The effects of capital leakage are magnified in developing economies that lack
economic diversity (as many do), and that are dependent on only a few sectors to
support the overall economy. In the case of countries whose economies are highly
dependent on tourism, for example, the construction of tourist facilities and infra-
structure results in economic growth, as jobs are added to the economy and capital
in-flows increase to finance the costs of construction. But in many cases the profits
generated to both foreign and local investors in such projects are seldom invested
in the domestic economy, but are sent back to markets in the economically devel-
oped world. Emerging countries must develop incentive strategies to induce capital
to remain in the local economy, but such strategies often lack effectiveness due to
the great allure of investment options in the industrialized countries.Carrying Capacity
Carrying capacity is a quantitative measure of the human, animal, or vegetative
population that a specific environmental space can support. It may be calculated
for various scales, from the local to the global. It is an important concept incul-
tural ecologyand environmental studies, is a centerpiece of the notion ofsustain-
able development, and is derived fromMalthusian Theory. Carrying capacity
represents equilibrium between a population and its environment: A population
that is below the carrying capacity of its environment will in theory increase to
the number represented by the carrying capacity, while a population that is above
the threshold of the carrying capacity will die back to that level.
Carrying capacity is a dynamic concept and may be affected by many different
factors. In the case of a human population, the carrying capacity of some regions
may change dramatically in a short period due to changes in technology or varia-
tion in local climate. The carrying capacity of a certain hectare in Africa’s Sahel
region, for example, may be ten adults under current conditions. This means that
enough food can be produced using current technology and under current climatic
conditions to support ten grown people. But, if the following year is particularly
dry and a drought occurs, the carrying capacity for that year may drop to seven,
meaning that famine will likely be prevalent in the region. On the other hand, if
climatic conditions are good and the farmers working the hectare are presented
with a tractor, an improved hybrid that ismore productive or more resistant to
insect damage, or some other technological innovation, this change will suddenly
increase the carrying capacity. For example, the carrying capacity of some farm-
land in India, the Philippines, and other developing areas dramatically rose
between the mid-1960s and the early 1990s from the technological success of46 Carrying Capacity