Financial flows

After the Second World War there was a marked change in the evolution of mechanisms for international financial co-operation. During the two decades following the 1929 crisis the amount of foreign investment in Latin America had declined. The capital markets of Europe and the United States had been closed to bonds issued by public or private entities in the region and the bitter experience of the 1930s had made it only too clear that, given the instability of the foreign exchange earnings of countries exporting primary products, the accumulation of a large external debt ruled out any possibility of carrying out rational economic policies in these countries. On the other hand, in the two decades referred to, the development of the region's economies had been financed, in the case of the region's most industrially advanced countries, mostly out of domestic savings. Moreover, a large part of the foreign debt accumulated in the preceding period had been repaid, thanks to the favourable balance of trade of the war years. Besides, the traumatic experiences resulting from the conflicts between foreign-owned enterprises and some of the region's national governments - the expropriation of Mexican oil was only the most spectacular instance - had created a climate that made it difficult to take an objective view of the problems of international financial co-operation.

Two trends emerged in the immediate post-war years. The first was the delimitation of areas closed to the operations of foreign-owned enterprises.