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Among those that were unsuccessful, the poorest record in the productive use of funds and repayments was that of the Mediterranean and Southeastern European countries. Often, funds from private investment and government loans were wasted and sometimes used corruptly. Like a domestic investment, for a foreign investment to contribute to economic development, it must generate a sufficient income stream to yield a positive rate of profit and end up repaying the original investment. In stark contrast to the poor track record of many of the investments in southern and eastern Europe (and in the Ottoman Empire, Egypt, and North Africa), the majority of investments

Figure 12.4 Distribution of foreign investment in 1914. A) by investor countries, B) by recipient.

The versions in the Scandinavian countries not only financed their return, but also made a very positive contribution to the development of the economies in which they were made. In fact, although the absolute amounts were relatively small, in per capita terms foreign investments in Sweden, Denmark and Norway were the highest in Europe. The amounts loaned were invested wisely, and along with the great educational achievements of these countries, they are to be credited with the rapid development of their economies in the late 19th century.

Like the Scandinavian countries, Australia, New Zealand and Canada received large foreign investment in relation to the size of their population, which explains their high growth rates and high living standards at the beginning of the 20th century. By 1914, Canada had received the equivalent of $ 3.85 billion (at 1914 values), mostly from Great Britain, although US citizens and their companies had invested about $ 900 million there. Australia received 1.8 billion dollars, and New Zealand, about 300 million – more than 95%, in both cases, coming from Great Britain. Most of the funds in all three cases were invested in public securities and used to finance infrastructure (railways, ports, public works, etc.), although substantial sums were also dedicated to mining in Australia and Canada. This model of foreign investment allowed national investment to be directed towards directly productive activities in the most promising sectors of the economy. Considering the small population and vast area of ​​the three countries, it is not surprising that they specialized in the production of goods that required little labor in proportion to the land: wool (and its derivative lamb meat) in Australia and New Zealand, and wheat in Canada.

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