Less-Developed Countries’ Foreign Capital Policies: Are They Irrational?

by Irvin Grossack



The encouragement of direct private foreign investment (DPFI) by U.S. citizens and other Westerners in less-developed countries (LDC's) has been a consistent official U.S. policy. This policy has been expounded by various high-level commissions and political leaders and has been implemented by a number of means: guarantees against certain risks; Cooley loans and participation in the promotion of international conferences delineating the rules of foreign investment. To some extent, the LDC's have cooperated in promoting this investment flow. The Indian Government, for example, has established offices in several foreign cities to facilitate foreign investment and has publicized its desire for DPFI. A recent U.N. publication indicates that virtually all LDC's are ready to accept private foreign investment in some form and lists the various agreements designed to promote DPFL. Past flows and projections of future DPFI's are generally judged inadequate as sources of capital and vehicles for transmitting know-how to the LDC's.

California Management Review

Berkeley-Haas's Premier Management Journal

Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

Learn more
Follow Us