Foreign Capital and Economic Growth

Abstract

In the current environment of significant global change, how can declining levels of development aid and private capital inflows be best used to promote economic growth in the developing countries? This question is addressed here and traditional analysis of this topic is complemented by taking a perspective that focuses on the limitations of how development aid and foreign capital inflows are usually allocated. It is suggested here that poor countries can benefit from a greater use of competitive markets to allocate development aid and private capital inflows.