Disadvantages/demerits /Negative implications of economic dependence
- It leads to capital out flow due to over dependence on foreign private investments. Foreign investors repatriate profits back to their home countries leading to capital accumulation in the country.
- It leads to unemployment due to heavy dependence on foreign skilled manpower and over dependence on imported inappropriate technology.
- It leads to neglect in the use of local resources and exploitation of local entrepreneurial skills. This is due to over dependence on foreign resources and manpower
- Direct economic dependence leads to development which is not in line with the social economic requirements of the country. This is because economic .and political decisions are made externally without involving the participation of the people.
- It worsens the balance of payment position. This is due to heavy dependence on imports which leads to increased import expenditure.
- It leads to imported inflation due to heavy dependence on imports especially the petroleum products.
- It leads to dumping. This is due to heavy dependence on cheap imports and this retards the development of the industrial sector in the county.
- It leads to fluctuations in incomes and foreign exchange earnings due to over dependence on primary agriculture exports. This is because they experience price fluctuations on the world markets and they are affected natural conditions like bad weather.
- It increases the debt burden on the future generation in case the country heavily depends on loans from foreign countries.
- Leads to cultural erosion
- Retards the development of local firms/industries
- Leads to political interference by foreigners
CATEGORIES General
TAGS Dr. Bbosa Science
