Acta Oeconomica 23. (1979)

1979 / 1-2. szám - Kádár Béla: Structural Changes in the International Capital Exports

76 В. KÁDÁR: CHANGES IN INTERNATIONAL CAPITAL EXPORTS The importance of the economic components of capital exports became again gradually enhanced by the international economic and political changes maturing since the middle of the sixties. The increasing capital intensity of up-to-date sectors and the growing share of the capital-intensive sectors in national economies, fewer constraints on international trade, expansion of the multinational companies, and the growing dynamism and capital absorptive capacity of countries having attained the medium level of development offered favourable conditions for boosting the international flow of capital. The volume of long-term direct capital investments more than doubled in the period 1970 to 1976, increasing from 140 thousand million dollars to about 300 thousand million dollars, while the gross value of foreign debts increased from 400 thousand million dollars to 600 thousand million. [ 1 ] As government capital exports were restricted in most developed market economy countries already in the 1970s by the development of a world inflation, and by growing budget deficits, private capital regained its importance in the international flow of capital and its movement is, naturally, determined by profit considerations. For example according to DAC data the share of private capital in the net capital exports to developing countries amounted to 39 per cent in the average of 1965—67 and to as much as 54 per cent in the average of 1974—75. Since interest, i. e., the return on loan capital is lower than profit, i. e„ the return on actively invested capital, in private capital exports direct investments, which earn higher profit, necessarily have a bigger share. Thus, through the changes in the relative shares of state and private capital, the economic criteria of capital exports became effective again and, partly, the distribution of the different forms of capital exports was altered. While in the period from 1950 to 1965 the share of direct long-term capital investments was 25 per cent in the combined volume of direct and loan capital, at the end of 1976 its share already amounted to about a third. In the following discussion the relationships between the export of direct capital and the structural transformation of the world economy will be studied because long-term direct capital investments exert a predominant influence on the structural intertwining between national economies as well as on the international flow of technologies which has become momentous in modem growth. Patterns of direct capital exports by countries For a quarter of a century after World War II the pattern of international long-term capital exports showed a pretty high concentration: the combined share of the USA and the former colonizing countries, namely, Britain, France, the Netherlands and Belgium, was nearly 90 per cent in long-term direct capital exports. The pattem of capital exports began to diversify at the end of the sixties. The growing world economic importance of the Federal Republic of Germany and Japan, their large trade surpluses, the revaluation of the DM and the yen partly necessitated and partly facilitated the establishment of positions in the international capital market. Also Canada, in close relationship with American capital, joined the ranks of the major capital exporting countries. In 1970 the Acta Oeconömica 23, 1979

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