Western Europe’s shares of trade and investment in Latin America have risen substantially from their low points around 1950, although both are still well below pre-World War II levels. The parallel rise of trade and capital flows is hardly accidental; for suppliers credit, medium-term loans to finance the export of European machinery and equipment have been the main type of postwar European lending. Long term bilateral lending has been much more modest. Most of this type, in fact, has resulted from periodic debt crisis in
Argentina and Brazil, which the creditor countries have helped to relieve by converting some of the outstanding suppliers credits into longer term official loans. At the end of 1964 Western European countries held about 24 percent of Latin America’s external public debt of all types. Two-thirds of the European holdings were suppliers credit, and somewhat over one-fourth long-term official loans.
European direct private investment also revived toward the end of the 1950s, so that in the early 1960s Europeans owned about half of the foreign private investment in Argentina and Brazil. Europe’s stake in the other Latin countries has been far more modest, although the degree of modesty depends on what nationality one chooses to assign to Shell Petroleum. In 1964 Britain was still the most important European investor in Latin America, but by only a small margin over West Germany, with Italy in third place.
La Participación de Europa is a comprehensive collection of statistics and other descriptive material on European post-war loans and investment in Latin America. It also contains comparative data on the mounting foreign debt and the external financial obligations of various Latin American countries. Many of the statistics are compiled from IMF and OECD publications, but the authors have also incorporated unpublished information from European and Latin American central banks and other official entities.
Particularly useful are the sections devoted to each of the E.E.C. countries and the U.K., detailing the flow of funds from each country to various Latin American countries, the types of loans and investments, and the regulations and institutions guiding these flows. Other sections summarize the changing regulations of the larger Latin American countries governing foreign investments and the distribution of these investments by activity. The trend in the external debt and the future profile of debt service are also given for each of these countries. The estimates of private debt and foreign investment are unavoidably based on incomplete and often contradictory information. However, since the international team of authors had inside access to both European and Latin American sources, their efforts to fill gaps and reconcile contradictory data are probably the most reliable ones available.
Studies of controversial subjects by international agencies tend to be long on reporting and cautiously grey in analysis and evaluation. This study is no exception to the rule. It touches on many pros and cons of suppliers credits, private foreign investment, and the rapidly increasing external indebtedness, but avoids any bold conclusions. Neither do the summaries of policies and procedures in the various countries penetrate beyond formal description into the politics of implementation. Nevertheless, the study should be a standard reference on a period which, if the current storm signals are accurate, may soon end in a major international financial crisis, as have similar periods of expanding capital flows in the past. This study, of course, gives little inkling of this possibility, but then Vietnam is outside its geographic scope.
