The present paper argues that though foreign resources play an important part in initiating and sustaining development, their importance has been over-stressed in the so-called two-gap models of foreign aid, as expounded by Chenery and Strout, Mckinnon, and others. In this paper it is shown that by designing appropriate policies on the domestic front, the critical importance of foreign resources can be relaxed to a significant extent. In particular, the present paper emphasizes the role of wage policy and the need for human resource mobilization for a labour-surplus economy. The paper also sketches out the paths of dual gaps for a labour-surplus economy and shows that policies ensuring appropriate wage growth can affect both types of gaps to a significant degree.