ABSTRACT
This chapter is concerned with the economic implications of foreign investment for the economic policies of some of the less-industrialized countries to-day. It considers the case of General Motors-Holden’s Ltd. in Australia. The chapter also considers the general question whether it makes any difference if foreign investment takes place through the expansion of existing foreign-controlled firms rather than in some other form. It argues that the growth of foreign investment through the reinvestment of retained earnings by firms is subject to different influences from those determining the inflow of foreign investment from other sources. Once a foreign firm is established its continued growth is an increase in foreign investment, but an increase which is more appropriately analysed in the light of a theory of the growth of firms rather than a theory of foreign investment. There are two types of benefits realized from foreign investment: additional supplies of capital and new techniques of production and management.
