Disproportionate foreign investment in indigenous industries

The process of takeover of traditional industries by foreign investors at best meets with resentment from the local business community and government, and at worst encounters solid opposition. By creating an unfavourable reaction, such action can lead to restrictive measures against all foreign private investors, including those offering scarce technology.

Foreign investment represents high levels of management skills and production, distribution and marketing technology. The profit motive of transnational corporations and its satisfaction assures countries of assistance in the development of traditional industries. Excessive government investment or nationalization of traditional industries assures a slow-down in development.