The Outlook for United States Foreign Direct Investment in the Andean Pact Countries in the Seventies
- PDF / 7,100,230 Bytes
- 26 Pages / 436.8 x 712.8 pts Page_size
- 3 Downloads / 190 Views
The General Latin Amn-ericanView of Private Foreign Investment The climate for private foreign direct investment is deteriorating rapidly in many countries of Latin America as the socialization of development is becoming not only more widespread, but also more leftist-oriented. Paradoxically, the gap between the lip-service paid to, and actual policies adopted regarding private foreign investment in this region, is increasing as rapidly as is the need for such external investment inflows. The contemporary Latin American attitude towards private foreign direct investment, especially with respect to investments by international corporations, is summarized below. It is recognized and acknowledged in all Latin American countries that foreign capital is needed to: (1) complement local private savings in order to achieve higher rates of net private sector investment in the development process; (2) serve as a catalyst for stimulating domestic investment through demonstration, competition, and/or joint ventures; (3) promote economic integration through specialization of production, economies of scale, and industrial complementarity (in the sense employed in the Montevideo Treaty establishing the Latin American Free Trade Association); (4) transfer organization and production technology and administrative skills; and (5) create enterpreneurial capacity. While the values of foreign direct investments are identified and appreciated in Latin America, a hardening of official policies for containing such investment has been occurring since the late 1960's. Today, private foreign capital is welcomed in Latin America, provided that it does not: (1) prejudice national economic policies; (2) constrain national industrial-
*Both Professor Pincus and Professor Edwards are members of the faculty at Louisiana Tech University.
69
Palgrave Macmillan Journals is collaborating with JSTOR to digitize, preserve, and extend access to Journal of International Business Studies ® www.jstor.org
ization by stifling domestic investment; (3) restrict national control over the economy of the host country; (4) impede regional economic integration; (5) work against the national interest of the host country; (6) worsen the domestic balance of payments situation; and (7) control important economic activities in the receiving country, particularly those activities deemed to be in the public interest (e.g., public utilities, banking, and the exploitation of natural resources in their primary stages). For the most part, these restrictions on private foreign investment tend to be accepted as legitimate aims by the capital-exporting countries as well as by the recipients in Latin America. Suitable accommodation to these general conditions of entry might be negotiated sucessfully were it not for certain additional policies emerging in Latin America, epitomized in Decision No. 24 of the Andean Pact countries (Bolivia, Chile, Colombia, Ecuador, and Peru). This Decision, adopted by the Commission of the Cartagena Agreement on December 31, 1970, created a so-c
Data Loading...
