ABSTRACT

International investment has been encouraged or discouraged by state action. It has been forced into certain channels or in certain directions for various reasons, economic and noneconomic. Government control of international investment is usually an attempt to regulate balances of payments without inflicting undue hardships in the shape of credit restrictions upon domestic industries. A Government Department must always, moreover, enjoy certain advantages over private firms in this type of business. The significant feature of this is, since some countries are in a much stronger economic position than others, that the principle that all holders of a loan should be treated alike has been ignored. If this is to continue in the future, it will have most profound effects on the trend of international investment. Finally, in borrowing countries, the state may prevent unwise borrowing from abroad and may thus help to preserve exchange stability.