Problems of capital formation in underdeveloped countries : and patterns of trade and development / Ragnar Nurkse.

Contains index (pages [159]-162).

I The size of the market and the inducement to invest - The vicious circle of poverty - weakness of investment incentives - The theory of development and the idea of balanced growth - Determinants of the size of the market - Balanced growth and international specialization - The traditional pattern of foreign investment -- II Populations and capital supply - Excess population in densely settled countries - The saving potential concealed in rural underemployment - Population growth and capital requirements - The case of sparsely populated areas - The two cases compared -- III The standard of living and the capacity to save - A new theory of consumption and saving - Growing awareness of advanced living standards - Effects on the propensity to save - Effects on the balance of payments - The defeatist solution: economic isolation - International and interregional income transfers -- IV External sources of capital - Direct business investments - International loans and grants - The significance of the terms of trade -- V Commercial policy and capital formation - Infant protection and infant creation - Effects of import restrictions on money income and saving - Effects on the pattern of investment - The rationale of luxury import restrictions -- VI Recent trends in the theory of international capital movement - Classical and neo-classical theory - Capital exports and the income approach - Foreign investment as an economic stimulant - The real case for foreign investment - The problems of the return flow -- VII Actions on the home front - External and domestic sources - The role of public finance - Social overhead capital - Individual effort: the groundwork.

"This subject [, capital formation,] lies at the very centre of the problem of development in economically backward countries. The so-called 'underdeveloped' areas, as compared with the advanced, are underequipped with capital in relation to their population and natural resources. We shall do well to keep in mind, however, that this is by no means the whole story. Economic development has much to do wit human endowments, social attitudes, political conditions - and historical accidents. Capital is a necessary but not a sufficient condition of progress.
The subject of capital formation has many ramifications, of which only a few can be singled out for consideration here. My selection will inevitably be arbitrary in some degree. The topics chosen will be of a general character. I therefore beg the reader not to expect anything like a systematic treatise, nor anything specifically related to any particular country. While the discussion will deal with problems which many of the poorer nations have in common we must remember that different countries all have their special circumstances, into which a general survey such as this cannot possibly enter" -- From the Introduction

Donation from Karl and Elizabeth Niebyl.