Abstract
The role of foreign private investment in the development process is an area rich in controversy. Advocacy and opposition to such investment ranges to extremes. The supporters believe that it can not only confer all the benefits of official aid on the recipients but also impart certain additional benefits. The foreign capital that it provides can bridge both the foreign exchange and savings gaps; and the technology that it imparts can bridge the technology gap. It can redress regional disparities and confer a host of other benefits in the form of linkage effects which it creates, and employment opportunities which it provides, all congealed in the catch-all phrase, ‘externalities’. The advent of the multinational corporation in recent years has even produced prophetic visions of a new integrated world order. It is argued that, under the aegis of these giant international corporations, managerial and financial resources would flow to sources of raw materials, and cheap labour and the fruits of technology would be widely disseminated. The trend would be towards the development of an integrated world economy dominated by the international corporations with wide access to financial and technical resources, and not towards the development of national economies.
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Notes
Peter Ady (ed.), Private Foreign Investment and the Developing World (New York: Praeger, Special Studies in International Economics and Development, 1971) p. 3.
John H. Dunning, Studies in International Investment (London: Allen & Unwin, 1970) pp. 4–5.
See Richard E. Caves, ‘International Corporations: the Industrial Economics of Foreign Investment’, Economica, February 1971.
Also Mac-Bean, ‘Economic Aspects of Direct Investment,’ Kajian Ekonomi Malaysia, December 1972.
J. W. C. Tomlinson, The Joint Venture Process in International Business, India and Pakistan (Cambridge, Mass.: MIT Press, 1970) p. 44.
J. S. Fforde, An International Trade in Managerial Skills (Oxford: Blackwell, 1957).
Grant L. Reuber et al., Private Foreign Investment in Development (London: Clarendon Press, 1973) p. 251.
G. C. Hufbauer and F. M. Adler, Overseas Manufacturing Investment and the Balance of Payments (Washington: United States Treasury Department, 1967).
Streeten and S. Lall, Main Findings of a Study of Private Foreign Investment in Selected Developing Countries (Geneva: UNCTAD, 1968).
Edith Penrose, The Large International Firm in Developing Countries (London: Allen & Unwin, 1968) p. 273.
Constantine V. Vaitsos, Transfer of Resources and Preservation of Monopoly Rents (Development Advisory Service, Harvard University, 1970). For other such examples see M. Kidron, op. cit.;
and Raymond Vernon, Sovereignty at Bay (New York: Basic Books, 1970).
R. B. Du Boff, ‘Transferring Wealth from Underdeveloped to Developed Countries via Direct Foreign Investment’, Southern Economic Journal, Vol. XXXVVIII, July 1971.
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© 1978 Alasdair I. MacBean, V. N. Balasubramanyam and the Trade Policy Research Centre
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MacBean, A.I., Balasubramanyam, V.N. (1978). Challenge of Foreign Private Investment. In: Meeting the Third World Challenge. Trade Policy Research Centre. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-17340-2_8
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DOI: https://doi.org/10.1007/978-1-349-17340-2_8
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