As the American proposal on world debt takes shape, the first reaction from Latin America seems to be that there's not enough money in it. But the amount of new lending required will depend heavily on the Latin governments themselves. There's another element of any solution that requires much more attention than it's been getting, and that is the flow of money going there in direct investment.

To the extent that the indebted countries can attract new investment, it will displace the need for additional loans. But if they cannot, the outlook becomes more somber than ever. It is not realistic to think that any likely amount of help from the World Bank, and coerced lending from the commercial banks, will suffice by itself to balance the Latin countries' accounts.

The rich countries have their own responsibilities here. The commercial banks may have to write off some part of their past loans. The industrial countries will probably have to put up more money to support expanded lending by the World Bank. The United States in particular is contributing to the Latins' troubles with its own huge -- and hugely self-indulgent -- budget deficits. By keeping American interest rates high and drawing in capital from all over the world, the United States makes it much harder and more expensive for the Latins to attract the capital they desperately need.

But there is also much that only the Latins themselves can do. A lot of their present debt, for example, was generated by financing the flight of capital from their own countries. That is not true of Brazil, but it happened on a large scale in Mexico and, especially, in Argentina. Latin banks borrowed dollars in the United States and sold them to customers who sent them right back to New York and Miami for safekeeping. The great challenge for these countries now is whether they can re-establish an atmosphere in which their own citizens decide to bring their money home.

That's not going to be easy. Mexico had nearly accomplished the feat early last year but then miscalculated and overstimulated its economy. Wealthy Mexicans, foreseeing another surge of inflation and devaluation, quickly began shipping their money north again. The questions of internal stability and attraction to movable money can only be resolved by the Latins themselves.

The proposal that the U.S. secretary of the Treasury, James A. Baker, made at Seoul calls for solutions that share costs between borrowers and lenders. But it also calls for a measure of change in the structure of the indebted countries' economies. The object is to get these economies growing again, steadily and strongly. To do that will require -- among other things -- a climate in which investment capital again flows freely into Latin American.