International Investment Policy: I
IN CHAP. 8 we outlined the general postwar foreign investment policy of the United States as contrasted with that of the 1930's. In this chapter we shall discuss the implementation and subsequent development of that policy in the postwar period. As was the case in our discussion of America's international monetary policy, no attempt will be made to provide a systematic account of the structure and operation of international investment institutions as such. Rather our principal purpose is to discuss American policy and its implementation in this important international field.
During the war period, United States policy with respect to both private and governmental foreign investments was dominated by the requirements of national defense and the related objective of promoting cordial inter-American relations. Thus the Export-Import Bank made a number of developmental loans to Latin America, some of which contributed directly or indirectly to the ability of these countries to supply raw materials needed by the United States and its Allies. Materials and equipment for use in private direct investment projects were, of course, under allocation during the war, but certain private investments in Canada, for example, contributed directly to the war effort. Private investments in petroleum in Venezuela and in Saudi Arabia were also given special encouragement during the war.
At the close of the war, the United States government sought to promote a large flow of American capital abroad, a substantial part of which it was hoped would take the form of private investment, given some encouragement through guarantees by the International Bank for Reconstruction and Development (IBRD). There were in general three reasons for this objective: (1) There was the urgent need for the reconstruction of war-torn areas. (2) There was the strong desire of underdeveloped countries in Latin America, the Far East, and elsewhere for economic development. The United States had both an economic and a political interest in stimulating economic development in foreign countries. (3) The United States desired to promote foreign investment as a means of stimulating trade and of providing a productive outlet for surplus capital. While foreign investment has not been encouraged pri-