The Politics of International Economic Relations, 5th Edition

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International Financial Flows

 

The effort of the South to obtain financial capital for development is a central theme in North-South relations. Developing countries, short of their own funds, traditionally turned to capital surplus countries for private funds in the form of bank loans and the purchase of bonds to finance infrastructure and productive facilities. In the nineteenth century, for example, British capital helped build U.S. railroads and industry; and in the first half of the twentieth century, foreign capital flowed to Latin America to finance industrialization. In the first twenty-five years of the Bretton Woods era, public funds for development were more important than private lending in North-South financial relations. Foreign ...