Abstract

Economic development in the so-called "underdeveloped countries" is a sort of three-pronged attack on the problems of human misery. One prong of the attack is the effort of the people in their private capacities or private national enterprise. A second prong of the attack is foreign private enterprise operating within the developing economy. The third prong is the government of the developing economy. The purpose of this article is to discuss some of the problems, achievements, and prospects of state enterprises in underdeveloped economies. Each newly independent country has strong emotional reactions to many things associated with colonial status and usually these reactions include being far more suspicious of institutions associated with private enterprise than those associated with state enterprise. Private foreign capital is often discouraged from creating industrial facilities in underdeveloped countries by the need for social expenditures not directly connected with the enterprise. Many of the developing countries that make use of state industrial enterprises have not worked out satisfactory financial institutions and practices for such enterprises. The government usually retains Western laws, particularly tax laws and treats the state industrial corporations like private industrial corporations.