Who Invests & Who Doesn't

The World Bank is no charity. When it makes a development loan, it expects the applicant to show that his project is well conceived and that his credit is good. The bank expects to make a modest profit on its international loans, and tends its business so shrewdly that in 16 years of lending it has not suffered a default. Last year the bank opened its vaults for $646 million in loans to 19 countries. Who got most of the money? Not Africa or Asia. Latin America got 51%.

In 1962 Asia received $78 million from the bank, plus $163 million from its affiliate, the International Development Association. But five Latin American countries got $328 million, 60% more than in 1961. Mexico received $30.5 million to build federal toll roads and bridges, $130 million for its massive electrification program. Before Argentina's military junta deposed President Arturo Frondizi last March, the bank came through with $95 million to expand electric power in Buenos Aires. Other loans: $50 million to Colombia and $4,000,000 to Panama for electric power, $18.5 million to Uruguay for highway development. From I.D.A.. in addition, came long-term loans of $8,000,000 to El Salvador and $350,000 to Haiti for highway construction. $3,000,000 to Nicaragua to expand the water system of the capital, Managua.

If the World Bank has few fears about its investments in Latin America, other investors have plenty. Political instability and chronic inflation have frightened U.S. investors to the point that in the first nine months of 1962 there was a $37 million net withdrawal of private U.S. capital v. a $144 million net inflow in 1961.

Nor were all Latin Americans them selves any less bearish. According to the best estimates, Latin Americans have $11 billion invested abroad and stashed away in U.S. and Swiss banks. How much went out last year is hard to pin down, but U.S. economists think the figure could be as high as $800 million. Said a Quito businessman, with feeling: "If all the capital abroad would return, Ecuador could be very well off. No basic foreign aid would be necessary."

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