Explain the role of foreign capital in the industrialization of any country. What are its shortcomings
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ROLE OF FOREIGN CAPITAL IN INDUSTRIALIZATION OF ANY COUNTRY (INDIA) CAN BE SAID AS - for economic growth of the country . In terms of industrialization , the foreign capital is necessary for the developing countries like India as the capital of the country falls inadequate for the development processes . It is generally seen with the view of filling gaps between the domestically available supplies of savings , foreign exchange ,government revenue and planned investment .
Explanation:
THE SHORT COMINGS OF FOREIGN CAPITAL IN INDUSTRIALIZATION OF ANY COUNTRY ARE AS FOLLOWS :-
- WASTEFUL USE OF FOREIGN CAPITAL - when the capital is easily available for the industries the concessional interest rate is likely to be misused , the immaterial projects are also engaged for production with the foreign capital .
- EXTERNAL DEBT BURDEN IS INCREASED :- in the terms of production in industries when unnecessary capital is used and there is no increase in net investment . There is general failure in raising in the income earning capacity through external capital .
- INFLATIONARY CONDITIONS :- due to heavy pressure of production force in the industries the foreign capital may enforce the inflationary pressures .
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