ABSTRACT

The stagnation of the volume of official development assistance and the contraction of voluntary bank lending to developing countries have highlighted the question of how the continuing external financial needs of the developing countries can be met. In this context, increasing attention is being given to the possibilities for augmenting other flows of foreign capital, primarily direct investment but also portfolio equity investment. The Baker initiative, announced on October 8, 1985, emphasized the vital role that foreign private investment can play as part of a comprehensive program to restore healthy economic growth in the Third World. 1