1989 is one such example: GDP growth in the early1990s in developing countries was significantly higher than in developed countries, and the difference between their growth rates is expected to increase substantially. This suggests that business cycles, to the extent that they cause a greater divergence between the growth rates of developed and developing countries than would otherwise have taken place, have stimulated flows of FDI to the latter" (ibid, p. 94)Data gathered by UNCTAD, Programme on Transnational Corporations, 1993, show that foreign direct investment inflows to 'developed countries' went up from about US$ 10bn (1980 prices) in 1970 to about US$ 50bn, at the same time that the rate of growth of real gross domestic product went down from around 4% to 2%. Between 1984 and 1990, the rate of growth decreased to 2% from almost 5% in 1984, and, foreign direct investment increased from about US$ 40bn to around US$ 180bn.By and large, those FDI appear more slowing down than speeding up economic growth in developing countries, which, of course, is consistent with classical economic theory which states that monopoly/oligopoly capital slows down rate of growth of the industry.For the whole period 1970-1990 in developed countries FDI grew from US$ 10bn to US$ 180bn while rate of growth decreased from 4% to 2%.The same study by UNCTAD shows for less developed countries the following:Rate of growth 1970-1981 = from almost 10% to 3%FDI flows 1970-1981 = from US$ 2bn to US$ 18bnRate of growth 1981-1985 = from 3% to 5%FDI flows 1981-1985 = from US$ 18bn to US$12bnRate of growth 1985-1991 = from 5% to 3.7%FDI flows 1985-1991 = from US$ 12bn to US$ 38bnREINVESTED EARNINGS AND RATES OF PROFITSAnother important issue related to FDI is that they "add" enormous sums of fresh capital to already capital-starved less developed economies.UN, 1993 argues that "in terms of inflows, reinvested earnings are a considerably larg...
