The growing disparity between the developed and the developing countries has once again rekindled the debate about the relative merits of foreign investment as means whereby the developed countries can help the devel­ oping countries in both achieving a reasonable rate of growth and also from preventing the widening gap between the North and the South from widening even further. This renewed interest in the debate was most sharply highlighted at the recently concluded North-South economic summit conference at Cancun, Mexico. There, the United States took the position that massive increases in foreign aid were neither practical nor the best means of ensuring continuing and satisfactory growth in the developing countries. Rather the solution was to be found in depending on a free market economy and on inflows of private foreign investment. Behind these views, of course lie the more fundamental questions: for example, what should be the role of multinational corporations in the developing countries since they constitute the main source of foreign private investment? Should there be greater cooperation between the public sectors of the North and the South? What is the best means of bridging the economic gap between the North and the South: through direct transfers of wealth from the North to the South or through raising South's growth rates via the transfer of technology and the inflow of investment by multinationals? These questions are of fundamental importance and have wide ranging implications, not only for the economic

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I / Introduction.- II / Foreign Capital, Savings and Growth: Some Descriptive Indicators.- 1. Trends, Patterns and Sources of Different Types of Foreign Capital Inflows.- 2. Summary Statistics of Sample Data on Growth, Savings, Income and Capital Inflows.- 3. Some Further Interpretations.- III / Foreign Capital and Growth.- 1. Review of Some of the Recent Empirical Studies.- 2. The Model.- 3. The Empirical Results.- 4. Further Analysis of Group Estimates.- IV / Foreign Capital and Savings.- 1. Review of the Selected Literature.- 2. The Model.- 3. The Results.- 4. Results for Income and Geographical Groups.- V / Foreign Capital, Growth and Savings: Implications of a Simultaneous Equations Approach.- 1. Review of Bacha and Papanek Studies.- 2. Implications of Simultaneity.- VI / Foreign Capital, Growth and Savings: A Simultaneous Equations Model.- 1. The Model.- 2. A Brief Discussion of the Structural Equations.- 3. The Estimates.- 4. Comparison with the 1960s.- VII / The Multiplier Analysis.- 1. Reduced Forms and the Elasticity Multipliers.- 2. Direct Versus Total Effects of Capital Inflows.- 3. Importance of Capital Inflows Relative to That of Other Factors.- 4. Some Other Implications of the Elasticity Multipliers.- 5. Comparison of the 1960s with the 1970s.- VIII / Stability Analysis.- 1. An Outline of the Test Procedure.- 2. The Stability of the Savings Rate Equation.- 3. The Stability of the Growth Rate Equation.- IX / Aggregation and Predictions.- 1. The Savings Rate Predictions.- 2. The Growth Rate Predictions.- 3. Some Comments on the Classification of Countries as 'Overachievers' and 'Underachieves'.- X / Conclusions.- 1. A Brief Summary of the Methodology.- 2. Summary of the Major Findings and Some Policy Implications.- 3. Suggestions for Further Research.- Appendix A / The Sample.- Appendix B / The Sources of Data and the Definition of the Variables Used.- Appendix C / The Reduced Form Equations and Elasticity Multiplier Tables.