The Distribution of Gains between Investing and Borrowing Countries

H. W. Singer

Chapter 3 in The Strategy of International Development, 1975, pp 43-57 from Palgrave Macmillan

Abstract: Abstract International trade is of very considerable importance to underdeveloped countries, and the benefits which they derive from trade and any variations in their trade affect their national incomes very deeply. The opposite view, which is frequent among economists, namely that trade is less important to the underdeveloped countries than it is to industrialized countries, may be said to derive from a logical confusion — very easy to slip into — between the absolute amount of foreign trade, which is known to be an increasing function of national income, and the ratio of foreign trade to national income. Foreign trade tends to be proportionately most important when incomes are lowest. Second, fluctuations in the volume and value of foreign trade tend to be proportionately more violent in trade of underdeveloped countries and therefore a fortiori also more important in relation to national income. Third, and a fortissimo, fluctuations in foreign trade tend to be immensely more important for underdeveloped countries in relation to that small margin of income over subsistence needs which forms the source of capital formation, for which they often depend on export surpluses over consumption goods required from abroad.

Keywords: Foreign Investment; Foreign Trade; National Income; Technical Progress; Capital Good (search for similar items in EconPapers)
Date: 1975
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DOI: 10.1007/978-1-349-04228-9_3

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