We have now reached a stage of profound disillusionment with development economics. The days of optimism, when the problems of the poorer countries were thought to be fairly well understood, and when the solutions, though not easy, were thought at least to be amenable to the conventional tools of economic analysis, are almost past. There was a time when certain views on economic development were held with the conviction and clarity of Victorian morals: development meant, or at least was measured by, the growth of national product per head; governments could adopt generally agreed-upon policies to provide such development, by planning (balanced or unbalanced) economic growth and by encouraging international aid, trade and investment; there was often the implicit assumption of a fundamental harmony of interests both between different classes or groups within the poor countries and between different nations; the transfer of the most advanced technology and knowledge from the rich to the poor countries was considered desirable and necessary; and, more generally, there were purely ‘economic’ answers to problems of underdevelopment. The main conflict was seen to be neither between classes nor between nations but an intertemporal one: between consumption now and more consumption later, as a result of the savings effort. The maximum feasible savings ratio, combined with a largely technically determined capital-output ratio, yielded the target growth rate. The role of international ‘co-operation’, including foreign investment, was to supply missing components, in the form of extra savings, foreign exchange or skills, so as to accelerate the government-organised march of the people towards ‘take-off’.
KeywordsForeign Investment Multinational Corporation Gross National Product Transnational Corporation Foreign Subsidiary
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