Economic policies must take account of poor countries’ problems

Press, 2 September 1980, Page 20

Economic policies must take account of poor countries’ problems

a article which appeared in th e “Financial Times,” London, just before the opening of. the special session of the United Nations General Assembly on Monday, August 25. , v .

The World. Bank’s latest, development report confirms the. increasingly parlous state of the international economy. One year ago. the bank found it necessary to reduce- its previous forecasts • of growth in the 1980s."by o.szper cent. This year, it has brought them down by a further one per-cent; The outlook for growth ; "is a cause'' for', deep ■ cerh,” according to Mr Robert McNamara, President of the World Bank. This is. all . the more . so because the avoidance of yet further falls in growth may depend , on the industrialised court-., tries adopting policies on. trade and aid .contrary to some present trends.-. -/• The report-, warns- that. adjusting to..the latest_.in- ; .: creases in oil prices is liable to 'prove ’ far harder * than ; in ~ 1973-74. The surpluses . of oil-exporting countries could stay at a high level for long-'' er._The prospects for an.in-., crease in aid and in .bank financing to developing countries are less promising. Oil-importing countries in the 'South have higher debts and . lower growth .than seven' years : ago. The industrialised .North faces . stagnation and inflation which, if now being contained/ is still' serious. ■; The Brandt Commission s report on North-South issues stressed; .that if: developing countries - had cut- their imports of manufactured goods to adjust to the increased oil. prices of ■ ’1973-74. Athene would have been 3M more unemployed in the countries v, of the Organisation for Economic Co-operation and Development (0.E.C.D.). The bank’s . World' Development Report brings out the extent, to which the international < banks, have a direct interest in the economic health of the Third World, if only because they , a: a over-extend-ed. ' ’ ■ : This month a further ; found of -the North-South “dialogue” 'started in New; v- York-when a special ,session of the U.N. General Assembly

met to discuss the world economy. The World Bank .is submitting its . .development report and a paper bn - energy in developing: countries to this , session as its contributions to the debate.. The session was initially intended to have ushered in the U.N.’s Third Development Decade, .1980-90. Some oil producers, apprehensive of increasing hostility in developing countries to rising . oil prices,. have succeeded .in turning it into an occasion for further negotiations .between North and South. ' Tir the past five years , the main concrete result of .'- these negotiations has . been the establishment of a -stilluntested, fund to stabilise commodity prices.. The developing’ nations had . hoped, with O.P.E.C.’s help,--- '. to achieve a massive transfer of resources from the North; But their demands - have struck : • the industrialised countries as • rhetorical ; and extreme, a reaction which the South has regarded as obstructive. The bitterness-and frustration; emerged yet again in theattemipts to prepare for the special session. The two sides. were at logger heads over "the agenda. The odds are that the outcome of the session: will be another inconclusive- wrangle. The present format of the North- ; South dialogue, " massive, international meetings, has not been a success and there ’ are' hopes- that a' limited summit of ’ 20-25 countries may- ‘be "more • productive. This was one proposal of the Brandt Commission • and Britain’s recent qualified support, fof the : suggestion is : to be' welcomed. But; there ; are clear limits to summitry, and more immediate alternatives need to. be considered. ' The Brandt Report set -out. to add the "common interest of mankind” ,to the moral . ‘ arguments', for helping deal with' the poverty _of many developing- countries. -The , -World Bank’s.report follows • '4 ' '

part of the same road, but analyses in detail future economic prospects. It fails to give the figures of the implications of the lowgrowth projection which it warns may be likely to occur.

’ The, South must understand that the industrialised countries insist on curbing inflation . before a major change. can be expected in their policies. - It must also look tto increasing its selfreliance — a theme which will be dealt ' with in next year’s development report of the World Bank. But forthe North the message is clear. Tackling trade deficits should be done, as Chancellor . Schmidt said .this month, with the problems of the developing world in mind. Recycling is not an, abstract concept, but a vital process into which O.P.E.C. must be drawn.