Investment Promotion in Developing Countries

Abstract

In the previous chapter, I have shown how the crux of investment theory relates to conditions prevailing in the developed world, but depart significantly from conditions in developing countries. In this chapter, I analyse investment from the experience of the developing world. The purpose is to conceptually situate Syria’s road to capital accumulation within a particular strand of theory from the web of developmental approaches addressing third world experiments. A review of investment promotion, in the state-controlled developing countries during the 1950s and 1960s will be presented. Apart from highlighting the importance of fixed capital investment, it summarises the means by which the developing states have historically intervened to augment their deficient productive capacities.

The crucial problem facing the developing countries is thus to increase investment considerably, not for the sake of generating effective demand, as was the case in an under-employed developed economy, but for the sake of accelerating the expansion of productive capacity that is indispensable for the rapid growth of national income [...] This simple fact is the difference in the economic and political situations in these two groups of countries and, in a sense, [has] determined the present phase of history.

(Kalecki, 1976: 23–24, 27)