ABSTRACT
Most less developed countries (LDCs) are now committed to the objectives of rapid economic development and higher living standards for their population. This concern may have arisen from demonstration effects arising from contact with the developed countries (DCs). To achieve these objectives, the LDCs have often turned to experts in the DCs and to the economic development literature. The economic development literature itself is replete with suggestions to the LDCs on how to achieve these goals. Probably the most crucial and frequently mentioned factor in the development process is capital. Indeed, Nukse (1953) has argued that a low investment ratio is both a cause and an effect of poverty in the LDCs. In order to break out of this vicious circle of poverty, most LDCs have therefore sought massive injections of foreign capital which often involve not just capital alone, but also management and know-how, all in one package. It is therefore important to examine some of the impacts and consequences of decades of massive inflows of foreign capital in such LDCs.
