One of the most serious omissions in the study of foreign direct investment or the operation of multinational corporations to date is in the area of macro-economic theory. For an individual firm the objective of maximising its profits and/or enlarging its market share through a multinational operation is justified from a micro-economic point of view. However, direct foreign investment has produced a conflict of interests with national objectives in both investing and host countries alike, since national (macro-) economic objectives remain paramount under circumstances where national populations (labourers, by and large) cannot easily move internationally. Resolution of this conflict so that foreign direct investment may contribute harmoniously both to investing and recipient country development, requires a new macro-economic approach to the problem.1