Introduction

The passion previously generated by debate over the activities of multinational corporations (MNCs) in the less-developed countries (LDCs) has now subsided considerably. The positive role these firms can play in the development process of host LDCs is now generally admitted, even if grudgingly by some. However, many still urge close supervision and restraints on the activities of MNCs lest they exploit LDC economies.1 There is thus much room for clarifying the theories of foreign direct investment and the process of economic development to permit a more healthy attitude towards foreign firms and the adoption of more consistent policies for Third World economic development. Part of that effort entails the restatement of some fundamental concepts from the classical and early neoclassical economists that have evidently become distorted over time. Another avenue is to interpret empirical research findings within a more consistent theoretical framework.