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This paper provides a sectoral analysis of foreign investment recognizing that many developing countries depend heavily on foreign capital to supplement domestic savings. But if economic development is to be facilitated by foreign investment these inflows must provide the greatest possible benefits to the host country. It is therefore important which local economic activities are the main recipients of that investment. It examines the sectoral distribution of private long term foreign capital in Barbados between 1977 and 1982 and explains why some economic activities are more likely conduits of foreign investment than others. It also presents the statistical tests which support the main findings and ends with some comments on the implications for policy. (Papers are still in draft form and are subject to revision. Please do not reproduce without the expressed permission of the author)