ABSTRACT
The model outlined in the last chapter can clearly form the basis of a methodology for empirical estimation of the level of foreign assistance required to achieve growth targets in developing economies, individually or as a whole. Ignoring skill constraints this model implies that two resource gaps-a ‘savings’ gap and a ‘trade’ gap-need to be estimated. It further implies that these two gaps need not be identical and that foreign capital must be adequate to fill the larger gap if the planned growth rate is to materialize. Two-gap computable models of this kind have been used in practice to estimate aid requirements of developing countries1 (see Table 7).
