Review of Development and Change, Vol.V /l,Jan-June,2000,52-80 Transnational capital and indebtedness of countries in the Third World: an analysis in the context of globalization Bhaskar Majumder* Abstract Almost all the countries in the post-Second World War developing world have depended for their development on borrowing capital from sources controlled by the Developed Market Economies (DMEs). TI1is paper <iccepts the fact that economic indebtedness of countries is neither globalization-specific nor is it Third World- spccific. Whilt this paper emphasize s is that the huge influx of Multinational Banks (MNBs)-controlled money into the Third World Countries (TWCs) led to a mobility of money so much so that finance capital created its own route of expansion increasingly independent of the sphere of production. The excess liquidity collected all over the world and brought through the MNBs for the Transnational Corporations {TNCs) operating in the TWCs resulted in the Third World debt crisis. This paper examines the re,1sons. This paper makes it clear that the problem of indebtedness of the countries p.:irticularly in the Third World is not confined to repaying debt at a particular point or period of time. This paper claims that tmless the broader stmctural questions related to the relevance of aid and loans received by the TWCs are analyzed, the real issues would conti nue to be brushed under the carpet . The paper accepts the difficulties for the indebted TWCs to be dclinked from the existing international economic order. The paper argues fo r ensuring steps to strenghthen the economic fundamentals of the TWCs through coun try-specific and inter-country collective self-reliance. The paper proposes the formation of a group of twelve indebted count ries that can initiate steps to solve the problems of indebtedness of all. Almost all the countries in the developing world have relied for their development on borrowing capital from official and private creditors, including the International Financial Institutions (IFls), essentially controlled by Developed Market Economies (DMEs). Governments of the newly independent, decolonized countries in the Third World immediately after the Second World War pursued welfare-oriented development as was natural for them. This necessitated large investments and most of the countries in the Third World, beca use of low per capita income, could not generate adequate domestic savings to match necessary domestic investments. In the absence of a strong capital base they were compelled to seek finance from abroad. As these countries could not repay the capital borrowed they have been facing the problems of accumulated external debt. The globalization project was launched by the leader of the DMEs to ensure essentially free flow of international capital within the framework of a single, integrated global market. The fact is that following the free flow of capital across the globe, the least developed countries today stand to lose up to$ 600 million a year, and sub-Saharan Africa $ 1.2 billion (UNDP 1997: 82). •Reader, G.B.Pant Social Science Institute, Allahabad 211 019. Review of Development and Change, Vol.V, No.1, January-June 2000