Please examine included material from the text and respond to the following questions below to the best of your ability, thank you!

• Describe a multinational corporation and foreign direct investment (FDI).
• Identify some benefits and costs for the host country from allowing a multinational corporation to locate there, despite its developing economy.
• Evaluate whether developmental assistance from world developmental agencies, such as the World Bank or the United Nations, would be preferable to private investment.
• What would you decide between developmental agency assistance or private investment, such as FDI from multinational corporations? Why? Explain.

16.5 Help From Outside: Development Assistance An important resource for economic development in many countries is a flow of economic aid from governments and investments from companies in already developed countries. One element of the vicious circle of poverty is a low level of investment. It seems logical, then, that one way to break this circle would be for both the public and private sectors in developing countries to borrow from the developed world. Aid may come in the form of grants, loans, technical assistance, or even foreign profit-seeking investments. The Marshall Plan for the recovery of Europe after World War II consisted mainly of grants, as did early development assistance. However; as it became apparent that the process of development would be slow and gradual, grants were used more for emergency relief, with the bulk of aid coming in the form of lowinterest, long-term loans [with conditions attached] and technical assistance. Bilateral and Multilateral Aid In 201?, $146.6 billion in aid flowed from the developed countries to developing countries. This aid is distributed using three areas of international cooperation [OECD, 2018a]: 0 in the multilateral trading system, 0 in the field of development nancing and 0 in the area of technical assistance. The United States is a major contributor to the development programs oflow-incorne countries. It concentrates its official development assistance through the US. Agency for International Development [USAID], which is part ofthe State Department and is in charge ofU.S. aid to foreign countries. The 2.019 president's budget for the State Department and USAID is $39.3 billion, which includes $16.8 billion in assistance that USAID fully or partially manages through the Economic Support and Development Fund, Global Health Programs, Transition Initiatives, International Disaster Assistance, and USAID operational accounts [USAID, 2018]. Funding agencies may choose to work bilaterally [single giver to single recipient] or multilaterally [multiple givers to multiple recipients]. In general, politicians tend to prefer bilateral aid, over which they can exercise more control, while recipients prefer multilateral aid. Policy Focus: The Developed World and Third-World Debt Until the 19TDs developing countries borrowed mainly from the World Bank and foreign governments. In the 19?Ds private banks began to lend to both governments and private rms in developing countries to allow them to undertake a variety of projects. These projects were expected to boost GDP enough to allow the borrowing countries to make interest and principal payments and still be better off. By 1932 problems began to surface. Many loans were not being used for capital investment to generate income. Some loans nanced current consumption [especially oil imports] or illconceived investment projects. Other loans lined the pockets of corrupt politicians. Some US. banks had made so many risky loans to developing countries that default by borrowers could lead to bank failure. Some nations were unable to service their debts [to meet scheduled payments ofinterest or principal]. As a result, banks were increasingly reluctant to extend or renew existing loans to those countries. Microfinancing A more recent resource for economic development has been microfinancing. Micronancing is when financial services are offered Microfinancing a New Home to microentrepreneurs and small business owners who usually lack access to traditional banking avenues. By using microfinancing instead Home owe}... A of a traditional bank loan, entrepreneurs are able to establish Fromm\": relationship-based banking as well as group-based models, which involve several entrepreneurs coming together and applying for loans as a group. Microfinance has been growing steadily: There were 123 million customers at microfinance institutions worldwide in 2.016, for a loan portfolio of $102 billion, with India as the leader. One success story of microfinancing is the Grameen Bank based in Bangladesh. The Grameen Bank makes small loans to impoverished people without requiring . _ _ . _ Iarnllnlina Nnunnra'l', collateral like traditional banks do. On any working day, Grameen collects around $1.5 million in weekly installment payments. More than F 0300 f1334 1X 9?% of the borrowers are women, and over 9?% of the loans are paid lnfohase.All Rights Reserved. Length: 01:34 back, which is a recovery rate higher than any other banking system [Grameen Bank, 2018]. Help From the Private Sector: Multinationals In addition to aid from government to government, many countries' development efforts benefit from direct foreign investment by private firms and individuals, which supply scarce capital. Both private loans and multinational corporations transfer capital to these countries. A multinational corporation is a firm with headquarters in one country and one or more branch plants in other countries. There has been a foreign corporate presence in most developing countries atleast since W'orld 1War II and in many cases going back to the beginning ofthe 20th century. The impact ofmultinational corporations on development is hotly disputed. Multinational corporations often choose locations in developing countries for access to raw materials or to local and regional markets for products they cannot easily export from home because of either distance, perishability; or trade barriers. They do benefit host countries by bringing in capital, providingjob opportunities, and increasing foreign exchange. The fact that developing countries actively encourage multinationals to locate there suggests that there are substantial benefits. However, good jobs are often filled by foreign nationals, not local workers. A multinational corporation may have no meaningful linkages to the rest of the host economy. It will then fail to act as a leading sector that spreads development to other sectors. A multinational corporation that is the largest taxpayer; the largest export earner, and a major employer in a small country may wield more real power than the host government. Some multinational corporations simply transplant technology developed in their home country, usually a nation with abundant capital and skilled labor but scarce unskilled labor. Many of these firms fail to adapt their methods of production to make the best use of local resources. Modifying production methods to suit local conditions is called technology adaptation, and its result is appropriate technology. In addition, multinationals do not usually make their technology available to other companies in related fields in the developing countries. 'While some multinationals develop supplier and customer relationships in host countries, in many cases the multinationals fail to create the linkage effects necessary to promote development