Evening star., 1953-08-17
American Investment Abroad

AS directed by the Mutual Security Act Of
1851, the Department of Commerce has recently
completed comprehensive study of the prob
lem Of encouraging private American capital
investment abroad. The job done is probably
the best ever accomplished on a subject that
has been discussed with varying degrees of
soundness during the postwar period, but on
which reliable and realistic definitions hitherto
have been lacking. The Departments study
provides some of these de1nitions-why such
investment is desirable, what conditions are
essential to encourage it, what obstacles cur
rently stand in the way, and what might be
done and by whom to remove the impediments.
1t is hardly controversial to say that the
economic development of the countries Of the
free world is to the advantage Of both the
United States and the beneficiary countries 1t
is reasonable to believe that private American
capital, commanding resources of technical
Skills and materials, can contribute SubStan-
TALLY to such development. Once these premises
are stated however, the practical problems
remain of how to stimulate this flow of
American capital and how to remove certain
obstructive barriers. While the considerations
are fundamentally economic ones the compli-
eating factors are primarily political and their
resolution requires action on political level.
Private American dollars are going abroad
only when there is reasonable assurance of
their safety and reasonable hope that they can
earn a profit. The relatively heavy American
investment in Canada in recent years demon
strates this doctrine, and the mutually advan-
tageous capital relationship that is constantly
broadening between these two countries should
provide an object lesson for other parts of the
globe.
The contrast is provided, unfortunately, in
some the countries which most urpentlv need
foreign capital investment. Import and export
controls restrictions on converting profits into
dollars and making remittances to the United
States, unfavorable exchange rates, diScrimina-
tory and costly labor regulations, restrictions
on stating and management, discriminatory
tax treatment and-worst of all-threats of
appropriation are factors certain to discourage
the venture of American dollars overseas.
A sweeping condemnation of these practices
is not a sufficient, or necessarily fair, answer.
The political behavior of many of the countries
that have applied such restrictions is influenced
in large measure by some of their own internal
economic problems. In other cases, however,
there has been simply shortsighted greed to
capture as much of the profit and benefit of
foreign investment as possible without intelli
gent regard for the original investor.
The Commerce Department study recon-
mendS that this Government-not only through
services here but in our foreign diplomatic and
economic miSSionS-provide the best possible
information and guidance to American firms
and individuals interested in or qualified to 60
abroad. 1t recommends further that Govern
ment effort be made through our international
trade policies, through negotiation of treaties
and agreements, and through simple politico
economic education to encourage foreign gov
ernments to improve the climate for American
investment. 1t recognizes that the obstacles
are "sizable and stubborn" and concludes that
there will be greatly increased flow of private
capital from this country in the next few years
With the values acknowledged and the problems
clearly stated, however, the study provides hope
that there will be progress toward thoroughly
sound objective.
1t is a wits opinion that romance lasted
longer in the old days because wife looked
the same after she washed her face. On the
other hand we'd guess it lasts even longer
today because wives look so much better after
they get the paint back on.