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Business Environment and Law-Foreign Capital And Collaboration

Foreign Capital Introduction– Foreign Capital And Collaboration

   Posted On :  06.05.2018 10:02 pm

Most countries of the world which embarked on the road to economic development have to depend on foreign capital to some extent.

Foreign Capital
 
 
Most countries of the world which embarked on the road to economic development have to depend on foreign capital to some extent. The degree of dependence, however, is varied with the extent to which domestic resources could be mobilized, the state of the domestic economy in respect of technical progress, the attitude of the respective governments, etc. But the fact cannot be denied that foreign capital contributes in many important ways to the process of economic growth and industrialization.

Need For Foreign Capital

 
The need for foreign capital for a developing country like India can arise on account of the following reasons:

  • Domestic capital is inadequate for purposes of economic growth.

  • For want of experience, domestic capital and entrepreneurship may not flow into certain lines of production.

  • There may be potential savings in a developing economy like India but this may come forward only at a higher level of economic activity.

  • It may be difficult to mobilize domestic savings for the financing of projects that are badly needed for economic development.

  • Foreign capital brings with it other scarce productive factors, such as technical know-how, business experience and knowledge.


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