Foreign Private Investment- A Boon to Developing Countries

The high standards of living and improved national security which industrialization can bring are so broadly evident that one cannot name a country which does not cherish the hope of industrializing itself. Why, then, with such a universal aim, do many countries which lack either the capital or the skill to develop their own industries, accomplish so little toward attracting the only functionary who can provide the necessary capital and skill, namely, the foreign private investor? Obviously, because they fail to understand what constitutes a favorable climate for investment, because they have false notions about being exploited or dominated by the foreign investor, or because they are so nationalistic that they refuse to permit outside assistance. The purpose of this paper is to aid the citizens and policy makers of the developing countries in achieving their aims, by defining the conditions which encourage investment and portraying the results of a policy of encouragement. The following is quoted from Eugene R. Black, president of the World Bank: "The danger today is not that the foreign investor will ask too much of a developing country, but that the developing countries will do too little to attract him. Today the foreign investor cannot go into a country unless he is actually wanted by the people of the country. By indulging the myth that the private investor is trying to force an entry to engage in some sort of evil exploitation, the less developed countries are cutting themselves off from one of the most productive sources of development assistance available to them. The capital and skills which the private investor brings with him may not be available from anyone else. Particularly, he brings with him the skills of industrial management - skills which have to be seen in action to be learned. If a country is bent on industrializing and having the benefits spread broadly among the people, it can do itself no better service than to seek out the private investor abroad who is willing to risk his capital on the chance of a fair return on a successful venture."