The Effect Abroad of American Private Enterprise

Arthur Smithies

The ANNALS of the American Academy of Political and Social Science, 1966, vol. 366, issue 1, 51-59

Abstract: One of the great revolutionary forces in the world today is the spread over the globe of the products of American capitalism. The automobile, the radio, and the movie may well do more to transform traditional attitudes than Communist ideology. The desire for these commodities has led to efforts by countries throughout the underdeveloped world to produce them domestically. The export incomes of those countries have not expanded sufficiently to permit them to buy the im ports that they want. However, the domestic production has depended not so much on local industry as on foreign firms which have been induced to establish local subsidiaries. The inducements have consisted of import quotas on finished goods, free imports of equipment, and tax concessions. Import sub stitution at the consumer level has been one of the main forces of development in Latin America, Australia, and parts of Asia. This type of development contrasts sharply with the classical or Communist approach which stresses building up the basic industries first and increasing consumption at a later stage. Import substitution when carried to excess has led to crisis and stagnation in a number of cases. Whether it will succeed de pends on the effectiveness of the capitalist revolution in trans forming human attitudes and on the ability of foreign enter prises to introduce modern technology and business manage ment.

Date: 1966
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Persistent link: https://EconPapers.repec.org/RePEc:sae:anname:v:366:y:1966:i:1:p:51-59

DOI: 10.1177/000271626636600106

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