global trade under neoliberal policies?

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Choose the Best Answer

A

By promoting local economies through fair trade practices

B

By extracting resources from developing countries while perpetuating economic dependency

C

By investing equally in all countries regardless of economic status

D

By establishing trade agreements that favor developing nations

Understanding the Answer

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Answer

Multinational corporations (MNCs) exemplify Dependency Theory by showing how wealthier countries and their companies can dominate global trade, often at the expense of poorer nations. Under neoliberal policies, which encourage free markets and minimal government intervention, MNCs can easily expand into developing countries. This allows them to exploit local resources and labor while sending profits back to their home countries, creating a cycle of dependency. For example, a large food company might set up farms in a developing nation, paying low wages and using local resources, but most of the profits go back to the corporation's headquarters. As a result, the local economy may struggle to grow independently, reinforcing the idea of dependency highlighted in Dependency Theory.

Detailed Explanation

Multinational corporations often take resources from poorer countries. Other options are incorrect because Some might think that these companies help local economies; It's a common belief that companies invest equally everywhere.

Key Concepts

Dependency Theory
multinational corporations
neoliberalism
Topic

Dependency Theory and Global Trade

Difficulty

hard level question

Cognitive Level

understand

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