Investment Dependence and Alternative Explanations of Third World Mortality: A Cross-National Study

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Abstract
Dependency perspectives contend that foreign investment promotes underdevelopment in the Third World, whereas diffusionist perspectives argue that it promotes development. Earlier cross-national research conceptualized development as economic growth or inequality. This study conceptualizes development as basic needs satisfaction, focusing on infant mortality and life expectancy at one year of age. Mortality effects of 1967 multinational corporate penetration and foreign aid dependence are assessed for 63 underdeveloped countries in panel models extending to 1980. Other variables affecting mortality include multinational corporate investment flows, secondary school enrollment, and changes in birth rates and government health spending. Aid dependence has no effects. Multinational corporate penetration has significant harmful effects on mortality that tend to increase with time. In addition to harmful effects on infant mortality, penetration has small benefits for infant mortality via promotion of health spending. The influence of multinational corporate penetration on mortality appears to be mediated in part by inequality.

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