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Private Investment in Developing Countries
Published online by Cambridge University Press: 02 July 2024
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The debate on aid to less-developed countries has recently been concentrated in the fields of private charity and government contribution. In the field of private charity there has been an extension of the 1 per cent idea, and schemes have proliferated—Third World First, 1 per cent Group, Good Friday appeal, St Andrewstide appeal. These are all designed to overcome one of the main disadvantages of appealing for money from the individual—the enormous cost of collection. In the field of government contribution the debate has settled in the field of multilateral v. bilateral aiding. The important point at issue here is to ensure that the aid does not become a political football.
The debate as it has been conducted, chiefly by men of good will of left-wing persuasions, has left aside the question of how private investment could be integrated or used for the development of the less-developed countries. The words that go round are those of moral obligation and what is right rather than the efficiency and profitability of the products of the development process. There is a lack of trust in the products of the capitalist system, a feeling that it cannot work fast enough or fairly enough to be able to augment the direct efforts that can be undertaken by direct transfer without receiving anything back.
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- Copyright © 1970 Provincial Council of the English Province of the Order of Preachers
References
page 84 note 1 Russia, the Atom and ths West, London 1958, p. 76.Google Scholar
page 84 note 2 Inagural Address,20th January,1961.
page 85 note 1 The Times (London) 29th October, 1957Google Scholar. The letter was signed by Professor R.F.Kahn, Professor E. A. G. Robinson, Professor R. Stone, N. Kaldor, W. B. Reddaway, T. Balogh, F.A.Burchardt, Colin Clark, R. F. Harrod, E. F. Jackson, Sir Donald MacDougall and G. D. N. Worswick.
page 85 note 2 The Times (London) 30th October,1957Google Scholar.Letter from Professor J. E. Meade.
page 86 note 1 7th Report of the Estimates Committee (Overseas Aid), H.of C.Paprs 442,23rd October,1968.§8, Quotation from White Paper ‘Overseas Development:The work in Hand’ (Cmnd 2736), August 1965.
page 86 note 2 Op.cit.
page 86 note 3 Op.cit.,§10.
page 87 note 1 Richard Bailey, ‘Joint Ventures and Development:the Economic Alternative’, in Economic Age, I,6,1969, and Geoffrey Chandler, ‘Private Investment and the Developing Countries’, in Economic Age, II,1,1969.
page 89 note 1 I have taken private enterprise to represent the most efficient method in economic terms of transforming capital, labour and land into productive resources and so into real output, but pure efficiency is not necessarily either humane or developmental.It is for this reason that in this country special arrangements are made for the slowing down of the natural rate of decline in the coal industry or for the introduction of industry to the north‐east.So in developing countries, governments have the right and the duty to their own citizens to modify and smooth the effects of efficient transformation.The argument that what is good for the company, is good for the country rests, therefore, on certain assumptions which could be spelled out as follows: (a) The country in which a firm is situated is strong enough to set its own rules, i.e. it sets the rules of labour hiring and firing, taxation of profits and incomes, company law setting out the duties, obligations and rights of the company, etc. (b) Labour which is improperly paid is inefficient; i.e. low wage rates yield discontent, absenteeism, sickness, etc. (c) In order to pay labour adequately it must be backed by sufficient capital to yield a suitable return. (d) There is no point in installing low yielding assets because (i) the product will be uncompetitive with similar products produced in other countries, (ii) there will be little surplus available for plough‐back, tax, etc. (e) If there are low profits the general environment of the company deteriorates became the country is unable to take sufficient tax to enable it to build up the social and economic infrastructure.
page 92 note 1 The Economist special supplement, ‘Boundless Banking’,15th November,1969.‘The Indian Experiment.’
page 93 note 1 The Times, Special Supplement, ‘East of Suez’,7th January,1969.‘Private Investors Confident’, John White, p.3.