Vanderbilt Journal of Transnational Law


Lajos Schmidt

First Page



At the Bretton Woods Conference in July 1944, in introducing the proposal for what is today the World Bank, John Maynard Keynes predicted: "In the dangerous and precarious days which lie ahead, the risks of the lender will be inevitably large and most difficult to calculate. The risk premium reckoned on strict commercial principles may be beyond the capacity of an impoverished borrower to meet, and may itself contribute to the risks of ultimate default." Three decades later this problem of the gap between the developed-country lender's required risk premium and the developing-country borrower's ability to generate an investment return sufficient to pay that premium still confronts the world despite 28 years of World Bank operation, billions of dollars of foreign aid spent by the United States and other nations to strengthen developing countries' economic infrastructure and despite the activities of the Export-Import Bank, the Overseas Private Investment Corporation and analogous institutions in other Western countries.