The benefits and costs of private investment from abroad: a theoretical approach

Abstract

The benefits and costs of private investment from abroad are a matter of considerable importance for Australia. This paper suggests one possible method of analysing some general aspects of the problem. It is mainly theoretical and does not attempt to reach clear-cut practical conclusions. This would require much more factual analysis and consideration of many other aspects. Some of these were discussed by Professor Arndt in ‘Overseas Borrowing — the New Model’ (Economic Record, August 1957), an article which also deals with many of the points analysed below.

The Economic Record, March 1960 — Essays in honour of Sir Douglas Copland. Reprinted in the Bulletin of the Oxford University Institute of Statistics, Vol. 22, No. 3 1960. This article was written while the author was Visiting Professor of Economics and Finance at the Australian National University. I am grateful to several economists, including Professor T. W. Swan, Mr. H. P. Brown and Dr. W. E. G. Salter, for discussing these matters with me, and especially indebted to Dr. I. F. Pearce for his help.