INVESTMENT IN SHIPPING AND THE BALANCE OF PAYMENTS: A CASE-STUDY OF IMPORT-SUBSTITUTION POLICY.

The object of this paper is to examine the extent to which these effects exist and to provide a simple method by which they may be estimated for any particular set of circumstances. This method is based upon the most likely combination of circumstances but may be varied to suit any others. Worked examples are included as an appendix. The method suggested here is applicable not only to decisions to create new fleets but also to decisions concerning the expansion or contraction of existing fleets and to decisions to withdraw from merchant shipping. Although it proceeds by a detailed analysis to some very simple conclusions, the detail is thought necessary because when the above assertions are made or implied they are rarely accompanied by any analysis at all. There appear to be four circumstances in which expenditure on current goods and services may change its location following the substitution. The first is that some large part of the crews' wages is normally spent in the countries in which the members of the crew are resident. They will spend it in advances of wages before joining the ship, in allotments of pay or cash sent home to support their families or for other purposes and they will often have part of their wages deducted as tax and as social-security contributions.