ABSTRACT
The Keynesian analysis throws light on the question of the use and abuse of foreign aid. There are two cases in which foreign aid is indispensable to getting development started. The first is when equipment is required which cannot be produced at home at any price, while at the same time world demand for all the commodities that the country can export is inelastic. In second type of case, the home labour force is technically capable of carrying out the desired investment, but there is no way to procure a sufficient surplus to support men taken from food production to work on investment. A revolution which nationalizes property without compensation makes resources that formerly fed U-consumption available for investment. The solution of one problem opens up the next; once Keynes' short-period theory had been established, in which investment plays the key role, it was evidently necessary to discuss the consequences of the accumulation of capital that investment brings about.
