ABSTRACT

Economic growth and development within so-called third world countries has been a subject of debate, on theoretical and empirical grounds, since the end of World War II. Since the eighteenth century, many economists have attempted to explain economic growth, including Adam Smith, Karl Marx and Joseph Schumpeter. Classical theorists are those which pre-date the publication of Keynes’ The General Theory in 1936. The use of economic growth theories to inform aid polices and programs have faced much criticism. Restrictions and conditions placed on aid prevent it from substituting for any domestic economic surplus which is drained from the periphery to the core due to foreign control of export sectors and capital deficits. Bilateral and multilateral organizations often make aid conditional on policies to ‘stabilize’ the economy that are designed to maintain trade patterns and flows of foreign investment, to continue debt payments and to build a social and economic system resistant to revolutionary change.