Leo Model

The unique role of the United States in the world economy arises not from the fact that it is by far the largest trading nation but from the importance of the Government's payments abroad and the magnitude of U.S. private foreign investment. In 1966, the Government provided $4.6 billion in economic aid and foreign credits, and military expenditures abroad were $3.6 billion (apart from military aid), while the outflow of private capital was close to $4 billion. It is clear enough that the international transactions of the U.S. Government are essentially of a political character, although they have important economic effects on this country and the rest of the world. What is not so clear is that there are political aspects to our private foreign investment-not because it is motivated by foreign policy considerations, but because foreign countries are concerned about its impact on their economic and foreign policies. This is inevitable, given the magnitude of these investments and their role in the economies of the countries in which they are made.