Where the Surpluses Are

Everyone has heard about balance-of-payments deficits -- the amount by which a country's outgo exceeds its in come in foreign trade and international finance. Rarely mentioned is the pleasanter side: balance-of-payments surpluses. Yet they exist, cropping up in highly unexpected places, sometimes for unique reasons. The Irish Republic last year enjoyed its first surplus -- about $6,000,000-- since 1961, thanks greatly to rising exports of textiles, food, refined petroleum and metal ores. Impoverished Tanzania achieved a $28 million payments surplus in 1966, despite its per capita annual income of about $65, because administrative bottlenecks and manpower shortages delayed government spending.

Strength Without Strains. More commonly, continued surpluses reflect national economies that are gaining strength without strains. Copper-rich Zambia's regular surpluses have enabled the government to improve roads, education and health facilities. The oil-producing Arab states of Kuwait, Saudi Arabia, Abu Dhabi and Qatar amassed hefty surpluses as usual in 1967, despite some losses from the Mideast war. Instead of squandering the money on palaces, limousines and concubines, the rulers of the four Persian Gulf states today split the oil-based riches between imported consumer goods (food, clothing, shelter) for their populace, new facilities such as water systems, hospitals and other public buildings, and investment (including U.S. and West German bonds). Saudi Arabia, which had hardly any schools ten years ago, is now building 300 a year. Argentina owes its status as the only South American country with a 1967 payments surplus to good corn and meat prices on world markets plus pruning of its government deficit and an economic stabilization plan that has lured large amounts of foreign investment. U.S. war purchases and spending by U.S. visitors have helped to create big surpluses for South Viet Nam, Thailand and Taiwan. South Korea ran up a payments surplus of some $100 million last year, partly by exporting such military items as jungle boots, uniforms and galvanized steel for troops fighting in Viet Nam. One result is spreading prosperity--including even traffic jams --in Korean cities. Men are turning to woolen suits and many women are discarding their traditional chima and chogori (silk blouse and long skirt) for once scarce Western dresses. The silk goes into exports.

Search for Stability. Ideally, nations would so order their economies as to keep their payments in balance over the long run. The search for such stability is greatly complicated by the world's increasing dependence on foreign trade, which means that shifts in one big national economy can inflict much damage on neighbors. Because West Germany's recession led to a sharp drop in imports and a surge of exports, both Belgium and The Netherlands suffered payments deficits in 1966, rebounding last year only after German business picked up again. Italy paid a heavy price in unemployment and bankruptcies to achieve a payments surplus starting in 1964. Having taken that medicine, the country has swung into a new boom providing more jobs, consumer goods and little inflation.

Ironically enough, these and many other comparatively small countries-- Switzerland, Mexico, Iran--showed payments surpluses last year while chronic deficits gave the mighty U.S. increasing problems and helped to bring the British pound to its knees. Nations reach a payments surplus only by unusually good luck or considerable economic self-discipline that involves a careful weighing of capability, purpose and commitment. Lacking that, small countries generally face early trouble such as inflation and weakened currencies. And even in the strongest economies the inexorable choice is ultimately the same: discipline or deterioration.

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