234 AMERICAN ECONOMIC ASSOCIATION development of their industries.However,these sponds to new entries of capital and 45 percent to goods are not freely available in the international reinvestment of profits;in recent years,the trend market;they are patented and usually belong to is more marked,with reinvestments between 1960 the big companies.The big companies do not sell and 1966 representing more than 60 percent of machinery and processed raw materials as simple new investments.(2)Remittances remained at merchandise:they demand either the payment of about 10 percent of book value throughout the royalties,etc.,for their utilization or,in most period.(3)The ratio of remitted capital to new cases,they convert these goods into capital and flow is around 2.7 for the period 1946-67;that is, introduce them in the form of their own invest- for each dollar that enters $2.70 leaves.In the ments.This is how machinery which is replaced 1960's this ratio roughly doubled,and in some in the hegemonic centers by more advanced tech- years was considerably higher. nology is sent to dependent countries as capital The Survey of Current Business data on for the installation of affiliates.Let us pause and sources and uses of funds for direct North Ameri- examine these relations,in order to understand can investment in Latin America in the period their oppressive and exploitative character. 1957-64 show that,of the total sources of direct The dependent countries do not have sufficient investment in Latin America,only 11.8 percent foreign currency,for the reasons given.Local came from the United States.The remainder is in businessmen have financing difficulties,and they large part,the result of the activities of North must pay for the utilization of certain patented American firms in Latin America (46.4 percent techniques.These factors oblige the national net income,27.7 percent under the heading of de- bourgeois governments to facilitate the entry of preciation),and from "sources located abroad" foreign capital in order to supply the restricted (14.1 percent).It is significant that the funds ob- national market,which is strongly protected by tained abroad that are external to the companies high tariffs in order to promote industrialization are greater than the funds originating in the Thus,foreign capital enters with all the advan- United States. tages:in many cases,it is given exemption from exchange controls for the importation of ma- V.Efects on the Productive Structure chinery;financing of sites for installation of in- It is easy to grasp,even if only superficially, dustries is provided;government financing agen- the effects that this dependent structure has on cies facilitate industrialization;loans are avail- the productive system itself in these countries able from foreign and domestic banks,which pre- and the role of this structure in determining a fer such clients;foreign aid often subsidizes such specified type of development,characterized by its investments and finances complementary public dependent nature. investments;after installation,high profits ob- The productive system in the underdeveloped tained in such favorable circumstances can be re- countries is essentially determined by these inter- invested freely.Thus it is not surprising that the national relations.In the first place,the need to data of the U.S.Department of Commerce reveal conserve the agrarian or mining export structure that the percentage of capital brought in from generates a combination between more advanced abroad by these companies is but a part of the total economic centers that extract surplus value from amount of invested capital.These data show that the more backward sectors,and also between in- in the period from 1946 to 1967 the new entries ternal "metropolitan"centers and internal inter- of capital into Latin America for direct invest- dependent "colonial"centers [10].The unequal ment amounted to $5,415 million,while the sum and combined character of capitalist development of reinvested profits was $4,424 million.On the at the international level is reproduced internally other hand,the transfers of profits from Latin in an acute form.In the second place the indus- America to the United States amounted to $14,775 trial and technological structure responds more million.If we estimate total profits as approxi- closely to the interests of the multinational cor- mately equal to transfers plus reinvestments porations than to internal developmental needs we have the sum of $18,983 million.In spite of (conceived of not only in terms of the overall in- enormous transfers of profits'to the United terests of the population,but also from the point States,the book value of the United States's di- of view of the interests of a national capitalist rect investment in Latin America went from development).In the third place,the same tech- $3,045 million in 1946 to $10,213 million in 1967. nological and economic-financial concentration of From these data it is clear that:(1)Of the new the hegemonic economies is transferred without investments made by U.S.companies in Latin substantial alteration to very different economies America for the period 1946-67,55 percent corre- and societies,giving rise to a highly unequal pro- Copyright©2001 All Riahts Reserved-·---.-