NODE YOUR HOMEWORK
Two of the major theories concerning the developing (or Third) world debated by political scientists are the "liberal" and "imperialist" theories. Note that the identifications of these theories as liberal and imperialist are arbitrary; others might have the same ideas under completely different names.
To understand why many Americans would favor the liberal theory of development and developing countries (often identified as "Third world countries") would favor the imperialist theory, one must first understand what these theories entail as well as the perceptions that lead to the conclusion that one is more beneficial than the other.
The Liberal theory
The liberal theory of development states that the process of economic growth has been arrested in developing nations by low rates of productivity combined with high levels of social waste and inefficiency. The problem according to the liberal theory is the waste of resources that keeps these nations from industrializing. A certain "take off" point is needed in self sustaining growth before they can develop, but they can't because the money invested in them is squandered on consumption instead of growth.
There are many things this theory finds that developing countries waste money on. War, corruption and control are prime examples. Population growth, for example, increases consumption but not productivity. Both the young and elderly are considered "wasteful" groups because they don't add to the work force, but still consume. Only China, through near world wide disapprovement, has lowered their birth rates by authoritarian population control. Urbanization is another example of waste. Mexico City, the largest metropolis in the world, has nearly 19 million people. Tons of resources are used to maintain the decaying, massive cities that could be used for growth. Military expenditure is considered to be wasteful as well. The oil exporting Middle Eastern nations are seen as especially guilty of this. Spending on military never helps the economy, and according to this theory, a self sustaining economy is needed. Luxury consumption of the upper economic class coupled with official corruption is another form of waste. The lack of a middle class in developing countries shows the widening gap between the wealthy and the poor. Governmental officials exhaust further resources on personal consumption rather than improving the state.
The liberal development theory states that to help these nations become more productive members of the international system, extra capital must be imbued in them. Financial aid in the form of low interest loans or outright grants is one way.
However, in recent years, many industrialized nations haven't contributed as much as they promised in earlier UN resolutions. Trading, another potential booster, is beneficial to everyone in the current international system. This liberal theory believes trading more things will bring more resources to industrialize the underdeveloped nations. Foreign investment is seen as a way to help build industry in the developing world for several reasons. It provides jobs, technology, and better efficiency among other things. Providing developing nations with technology is another liberal theory solution. A successful example of this would be agricultural technology in India and Pakistan. Both countries have had a great increase in agriculture due to Western genetic farming technology. In many other countries, however, technology hasn't been nearly as successful.
The Imperialist theory
The imperialist theory of development disagrees in the very fundamental causes and cures of underdeveloped nations. Whereas believers of the liberal theory think that nations are undeveloped because of internal waste and inefficiency, believers of the imperialist theory think that they are being exploited by developed nations. The liberal theory believes that foreign intervention is needed to help nations industrialize. The imperialist theory believes a fundamental change between the relations of rich and poor nations must change. In addition, advocates of this theory disagree that industrialization is even necessarily development. They believe that conventional cures championed by the liberal theory actually spread underdevelopment.
The imperialist theory sees the terms of trading as disadvantageous but necessary to survival in the international system. They feel they are forced to trade with only one resource- Oil, for example, in the Middle East. This theory believes that wealthy nations see the populations of these countries as just "vague" appendages to the resources they geographically live near.
Increasing in productivity doesn't make a difference in trade either. For example, Malaysia increased their production of an exported resource by about 25%, but the price dropped 33%. This is because inelastic demand. The consumption level for certain products will remain the same regardless of how much supply there is. Unorganized labor in developing nations is a problem which causes profits to be handed to the industrial overlord of the country or foreign investors. Thus, the belief arises that the current trading system designed by the Bretton Woods institutions is designed to keep new countries from developing.
Another aspect of disagreement is foreign investment. Followers of the liberal theory see this as a means to introduce industry, technology, and capitol to these nations. The others see it as an instrument for ruthless exploitation. For example, the United Fruit Company's revenue exceeds the budgets of several countries it's in. The system that is established become relied upon although the profits don't go towards helping the country grow. Believers of the imperialist theory even are wary of foreign aid. To the liberal theory, foreign aid seems like the most harmless charity imaginable, but their opponents see the aid as tools to afflict endless circles of debt repayment due to interest. To borrow money to pay off debts just leads to an infinite circle of debt that ultimately passes the problem onto the future.
Who supports what and why
Many Americans can easily identify with the liberal development theory because of their perceptions. In general, they value hard work, efficiency, dedication, industry, and capitalism and believe that these qualities allow a country to develop. Undeveloped countries must then lack these qualities that worked correctly for America, or so the belief is. The liberal theory is an embodiment of these beliefs.
The majority of people in developing nations have a negative view of America, and therefore the liberal theory. They believe that Western people achieved their "development" through imperialism, hegemony, and conquest as opposed to superior production and economy. Development, to those in developing nations, may not even be industrialization. In fact, capitalism and industry might be against their deep rooted religious, cultural, or social values and beliefs. Only a respectful stance of the wealthy nations towards the poor will bring any change, they believe. That is why they associate with the imperialist theory.
Source: Jones, Walter. The Logic of International Relations. Longman: 1997.