The New Hungarian Quarterly, 1966 (7. évfolyam, 23. szám)
József Bognár: The Future Place and Role of the Developing Countries in the World Economy
46 THE NEW HUNGARIAN QUARTERLY the world, that is, the socialist countries, the countries pursuing an anticolonialist policy, and the democratic forces of the West. To clarify the methods and problems of this cooperation would need another complete paper. Here we shall only try to examine the effect of the movements of capital upon the developing countries, by relying on purely economic criteria. 1) What Gunther Myrdal calls the dispersion effect of capital has substantially diminished during the past decades. Hence foreign investments are relatively smaller than they used to be prior to the First World War, i.e., relative to the economic resources of the capital-exporting countries, the order of magnitude of the world economy, and to the needs of the less advanced countries. The foreign investments of the greatest capital-exporting country before World War I, Great Britain, in 1913 amounted to one and a half times the annual national income. The capital investment of the USA abroad today, on the other hand, is hardly above 12 to 13 per cent of the national income. 2) The greater part of the capital invested abroad goes to advanced areas (Europe, Canada, Australia, New-Zealand) and to South Africa. 3) A significant part of the credits extended by America have military strings attached to them. 4) International private capital enjoys absolute security in advanced countries and is therefore reluctant to leave familiar fields. 5) It should be realized in conclusion that most international sources of information only report the influx of capital, but are reticent on the exodus of capital associated with the transfer of interests and profits. Between 1950 and 1961 the balance of the capital movements in these two directions barely reached $ 2,000 million on the credit side and the balance in certain areas—Latin America, for instance—amounted to a debit figure for the receiving party. According to R. Prebisch’s calculations, the influx of foreign capital into Latin America amounts to about x 0,000 million dollars a year, and the annual remittances amount to $ 13,600 million. In the last ten years the socialist countries have made considerable efforts to increase credits and aid to the developing countries. They have achieved significant results in certain countries (India, the United Arab Republic, Afghanistan, etc.). The great advantage of these credits is that they are given to the governments and can thus be used to accelerate the development of the state sector. Credits extended to governments, moreover, have established a precedent in international economic life and prompted certain capitalist countries to adopt similar practices.