DEVELOPING COUNTRIES: A PREDICAMENT OF TRADING OR
INDUSTRIAL STATE AND ITS RISKS
Gatut L. Budiono, PhD, associated professor,
University of Pancasila,
gatutbudiono@gmail.com
Jiwa T. Tunggadewi, MM,
University of Pancasila,
jiwa.tunggadewi@gmail.com
DEVELOPING COUNTRIES: A PREDICAMENT OF TRADING OR
INDUSTRIAL STATE AND ITS RISKS
Gatut L. Budiono, PhD, associated professor,
University of Pancasila,
gatutbudiono@gmail.com
Jiwa T. Tunggadewi, MM,
University of Pancasila,
jiwa.tunggadewi@gmail.com
Развивающиеся страны встают перед дилеммой выбора стать государством с
развитым промышленным или торговым сектором. Промышленные государства
могут быть жестче чем государства с развитым торговым сектором в плане
экспортирования и импортирования товаров. Развитие промышленного сектора
требует высоких технологий и огромных капиталовложений для создания машинной
индустрии. Развитым странам не обязательно оказывать помощь без политической и
экономической компенсации. Развитие торгового секторая является более легким
выбором, потому что, требует усилий только в привлечении иностранного капитала
и ожидается взаимовыгодная торговля, как правило в пользу развитых стран.
Developing countries are facing the dilemma of choosing developed into a trading
State versus industrial State. Industrial countries may be even tougher than being a trading
state in terms of activities of imported goods, exported goods. Become an industrial State
requires mastery of high technology industry and a large capital to create machinery
industry. Not necessarily the developed countries are willing to provide assistance for
technology transfer without political and economic compensation. Being a trading state is
an easier option because it requires effort to call foreign capital only to invest in
developing countries and is expected to mutually beneficial trade, normally would always
tend to favor developed country trading partners.
Keywords: Trading state, Industrial state, developing countries, debts, imported
goods, exported goods, Technological exchange, political compensation, economical
compensation, creative culture
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Introduction
Developing countries option to direct the development of the economy into the
trading State or Industrial is very heavy. Once the decision is made under the plan, then the
various factors supporting the development of trade and industry need to be calculated. the
State selection as a form of trading or industrial the State can increase economic activity
and welfare of people's lives, but not as easily as ordinary estimates, could lower work
culture developing countries improved so as to achieve high work culture that is capable of
supporting the changes into the State industry, while it does have a low work culture for
centuries - developing and entrenched into the pattern of everyday life? While the industry
can the State is formed without the intervention of foreign capital and the consequent
emergence of foreign pressure on various political and economic decision-making in a
developing country? Choice of becoming the State of Trade may be more convenient and
pragmatic, although it will probably lead to high international debt obtained from various
advanced countries; the condition is accompanied by an obligation to pay back loans
obtained with various consequent necessities of political ties, economic, cultural and
social. More than that is usually highly advanced countries are reluctant to lend money real
without compensation political relations and compensation of trade and economic
cooperation as a consequence of the State's willingness to lend to a friend.
1.
High increasingly Debt Capital a Start of Trading and Losing Indigenous
Cultures
Most developing countries are country which has a wealth of natural and abundant
resources. Lots of natural resources, is should be managed properly, then the State can
have economic opportunity and progressed without the help of other countries.
Unfortunately, most developing countries have a weak culture, and are not able to avoid
the conquest of foreign cultures that are not able to process and utilize all the wealth that is
to be developed, instead became proud when using foreign-made products and services. To
start a business is in need of major capital so the business can run well. But developing
countries in fact do not have enough capital to start trading business so that it forced them
to rich countries to obtain loan capital carry trade. Moreover, for obtaining debt, foreign
cultures enter and conquer the weakness of the native culture. Developing countries are
strongly influenced by foreign cultures, showing the condition of the nation's weak
mentality shown by not being able to work even harder and even just want to get venture
capital business easy and instant and hope to get the help of funds from abroad. But
actually unwittingly helping fund the foreign debt is very detrimental to developing
countries. Loss of native culture is the main disadvantage is never realized by developing
countries with poor communities, not knowledgeable and materialistic as well as the
interests of the world
Poor countries are weak in political and business strategy, consider helping debt of
rich countries as aid, and believe that the rich countries to help poor countries, which may
be a business without seeking profits? It is impossible, helping by giving the debt is not
aid, but for lender’s profit. Actually, the problem is not solely providing assistance
goodness of money, but for the benefit of the donor country. Lent money to poor countries
to build their own country by providing venture capital for poor countries so that poor
countries can carry out the business of using loans from donor countries, if the use of the
loan money generating business growth and economic success, then the consequences
State poor beneficiaries the money must be willing to trade with Donors who gave him a
debt; thus poor countries become complacent and are addicted to continue to make loans to
foreign debt in order to build a trading business which is only detrimental to poor countries
because of the advantages that can only pay the foreign debt while poor countries actually
do not have any because of continued The exploitation by other countries subtly.
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Debt is increasing every year, making poor countries think how poor countries to
restore all the loans from abroad which accumulate and must be accounted for. The
following debt value shows that debt in poor countries have increased every year.
Indonesia's debt continues to rise. Until April 2013, the number of Indonesian government
debt increased by Rp 48 trillion to Rp 2023.72 billion, compared to the circumstances at
the end of 2012 USD 1975.42 trillion, China's debt ratio rose 183% by mid-2012 from
153% in 2008 (Arum: 2013). Malaysia increased by 250% in 1990 to 2010 (Frangos;
Davis: 2013). Some of the value of the national debt - Countries in Asia among other
China US $ 685.4 billion, US $ 543.0 billion Russia, Turkey US $ 307.0 billion, US $
334.3 billion India, Indonesia US $ 213.5 billion, Ukraine US $ 134.5 billion, US $ 124.4
billion Kazakhstan (Martowardojo: 2012).
The country's largest lender to the poor countries are Japan, the second is the Asian
Development Bank (ADB), the third is the World Bank (WB), the fourth is German, and
the rest is the other party either bilateral or multilateral. Poor countries that have a lot of
debt would lead to world financial crisis at a later time if left unchecked, therefore poor
countries should be able to reduce the number of foreign business investment services to
the poor state that does not increase the risk of the debt; besides that poor countries should
also undertake economic development independently and are not dependent on foreign aid,
poor countries could take advantage of all the natural resources and human resources at
their disposal to produce objects that can benefit the economy, so that poor countries can
do a trade without having continue to hope on foreign capital which is very detrimental,
because if the poor countries as an agricultural country can trade over its natural resources,
it certainly will be able to also build its own industry and subsequently make investments
and increase exports abroad.
2.
Impoverished Country are only being able Becoming Importing of Foreign
Goods
In today's world trade, many poor countries prefer and only able to be a trading nation
because it does not require a high level of ownership industrial mass products maker. Too
many goods imported into the cause of the poor countries poorer countries into markets of
industrialized countries to sell their products. Goods imported into poor countries are
greater than the goods exported by poor countries. Poor countries simply are the market of
products of foreign countries and while the poor countries cannot afford the products sold
abroad. The data show the goods imported into poor countries several years to prove that
the goods imported into the poor countries continues to increase in both volume and value
from year to year. The value of exports and the volume of exports of poor countries are
also increasing every year, but the number is small compared to the import of poor
countries. With the evidence, it is clear that poor countries simply act as a trading nation
which only becomes the market and there is no industry that is capable of producing the
product. Production at best poor countries simply do the assembly of foreign goods; the
condition can be observed in the industrial assembly of motorcycles and cars as well as the
production of other household equipment assembly. The assembling factory owner is a
foreign country rich instead of poor countries.
Until now, many poor countries have not been able to produce industrial goods
which can be exported abroad. Industrial agriculture is the mainstay of export goods of
poor countries today. Impoverished countries have more agricultural products such as
tobacco, rubber, rice. The condition is certainly not enough for poor countries can compete
in the global trade, and the consumptive nature of society also makes impoverished country
simply as a "market" for the trading of goods in global trade. Even worse condition as
imported goods cheaper selling price when compared with local homemade stuff which
makes people impoverished country more interested in buying imported goods of a higher
quality than local production; The condition is triggered the interest of the consumer.
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Moreover, poor countries simply a market for products of foreign countries because
they do not have a quality local products to compete with imported goods which is cheaper
and high quality. It is expected that the poor countries in the future will be able to improve
their level in the country to compete with the rich and respond quickly to market
conditions to control the balance of imports and exports levels. Hopefully it can be.
3.
High Imports of Poor Countries, Few Local Production and Becoming Market of
Goods of Rich Countries
In Ghana import demand continues to grow (Harvey and Sedegah: 2011). In the
Philippines imports showed a high increase continuously reaching US $ 5,954,820,000
month of January 2014. The condition should be the balance of exports and imports for
developed countries and poor countries competing in international trade. However, exports
made many poor countries. Poor countries do not have national original product
manufactured locally. Actually the production of poor countries still use basic materials
obtained from abroad; so to make products that are exported are still using imported
components so that their products are less efficiently compete with imported products
circulating in the region. Although exports of poor countries can compete with its import
but still poor countries to import larger to meet all the needs, which can be found in the
country without having to import, but unfortunately the poor countries is a sovereign state
internationally are not able to do so; The condition has been proved significantly that poor
countries have a very weak culture and easily influenced by foreign cultures that go along
with the imported goods; the result is a poor country just became satellites of developed
countries and an opportunity for the rich countries to make a profit selling their products to
poor countries.
Imports are being conducted by the poor countries is very dangerous and
detrimental to the survival of the economy. Import activities are constantly slowing the
growth of domestic production capabilities; slowdown triggered by continuous import
activity, but not enough to have a local commodity production in the country.
Development of national capability to export local production in poor countries will lose
and die so it can not thrive and continue to depend on imports very detrimental. Limited
imports beneficial to the growth of international trade and strengthen the relations between
poor countries and other countries. Good import activities are activities that do not exceed
export import. Reflecting the mercantilism theory which states that the economy of a
country depends on the ability of strong exports performed; when a country exports more
and reduce imports, it can directly increase the income of the exporting country. Hence
excessive imports continuously can make continue to depend on foreign products and
eventually kill the creativity of poor countries to be able to produce their own commodities
for export, in addition to the consumption pattern of poor countries into hedonism mimic
patterns of foreign luxury consumption will be able to reducing public savings for
investment as society became consumptive. This is actually a great loss that is not realized
by the people of poor countries because of excessive imports; anyway unwittingly poor
countries become economically colonial system continuously by developed countries with
products and foreign culture that comes to poor countries, which leads to a weakening of
the public culture of poor countries and is easier to continue to be used by other countries.
Therefore, poor countries should continue to increase its export activities than its import
activities so that poor countries do not continuously occupied by the economically
developed countries. But to export a lot of which must be addressed by the poor countries,
among others, provide welfare to workers and improve the quality of production and the
price of export goods in order not to be too low in the International market.
4.
Highly Unemployment Due to Less Industrialization Instead of Being a Market of
Imported goods
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Impoverished countries are currently experiencing high population density. On the
other hand, the industry is not growing in that poor countries when compared with the
population or labor and employment industry even did not grow. it is also included in one
of the impact felt by the poor state because only a market that is not growing employment
that can not absorb the existing workforce (Keynes: 1937). It also makes people to simply
consumptive. Consumptive nature of society impoverished country, if it is pressed it will
increase the rate of import of impoverished country. Another economic problem allows to
arise due to the growth of unemployment, even so many ignorant people who have a
consumptive nature which could detrimental to their own country.
It is certainly detrimental to the poor countries because it will further increase the
unemployment rate. The data shows that industrial employment less labor intensive
relative to employment in services, agriculture, plantation, forestry, fisheries amount is
greater. Although the number of workers in the industry continues to increase every year
but still accounted for less than the jobs in agriculture, plantation, fishery, forestry, so that
employment in the industrial areas of poor countries is still not able to absorb the available
labor. By doing so, poor countries are still not able to produce their own and tend to buy
industrial products from overseas or continue to increase the amount of imports. Such a
situation is extremely detrimental to poor countries. They were only able to produce goods
from the services sector, agriculture, plantation, fishery, and forestry but not able to do
mass production of industrial goods with high technology itself to be exported.
If poor countries are able to build mass production with high-tech industry, the
growth of employment could be increased; with the spread of jobs available, it can gain
more income, whether it comes from the manufacturing industry or agriculture. In fact,
poor countries have the strength of its natural wealth; poor countries should be able to
make it as competitive global trade competition. But on the other hand, poor countries
must be able to absorb knowledge from countries of high-tech industries that have been
successful in global trade. Poor countries should start producing manufactured goods in the
country not only to compete in global trade but to suppress the consumptive nature of
society. Society poor countries should buy domestically produced its own production and
boost exports. Communities of poor countries should be willing to buy local products so
that imports can be restricted; or by reducing the consumption of imported goods it could
reduce the level of imports in poor countries.
5.
Economy of Capitalism is Highly Profitable for The Capitalist
In the capitalism economic system, the flow of funds from foreign countries
unlimited incoming and economic activities are carried out every person or group is done
by giving them complete freedom without government interference or intervention. Human
deemed always pursue their own interests, especially in the form of financial gain.
Christopher Chase-Dunn in The journal titled "Interstate System and the Capitalist World-
Economy: Logic One or Two?" Reveals that capitalism is a unique combination of
economic and political processes where the overall combination operates at the level of the
world economy (Dunn: 1981).
Based on this theory, we assume that the capitalist economy is running with strange
because there is no balance between the economy and politics. The business community is
competing for profit as much as possible in various ways. Ways in which they have done is
often bad. They compete by using political power to win the business competition. This
leads to the poor becoming increasingly depressed and increasingly harmed by the
capitalist economy. Meanwhile, the middle class and above society and the business
community who have a political network that will receive the benefits. Because the flow of
foreign funds are not used for industrial development that would be able to increase job
creations, but to absorb the merchant middle class and educated people to become
employees of their company.
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Figure 1 The Flow of Capital in poor countries from 2010 to 2013
The conditions of poor countries today are economically poor. There are more and
more foreign banks have been established in the poor countries and so did the number of
insurance companies have more numbers, the condition causes the amount of money from
the economy and banking activities have become increasingly numerous and have become
one of the causes of inflation. In the journal, entitled "The Violence of Financial
Capitalism" Christian Marazzi showed that individual debt and financial management
market is actually ordered techniques labor is not a material change, general knowledge,
and social cooperation. Because many parties to put forward their own interests, the
condition (Marazzi: 2011) will be more difficult for poor countries to compete with the
foreign capitalist investors because the debt is very much; even poor countries do not have
a developed industrial sector and generate enough money to pay their debts.
Poor countries can only ask for credits to rich countries; consequently then foreign
capital in poor countries is increasing and encouraging people of that State for
consumptive life, this is happened because of the weak culture of poor countries. Foreign
companies will continue to grow in poor countries because of poor countries is considered
as a profitable business. Industry difficult for poor countries to grow, the need for domestic
consumption obtained from the import. Finally, poor countries do not get anything; but
ironically the people are proud of foreign products obtained from imported and consumed,
when in fact the poor state of the property and also technology.
It is important for poor countries to be able to get out of the capitalist environment
and poverty as a result of the strong influence of the capitalist economy which shows a
very strong capitalist culture. In this case there has been a war of intercultural, between
culture against a strong culture with a very high level of civilization. Increasingly poor
countries are in a capitalist environment, it will become increasingly impoverished the
poor countries, because of widespread poverty and the behavior of a consumer society
which is a sign of a weak culture.
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Foreign companies build factories in poor countries to undertake production
activities and meet the demand of the domestic poor countries, but there is no technology
transfer to poor countries. Poor state government should first develop the industrial sector,
especially the field of agricultural and marine products. Due to poor countries actually
have an abundance of resources in the field of agricultural and marine products. However,
the people who work in these sectors, namely farmers and fishermen, less appreciated by
the government. Moreover, people who have the technological capabilities in both sectors
lacking in appreciation by the government, so that foreign countries trying to attract the
skilled people to develop agricultural and marine industries in the country with an
appreciation and remuneration which is much higher than they get in the poor countries.
Moreover, the absence of technology transfer is also increasingly detrimental to the poor
countries. Yet if this technology transfer can occur, then poor countries will be able to
develop an agricultural and marine industries so that in future poor countries can export
industry results to foreign countries. As such trading activity will be more balanced and
mutually beneficial among trading countries.
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