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The study investigated the role of the postnatal caregiving environment in the socio-emotional development of children under the age of 16 who had been exposed to alcohol in utero and placed in foster family care (n=38). Quantitative and qualitative methods of analysis were utilized. Based on psychological examinations, most of the children (76%) were reported to have at least one developmental problem; concentration, attention and language/speech problems being the most typical. The critical issues affecting children's development were 1) the range of somatic illnesses and disabilities that had impaired their functional capacity, 2) children's age at the time of the first placement and of entry into long-term foster family care, and 3) the number of traumatic experiences. Placement outside a biological family at an early age decreased, and traumatic experiences, illnesses and disabilities increased socio-emotional …