vhich suffered from the rapid increase in raw materials prices following the outbreak of the Korean war in the summer of 1950. The U. S. balance of payments in recent years indicates that countries abroad have for the most part recovered their ability to pay for purchases of dollar goods with sales to the U.S. Despite a continued high level of imports from the U.S., foreign countries since the beginning of 1952 have been able to increase their reserves of gold and short-term dollar assets by more than the amount of economic aid extended by the U.S. in that period. The balances of payments of nine foreign countries are presented in this section in a somewhat different form than that used to present the U.S. payments balance. This form was developed by the International Monetary Fund to focus attention on so-called "compensatory" financing undertaken by the monetary authorities. This statement attempts to isolate all so-called "autonomous" transactions. These autonomous transactions are covered in the items "Goods and services," "Capital movements" (private capital including private donations), and "Special official financing." Compensatory official financing is undertaken by the monetary authorities in response to a surplus or deficit in these transactions. Special official financing covers official transactions that are undertaken without regard to the general balance of payments position. Such transactions may in fact increase a payments deficit. For example, contractual obligations such as amortization and reparations payments must be met regardless of a country's payments position. Official loans extended to finance specific productive projects, as distinguished from general purpose loans, are also considered as special rather than compensatory financing. Thus development loans of the Export-Import Bank or the IBRD are considered as special official financing. Compensatory official financing includes such transactions as multilateral currency settlements, utilization of EPU or OEEC drawing rights or IMF resources, inter-governmental grants and loans, movements in official short-term assets and gold, or any other similar transactions. UNITED STATES BALANCE OF PAYMENTS 1953 (In millions of dollars) U. S. imports of goods and services were.... 16,352 U. S. exports of goods and services (excluding those furnished under economic and military grants in aid) were.... So that foreign countries' dollar receipts from goods and services exceeded expenditures by.... Foreign countries received additional dollars from: 14,910 1,442 Foreign countries were able to increase their gold and dollar assets by.... Foreign countries received additional goods and services in the amount of.... 2,414 6,219 UNITED STATES BALANCE OF PAYMENTS (In millions of dollars) U. S. imports of goods and services were.... U. S. exports of goods and services (excluding those furnished under economic and military grants in aid) were.... So that foreign countries' dollar expenditures for goods and services exceeded receipts by... Foreign countries received dollars from these sources: Private remittances U. S. private direct investments and other loans... U. S. Government loans, net Net dollar expenditures of foreign countries Foreign countries reduced their gold and dollar assets to cover expenditures Foreign countries received additional goods and services in the amount of 8,318 17,878 9,560 665 999 6,957 939 1,919 1,918 ECONOMIC CONSEQUENCES OF ALTERED COLONIAL RELATIONSHIPS Summary Changes in colonial status have had a very definite effect on the trade relations between the (former) mother countries and their colonies. There have, however, been several other factors which have affected these relations. Moreover, such changes as have occurred may be the continuation of a long-term trend rather than the result of more recent political patterns. Other considerations which have entered the picture have included the ups and downs of prices, the fluctuations in the terms of trade, the inability of mother countries to supply certain types of capital goods on a competitive basis, and the emergence of the United States as the world's leading foreign trade nation. Conversely, dollar shortages may at times have forced colonial countries to buy in the former metropolitan countries, although they may not have desired to do so. Altogether, the effect of political severance appears to have been stronger on investment earnings and on the placement of new capital than on the actual volume of trade. For the United Kingdom and the Netherlands the dwindling of earnings from investments in former colonies constitutes a serious balance of payments problem. In turn, they may look to other overseas areas as potential-outlets for future capital investments. There is also the question whether, as political friction disappears, old trade and financial bonds can be re-established. France and Belgium have maintained close economic relations with their colonial areas overseas, and France, in particular, has been able to ship an increasingly large percentage of her exports to the colonies. The relative protection which French exporters enjoy in the colonies has also produced certain disadvantages, as surpluses piled up vis-a-vis the colonies cannot be used to pay for trade deficits incurred elsewhere. The strengthening of United States trade with the colonial areas has been the result, among other things, of larger American raw material purchases, and of dollar funds made available by the United States to overseas countries, to be used for purchases in this country. WHO WOULD BENEFIT MOST FROM FREER TRADE Summary After their virtual eclipse in the years immediately following World War II, West German exports have made a spectacular reappearance. At a time when the exports of other countries had passed their post-war peak, those of Germany were and still are expanding. Even now, however, West Germany accounts for a smaller share of world trade (both export and import) than before the war. European manufacturers, particularly those of capital goods, are most concerned over the impact of West German trade on overseas markets, such as Latin America and the Near and Middle East. This concern does not extend to the United States market, and West German manufacturers, despite some gains in their American business, do not now consider the United States a major or worthwhile outlet for capital goods. German successes in Latin America have been the most striking in any overseas territory. Taking advantage of unutilized industrial capacity, West Germany almost doubled its shipments to Latin America between 1950 and 1951. Since then, however, German sales have failed to rise further, partly because of the payment difficulties experienced by some Latin American republics. Even now, Germany sends a somewhat smaller part of her exports to Latin America than she did before the war. Short delivery periods and satisfactory credit terms for capital goods purchases have become the deciding factors in the Latin American business, which is now more competitive than before. Germany enjoys no particualr advantages over other European countries on those two points. West Germany has reappeared also in the Near and Middle Eastern markets which are generally considered to be more valuable in the future rather than at present. In actual volume German exports to this area have been small, and she has a long way yet to catch up with the United Kingdom, the strongest competitor in this region. Nevertheless, Germany has been able to capture some important capital goods orders in this part of the world. Some political factors, such as the reparations agreement with Israel and efforts to keep on good terms with the Arab nations, may also in the long run benefit West German trade with the Near and Middle East. LOSS OF MARKETS NOW BEHIND THE IRON CURTAIN Summary Western European trade with Soviet Russia and her satellites today is clearly much smaller than in pre-war years. Not only have exports to, and imports from, the Iron Curtain countries failed to keep up with the overall increases in trade values, but they have actually declined absolutely, as the political gulf between the West and the East has widened. This pattern is even more evident in the case of Germany which before the war did relatively more business with the Eastern countries than other West European nations. West German trade with the East now is at an even lower level than that of Western Europe generally. What is true of East-West trade in general applies also to the electrical industry in particular. Before the war, the Eastern countries vere a not inconsiderable market for electrical goods, especially exports from Germany. At present, such trade rarely goes beyond spare parts and accessories for installations made in pre-war years. |