... theories have stressed the importance of increasing both the rate of saving and investment. It is important to note, however, that investment can not only increase the level of total output of an economy but also the level of output per worker as capital accumulation helps to increase the size and productivity of the labour force allowing a more extensive division of labour. Having stressed the importance of increasing the saving and investment rate this essay aims to illustrate the methods through which this may be achieved, whilst acknowledging that a rise in the level of investment, although necessary is not sufficient condition for the successful promotion of economic development. In order for a developing country to invest and acquire capital there must be a growing surplus of income above the current level of consumption which can be directed towards productive investment projects. In essence capital formation involves the following ...

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