Mr. Finch, economist in the Balance of Payments Division, is a graduate of the University of Melbourne, Australia, and the London School of Economics. He was formerly a lecturer in the University of Tasmania.
This paper was prepared in accordance with the terms of Resolution 294 (XI) D of the 11th (August 1950) Session of the Economic and Social Council, which requested the Fund to assemble and analyze the statistical and other data bearing upon the capacity of underdeveloped countries to service investments of foreign capital, with special reference to the proportion of foreign exchange receipts absorbed by service on foreign investment.
For a complete discussion of compensatory financing and the items which may be so classified, the reader is referred to the introduction to the Fund’s first Balance of Payments Yearbook. Monetary gold exports are a form of compensatory financing, and the proceeds of monetary gold sales are, therefore, not included in foreign exchange receipts for the purpose of this study. On the other hand, proceeds of nonmonetary gold exports (i.e., gold production, gold scrap, and gold drawn from private hoards) are included in receipts since sales of such gold to the monetary authorities or to foreigners are essentially the same as merchandise exports. In reports to the Fund for the postwar years, such sales have been computed on a net basis by taking the difference between the monetary movement (i.e., change in official gold reserves of the reporting country) and the country’s international transfers of gold (i.e., exports, imports, earmark, and release from earmark). In the present study, net credits so computed are added to receipts from merchandise exports for the years and countries covered by data drawn from the Fund’s Yearbooks. In most other cases, only gold production is entered in nonmonetary exports since lack of detailed information (e.g., with regard to changes in gold under earmark and gold coin in circulation) makes it difficult to compile data comparable with those reported to the Fund for the postwar period.
The detailed statistics underlying these charts for the more-developed countries are presented in Tables 1-6, together with explanatory notes on their sources and on some of the qualifications concerning their comparability.
The countries covered are those included in the Fund’s Yearbooks.
Refers to 1939.
This figure is inflated through the inclusion of a liquidation dividend by a mining company.
Refers to 1938-39.
The postwar figures for Indonesia are possibly substantially understated because oil transactions are excluded in toto from the balance of payments. Even if full allowance is made for such understatement, however, there was still undoubtedly a substantial decline in the investment service ratio for Indonesia.