The Role of Foreign Capital

Part of the Problems in Focus Series book series (PFS)


The apparent role of foreign capital in financing investment in Latin America varies enormously from one country to another. This can be seen by comparing the deficit on the current account of the balance of payments (which measures the net inflow of foreign capital) with total gross domestic savings. In the period 1960–7 foreign savings accounted for —7.2 per cent of total gross savings in Venezuela, i.e. there was a net capital outflow. On the other hand in Nicaragua in 1965–7 over a third of total savings originated abroad. The average for Latin America as a whole probably is about 12 per cent.1


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  1. 2.
    Several of the models are summarised in R. F. Mikesell, The Economics of Foreign Aid (1968), ch. 3.Google Scholar
  2. 4.
    Inter-American Committee for the Alliance for Progress, Organisation of American States, La Brecha Externa de la America Latina 1968–1973 (Washington, Dec 1968), p. 30.Google Scholar
  3. 8.
    See Keith Griffin and John Enos, ‘Foreign Assistance: Objectives and Consequences’, in Economic Development and Cultural Change (April 1970).Google Scholar
  4. 9.
    Lester B. Pearson, Partners in Development (1969), p. 248. As regards Brazil’s experience, the Pearson report might better have been entitled ‘Partners in Dictatorship’.Google Scholar
  5. 12.
    J. H. Adler (ed.), Capital Movements and Economic Development (1967), 20Google Scholar
  6. 13.
    See P. P. Streeten, ‘The Contribution of Private Overseas Investment to Development’ (Paper presented to the Columbia University Conference on International Economic Development, Feb 1970).Google Scholar
  7. 14.
    A. O. Hirschman, How to Divest in Latin America, and Why (Essays in International Finance no. 76, Princeton, Nov 1969), p. 6.Google Scholar
  8. 16.
    Sir Dennis Robertson, Britain in the World Economy (1954), pp. 58–9.Google Scholar

Copyright information

© Keith Griffin, Lester C. Thurow, Jorge Arrate, Lucio Geller, Laurence Whitehead, Arthur L. Domike, Victor E. Tokman, Timothy King, Rosemary Thorp 1971

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