Repatriation of Capital
Repatriation of Capital
the return of capital from abroad to the country of its origin, by the transfer to the homeland of capital invested abroad, as well as the profits on it, and by the transfer of foreign currency earned from the sale of goods and services.
The repatriation of capital is closely associated with the problem of the export of capital. When their currency and economic condition deteriorates, capital-exporting countries stimulate the repatriation of capital to improve the balance of payments. The bourgeois states use currency, tax, and credit policies for this purpose and grant privileges and guarantees to the monopolies. For example, in France after World War II (1939–45) state currency control agencies authorized the repatriation of capital through the Paris gold market at a privileged rate. This may be viewed as an amnesty for large-scale national capital transferred abroad just before and during the war. When their currency and economic condition deteriorates, capital-importing countries place restrictions on the repatriation of capital invested in their economies.
The problem of the repatriation of long-term capital in the form of foreign investments in various economic sectors involves primarily relations between the industrially developed and the developing countries. It is difficult to make foreign investments liquid and transfer them to the homeland. Pursuing a policy of forcing foreign capital out of their economies, many developing countries nationalize foreign property and pay cash compensation for it. This is a type of capital repatriation.
The problem of the repatriation of short-term capital deposited in foreign banks involves primarily relations among the industrially developed capitalist countries. Under the conditions of the monetary crisis, the repatriation of short-term capital has become a more urgent problem. It is related to efforts to recirculate speculative, yield-sensitive capital (“hot money”). Agreements between central banks concerning mutual short-term credit are aimed at the recirculation of this speculative capital and have been widely used since the early 1970’s. Ruling circles in the bourgeois countries try to return the “hot money” to the country from which it was transferred, in order to restore a relative balance in the currency markets. However, all plans to stop the leakage of “hot money” are unfeasible as long as the uncontrolled market for Eurocurrencies is functioning.
Foreign currency earned from the sale of goods and services is repatriated during periods established by international accounts. When they expect a revaluation of the national currency, exporters usually accelerate the transfer to the homeland of the foreign currency they have earned. Before a devaluation the repatriation of earnings slows down. This has a negative effect on a country’s balance of payments.
State-monopoly methods of stimulating the repatriation of capital cannot overcome the private interests of the monopolies, which export their capital, seeking the most profitable and reliable place to invest it during political, currency, and economic upheavals in their own countries.
L. N. KRASAVINA