The theory of development, which influenced the world from the mid-1940s to the 1970s, viewed the problem of less developed countries stemming from low capital and resource misallocation. Economists during this period believed that development was equivalent to a growth process that required high capital and resource reallocation from low-productivity agricultural sectors to high-productivity manufacturing sectors. Rostow (1960) argued that countries had to go through successive stages of growth, from the taking-off stage to the sustaining growth stage. Also, savings-led growth was considered essential (Harrod 1939; Domar 1957). However, there was a problem of capital accumulation in less developed countries—people were too poor to save. It was thought that foreign aid, together with the right combination of savings and investment, would solve the capital accumulation problem. These patterns of growth-driven development and structural change dominated development theory at that early stage (see, for example, Singer,1950; Lewis, 1955; Kuznets, 1955; and Prebisch, 1962).