From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Wed Feb 04 2004 - 11:28:56 EST
If there was a net outflow of funds from Britain to its colonies it must predate 1851, which is the starting point for Feinstein's historical tables of UK national income. For the entire period that he surveys there was a net inflow to Britain rather than vice versa. -----Original Message----- From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On Behalf Of Rakesh Bhandari Sent: 03 February 2004 01:34 To: OPE-L@SUS.CSUCHICO.EDU Subject: Colonial Surplus and Foreign-Owned Investment in South-East Asia Alec Gordon http://epw.org.in/showArticles.php?root=2004&leaf=01&filename=6755&filetype=html EPW Special Articles January 24, 2004 Colonial Surplus and Foreign-Owned Investment in South-East Asia This paper seeks to initiate a wider discussion on the origins and direction of colonial flow of investment funds to and/or from south-east Asia.Where did these investment funds actually come from and how much of it was actually 'foreign produced'? An analysis for Indonesia, formerly the Netherlands East Indies and Malaysia. Alec Gordon One of the elements of the folk wisdom of most economists and mainstream economic historians is the very significant role European investment played in the development of the rest of the worldİ - Bagchi 2002: EPW: 2230 Unfortunately, however, the conventional view seems to have survived against both historical evidence and the remarks of passing critics. - Drake, 1972: 951 I Introduction This study is intended as part of a larger one on the origins and direction of the colonial flow of investment funds to and/or from south-east Asia. However, as the data so far available for Indonesia and Malaysia show, both stand on their own and are important, we present them below. Recent interest in the subject in general and in particular the contemporary north-south financial relationship has provided stimulation to consider the historical situation and a real need to show the matter as it was in colonial times.1 Where did the investment funds actually come from? This interest is despite or rather because so much current academic effort goes into ignoring it. A questioning of how much of foreign owned investment is really 'foreign produced' is surely in order. For example, a recent official statement on behalf of the Association of South-East Asian Nations, Reinvestment earnings played a significant role in supporting Foreign Direct Investment (FDI) flows to the region last year, representing at least 75 per cent of the total FDI in Singapore and Malaysia. (Bangkok Post, Business News, 2002:1) When over three-quarters of 'foreign' investment is produced 'locally' there is surely a need at least to re-consider definitions. Or consider, Cal-Comp Electronics of Thailand said business was so good they will open five new factories - in ChinaİThey expect 2003 sales to reach $870 million, up from $780 million in 2002İSo the Thai profits will be sent quickly to China so that Cal-Comp can put $125 million into the project to build the five new plants. (Bangkok Post, Database: 8 Home Review, 4/12/02) In other words although the money is foreign owned, it was produced in Thailand. With those cases in mind and since history has not yet come to a halt we propose to examine the beginnings of this phenomenon in colonial times. The investigation that follows is simple in its aim. Given the eventually huge amounts of foreign investment generated in colonial regions, where did it come from? What was the flow of funds of colonial south-east Asia? Most of that foreign investment was located in the Netherlands East Indies now Indonesia and in what is now Malaysia and we shall concentrate on these two colonies. Our analysis leads to the conclusion that the funds for investment were originally found locally, in south-east Asia if not in the two places themselves and, as the amounts of investment rose, continued to be funded by the outflow of funds from those colonies.2
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