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Some Aspects of the “Value” of Less-developed Countries to the United States

Published online by Cambridge University Press:  18 July 2011

Charles Wolf Jr
Charles Wolf Jr
Affiliation:
The RAND Corporation
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Extract

If one thinks seriously about any of the major international trouble spots in the world today, one soon confronts the problem of what really is the “value” of, for example, Cuba, Berlin, or Laos to the United States. The view put forward in this article is that, while the question is unanswerable in a rigorous and precise sense, some useful things can be said in approaching it, and in trying to distinguish between more and less unsatisfactory answers to it. In principle, of course, the value of other countries to the United States includes that of the advanced countries, and, most significantly, of Western Europe. The present article, however, will be primarily concerned with the value of less-developed countries to the United States, and with their value in certain extreme contingencies over a time period that is relatively short from the standpoint of history, though somewhat longer from the standpoint of economics.

Type
Research Article
Information
World Politics , Volume 15 , Issue 4 , July 1963 , pp. 623 - 635
Copyright
Copyright © Trustees of Princeton University 1963

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References

1 In the light of the Cuban crisis of October 1962, I hope I may be allowed the conceit of noting that this sentence, and the entire paragraph which contains it, were written in July 1961.

2 U.S. Department of Commerce, U.S. Business Investments in Foreign Countries (Washington 1960), 91.Google Scholar

3 That is, the shaded quadrilateral may exceed the rectangle Q1Q3RT.

4 Defined as the rest of the world excluding Canada, Western Europe, Australia, New Zealand, Japan, South Africa, and the Sino-Soviet bloc.

5 Yearbook of International Trade Statistics, 1960 (New York 1962), 18–27.

6 That is, the shaded quadrilateral may exceed the rectangle Q1Q3 RT.

7 Yearbook of International Trade Statistics, 1960, 18–27.

8 Consider a program (e.g., economic or military aid) costing X. Associated with X is a probability of “loss” of P. In the absence of X, the probability of loss is estimated as II, with II > P. Assuming the “value” of the country concerned is V, X is only justifiable if:

In the case most favorable for the contemplated program, (II–P) approaches unity, so that V provides the upper bound for a justifiable X. Generally, however, (II–P) will be less than unity, because P will seldom approach zero. Hence, a justifiable X ought to be appreciably less than V. It is easy to adapt this formulation to allow for the fact that if “no-loss” occurs, with or without X, some further costs may subsequently have to be incurred to support the country under consideration. Under this circumstance, X will be less attractive the greater the subsequent “no-loss” costs are likely to be. Denoting these subsequent costs by S, (1) can be restated:

In this case a justifiable X must be less in relation to V than in (2) because of the higher probability that additional costs will be required after X, i.e., since P–II < O.