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Desirable International Movements of Capital in Relation to Growth of Borrowers and Lenders and Growth Of Markets

In: International Trade Theory in a Developing World

Author

Listed:
  • R. F. Harrod

    (Christ Church)

Abstract

It is expedient to spend a little time, if only to remove conceptual difficulties, in dwelling on the optimum rate of investment, since the optimum rate of foreign investment must depend partly on that. I take the main factor governing the optimum rate of investment to be the growth potential of the economy. This depends on the rate of increase of the working population and on the greatest feasible increase in output per head. In mature countries the latter is largely dependent on the occurrence of new ideas, including, but not consisting only of, the latest findings of technology. But in developing countries the latter depends mainly on the rate at which cadres of entrepreneurs, production engineers, managers, foremen, designers, draughtsmen, accountants et hoc genus omne can be made to grow. The maximum rates of increase of these impose, in my judgement, a far more important limitation on the growth of developing countries than the lack of availability of capital disposal, although that also has its place.

Suggested Citation

  • R. F. Harrod, 1963. "Desirable International Movements of Capital in Relation to Growth of Borrowers and Lenders and Growth Of Markets," International Economic Association Series, in: Roy Harrod & Douglas Hague (ed.), International Trade Theory in a Developing World, chapter 0, pages 113-141, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-349-08458-6_5
    DOI: 10.1007/978-1-349-08458-6_5
    as

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