HERBERT FEIS
This has generally been true with American investments in underdeveloped nations. However, by the 21st century the differential yield expected for the greater risk was not 2 percent but upwards of 15 percent or more.
With their slave labor cotton growing capacity, the American Southern states looked like good, safe, investments for British investors who were not concerned about the morality of slavery. However, what the foreign investors did not imagine was that the Southern states would create economic suicide and precipitate the Civil War.
This is a tension that exists in almost every nation. Money invested abroad, may have substantial benefit to the individual investor, but very little to his country. In the worst case, American’s invest in building manufacturing facilities in foreign countries, which then use foreign labor to make products that are imported back to the United States. These investors have not only sent the capital made in America abroad, but also exported American jobs with it. Some countries have made laws limiting the export of capital but this rarely works. In America, this would be unconstitutional. The best a country can do is to be sure its productivity is competitive with the rest of the world. Also to provide the confidence that money invested in America is safe.
It certainly did.
This was an excellent prediction. Canada was one of the largest targets of American capital investment.
Herbert Feis was an American historian, author, and economist who was the Economic Advisor for International Affairs to the US Department of State in the Herbert Hoover and Franklin Roosevelt administrations.
