Word: demands
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Dates: during 1950-1959
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...underdeveloped countries, the demand for capital is even more urgent -and even harder to supply. The same factors that apply to Western Europe apply more primitively to the awakening nations of Asia, Africa and South America, struggling to catch up with the world's more industrialized nations. Countries such as India have adopted vast development programs that are based more on artificial paper goals than economic realities. But underdeveloped lands lack the basic industry to create new capital, as well as the savings institutions to channel what money there is into industry. The average Middle Easterner, says one Arab...
...credit ratings can still make short-term loans at 4%, British businessmen must pay 51%. In Germany, Japan, France, Brazil and Greece, interest rates run anywhere from 7% to 12%. For smaller companies, the effective rate often is much higher, reaching 25% or more annually. Even at such rates, demand so far outstrips supply that companies are hard-pressed for expansion capital, are turning increasingly to profits to get the funds they need. In Britain, West Germany and Belgium, some businessmen are plowing up to 60% of all profits back into their firms...
...basic reason for the capital shortage is that the free world is riding the crest of a postwar boom, and the great demand is to expand and industrialize at once. Enormous technological breakthroughs in almost geometrical progression force businessmen everywhere to search for capital to buy new equipment and materials. And with more jobs and higher pay than ever before, the effective demand of consumers with money to spend and the will to spend it has created vast new markets. In their rush to produce and buy, businessmen and consumers have pushed many a nation into serious inflation (see FOREIGN...
These byproducts of prosperity are felt most strongly in Western Europe, where industry is highly developed and consumer demand high. In many nations, consumers have been spending so much money that the relative level of effective savings, traditionally the most important pool of new capital, has not increased as fast as the economy as a whole. Another problem is competition between Government and private industry for available funds. Great Britain's current investment program for the nationalized railway and fuel industries alone totals $1.5 billion, v. $2.4 billion for the entire privately owned manufacturing industry...
...World Bank and the U.S. Government's Export-Import Bank are doing their best to alleviate the capital shortage, but the aid falls far short of demand. Nor have private investors in the U.S. and Great Britain, traditionally major world exporters of venture capital, been able to supply the demand from overseas, especially since pressure for capital at home is greater than ever. Overseas, even in cases where investment opportunities compare favorably with those at home, a lack of political and economic stability and the threat of nationalization have acted as a deterrent...