Capital requirements of developing countries

In conclusion it can be said that the UNCTAD study represents an improvement over the former UN estimates in that it is based on individual country studies, employs a more refined methodology and an improved statistical basis as well as more realistic assumptions. The target rates of growth of GDP of the developing countries are ambitious. Even the low assumption of 5.2 per cent per annum is higher than their recent growth performance and exceeds the UN Development Decade target. The universal treatment of the trade gap as the dominant constraint on growth minimises the role of the mobilisation of domestic resources—as expressed by the savings performance—in economic development. One basic weakness, admitted in the study, is the fact that it is based on past standards of performance. Another shortcoming is the assumption of the stability over time of the crucial parameters used in the projection. The study also fails to explore alternatives: i.e., the effect on the results of changes in the assumptions and vice versa. The underlying country studies, though based on a similar methodology, differ greatly in depth and quality which effects the reliability of the aggregate figures accordingly. The assumptions about the various means of closing the gap are highly arbitrary and lead to some incongruous results.