Capital Movements and Economic Development

526 Pages·1967·49.535 MB·English

by  John H. Adler (eds.)

INTERNATIONAL ECONOMIC ASSOCIATION
CONFERENCE VOLUMES, Numbers 1-50
NUMBER 19
Capital Movements and Economic
Development
CAPITAL MOVEMENTS
AND
ECONOMIC DEVELOPMENT
Proceedings of a Conference
held by the Internati'onal Economi'c Associ'ati'on
EDITED BY
JOHN H. ADLER
WITH THE ASSISTANCE OF
PAUL W. KUZNETS
M
. .
S
TOCKTON
P R E S S
© International Economic Association 1967
Softcover reprint of the hardcover 1st edition 1967 978-0-333-40647-2
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First published 1967
This 50-volume set reprinted 1986 jointly by
THE MACMILLAN PRESS LT O
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Distributed exclusively in Japan
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50-volume set ISBN 978-0-333-40626-7
ISBN 978-1-349-15240-7 ISBN 978-1-349-15238-4 (eBook)
DOI 10.1007/978-1-349-15238-4
CONTENTS
PAGE
ACKNOWLEDGEMENTS vii
LIST OF PARTICIPANTS ix
INTRODUCTION. John H. Adler x1
INAUGURAL MEETING OF CoNFERENCE. Remarks by Pierre-
Paul Schweitzer, Felipe Herrera and Irving S. Friedman xvii
PART I
THE HISTORICAL RECORD
CHAP.
1. THE HISTORICAL RECORD OF INTERNATIONAL CAPITAL MoVE-
MENTS TO 1913. Brinley Thomas 3
THE PATTERN oF NEw BRITISH PoRTFOLIO FoREIGN INVEST-
MENT, 1865-1914. Matthew Simon 33
2. THE FINANCIAL EXPERIENCE OF LENDERS AND INVESTORS.
Andrew M. Kamarck 71
3. TREATMENT OF FOREIGN CAPITAL-A CASE STUDY FOR JAPAN.
Saburo Okita and Takeo Miki 139
4. PHILOSOPHY OF INTERNATIONAL INVESTMENT IN THE SECOND
HALF OF THE TWENTIETH CENTURY. P. N. Rosenstein-Rodan 175
THE RoLE OF INTERNATIONAL MovEMENTS oF PRIVATE CAPITAL
IN PROMOTING DEVELOPMENT. Felipe Pazos 186
PART II
THE RESOURCES ASPECTS
5. EcoNOMIC EFFECTS OF CAPITAL IMPORTS. Alexandre Kafka 211
6. THE 'NEED' FOR FoREIGN REsouRcEs, ABSORPTIVE CAPACITY
AND DEBT SERVICING CAPACITY. Ravi I. Gulhati 240
7. FoREIGN AssiSTANCE AND EcoNOMIC DEVELOPMENT. Hollis B.
Chenery 268
8. FoREIGN CAPITAL AND DoMESTIC PLANNING. I. G. Patel 293
9. TIED CREDITS-A QuANTITATIVE ANALYSIS. Mahbub ul Haq 326
10. CAPITAL MoVEMENTS AND THE VoLUME AND TERMs oF TRADE.
H. M. A. Onitiri 360
v
Capital Movements and Economic Development
PART III
THE MONETARY ASPECTS
CHAP. PAGE
11. CAPITAL MovEMENTS AND INFLATION. A. J. Brown 381
12. PRIVATE CAPITAL MovEMENTS AND ExcHANGE RATES IN DE-
VELOPING COUNTRIES. Rudolf R. Rhomberg 411
13. INTERNATIONAL DISEQUILIBRIUM AND THE ADJUSTMENT PRO-
CESS. R. A. Mundell 441
14. FINANCIAL INTEGRATION AND THE FLOW OF RESOURCES IN
LATIN AMERICA. Javier Marquez 472
INDEX 494
Vl
ACKNOWLEDGEMENTS
THE International Economic Association wishes to thank the
International Bank for Reconstruction and Development, the
International Monetary Fund and the Inter-American Develop
ment Bank which provided financial support and assisted in the
organization of the Conference. The preparations for the Conference
was in the hands of a Programme Committee. Its members were:
Professor Henry C. Wallich (Chairman), John H. Adler, John S.
de Beers, D. J. Delivanis and Marcus Fleming.
vii
LIST OF PARTICIPANTS
Dr. John H. Adler, Economic Development Institute, International Bank
for Reconstruction and Development, Washington, D.C., U.S.A.
Dr. R. N. Andreasyan, Institute of World Economics and International
Relations, Moscow, U.S.S.R.
Professor G. H. Borts, Brown University, Providence, Rhode Island,
U.S.A.
Professor A. J. Brown, Leeds University, England
Professor Hollis B. Chenery, Harvard University, Cambridge, Massa
chusetts, U.S.A.
Dr. John S. de Beers, Inter-American Development Bank, Washington,
D.C., U.S.A.
Professor D. J. Delivanis, University of Thessaloniki, Greece
Dr. Just Faaland, The Chr. Michelsen Institute, Bergen, Norway
Professor Aldo Ferrer, University of Buenos Aires, Argentina
Dr. Marcus Fleming, International Monetary Fund, Washington, D.C.,
U.S.A.
Dr. Ravi Gulhati, International Bank for Reconstruction and Develop
ment, Washington, D.C., U.S.A.
Dr. Mahbub ul Haq, Planning Commission, Karachi, Pakistan 1
Dr. Branko Horvat, Yugoslav Institute of Economic Research, Belgrade,
Yugoslavia
Professor Alexandre Kafka, University of Virginia, Charlottesville,
Virginia, U.S.A.
Dr. Andrew M. Kamarck, International Bank for Reconstruction and
Development, Washington, D.C., U.S.A.
Professor Paul W. Kuznets, University of Indiana, Bloomington, Indiana,
U.S.A.
Professor Gaston Leduc, University of Paris, France
Dr. Javier Marquez, Center for Latin American Monetary Studies
(CEMLA), Mexico
Dr. Jorge Marshall, Central Bank of Chile, Santiago, Chile
Professor R. A. Mundell, McGill University, Montreal, Canada
Dr. Saburo Okita, Japan Economic Research Center, Tokyo, Japan
Dr. H. M.A. Onitiri, Nigerian Institute of Social and Economic Research,
University of Ibadan, Nigeria
'Contributed paper but was unable to attend.
A2 ix
Capital Movements and Economic Development
Professor G. Ugo Papi, University of Rome, Italy
Dr. I. G. Patel, Ministry of Finance, New Delhi, India
Dr. Felipe Pazos, Committee of Nine (OAS}, Washington, D.C., U.S.A.
Dr. Rudolf R. Rhomberg, International Monetary Fund, Washington,
D.C., U.S.A.
Professor P. Rosenstein-Rodan, Massachusetts Institute of Technology,
Cambridge, Massachusetts, U.S.A.
Professor Matthew Simon, Queens College, Flushing, New York, U.S.A.
Dr. Hans W. Singer, United Nations, New York, U.S.A.
Professor Wolfgang F. Stolper, University of Michigan, Ann Arbor,
Michigan, U.S.A.
Professor Brinley Thomas, University College of Wales, Cardiff1
Dr. Henry C. Wallich, Yale University, New Haven, Connecticut, U.S.A.
Mrs. Ona B. Forrest (Observer), United Nations, New York, U.S.A.
1 Contributed paper but was unable to attend.
X
INTRODUCTION
BY
JOHN H. ADLER
THE Round Table Conference on Capital Movements and Economic
Development was organized because it was felt that a discussion
of the subject would constitute an important addition to the series
of conferences which the International Economic Association had
held on various aspects of the process of economic development, a
subject of major concern in recent years to economic theorists,
'political' economists and officials of governments and international
organizations. Although interest in the role of international capital
movements in the development of poor countries is worldwide, it
was befitting that the Conference was held in Washington, the seat
of the United States Government and of three important inter
national organizations concerned with international capital move
ments - the World Bank, the International Monetary Fund and
the Inter-American Development Bank-and therefore the point
of origin of a large proportion of the flow of capital across national
boundaries. This enhanced the importance of the Conference
because it facilitated the participation of a large number of economists
who as officials of the United States Government or of international
organizations are concerned with the practical aspects of international
capital movements. In addition, participants coming from countries
which obtain resources from abroad had reasonable assurance that
they were reaching an important audience through their contri
butions at the Conference.
The papers and comments prepared for the Conference and the
discussions there brought out with clarity and considerable unanimity
the fact that economic theory dealing with international capital
movements was in need of reconsideration and re-evaluation. This
subject has been considered an important part of economic theory
standing somewhere between the theory of the transfer of real
resources across national boundaries and the theory of international
financial relations, and therefore monetary theory. The need for
reconsideration arises because of the advent of capital movements
from public sources which in recent years have accounted for more
xi