Recent Flows of United States Funds to Underdeveloped Countries

Abstract

The purpose of this paper is to examine certain aspects of the flow of United States funds to underdeveloped countries during a large part of the past decade. The 1952-58 period is one in which both general interest in, and United States concern with, the problems of raising living standards in underdeveloped countries became more pronounced than ever. The likelihood of large, and probably expanded, levels of economic aid underscores the importance of broadening our understanding of past patterns of international flows to the underdeveloped countries. In order to provide a frame of reference the analysis in the second section of the distribution of United States flows to underdeveloped countries the aggregate trends in levels of both net private investment and net public nonmilitary assistance are summarized first. Next the degree of concentration in private and public flows to underdeveloped countries is examined. The central question asked here is, from the standpoint of the recipient countries how broadly or narrowly have United States funds been distributed during the 1952-58 period? Have U. S. outflows been fairly evenly spread among the recipients, or very concentrated among a relatively small number of people? The concentration of public flows is then examined in detail and the separate contributions of private and public flows to the concentration in total flows are analyzed. The final section attempts to determine the extent to which the concentration in various United States flows has tended to compensate for differences in living standards among countries. I orde to obtain as much consistency as possible in he coverage of private and public outflows the data examined relate to net flows. In the case of private flows the data cover direct inves ments abroad and include net capital outflows and u istributed subsidiary earnings, as reported in the Survey of Current Business of the Commerce Department. Although portfolio investments are excluded, the effect of this omission on the results is undoubtedly a minor one because of the relatively small magnitude of such flows. The United States government flows comprise et nonmilitary grants and long term credits as reported in the Commerce Department's quarterly Foreign Grants and Credits of the United States Government.