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EFFECT OF CAPITAL IMPORTS ON SAVINGS AND GROWTH IN LESS DEVELOPED COUNTRIES
Author(s) -
Gulati Umesh C.
Publication year - 1978
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1978.tb00526.x
Subject(s) - economics , capital deepening , capital (architecture) , foreign capital , international economics , capital formation , developing country , monetary economics , macroeconomics , financial capital , human capital , foreign direct investment , market economy , economic growth , archaeology , history
This paper examines some of the arguments of the critics of foreign aid and other capital inflows to less developed countries (LDCs). The paper finds that the critics lack sufficient evidence on the supposedly adverse effect of capital transfers to LDCs on their savings and growth of incomes. This, however, does not mean that these capital inflows always promote growth in LDCs. In particular, it is shown that the relative importance of foreign capital on economic growth of LDCs would depend on the degree to which that growth is constrained by the lack of capital.