Foreign Resources And Economic Development
Foreign resources have played an important role in the economic development of many economically advanced countries of today. For example, between 1870 and 1914 the ratio of capital inflow to gross domestic capital formation was about 40 per cent in Canada. The same ratio for Australia was about 37 per cent between 1861 and 1900, and for Norway it was 29 per cent between 1885 and 1914 and 31 per cent between 1920 and 1929 (Hagen 1975). Even in countries like Japan and the United States, where such ratios were lower during their early stages of economic development, foreign capital played a significant role. The LDCs of today are more or less at the same stage of economic development as the DCs in the eighteenth and nineteenth centuries. It is generally contended that foreign resources could play a vital role in promoting economic development in the LDCs. This is explained in terms of concepts such as 'the savings gap' and 'the foreign exchange gap'. But at the outset it is necessary to clarify certain key terms in the definition of foreign resources.