World Development Report, 1979 PUB2534 The World Bank Part I. Development Prospects and International Policy Issues Prospects for Development International Policy Issues Part IL StructUral Change and Development Policy Employment Trends and Issues Industrialization Urbanization Patterns andPolicies Part III, Country Development Fxerieflce and Issues Growth and Equity in Semi-industrialized Nations Developipent in Primary Producing Countries Conclusions Annex: World Development Indicators World Development Report 1979 Published for the World Bank Oxford University Press Oxford University Press NEW YORK OXFORD LONDON GLASGOW TORONTO MELBOURNE WELLINGTON HONG KONG TOKYO KUALA LUYIPUR SINGAPORE JAKARTA DELHI BOMBAY CALCUTTA MADRAS KARACHI NAIROBI DAR ES SALAAM CAPE TOWN © 1979 by the International Bank for Reconstruction and Development / The World Bank 1818 H Street, N.W., Washington, D.C. 20433 U.S.A. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press. Manufactured in the United States of America. ISBN 0-19-502637-3 cloth 0-19-502638-1 paperback Library of Congress Catalog Number: 78-67086 Foreword The World Development Report, 1979, along developing countries and have given rise to with its statistical annex, is the second in a troublesome questions and uncertainties about series of annual reports designed to provide a the future. comprehensive, continuing assessment of global The success of developing countries will very development issues. This year's report empha- largely depend on their domestic programs and sizes issues of employment, industrialization policies. But their task can be greatly aided by and urbanization in developing countries and improved access to markets in the industrialized discusses the policies necessary to pursue the nations and by more generous flows of conces- twin objectives of growth and poverty allevia- sional assistance from these countries. The un- tion. Over the next two decades, these countries certainties in the world economy could be much will face unprecedented challenges: they will reduced, and the dynamism of world produc- need to create productive employment for a tion and trade restored, if countries were to act work force that is likely to expand by more than in recognition of their growing economic inter- 500 million people between 1975 and 2000; over dependence. Over the long term, a more liberal the same period their cities will need to provide environment for international trade and capital jobs, housing, transportation, water, sanitation flows would bring benefits to all groups of na- and health care for almost one billion additional tions. Industrialized countries stand to gain inhabitants; and a growing number of develop- from buoyant economic conditions in develop- ing countries face the need for new policy initia- ing countries, which are important markets for tives to shape the process of industrialization. their exports; increasing trade barriers and re- At the same time, however, the range of policy ducing foreign aid in response to short-term choices available to developing countries is pressures may appease sectional grievances, but becoming narrower, partly as a result of the only at the expense of greater, long-term gains. past orientation of their development strate- This volume reflects the work of many of my gies, but partly because of the uncertain and colleagues in the World Bank. The judgments less expansionary climate in the international expressed do not necessarily reflect the views environment. of our Board of Directors or the governments The quarter of a century between 1950 and they represent. The report has been produced 1975 witnessed substantial progress in develop- under the direction of Attila Karaosmanoglu; ing countries. Such advances were greatly Shankar Acharya is the principal author. helped by rapid economic growth in industrial- ized nations and the progressive relaxation of barriers to international trade and capital flows. The slower rates of growth of industrialized economies since the mid-1970s, and the asso- ciated increase in protectionist tendencies, have had adverse effects on the growth of Robert S. MeNamara III WORLD DEVELOPMENT REPORT, 1979 Contents Page 1. Introduction 1 Part I: Development Prospects and International Policy Issues 3 Prospects for Development 3 Recent Trends and Implications for the Future 4 Alternative Scenarios 16 Implications for the Alleviation of Poverty 19 International Policy Issues 20 The World Trade Environment 20 External Debt and Capital Flows 28 Energy 35 Part H: Structural Change and Development Policy 44 Employment Trends and Issues 46 Scope and Nature of the Employment Challenge 46 Development Strategies for Expanding Employment and Improving Skills 49 Labor Market Policies 53 Population Planning 56 Industrialization 59 Shared Patterns and Problems 59 The Role of Agriculture 61 Government Support for Industrialization 62 Foreign Trade and Competition 67 Urbanization: Patterns and Policies 72 Key Features of Urbanization in Developing Countries 72 National Spatial Development: Determinants and Policies 75 Policies for Efficient and Equitable Growth of Cities 78 Part III: Country Development Experience and Issues 86 Growth and Equity in Semi-industrialized Nations 87 Development Patterns in Semi-industrialized Countries 87 Growth and Equity: The Record 88 Approaches to Poverty Elimination 91 Sustaining Economic Growth in a Changing World 95 Development in Primary Producing Countries 99 Development Issues in Mineral Economies 99 Structural Change in Predominantly Agricultural Nations 105 Conclusions 110 Policies to Increase Productive Employment and Alleviate Poverty 110 Urbanization: Priorities for Action 112 Improving the International Environment for Development 113 Annex: World Development Indicators 117 V Text Tables Page Developing Countries: Growth of Gross Domestic Product, 1970-90 3 Industrialized Countries: Growth of Gross Domestic Product, 1960-90 4 Growth of Merchandise Exports, by Product Category and Country Group, 1960-76 and 1976-90 5 Developing Countries: Merchandise Exports, by Product Category and as a Share of World Merchandise Exports, 1960, 1976 and 1990 5 Structure and Growth of Merchandise Exports, 1960-90 7 Developing Countries: External Financing Requirements, 1976-90 7 Net Flows of Official Development Assistance from Donors, 1975-90 8 Net Disbursements of Medium- and Long-term Capital to Developing Countries, 1975-90 9 Net Disbursements of Medium- and Long-term Loans and Official Grants to Developing Countries, by Type of Capital and Country Group, 1976-90 9 Developing Countries: Debt Service Ratios, 1977-90 10 Developing Countries: Growth of Gross Domestic Product and Merchandise Trade, 1965-74 and 1974-77 11 Structure of Population, Production and Exports, 1976 and 1990 12 Growth of Population, Gross Domestic Product and Gross Domestic Product per Capita, 1960-90 13 Developing Countries: Investment and Savings Rates, 1976 and 1990 15 Developing Countries: Structure of Production, 1975 and 1990 15 Alternative Assumptions for Base, High and Low Growth Scenarios, 1980-90, and Historical Growth, 1960-75 17 Growth and Levels of Gross Domestic Product Under Alternative Scenarios 18 Levels of Absolute Poverty Under Alternative Scenarios, Year 2000 19 Manufactured Exports from Developing Countries as a Share of Markets in Industrialized Countries, Under Alternative Scenarios 21 Manufactured Exports from Industrialized Countries to Developing Countries, 1970-76 23 Trade in Manufactures Among Developing Countries, 1976 27 Developing Countries: Medium- and Long-term Debt Outstanding and Disbursed at Year-end, 1970-90 29 Middle Income Countries: Debt Service Ratios, 1970-90 29 Commercial Primary Energy Balances, 1960-90 35 Developing Countries: Commercial Primary Energy Balances, 1976 and 1990 39 Structure of the Labor Force, 1950-70 46 Growth of the Labor Force, 1960-2000 47 Growth of Industrial Production and Labor Force in Selected Developing Countries, 1960-70 51 Contraceptive Use and Crude Birth Rates in Selected Developing Countries, 1977 57 Structure and Growth of Production, 1960-76 59 Urbanization Rates and Urban Population Growth, 1950-2000 72 vi Page Basic Indicators for Selected Semi-industrialized Countries 87 Semi-industrialized Countries: Comparative Growth of Agricultural Production, Labor Force and Productivity, 1960-76 89 Semi-industrialized Countries: Comparative Growth and Structure of Merchandise Trade, 1960-77 89 Semi-industrialized Countries: Some Comparative Indicators of Welfare 91 Semi-industrialized Countries: Comparative Investment and Debt Service Ratios, 1960-77 97 Mineral Producing Countries: Export Diversification, 1960 and 1976 102 Basic Indicators for Selected Predominantly Agricultural Countries 105 VII Figures Page Shares of Merchandise Exports, by Country Group, 1960, 1976, 1990 6 Petroleum Prices, 1972-79 11 Population, Exports and Gross National Product, by Country Group, 1976 and 1990 14 Trends in Gross National Product per Capita, by Country Group, 1960-90 16 Population, Energy Production and Consumption, 1976 37 Aspects of Structural Transformation 44 Labor Force Estimates and Projections, 1950-2000 48 Population Estimates and Projections, 1950-2000 57 The Pattern of Structural Change 60 Urban Population Estimates and Projections, 1950-2000 73 Urbanization Estimates and Projections for Developing Countries, 1950-2000 74 Semi-industrialized Countries: Comparative Growth of Gross Domestic Product and Population, 1960-76 88 Mineral Producing Countries: Comparative Growth of Gross Domestic Product and Population, 1960-76 100 Definitions Country Groups in the analytical framework of The Development Assistance Committee this report are as follows: (DAC) of OECD comprises Australia, Austria, Belgium, Canada, Denmark, Finland, France, Developing Countries' are divided, on the the Federal Republic of Germany, Italy, Japan, basis of 1977 gross national product (GNP) the Netherlands, New Zealand, Norway, per capita into: Sweden, Switzerland, the United Kingdom, Low Income Countrieswith per capita in- the United States and the Commission of the come of US$300 and below; European Community. Middle Income Countrieswith per capita The Organization of Petroleum Exporting income above US$300. Countries (OPEC) comprises Algeria, Ecua- Capital Surplus Oil Exporters: Kuwait, Libya, dor, Gabon, Indonesia, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Libya, Nigeria, Qatar, Saudi Arabia, the Emirates are identified as a separate group United Arab Emirates and Venezuela. from other developing countries since, at least Manufactured goods refers to commodities in for the near future, their economic character- the Standard International Trade Classification istics are significantly different. Other major (Revised) (SITC), Sections 5 through 9 minus exporters of oil are grouped among the devel- Division 68: chemicals and related products, oping countries. including manufactured fertilizers and plastic Industrialized Countries are the members of materials; manufactured articles, including tex- the Organisation for Economic Co-operation tiles and products based on leather, rubber and and Development, apart from Greece, Portu- wood; iron and steel; products based on metals gal, Spain and Turkey, which are in- and non-metallic minerals; machinery and trans- cluded among the Middle Income Developing port equipment; building fixtures and fittings; Countries. furniture, clothing, footwear, professional and scientific instruments, photographic and optical Centrally Planned Economies (CPE5) are Al- goods, watches and clocks, and miscellaneous bania, Bulgaria, the People's Republic of articles not classified elsewhere in the SITC. China, Cuba, Czechoslovakia, the German Democratic Republic, Hungary, the Demo- Primary commodities comprise SITC Sections 0 cratic Republic of Korea, Mongolia, Poland, through 4: food and live animals; beverages and Romania and the USSR. tobacco; inedible crude materials; fuels, includ- ing coal, petroleum and petroleum products, Organisation for Economic Co-operation and natural and manufactured gas, and electric cur- Development (OECD) members are Australia, rent; animal and vegetable oils, fats and waxes; Austria, Belgium, Canada, Denmark, Finland, and the non-ferrous metals of SITC Division 68. France, the Federal Republic of Germany, Greece, Iceland, Ireland, Italy, Japan, Luxem- Billion is 1,000 million. bourg, the Netherlands, New Zealand, Nor- way, Portugal, Spain, Sweden, Switzerland, Growth Rates are in real terms unless otherwise Turkey, the United Kingdom and the United stated. States. Symbols used in the text tables are as follows: 'The division is slightly different for the projections, where, Not available. in order to retain comparability with those made for World Development Report, 1978, the earlier country groupings (.) Less than half the unit shown. used in that report have been maintained. The difference na. Not applicable. involves less than 1 percent of the total GNP of all develop- ing countries. ix Chapter 1: Introduction This report is the second in a continuing series will demand bold initiatives in the design and designed to address, in an analytical framework, allocation of urban land, transport, shelter, the principal issues of development policy at the water, sewerage and other services. domestic and international levels. Many of the As policy makers confront the new chal- themes and points of focus in the present docu- lenges thrown up by rapid urban growth, they ment have evolved out of the extensive discus- will need simultaneously to grapple with the sion of the 1978 report. That document gave manifold problems of industrialization. Increas- particular attention to the problems and pros- ing numbers of developing countries are engaged pects of the poor countries of Asia and Sub- in the endeavor of widening and deepening their Saharan Africa: countries in which the key to industrial sectors. The task they confront is to more rapid and equitable development lies in encourage a pattern of industrial development policies to stimulate agricultural growth and to that will rapidly expand productive employ- confront rural poverty. This year's report gives ment, and will strengthen the mutually bene- greater attention to development in the Middle ficial links between industry and agriculture. Income countries, in most of which the process These intersectoral links are particularly im- of structural transformation is much further ad- portant since, in the majority of developing vanced than in the poorer developing countries. countries, agriculture will remain the most im- Two of the principal aspects of this transforma- portant single source of livelihood for some time tionindustrialization and urbanizationare to come, and broadly based agricultural devel- important concerns in all developing nations, opment will, in most cases, continue to be a cen- but pose especially urgent choices for policy in tral element of strategies to alleviate poverty. Middle Income nations. Common to all develop- The discussion of international issues in this ing countries is the challenge of creating enough report takes as its starting point the analysis in productive jobs for a labor force that is expand- World Development Report, 1978, which em- ing at unprecedented rates. Though world popu- phasized the growth of interdependence among lation growth is believed to have peaked in the nations over the past quarter century, gave illus- early 1970s, the earlier rapid growth will add trative projections of how the world economy more than 500 million people to the labor force might evolve in the years to 1985, and traced the in developing countries between 1975 and the implications for the economic growth of devel- end of this century. oping countries. Chapter 2 of this report assesses The natural growth of population and the recent trends and their implications for future process of industrialization are key factors developments up to 1990. For the period up to fueling the rapid increase in the size of urban 1985, the basic set of projections foresees some- populations in developing countries. In the final what slower growth of developing countries quarter of this century the number of people liv- than was projected last year, particularly for ing in the cities and towns of these nations is Middle Income countries, whose development projected to increase by nearly a billion, from prospects are especially sensitive to conditions about 650 million in 1975 to over 1,600 million in the world economy. Alternative sets of pro- in 2000. Urbanization is likely to be accompa- jections are also presented. One of them outlines nied by an increasing concentration of urban the dismal consequences that might follow if dwellers in large cities; by the year 2000, some the slow growth of world output and trade since 40 cities in developing nations are projected to 1973 were to continue through to 1990. Another exceed 5 million people in size, while 18 of them assesses the implications of recovery in world may be larger than 10 million. This dramatic ex- trade and output growth to rates comparable to pansion in urban communities will pose massive those experienced in the 1060s. These projec- new tasks of urban resource management for tions reveal a clear need for international and national and municipal authorities: tasks which domestic policy actions that will improve the 1 environment for international trade and capital ence and issues than was given in last year's flows, and will strengthen the basis for more report. To make the analysis more relevant and rapid growth and more efficient structural ad- responsive to the enormous diversity among justments in developing and industrialized na- Middle Income countries, three major types of tions. These policy priorities are the subject of nations are distinguished and discussed. subsequent chapters of the report. The analysis highlights the crucial role of Chapter 3 discusses three areas of interna- development strategies and policies in creating tional concerntrade, capital flows and energy productive employment and alleviating poverty where all countries have strong mutual inter- in developing countries. But it also shows that ests, which need to be protected and furthered for these policies to yield their full potential, by national and international action. The next support from a liberal international environment three chapters, on employment, industrializa- is essential. Further deterioration in the inter- tion and urbanization, dwell on the policy issues national framework for trade and capital flows and options confronted by developing nations as would damage both industrialized and develop- their economies develop and change in struc- ing economies, and make more intractable the ture. Chapters 7 and 8 provide a fuller treatment daunting tasks the latter face of expanding em- of Middle Income country development experi- ployment and alleviating poverty. 2 PART I: DEVELOPMENT PROSPECTS AND INTERNATIONAL POLICY ISSUES Chapter 2: Prospects for Development A year ago, World Development Report, 1978 events and further perspectives on trends in the put forward projections of developing coun- 1970s. The projections are extended to 1990, and tries' economic growth through 1985 on the the growth prospects of the Middle Income basis of what was then viewed as a likely evo- countries are disaggregated by region. Follow- lution of the international environment, together ing the basic set of projections, alternative with assumptions about these countries' own growth scenarios are analyzed more thoroughly performance. Gross domestic product (GDP) in and over a wider range of possibilities than the industrialized countries was projected to could be done last year. grow at 4.2 percent a year in 1975-85, signifi- It needs to be emphasized that the projections cantly more slowly than in the 1960s (4.9 per- presented are simply intended to provide illus- cent), in reflection of economic troubles since trative frames of reference for the discussion of then. Protectionist restrictions against the de- development issues in subsequent chapters. The veloping countries' manufactured exports were projections themselves should not be viewed as judged likely to remain at much the same inten- targets for international decision making. Nor sity as in early 1978. Thus, though exports of should they be seen as precise forecasts for the textiles and clothing would be severely affected future. The prevailing uncertainties regarding by the tighter quotas introduced in 1977-78, and growth in industrialized countries, international there would be a continuing threat of new non- inflation, currency instability, trade and capital tariff barriers, further increases in protection flows, and the institutional framework within would be held in check. An early slowdown was which they occur, caution against that. expected in the growth of private capital flows The assumptions underpinning this year's to developing countries. Private flows had ac- projections differ from those made last year counted for nearly 90 percent of the increase only where recent developments clearly indi- in these countries' net capital inflows during cate that modifications are necessary. For the 1970-75, mainly reflecting the rapid growth of period 1975-85 the main changes as they affect commercial bank lending. Official Development Assistance (ODA) was projected to rise at 5 1. Developing Countries: Growth of percent a year in real terms, reversing its earlier Gross Domestic Product, 1970-90 (Average annual percentage growth rates, at 1975 prices) downward trend as a share of the GNP of the 1977 1978 1970-76 1975-85 1985-90 industrialized countries that make up the Devel- Low Income opment Assistance Committee (DAC) of the Countries 3.4 5.7 5.4 4.7 4.9 Organisation for Economic Co-operation and Africa 2.6 4.0 3.4 3.7 3.8 Development. This share was projected to rise Asia 3.5 6.0 5.7 4.9 5.1 from 0.36 percent of their GNP in 1975 to 0.39 Middle percent in 1985. Income Based on these and other assumptions about Countries 6.2 4.6 5.0 5.3 5.8 international economic conditions, Middle In- All Developing come developing countries were expected to Countries 5.7 4.8 5.1 5.2 5.6 sustain GDP growth rates averaging 5.9 percent Estimates based on preliminary and incomplete data. a year in 1975-85. Low Income Asia was ex- pected to accelerate its growth to 5.1 percent a the developing countries are slightly slower year, considerably better than its historical ex- growth in industrialized countries, world trade perience, in large measure through improving and external concessional assistance, and a dif- performance in agriculture. Slower growth at 4.1 ferent trajectory of private commercial lending. percent was expected in Low Income Africa. The overall effect is to reduce the projected This chapter reassesses the growth prospects annual growth of gross domestic product in the of the developing countries in the light of recent developing countries in 1975-85 from 5.7 percent 3 to 5.2 percent. The largest reduction comes in Developments in World Trade the Middle Income countriesfrom 5.9 percent Slow and erratic growth in industrialized to 5.3 percent a year. A sizable reduction is also countries in recent years, combined with other indicated in Low Income Africa. However, these disruptive influences, including increased pro- reductions stem less from changes in the assess- tection, international inflation, and exchange ment of the future and more from the fact that rate instability, reduced the volume growth of recovery from the economic difficulties of 1974- world trade from about 9 percent a year be- 75 has been slower than anticipated. tween 1965 and 1973 to just over 4 percent a year between 1973 and 1977. In the same per- Recent Trends and Implications for the Future iods, the growth of developing country exports Growth of Industrialized Economies declined from 6.4 percent to 3.6 percent a year. The economic health of industrialized coun- Recent export price trends have been erratic tries is a key determinant of the growth pros- and, on balance, unfavorable to developing pects of developing nations. Industrialized coun- countries. In 1978 adverse changes in export and tries are the principal markets for exports from import prices appear to have more than offset developing countries and their main suppliers of the growth in their export volume, resulting in external capital and technology. In 1976 indus- a decline in the purchasing power of their trialized countries purchased two-thirds of all exports. merchandise exports from developing countries; Primary commodity exports of developing the share was 69 percent for fuel, 65 percent for countries have grown little in volume since the other primary commodities and 61 percent for boom year of 1973. Aside from the unfavorable manufactures. The joint attainment of rapid international market conditions, noted above, growth, full employment and price stability has this stagnation also reflects adverse weather remained elusive in recent years in the indus- conditions during the mid-1970s in key pro- trialized economies. In several countries, strong ducers of agricultural exports, and other supply difficulties, including the inadequate incentives 2. Industrialized Countries: Growth of and low investment priorities that have fre- Gross Domestic Product, 1960-90 quently been accorded to primary production. (Average annual percentage growth rates, at 1975 prices) With the recovery of growth momentum in the 1960-70 1970-78° 1970-80 1980-90 industrialized countries, improved weather con- North America 4,0 3.4 3.3 4.0 ditions, and growing benefits from recent efforts Japan and to accelerate primary production, the rate of Oceania 9.4 5.1 5.1 5.9 growth of developing countries' primary exports Western and Northern can be expected to return to historical levels. For Europe 4.7 2.8 2.9 3.8 the period 1976-90 the non-fuel primary com- All Industrialized modity exports of developing nations are pro- Countries 4.9 3.4 3.4 4.2 jected to grow at an average annual rate of 3.3 °Estimates for 1978 are based on preliminary data. percent (Table 3). Developing countries' manufactured exports inflationary pressures and volatile external pay- have continued to show much greater dyna- ments situations have hampered sustained mism, but their growth slowed from an average recovery from the recession of 1974-75. Projec- of about 15 percent a year in the period 1965-73 tions for 1979 and 1980 do not indicate any sig- to about 11 percent a year in 1974-77. To a large nificant improvement over the 3.4 percent an- extent, this slowdown was the result of slower nual growth recorded between 1970 and 1978, economic growth and heightened protection in which itself was significantly below the 4.9 per- industrialized countries. After clothing and tex- cent annual growth achieved in the previous tiles, the major product categories most affected decade. The outlook for the next decade is Un- by increased protection have been footwear and certain, but it seems reasonable to assume re- steel. In 1977, in these four product groups to- covery to an average growth rate of 4.2 percent gether, the current US dollar value of developing a year, with Japan's economy growing at nearly countries' exports rose by only 7 percentless 6 percent a year while the economies of North than the average rise in prices of all traded America and Europe grow at or below the aver- manufactures (9 percent), reflecting an apparent age rate for the group. decline in volume. By contrast, their exports of 4 3. Growth of Merchandise Exports, by Product Category and Country Group, 1960-76 and 1976-90 (Average annual percentage growth rates, at 1975 prices) 1960-76 1976-90 Industrialized Developing Industrialized Developing World Countries Countries World Countries Countries Fuels and Energy 6.7 4.5 6.3 3.1 3.3 3.2 Other Primary Products 4.4 5.1 3.7 3.3 3.3 3.3 Food and Beverages 4.4 5.4 3.5 3.7 3.9 3.1 Non-food Agricultural Products 5.1 6.3 3.4 1.8 1.1 2.8 Minerals and Non-ferrous Metals 3.9 3.4 4.7 3.5 3.0 4.5 Manufactures 9.1 9.1 12.7 7.0 6.5 10.9 Machinery and Transport Equipment 9.9 10.0 17.5 7.6 7.1 15.3 Other Manufactures 8.5 8.3 11.8 6.5 6.0 9.0 Total Merchandise 7.4 7.8 6.3 5.7 5.9 6.1 Sources: World Bank; United Nations Yearbook of International Trade Statistics, various issues (New York: United Nations, UN Statistical Office); Handbook of international Trade and Davelopment Statistics, various issues (Geneva: United Nations Conference on Trade and Development); and Networks of World Trade, By Areas and Commodity Classes, 1955-76 (Geneva: General Agreement on Tariffs and Trade, Studies in International Trade No. 7, 1978). other manufactured goods rose in current value resistance to protectionist pressures. It is im- by 23 percent, resulting in a 16 percent increase portant to emphasize also that the attainment in their total manufactured exports (about 9-10 of the export growth rates projected here would percent in real terms since their export prices require bold policy reforms and sustained effort probably rose less than those of other countries). on the part of developing countries. Preliminary information indicates that develop- The trade projections assume that the devel- ing countries' manufactured exports grew some- oping countries will continue their rapid expan- what faster in 1978 than in 1977. sion of trade with one another. In 1976 more The projections for manufactured exports in than one-fourth of developing country mer- Table 3 assume that growth in industrialized chandise exports went to other developing na- countries will recover to an average rate of 4.2 tions. This trade-analyzed further in the next percent a year in the 1980s, and that further in- chapter-appears to depend more on the devel- creases in protection will be averted through oping countries' payments situations, economic improved economic policies and determined growth and overall trade policies than on special 4. Developing Countries: Merchandise Exports, by Product Category and as a Share of World Merchandise Exports, 1960, 1976 and 1990 (Percentages, at 1975 prices) Product Developing Countries' Exports Composition as a Share of World Exports 1960 1976 1990 1960 1976 1990 Fuels and Energy 38 38 26 44 41 42 Other Primary Products 51 35 24 37 34 34 Food and Beverages 34 22 15 40 35 32 Non-food Agricultural Products 9 6 4 39 30 34 Minerals and Non-ferrous Metals 8 7 5 29 33 38 Manufactures 11 27 50 6 10 16 Machinery and Transport Equipment 1 6 20 2 5 12 Other Manufactures 10 21 30 9 14 19 Total Merchandise 100 100 100 24 21 22 Sources: As in Table 3. 5 Figure 1 Shares of Merchandise Exports, by Country Group, 1960, 1976, 1990 (Percentages, at 1975 prices) Developing Countries ndustrialized Centrally Planned Capital Surplus Countries Economies Oil Exporters 1960 1976 1990 Fuels and Energy 23.2 0/ 344% 34.0% 41.9% 66 187 285 .0/s 10.6% 8.7% 15 7.9% 16.2 % Negligible Other Primary Products 8.8% Negligible 11.0% Negligible 33.8% 33.6% 104 206 326 51.7% 57.6% 57.4% 0.3% Manufactures 0.2% Negligible 156% 12.4% 5.7% 143 578 1,499 81.9% 80.9% 75.6% 4.8°/n Total Merchandise Exports (excluding gold) 6.7% 8.4% 4.9% 22.0% 20.7% 11.6%i 9.20/1 312 972 2,110 59.2% 63.4% 64.8% Note: Numbers beside pies indicate the total values of world merchandise exports, in billion 1975 US dollars. Percentages may not add to 100, due to rounding. Sources: As in Table 3. 6 5. Structure and Growth of Merchandise Exports, 1960-90 (Percentages, at 1975 prices) Country Average Annual Composition Growth Rate 1960 1976 1990 1960-76 1976-90 Developing Countries 24 21 22 6.3 6.1 Industrialized Countries 59 63 65 7.8 5.9 Capital Surplus Oil Exporters 5 7 5 9.5 3.2 Centrally Planned Economies 12 9 8 5.8 5.1 World 100 100 100 7.4 5.7 Sources: As in Table 3. arrangements among these nations. Setbacks in international trade and capital flows could have the expansion of trade with industrialized econ- significant implications for developing coun- omies would adversely affect the overall export tries, but not enough is known to take this into performance and balance of payments positions account in the projections. The composition of of developing countries, and hence would im- developing countries' exports and their shares pede the growth of trade among them. No major of world trade in principal product categories change is projected in the trade orientation of are shown in Table 4 and Figure 1. the centrally planned economies, which pur- If world trade evolves according to these pro- chased only 6 percent of developing country jections, the relative importance of major coun- merchandise exports in 1976. The growing in- try groupings would show little change by 1990 volvement of the People's Republic of China in (Table 5). 6. Developing Countries: External Financing Requirements, 1976-90 (Billion current US dollars) Low Income Middle Income All Developing Countries Countries Countries 1976 1985 1990 1976 1985 1990 1976 1985 1990 Net Imports 3 19 29 24 75 91 26 94 119 (Imports of Goods and Non-factor Services) (26) (90) (146) (275) (889) [1,539) (301) (979) (1,685) Less: (Exports of Goods and Non-factor Services) (24) (71) (118) (251) (814) [1,448) (275) (885) (1,566) Interest on Medium- and Long-term Loans 1 4 6 9 40 73 10 44 79 Repayment of Principal 2 8 11 18 115 214 20 122 225 Increase in Reserves 3 2 4 5 21 42 8 23 46 Total to be Financed 8 32 50 56 251 419 64 283 469 Net Factor Income, excluding Interest on Medium- and Long-term Loans (.) 1 2 5 21 32 5 21 33 Official Grants and Concessional Loans (gross) 5 19 32 9 23 33 15 42 65 Medium- and Long-term Loans at Market Terms (gross) 4 9 12 45 179 309 49 188 321 Direct Investment and Other Capital (net) 1 2 3 5 23 38 6 25 41 Private Transfers (net) (.) 1 1 2 5 8 3 7 9 Total Financing 8 32 50 56 251 419 64 283 469 At 1975 Prices 8 15 17 54 118 147 62 133 165 Note: Totals may not add due to rounding. The assumed average annual rate of inflation between 1975 and 1990 is 7.2 percent. 7 The Supply of External Capital 77. This assistance, currently equivalent to about The external capital required by developing 2 percent of the donors' GNP, is projected to de- countries to sustain the growth projected in the cline slowly in real terms, reflecting slower rates basic scenario is outlined in Table 6. of economic growth than those experienced in Despite promises by donor governments and recent years. However, if the real price of petro- some recent actions on debt forgiveness, net leum were to increase during the 1980s, net ODA flows of Official Development Assistance (ODA) flows from OPEC nations could be expected to from the industrialized countries that make up rise. Flows of ODA are assumed to be progres- the Development Assistance Committee of the sively reallocated toward Low Income countries, OECD fell in real terms between 1975 and 1977. so that their share of net ODA disbursements As a proportion of their gross national product, increases to 47 percent by 1985 and 51 percent ODA from these countries declined from 0.35 by 1990. Concessional assistance will continue percent in 1975 to 0.31 percent in 1977 (Table 7). to be of crucial importance to Low Income 7. Net Flows of Official Development Assistance From Donors, 1975-90 Billion Current Average Annual Percentage US Dollars Growth Rate (at 1975 prices) 1975 1977 1985 1990 1975-77 1977-90 Members of Development Assistance Committee of OECD 13.6 14.7 41.8 69.0 -1.9 4.8 Members of Organization of Petroleum Exporting Countries 5.5 5.7 9.4 12.4 -3.7 -1.2 Others 0.5 1.3 1.9 Total 19.6 52.5 83.3 At 1975 Prices 19.6 24.7 29.4 Note: DAC Flows as a Percentage of Donors' GNP 0.35 0.31 0.35 0.35 OPEC Flows as a Percentage of Donors' GNP 2.71 2.01 Capital Surplus Oil Exporters' Flows as a Percentage of Donors' GNP 6,46 5.58 Note: ODA flows in this table include contributions to multilateral agencies as well as to developing countries, and the value of technical assistance. The assumed average annual rate of inflation between 1975 and 1990 is 7.2 percent. This was less than half the target of 0.7 percent countries: nearly two-thirds of the external endorsed by the United Nations General Assem- financing requirements of these countries in bly in 1970. Based on renewed commitments by 1990 is projected to be met by gross disburse- donor governments and preliminary estimates ments of concessional capital (Table 6). for 1978, indicating a rise in the ODA share to In marked contrast to the Low Income coun- 0.32 percent of donors' gross national product, tries, about four-fifths of the external financing ODA from DAC countries is projected to in- requirements of Middle Income countries in crease by nearly 5 percent a year in real terms 1976 were met by loans at market terms, with from 1977, to reach a proportion of 0.35 percent private sources accounting for over 85 percent of GNP by 1985, where it is assumed to remain of this lending. In World Development Report, through 1990. This reflects some reduction from 1978 it had been assumed that after the rapid last year's projection, in which Official Develop- growth between 1971 and 1976 the expansion ment Assistance from DAC countries was ex- of private lending would slow down sharply, so pected to reach 0.39 percent of GNP by 1985. that over the period 1975 to 1985, net inflows of Achieving even these modest increases will re- private loans to developing countries would quire renewed efforts by donor countries. grow at about 12 percent a year in current prices. Net ODA flows from the Organization of In practice, continuing liquidity in international Petroleum Exporting Countries, which had capital markets permitted a much more rapid grown rapidly in the early 1970s, leveled off at expansion of private lending, mostly by banks, an average of US$5.6 billion a year during 1975- in 1977 and 1978. Liquidity in international mar- 8 8. Net Disbursements of Medium- and Long-term Capital to Developing Countries, 1975-90 Average Annual Billion Current Percentage Growth Rate US Dollars [at 1975 prices) 1976 1980 1985 1990 1975-85 1980-90 Private Direct Investment 2.4 8.7 14.0 22.5 0.3 3.3 Official Development Assistance 13.1 21.8 37.9 57.9 1.9 3.6 Grants 5.9 9.7 18.0 28.3 2.7 4.5 Bilateral Concessional Loans 5.4 9.4 15.3 23.5 0.5 2.9 Multilateral Concessional Loans 1.7 2.7 4.6 6.1 4.5 1.9 Medium- and Long-term Loans at Market Terms 30.3 39.4 69.8 103.1 2.9 3.4 Private 26.0 30.0 55.1 82.6 2.4 3.9 Multilateral 2.4 6.1 9.9 11.7 6.4 0.2 Official Export Credits 1.9 3.3 4.7 8.8 3,3 3.7 Total 45.8 69.8 121.7 183.5 2.3 3.4 At 1975 Prices 44.4 46.0 57.1 64.4 Note: Totals may not add due to rounding. The data on official grants and concessional loans in this table are not comparable with those in Table 7. Table 7 shows disbursements by donor countries for all purposes; Table 8 shows receipts of medium- and long-term capital by developing countries. The principal d ifferences are that Table 7 covers technical assistance and con- tributions to multilateral institutions, including paid-in capital. The latter is the basis of multilateral lending at market terms. The data on official grants and concessional loans in Table 8 do not include technical assistance, and they include the dis- bursements of concessional loans from multilateral institutions. kets also helped to ease lending terms, to extend seven years; this was true of only about 13 per- the availability of loans to a wider set of Middle cent of such loans in 1977. Income countries, and to lengthen maturities. However, the growth of private lending can For example, nearly two-thirds of the publicized be expected to slow in the 1980s as a result of Eurocurrency credits negotiated by developing rising debt service ratios in developing countries countries during 1978 carried maturities of over and increasing supply constraints on commer- 9. Net Disbursements of Medium- and Long-term Loans and Official Grants to Developing Countries, by Type of Capital and Country Group, 1976-90 (Percentages) Low Income Middle Income All Developing Countries Countries Countries 1976 1985 1990 1976 1985 1990 1976 1985 1990 Distribution of Capital by Category Official Grants 21 35 43 12 12 11 14 17 18 Concessional Loans 47 52 46 10 11 11 16 19 18 Loans at Market Terms 32 13 11 77 77 78 70 65 64 [Official) [10) (9) [7) (10) [15) (14) [10) (14) (13) [Private) (23) (4) [4) (67) [62) (64) [60) [51) (51) Total 100 100 100 100 100 100 100 100 Distribution of Capital by Income Groupa Official Grants 25 40 50 75 60 50 100 100 100 Concessional Loans 47 53 51 53 47 49 100 100 100 Loans at Market Terms 8 4 4 92 96 97 100 100 100 Official 16 12 11 84 88 89 100 100 100 Private 6 2 2 94 98 99 100 100 100 Total 16 19 21 84 81 80 100 100 100 Note: Totals may not add due to rounding. The data on official grants and concessional loans in this table and Table 8 are not comparable with those in Table 7, as explained in the note to Table 8. aThe distribution of concessional capital by income group is highly sensitive to the criterion used in classifying countries into Low and Middle Income groups. 9 cial banks and other private lenders. Further- cumstances, it is not easy to project price trends. more, the bunching of repayment obligations in World oil production is expected to peak the period 1978-82 would make net inflows much around the end of the century, and over the next lower than the levels of gross lending. In the two decades the energy problem is essentially light of these considerations, net private lending that of assuring gradual transition to higher-cost to developing countries is now projected to grow substitutes for oil. In the meantime, the intensi- at an average annual rate of about 10 percent in fied exploration and production in many coun- current prices-under 3 percent a year in real tries, the growing use of non-oil energy sources, terms-for the period 1975-85. During the 1980s, and the reduced energy intensity of economic the real growth rate is projected to be a little growth in some important consuming nations, higher, at almost 4 percent, partly reflecting an point to the adjustment already being made to expectation of slower world inflation in the later the sharp oil price increases of 1973-74. years. These and other assumptions about net The behavior of petroleum prices in recent capital flows to developing countries are sum- years is illustrated in Figure 2. They continued marized in Table 8 on page 9. to rise in current terms after the massive in- The composition of projected net disburse- crease of 1974, but declined in real terms, eroded ments of medium- and long-term loans and by global inflation and the devaluation of the US official grants and their distribution by country dollar. The sharp oil price increases during the groups is shown in Table 9, while the debt ser- first half of 1979 more than compensated for the vice ratios associated with the projected capital earlier decline in the real price of petroleum. By flows, trade and economic growth are presented July 1, 1979 the average price of OPEC crude in Table 10. For the broad country groupings oil had risen from its 1978 level of nearly shown, these ratios are not unacceptably high US$13 per barrel to about US$20 per barrel; it is expected to average just under US$18 per 10. Developing Countries: Debt Service barrel in 1979 as a whole-a level about the Ratios, 1977-90 same, in real terms, as in 1974. As Percentage of As Percentage If economies grow at the rates projected in the Exports of of Gross basic scenario, and if major oil consuming na- Goods and National Services Product tions follow strong policies with respect to de- 1977 1985 1990 1977 1985 1990 mand conservation, domestic pricing of energy Low Income and development of alternative energy sources, Africa 9.6 11.6 9.8 2.6 3.4 3.1 it is possible that a balance can be maintained Low Income between the global demand and supply of Asia 13.5 17.0 16.0 1.7 1.8 1.6 energy through the T1980s without major and Middle sustained increases in the real price of oil from Income its level of July 1, 1979.1 However, if energy Countries 11.8 18.3 19.2 3.3 5.0 5.3 policy in major consuming countries is weak, if All Developing oil production in key supplying nations suffers Countries 11.8 18.1 18.8 3.1 4.6 4.7 prolonged setbacks, or if the industrialized Pre1iminary. economies grow faster than projected above, then upward pressure on energy prices is likely and do not signal a general debt problem, though to be exacerbated. These possibilities are ex- individual countries can be expected to en- plored further in Chapter 3. counter liquidity shortages from time to time. These issues are taken up in the next chapter. Recent Performance in Developing Countries With the collapse of a sustained and simul- Energy taneous boom in industrialized countries, the As recent events have demonstrated, the bal- peaking of major commodity prices and the ance in world energy demand and supply hinges sharp increase in the price of imported oil, 1974 on what happens in a few key oil producing marked a turning point in the economic per- countries. Short-run supply bottlenecks and 1The basic set of projections, made before the oil price temporarily high oil prices can be precipitated increases of July 1, 1979, assume that petroleum prices by events in a single country even when global would remain at their average level for the period 1975-78. clearly, future projections will have to take account of the supply capacities exceed demand, In these cir- recent price increases and their repercussions. 10 Petroleum Prices, 1972-79 F(gure 2 (US dollars per barrel) 20 Current US Dollars 15 Constant 1970 US Dollars 10 5 .0 w 1972 1973 1974 1975 1976 1977 1978 1979 JuIyl,1979 Note: The prices shown are average prices for each year. They refer to petroleum exports by the Organization of Petroleum Exporting Countries, and are based on estimates of realized export prices and government sale prices, weighted by countries' shares in total output. Realized and government sale prices are fob, loading ports in OPEC countries. The prices in constant US dollars have been deflated using the Index of International Prices, which is an index of the c.i.t. prices of manufactured L goods (5ITC 5-8) exported by industrialized countries to all destinations. The prices shown for 1979 are estimates based on information available as of July 1, 1979. OPEC accounts for over four-fifths of world exports of petroleum. formance and prospects of developing countries. imports was halved and there was an associated Though external assistance and increased bor- reduction in economic growth in the years 19 74- rowing cushioned the effects of these changes 77, compared to the period 1965-74 (Table 11). in the international environment, the rate of The sharpest declines in growth occurred in growth of developing countries' merchandise countries of Sub-Saharan Africa, partly because 11. Developing Countries: Growth of Gross Domestic Product and Merchandise Trade, 1965-74 and 1974-77 (Average annual percentage growth rates, at 1975 prices) GDP Exports Imports 1965-74 1g7477a 1965-74 1g7477a 1965-74 197477a Low Income Countries 3.9 5.1 6.2 5.2 2.2 -0.9 Africa 4.1 2.4 5.5 2.3 4.9 -9.6 Asia 3.9 5.5 6.4 5.8 1.1 2.8 Middle Income Countries 6.8 4.8 6.0 4.0 8.7 4.3 East Asia and Pacific 8.3 8.0 11.9 13.2 11.0 5.3 Latin America and Caribbean 6.5 4.0 4.0 -0.9 8.8 -0.4 Middle East and North Africa 7.0 7.5 4.7 3.5 10.5 10.8 Sub-Saharan Africa 5.9 1.6 3.6 -0.7 5.8 2.7 Southern Europe 6.9 4.0 10.8 5.8 7.1 5.5 All Developing Countries 6.2 4.9 6.0 4.1 7.8 3.8 aThe data for 1977 are preliminary. Sources: World Bank; UN Yearbook of International Trade Statistics (op. cit.), various issues. 11 of the additional burden of very unfavorable rowed particularly heavily from private banks. weather which afflicted many of these nations in While most nations used their borrowed re- 1974-75. The pace of development was also sources effectively, a few, such as Peru, Turkey significantly reduced in Latin America and and Zaire, which borrowed heavily and some- Southern Europe; in the latter, tourism, migrant times imprudently to sustain the growth of im- workers and investment were adversely affected ports and production, have been markedly less by depressed conditions in Western Europe. successful than others in carrying out the neces- Some countries have adjusted more success- sary economic adjustments, and continue to face fully than others to the difficult external condi- severe short-term problems. In recent months, tions: the Middle Income countries of East Asia these countries have undertaken, with varying have demonstrated a remarkable capacity to success, difficult programs for economic sta- reduce their growth of imports, accelerate the bilization. expansion of exports and sustain extraordinarily One of the brighter aspects of recent per- high economic growth; many other developing formance has been the acceleration in the nations have achieved less dramatic, but com- growth of Low Income Asian countries, espe- mendable, success in steering their way through cially India. During 1977 and 1978, GDP growth a difficult period. Most developing countries in- in this region is estimated to have averaged over creased their recourse to commercial and con- 5 percent a year, significantly faster than the 4 cessional external capital flows, and some of the percent annual average of the previous 15 years. more advanced Middle Income countries bor- Much of this improvement in performance can 12. Structure of Population, Production and Exports, 1976 and 1990 Percentage Shares of Country Groups Gross in Developing Country Total National Exports of Product Gross Domestic Goods and Non- Population Per Capita Product factor Services (millions) (US dollars)a Population (at 1975 prices) (at 1975 prices) 1976 1976 1976 1990 1976 1990 1976 1990 Developing Countries Low Income Countries 1,193 157 56.1 55.6 16.1 15.2 8.6 7.3 Africa 156 158 7.4 7.8 2.1 1.7 2.0 1.8 Asia 1,037 157 48.7 47.8 14.0 13.5 6.5 5.5 Middle Income Countries 936 1,022 43.9 44.4 83.9 84.8 91.4 92.7 East Asia and Pacific 162 671 7.6 7.3 9.3 13.2 19.1 27.1 Latin America and Caribbean 320 1,159 15.0 15.4 32.8 32.6 25.1 24.6 Middle East and North Africa 142 989 6.7 7.0 11.6 11.1 19.4 16.0 Sub-Saharan Africa 190 523 8.9 9.8 9.6 8.0 12.8 8.7 Southern Europe 122 1,948 5.7 4.9 20.6 19.9 15.0 16.4 Total 2,129 538 100.0 100.0 100.0 100.0 100.0 100.0 Percentage Shares of Country Groups Gross in World Total National Exports of Product Gross Domestic Goods and Non- Population Per Capita Product factor Services (millions) (US dollars)a Population (at 1975 prices) (at 1975 prices) 1976 1976 1976 1990 1976 1990 1976 1990 World Developing Countries 2,129 538 52.2 56.8 15.3 20.2 22.6 23.2 Industrialized Countries 661 6,414 16.2 13.6 64.6 62.5 63.9 65.8 Capital Surplus Oil Exporters 12 6,691 0.3 0.4 1.1 1.4 5.7 4.0 Centrally Planned Economies 1,276 1,061 31.3 29.2 190b 15gb 7.8 7.0 Total 4,078 1,673 100.0 100.0 100.0 100.0 100.0 100.0 Note: Totals may not add due to rounding. aCalculated using World Bonh Atlos methodology, as described in the Notes to Table 1 of World Development Indicators. 'East European centrally planned economies only. 12 be attributed to an acceleration of agricultural As Table 13 shows, wide contrasts in growth output growth to rates above 3 percent a year- are expected across different regions of the over twice the rate recorded between 1970 and world. In Low Income Asia, the projection of a 1975. Part of the improvement in agriculture was 5 percent annual increase in output during the due to better weather, but there is growing evi- coming decade is based in part on the recent dence that the expansion of irrigation and other acceleration of agricultural production in India investments in agriculture have increased pro- and the buoyancy of Indonesian oil revenues. ductivity and enhanced the capacity to with- Given the anticipated rate of growth of popula- stand fluctuations in weather. tion in this region, GDP per person is projected to increase at nearly 3 percent a year during Growth Prospects Until 1990 the 1980s. However, this outcome hinges on Based on the assumptions and recent trends achieving the improvements in domestic savings outlined above, economic growth and accom- effort indicated in Table 14. Furthermore, this panying changes have been projected through region confronts a daunting employment chal- 1990 for regional groups of Middle Income coun- lenge: despite the declines in fertility that have tries and for the poor countries of Asia and been achieved and are expected, the past growth Sub-Saharan Africa. In looking at the growth of population is expected to expand the work prospects that emerge from these projections force by over 120 million between 1977 and it is important to keep in mind that population, 1990. This will compound the enormous tasks output and trade are very unevenly distributed these countries already face in reducing their among developing countries (Table 12 and Fig- present high levels of underemployment and ure 3). Aggregate trends in production, trade, unemployment. capital flows and many other magnitudes dis- Although optimistic assumptions have been proportionately reflect what happens in the made regarding foreign capital inflows and im- richer developing countries, even though popu- provements in domestic savings, income per per- lation is concentrated in the poorer ones. For son in the Low and Middle Income countries of example, nearly half the population of develop- Sub-Saharan Africa is projected to increase at ing countries lives in Low Income Asia, compris- an average rate of less than 1.5 percent a year ing the Indian subcontinent, Indonesia and a few during the next decade. The principal factors smaller countries; yet this region accounted for underlying this dismal outlook were analyzed only a seventh of developing countries' GDP, a in last year's report. They include the expecta- fifteenth of their exports and a tenth of their net tions that population will continue to expand capital inflows in 1976. Nor are these shares rapidly throughout this period; that the legacy expected to change significantly by 1990. of insufficient agricultural research and difficult 13. Growth of Population, Gross Domestic Product and Gross Domestic Product Per Capita, 1960-90 (Average annual percentage growth rates) GDP Per Capita Population GI1JP (at 1975 prices) (at 1975 prices] 1960-70 1970-80 1980-90 1960-70 1970-80 1980-90 1960-70 1970-80 1980-90 Low Income Countries 2.4 2.3 2.2 4.2 4.0 4.9 1.8 1.7 2.7 Africa 2.6 2.8 2.8 4.1 3.0 3.8 1.5 0.2 1.0 Asia 2.4 2.2 2.2 4.2 4.2 5.0 1.8 2.0 2.8 Middle Income Countries 2.5 2.5 2.4 6.4 5.5 5.8 3.9 2.9 3.4 East Asia and Pacific 2.8 2.3 2.0 7.7 8.5 7.6 4.9 6.2 5.6 Latin America and Caribbean 2.8 2.7 2.5 5.7 5.3 5.7 2.9 2.6 3.2 Middle East and North Africa 2.6 2.7 2.6 7.3 5.7 5.5 4.7 2.9 2.8 Sub-Saharan Africa 2.5 2.9 3.0 5.0 4.3 4.4 2.5 1.4 1.4 Southern Europe 1.4 1.5 1.2 7.2 4.9 5.4 5.8 3.4 4.2 All Developing Countries 2.5 2.4 2.3 5.9 5.2 5.6 3.4 2.8 3.3 Industrialized Countries 1.1 0.7 0.5 4.9 3.4 4.2 3.8 2.7 3.7 Capital Surplus Oil Exporters 3.5 3.7 2.8 11.7 5.6 5.0 8.2 1.8 2.2 Centrally Planned Economies 1.7 1.4 1.1 6.8a 5,5a 4.2a 57a 4a 34 East European centrally planned economies only, 13 Figure 3 Population, Exports and Gross National Product, by Country Group, 1976 and 1990 Low Income Middle Scorns Industrialized Capital Surplus Planned Countries Countries Countries Oil Exporters Economies UCentrally 1976 1990 Population (Millions) 0.4 5/ 0.3 5/ 4,078 5,183 Exports of Goods and Non-factor Services (Billion 1975 US dollars) 5.7 n/n 1,178 2,593 GNP (Billion 1975/77 US dollars) 1.3% 6,821 aSee footnote a to Table 12. entages may not 0 due to roun 14 14. Developing Countries: Investment and Savings Rates, 1976 and 1990 (Percentages of gross domestic product, at 1975 prices) Gross Gross Net Foreign Domestic Domestic Resource Investment Savings Inflows 1976 1990 1976 1990 1976 1990 Low Income Countries 17.8 25.0 15.7 21.2 2.1 3.8 Africa 16.0 22.1 8.8 11.4 7.2 10.7 Asia 18.0 25.3 16.7 22.4 1.3 3.0 Middle Income Countries 26.1 26.0 23.1 23.9 3.0 2.1 East Asia and Pacific 27.0 30.9 25.5 31.1 1.5 -0.2 Latin America and Caribbean 23.7 26.0 22.3 24.8 1.4 1.2 Middle East and North Africa 31.4 25.1 29.0 20.0 2.4 5.1 Sub-Saharan Africa 27.0 24.4 25.1 21.0 1.9 3.4 Southern Europe 26.2 23.8 19.0 21.1 7.2 2.7 All Developing Countries 24.8 25.8 21.9 23.5 2.9 2.3 ecological conditions will continue to limit im- the projected growth rates of manufactured and provements in farm productivity; and that defi- primary exports imply significant differences in ciencies in physical and institutional infrastruc- export performance and economic development ture are likely to hamper rapid and efficient across regions. With manufactures accounting industrial development. for 60 percent of their merchandise exports in The development prospects of the Middle In- 1976, and given their demonstrated success in come countries are closely linked with the exploiting international market opportunities, evolution of the international environment. With the East Asian economies are expected to main- continued access to international capital mar- tain rapid export growth. In contrast, the much kets and a moderate recovery in their export higher share of slow growing primary products performance, most of these countries are ex- in the exports of Middle Income African nations pected to improve on their somewhat sluggish will limit these countries' overall export expan- growth performance during the latter half of sion. In the East Asian economies, rapid eco- the 1970s. The growth prospects of different nomic growth and a reduced rate of population Middle Income regions are likely to vary, de- expansion combine to hold out particularly pending on their future opportunities to benefit favorable prospects for per capita income in- from international trade, and their ability to creases which, in turn, can be expected to induce save, invest and use resources efficiently. In swifter structural change than in other countries. particular, the contrasts noted earlier between The population of Middle Income countries 15. Developing Countries: Structure of Production, 1975 and 1990 (Percentages of gross domestic product, at 1975 prices) Agriculture Industrya Services 1975 1990 1975 1990 1975 1990 Low Income Countries 41 30 23 28 36 42 Africa 41 33 17 20 42 47 Asia 41 30 24 29 35 41 Middle Income Countries 15 10 38 41 48 49 East Asia and Pacific 22 12 31 39 47 49 Latin America and Caribbean 12 9 36 40 52 51 Middle East and North Africa 12 8 51 50 37 42 Sub-Saharan Africa 22 17 37 37 41 46 Southern Europe 15 11 36 39 49 50 All Developing Countries 19 14 35 39 46 47 Note: Sectoral shares may not add to 100 percent, due to rounding. 1ndustrial production in all tables in this report refers to value added in manufacturing, mining, construction and public utilities. 15 Figure 4 Trends in Gross National Product Per Capita, By Country Group, 1960-90 (1975 US dollars) Industrialized Middle Income Low Income Countries Countries Countries has been growing at an average annual rate of to international migration in these host coun- 2.5 percent since 1960, with rates higher than tries. For most Middle Income countries the this in Africa, the Middle East and Latin Amer- projections emphasize the need to improve ica. This is iii sharp contrast to the 1.4 percent investment choice and productivity in the indus- rate in Southern Europe. Variations in popula- trial sector in order to accelerate the absorption tion growth among Middle Income countries lead of labor, realize the potential for increased man- to significant differences in development pros- ufactured exports and enhance the efficiency of pects and problems. Thus Southern Europe is industrial units producing for growing domestic projected to enjoy substantially higher increases markets. in per capita output during the next decade than Latin America, the Middle East, or North Alternative Scenarios Africa, even though the expected differences in It is not difficult to conceive of many different aggregate economic growth performance are ways in which the evolution of world economic minimal. The higher rates of population growth conditions could depart from that outlined in the latter regions over the past twenty years above. To provide some indication of the sen- also pose commensurately greater challenges sitivity of developing country prospects to of job-creation, to absorb the sizable incre- conditions in the international economy, two ments in the labor force that will occur in these alternative scenarios have been explored in countries. For those Mediterranean countries some detail. In the High case the assumptions that have thus far used the safety valve of labor with respect to the growth of industrialized migration to Western Europe and capital surplus countries, world trade and capital flows are more oil exporting countries, the outlook is compli- favorable than in the Base scenario, while the cated by slower growth and changing attitudes converse is true of the Low scenario. In both 16 16. Alternative Assumptions for Base, High and percent of the gross national product of DAC Low Growth Scenarios, 1980-90, and Historical countries by 1990. Swifter growth of world Growth, 1960-75 output will inevitably increase the demand for (Average annual percentage growth rates, at 1975 prices) energy and exacerbate pressures for higher 1960-75 1980-90 prices. The High scenario assumes an increase Base High Low in the real price of internationally traded energy GDP of of 2 percent a year during the 1980s. Industrialized The world view projected in the Low scenario Countries 4.2 4.2 4.9 3.5 is strikingly different. The growth of industrial- Net Official ized economies does not recover from the un- Development Assistance 4.1 3.6 6.7 3.1 distinguished performance of the present dec- ade. As a result world trade growth is held back Net Private Medium- and to 5 percent a year. The implied continuation Long-term Loans 3.9 6.3 -1.0 of high unemployment and business distress in World industrialized countries is likely to weaken Merchandise Trade 7.1 6.0 7.3 5.0 resistance to demands for protection against Developing developing country exports, especially of man- Countries' ufactures. As a consequence of these factors, Merchandise developing country exports of manufactures are Exports 5.8 6.5 7.6 5.2 projected to grow at less than 9 percent a year, (Primary Products) (4.5) (3.3) (3.5) (2.8) compared with rates of 13 percent in the High (Manufactures) (12.3) (11.1) (13.1) (8.8) case and 11 percent in the Base scenario. Even Real Price of if the same shares of donor GNP were allocated Traded Energy 0.0 2.0 0.0 to ODA as in the Base case, slower economic The data underlying this growth rate exclude OPEC flows growth would entail slower expansion of ODA of Official Development Assistance in 1960, on which infor- from industrialized countries. With dimmer ex- mation is not available, but include these flows in 1975. bOfl the basis of end-point comparisons, the real price of port prospects, developing countries' capacity petroleum remained approximately constant between 1960 to service debt would be restricted, leading to and 1973, and rose sharply between 1973 and 1975. a likely reduction in their net receipts of private capital inflows. Since the slower expansion of cases, the variation in underlying premises is global output can be expected to check the limited to the 1980s, and moderately optimistic growth in demand for energy, sustained in- assumptions are made regarding the capacity of creases in the real price of energy are deemed developing countries to undertake difficult but unlikely in the Low scenario. desirable domestic policy adjustments to chang- The implications for developing country ing international circumstances. The principal growth of these different assumptions are out- assumptions distinguishing each scenario are lined in Table 17. The projections indicate the outlined in Table 16. sensitivity of developing country prospects to The High scenario assumes that economic conditions in the world economy. They are, in growth in the industrialized countries will re- substantial measure, consistent with historical cover to the 4.9 percent annual rate recorded in experience during the past 15 years: the 4.8 the 1960s. This would fuel a strong expansion percent annual growth of developing countries of world trade at the rate of 7.3 percent a year, in the Low scenario is similar to the experience including a more rapid growth of developing of 1974 to 1978, while the 6.6 percent a year country exports. The faster expansion of devel- growth projected in the High case is not unlike oping country exports would stem from two the record of 1965 to 1974. sources: the buoyant world market conditions, In the High scenario the main impetus for the and a substantial relaxation in trade barriers faster growth of Middle Income countries comes which should be facilitated in the industrialized from the postulated improvement in the inter- countries in conditions of rapid growth and de- national trade environment, while the larger clining unemployment. Faster growth in indus- flows of concessional assistance assumed in this trialized countries should also make it possible case would have a strong positive impact on the to accelerate the expansion of Official Develop- growth of Low Income countries. The variation ment Assistance, which is assumed to reach 0.45 in growth increments across Middle Income 17 17. Growth and Levels of Gross Domestic Product Under Alternative Scenarios Average Annual Growth Rates, 1980-90 Gross Domestic (percent, at 1975 prices) Product Per Capita Gross Domestic Gross Domestic (1975 US dollars) Product Product Per Capita 1975 1990 Base High Low Base High Low Base High Low Low Income Countries 4.9 5.9 4.3 2.7 3.5 2.0 147 211 232 200 Africa 3.8 4.8 3.6 1.0 1.9 0.7 146 165 181 160 Asia 5.0 6.0 4.4 2.8 3.8 2.2 148 219 240 206 Middle Income Countries 5.8 6.8 4.9 3.4 4.3 2.4 950 1,476 1,622 1,354 East Asia and Pacific 7.6 9.3 6.4 5.6 7,1 4.3 582 1,399 1,638 1,258 Latin America and Caribbean 5.7 6.5 4.6 3.2 3.9 2.1 1,103 1,632 1,756 1,471 Middle East and North Africa 5.5 6.3 5.0 2.9 3.6 2.4 823 1,234 1,325 1,173 Sub-Saharan Africa 4.4 5.3 3.7 1.4 2.2 0.7 544 630 683 586 Southern Europe 5.4 6.5 4.7 4.2 5.2 3.4 1,808 3,122 3,463 2,907 All Developing Countries 5.6 6.6 4.8 3.3 4,2 2.4 499 773 849 712 Industrialized Countries 4.2 4.9 3.5 3.7 4.5 3.1 5,865 9,999 10,747 9,381 Capital Surplus Oil Exporters 5.0 6.1 4.6 2,2 3.2 1.7 6,192 8,439 9,332 8,049 Centrally Planned Economiesa 4.2 3.4 2,560 4,351 East European centrally planned economies only. regions reflects differences in their export pros- developing nations into the ranks of industrial- pects and capabilities and in the extent to which ized countries by the end of this century. Fur- their debt situations at the beginning of the pro- thermore, the projections suggest that the jection period permit additional borrowing to present diversity in income levels among devel- facilitate import growth. Under the Low scen- oping countries will continue: all three scenarios ario, the outlook would be particularly bleak for project a widening gap between the average the Middle and Low Income countries of Sub- incomes of Low and Middle Income countries. Saharan Africa: per capita output would in- Though the disparities among groups of na- crease by less than 1 percent a year. In all devel- tions are unlikely to be changed in a matter of oping countries the contrasts between the High a few decades, the welfare of millions of people and Low scenarios are particularly strong in in developing countries nonetheless depends on regard to the growth of industry, since the choices to be taken now. By 1990, the outcomes availability of imported inputs and the fast of the High and Low scenarios represent very growth of demand are crucial to the growth substantial differences in living standards. These of this sector. differences underline the urgency of interna- Table 17 also shows the effects that the differ- tional and domestic policy actions to improve ent growth paths would have on GDP per person the environment for international trade and in 1990. It is sobering to note that even in the capital flows. Without such action, it is not High scenario, after ten years of vigorous eco- difficult to foresee conditions in developing nomic expansion in developing countries, aver- countries that are even worse than those pro- age income per person in these countries would jected here. Slow growth and protectionism in be less than a twelfth of that in industrialized industrialized countries could compound one countries; in Low Income countries the propor- another and have even worse effects on these tion would be less than a fortieth. Even making countries' economic health than in the Low necessary allowances for differences in con- scenario. The more dismal trends in world trade sumption patterns and purchasing power,, it is and exports from developing countries would clear that massive disparities in living standards imply correspondingly worse consequences for will persist among the nations of the world. these nations' debt servicing capacity and capital Even with substantial external assistance and a inflows, thus reducing imports and economic favorable international environment, the 1980s growth to levels below those projected in the will only be one decade in the long process of Low case. Such a deterioration in the interna- development that will lift only a few of today's tional environment could trigger inappropriate 18 policy actions or delay reform in developing case, whereas their numbers would be approxi- countries, causing further setbacks in their mately 240 million fewer if growth were to be development. The resulting stagnation in de- accelerated in line with the High scenario. veloping countries could limit the growth of a Improvements in the distribution of income particularly buoyant market for exports from could make a further significant contribution to industrialized countries, and aggravate reces- the alleviation of absolute poverty. The above sionary conditions and low productivity growth projections assume that, in line with past trends, in these countries. The maintenance of a liberal approximately three-fourths of the increase in international environment is a need shared by aggregate income would accrue to the top 40 all countries. This need emerges even more percent of income recipients. With very strong clearly from an assessment of the effects of redistributive policies in developing nations, the different growth paths on the dimensions of share of this group in increments in national absolute poverty in the world. income might be reduced to about 60 percent. If such improvements in income distribution were Implications for the Alleviation of Poverty achieved together with the rapid growth rates Last year the World Development Report of the High scenario, the number of people estimated that 600 million people could be living remaining in absolute poverty by the year 2000 in absolute poverty at the end of the century if could be reduced to between 300 and 350 million, growth in developing countries continued at the or less than 10 percent of the total population rates envisaged in the Base scenario. Table 18 of developing countries. Such favorable condi- 18. Levels of Absolute Poverty Under Alternative Scenarios, Year 2000 Base Scenario High Scenario Low Scenario Percentage Millions of Percentage Millions of Percentage Millions of of Absolute of Absolute of Absolute Population Poor Population Poor Population Poor Low Income Countries 22 440 17 340 26 520 Middle Income Countries 10 160 8 130 12 190 All Developing Countries 17 600 13 470 20 710 presents estimates of the numbers of people in tions could also help to lower fertility rates more absolute poverty in the year 2000 if the develop- rapidly than otherwise, and this should lower ing economies grow at the rates envisaged in the numbers in absolute poverty somewhat the three scenarios. Estimates of the future further. extent of poverty are even more impressionistic Absolute poverty is not likely to be eliminated and subject to error than the projections that by the year 2000. Nonetheless, substantial prog- were outlined above, but the variations that ress could be achieved through a combination would be associated with differences in econo- of higher growth, improved income distribution, mic growth rates can be projected with some- and reduced fertility. These projections empha- what greater confidence. These variations are size the need to seek every possible means to substantial: the projections indicate that there support the future growth of developing coun- would be over 700 million people living in abso- tries. The international and domestic policy lute poverty in 2000 if developing countries issues that merit attention in pursuit of this task were to grow at the rates projected in the Low are the subject of ensuing chapters of this report. 19 Chapter 3: International Policy Issues This chapter discusses three principal areas their international prices. Recent international of international concern: the environment for decisions appear to have paved the way for the international trade, the prospects for capital establishment of a Common Fund which, to- flows and external debt, and energy. As noted gether with individual commodity agreements, in Chapter 2, the issues in these areas are inter- could reduce the amplitude of price fluctuations dependent. A more liberal trade environment and facilitate a steadier expansion of supply. improves the export and growth prospects of The scale and scope of the Fund and the proce- developing countries, which, in turn, enhances dures governing its operation remain to be de- their capacity to service debt and helps to termined. Until this occurs and some operational strengthen the structure of international capital experience is gained, it will be difficult to assess flows. As another example, sharp and unpre- the effect of the institution on the volume and dictable increases in the price of internationally prices of primary commodity exports. traded petroleum, which increase the strain on Non-fuel primary exports from developing the balances of payments of oil importing coun- countries would also benefit from improved tries, can induce major industrialized nations access to markets in industrialized countries. to adopt unduly deflationary policies, slowing While tariff and non-tariff barriers are low or their own growth and that of developing nations, non-existent for non-agricultural primary prod- which rely on them as major markets for ex- ucts, industrialized nations continue to main- ports. Furthermore, in each of the three areas tain strong restrictions against agricultural com- chosen for extended discussion, the developing modities that compete directly with domestic and industrialized countries have strong, long- farm products. Relaxation of these barriers term mutual interests. The international com- would be of particular benefit to developing munity faces the challenge of undertaking in- countries of Latin America, North Africa and formed policy initiatives to realize these mutual Southern Europe. Some of the Southern Euro- interests and to protect them from ill advised pean nations can, in any case, expect to obtain actions in pursuit of ephemeral gains. greater access to the European Community market through gaining membership in the The World Trade Environment Community over the next few years. Trade in Non-fuel Primary Commodities Protection in Manufactured Products: Trends In 1976, non-fuel primary commodities ac- and Consequences counted for 35 percent of the total merchandise While manufactures amounted to only 27 per- exports of developing countries. Sixty-five per- cent of developing country merchandise exports cent of these primary exports were purchased in 1976, they are the fastest growing category by industrialized nations. As noted earlier, the and the one that is likely to supply the bulk of recent slowdown in the growth of primary ex- total export growth in the future. It is, of course, ports is attributable to sluggish growth in indus- true that exports of manufactures largely come trialized countries and to a wide range of factors from only a few countries, and that for many inhibiting the supply capability of developing developing countries non-fuel primary com- nations. Part of the supply problem results from modities will remain the principal exports for the inadequate incentives and low investment a long time to come. However, the long-term priorities that have been accorded to primary growth of primary commodity markets is ex- production in developing countries. Over the pected to remain slow; besides, the ability to past few years these policies have been reversed expand mineral exports depends in part on in an increasing number of nations and export chance. Thus the expansion of manufactured dividends could soon be forthcoming exports will be vital for most developing coun- Production and exports of primary commod- tries, however tenuous their current foothold in ities have also been hurt by large fluctuations in world markets. 20 The industrialized countries are the most im- and textiles, where the increase in restrictive portant markets for the manufactured exports measures has been most severe. Good oppor- of developing countries, absorbing over three- tunities still survive outside the most affected fifths of the total in 1976. Developing countries sectors, but the consequences of present bar- themselves accounted for 31 percent and the riers and the continuing threat of further pro- centrally planned economies purchased only tectionist action constitute clear causes for 6 percent. Thus, access to the markets of in- alarm. dustrialized nations is a vital concern for de- During the past year protectionist pressures veloping countries. The rate of growth of in- in industrial economies have continued to be dustrialized economies is important in this very strong, although in some countries they context, first, for its direct effect on market size, have met growing resistance. The results have and second, and even more important, for its been mixed. The favorable signs include: indirect effects on the trade policies of these A determined effort by the United States and countries. Though opportunities for new sup- others to push the multilateral trade negotia- pliers are generally best in dynamic markets, tions to a successful conclusion. These agree- the enormous size of the markets in question ments could prove to be the most significant reduces the significance of this constraint. In development of the past year. 1976, developing countries accounted for only 10 percent of the total imports of manufactures German-led resistance in the European Com- by industrialized nations, and for less than 2 munity that has restrained the spread of pro- percent of their total consumption of manufac- tection and cartelization to new industries. tures. Even if developing countries succeed in A tendency in the US, since mid-1977, to expanding their manufactured exports at the give "escape clause" relief to domestic pro- rates projected under the High scenario, the cor- ducers through temporary increases in im- responding ratios for 1990 are not awesome port tariffs, rather than new non-tariff (Table 19). The more significant effect of slow barriers, though this trend has not continued growth and unemployment in industrialized in the most recent ruling. economies on the manufactured export pros- Determined action by France to permit ad- pects of developing countries is through in- justment of domestic industry to imports in creased protection and other defensive meas- such sensitive sectors as steel. ures to curb the rise in their market shares. Measures by Japan to facilitate imports. 19. Manufactured Exports From Developing Countries as a Share of Markets in Industrialized Countries, Under Alternative Scenarios (Percentages) Share in Market Growth 1976 1985 1990 1976-90 Low Base High Low Base High Low Base High In Imports 9.9 12.9 13.7 13.8 14.2 15.8 16.2 17.2 19.3 19.1 In Consumptiona 1.6 2.6 2.9 3.1 3.4 4.0 4.6 6.2 7.2 8.0 aconsumption of manufactures here refers to the amount of manufactured goods demanded and supplied for all uses, estimated as gross output plus imports minus exports. Discriminatory protection against the manu- However, there have also been adverse changes: factured exports of developing countries is not In textile products, where high US protection new; it has been significant since the early was until recently the envy of European pro- 1960s. While the early measures were trouble- ducing interests, stringent new quotas intro- some, they did not prevent 15 years of rapid duced by the European Community have growth. But the recent upsurge of protectionism, encouraged US industries to raise their sights described in World Development Report, 1978, in turn. These industries are demanding and has had substantial adverse effects on develop- apparently obtaining even more non-tariff ing countries' exports, particularly in clothing protection as a condition for supporting legis- 21 lation needed to complete the multilateral interest to these countriesfor example, tex- trade negotiations. tiles and footwearare either being exempted The US has imposed restrictive "orderly from cuts or are being reduced much less than marketing arrangements" against imports of other tariffs. Furthermore, there is a threat that color television sets from the Republic of a proposed new code on "safeguards" could China and the Republic of Korea. legitimize discriminatory restrictions against The European Community has renewed for successful exporting nations. Another signifi- another year its "anti-crisis" program in steel, cant problem is that in order to gain legislative including export restraint agreements with approval of the overall package, additional pro- outside suppliers as well as minimum import tection may be granted to certain producing in- prices. The evolution of protection in steel terests in industrial nations. Such additional and steel products is of significance to devel- protection is most likely in products such as oping countries, where steel is a fast growing textiles, steel and sugar which are of special industry with, in some countries, exception- importance to developing countries. Finally, and ally low production costs. perhaps most important for developing nations, There has been particularly strong pressure the Tokyo Round negotiations have not ad- for increased protection in the United King- dressed the reduction of existing quantitative dom, with new "voluntary" restrictions that restrictions, such as those on textiles, clothing affect Japan above all. and footwear. Subsidies to declining industries, such as Increased protection in industrialized coun- shipbuilding, steel and textiles, have reached tries reduces the export opportunities of devel- high levels, especially in some European oping countries. However, it is important to countries. More general employment and re- keep the effects in perspective. While the ad- gional subsidization programs are supporting verse implications for exports of textiles, cloth- such industries as clothing and footwear. ing, footwear and steel have been noted, overall, The outcome of the Tokyo Round of multi- the potential for growth in the volume of devel- lateral trade negotiations is also likely to be oping country manufactured exports is still mixed. On the one hand, the agreements pro- good. It is noteworthy that those developing vide for a series of detailed codes relating to countries against which protection has been subsidies and countervailing duties, govern- principally directed continue to expand their ment procurement, standards, customs evalua- exports faster than others, even though their tion procedures and other matters, which are export levels are already high. The worst result designed to constrain the deployment of such of the increased protectionism may be a greater non-tariff barriers to trade. Depending on how unwillingness on the part of many developing these codes are implemented, developing coun- countries to risk more outward-looking trade tries could gain improved access to markets in policies, even where these are urgently needed. industrial countries. The new codes also pro- They could, therefore, suffer the consequences vide for mechanisms for surveillance and set- of inflexibility and low import capacity usually tlement of disputes among nations, though the associated with inward-looking trade regimes role of developing nations in establishing and costs that are likely to be particularly high in an implementing these procedures, and hence their uncertain and protectionist international en- potential benefits from them, will partly depend vironment, where flexibility is at a premium. on their readiness to sign the codes. The Tokyo Partly for this reason, and partly because very Round agreements also recognize that develop- low quotas are being imposed on new entrants ing countries face special problems and make in such obvious first industries as textiles and some allowances for these: developing coun- clothing, the adverse effects of heightened pro- tries can be granted tariff preferences by indus- tection may be felt more by the poorer and less trial nations; they can establish preferential ar- successful developing countries than by the rangements among themselves; and developing most successful and visible targets. country signatories are generally exempted Nor is protection in the long-term interest of from the ban on export subsidies. the industrialized countries imposing it. Indus- On the other hand, the Tokyo Round tariff trialized economies have much to gain from ex- cuts discriminate against developing countries. panding trade with developing nations. This Duties on some product categories of particular trade makes it possible to release workers from 22 low-skill jobs in declining industries and to cre- creases and increase the purchasing power of ate a large number of highly skilled and satisfy- consumers. A 1978 survey of all consumer goods ing occupations. A recent study of the OECD except food and automobiles, sponsored by US countries reveals that this shift of labor follows retail organizations, found that goods imported naturally from the pattern of developing coun- from Asia and Latin America were, on aver- try purchases from industrialized nations. The age, sold for 16 percent less than domestically study estimates that between 1976 and 1986 made products of similar quality. Furthermore, trade in manufactures with developing coun- these imports were of greater importance in the tries will lead to a net loss of almost 200,000 expenditures of families with below-average unskilled and semi-skilled production jobs in incomes. the OECD area, while the employment of skilled Much of the impetus for protectionist action workers, managers and administrators will ex- stems from concern over the employment ef- pand by an almost exactly equivalent amount. fects of trade with developing countries. It is In the long run, labor displacement by imports important to place these concerns in perspec- from developing countries can substitute for the tive. In one sense, the problem of unemploy- crucial role played by agriculture and immigra- ment is a necessary corollary of the benefits tion in many industrialized nations during the from trade, which come, in part, from the re- 1950s and 1960sthat is, as a source of new lease and temporary unemployment of some workers for more dynamic economic sectors. factors of production. Compared with other The data in Table 20 demonstrate the import- causes of unemployment, labor displacement ance of developing nations in stimulating the through trade has the advantage of being almost 20. Manufactured Exports From Industrialized Countries to Developing Countries, 1970-76 (Percentages) Product Shares of Industrialized Composition Countries' Exports Going Average (at current to Developing Countries Annual Real prices) [at current prices) Growth Rate 1970 1976 1970 1976 19 70-19 76 Machinery and Transport Equipment 53 59 29 36 10 Non-Electrical Machinery (24) (24) 31 37 8 Transport Equipment (18) (22) 26 34 10 Electrical Equipment (11) (13) 39 37 15 Chemicals 13 12 30 29 7 Iron and Steel 8 7 24 29 6 Other Manufactures 26 22 21 24 7 All Manufactures 100 100 26 31 9 Note: Totals may not add due to rounding. Sources: Statistics of Foreign Trade, Series C: Trade by Commodities, Market Summaries: Exports, Vol. 1, Jan-Dec. 1970, and Vol. 1, Jan-Dec. 1976 (Paris: Organisation for Economic Co-operation and Development); United Nations Yearbook of Interna- tional Trade Statistics, 1977 (New York: United Nations, UN Statistical Office); Networks of World Trade, By Areas and Com- modity Classes, 1955-76 (Geneva: General Agreement on Tariffs and Trade, Studies in International Trade, No. 7, 1978); and United Nations Monthly Bulletin of Statistics, March 1979 (New York: United Nations, UN Statistical Office). expansion of industrialized country exports in instantaneously offset through the increase in high productivity sectors such as machinery, demand for exports created by that trade. A transport equipment and chemicals, which make number of analyses of the consequences of bal- up 70 percent of the manufactured goods im- anced expansion in trade in manufactures with ported by developing countries from the indus- developing countries have been carried out, in- trial economies. Protection reduces the import cluding studies for Belgium, France, the Federal capacity of developing countries and damages Republic of Germany, the Netherlands, the US the growth prospects of these export sectors. and the OECD as a whole. The estimates of em- Low-cost manufactured imports from devel- ployment implications range from negligible to oping countries help to hold down price in- small net losses. Moreover, these and other 23 studies emphasize the very limited significance for governments, protection imposes no im- of imports from developing countries in displac- mediate fiscal burden. Those who lose from ing jobs in import-competing industries, in com- protection, such as consumers and export in- parison with other factors such as technological dustries, are weakly organized in comparison change and productivity growth. Indeed, pro- with the interests seeking protection. Imports tection against developing country imports has from developing countries are particularly vul- sometimes accelerated the adoption of labor- nerable to political pressures for protection, as saving equipment in the protected industry and these nations offer little threat of retaliation. undermined the objective of preserving jobs. If industrialized and developing countries are Furthermore, to the extent that unemployment to realize, more fully, their strong mutual bene- exists because of governmental fears about in- fits from more liberal trade, steps must be taken flationary pressures, a protectionist policy can to resist or reduce the protectionist pressures worsen the problem by reducing the mobility of from those who fear the consequences of productive factors, and thus exacerbating bot- change. Four broad approaches offer promise tlenecks and shortages at a given level of aggre- for this purpose. First, it is essential to impose gate demand in the economy. international restraints on the freedom of ac- tion of individual governments. These must in- Curbing Protection and Adjusting to Imports clude restraints on the use of various protec- Despite the strength of the economic argu- tionist measures, and their effective surveil- ments against it, protection retains some appeal lance. However, juridical restraints alone will for governments for two principal sets of rea- not prevent action by sovereign governments in sons. First, growth in imports from developing what is considered a crisis. Partly for this rea- countries, like all other economic changes, im- son, it is essential and equally useful to mobilize poses adjustment costs on certain groups in in- domestic interests against protection and to edu- dustrialized countries. Second, political factors cate the public that the "menace" from abroad influence the response to the challenge of ad- is not the cause of unemployment problems. justment. The pressures of import competition Third, and probably most important, it is are concentrated on a small set of labor- necessary to promote a return to full employ- intensive industries, some of which, such as ment and better overall economic performance clothing and footwear, are already depressed in the industrialized world. While this issue is by slow market growth. As a consequence of not considered further here, it is important to historical and economic forces, these industries stress that policies aimed at improving the ad- are often located in relatively depressed re- justment mechanism can only assist with this gions, where they offer low wages to their central aim, while a long-run policy of protec- largely unskilled workers. Many of the em- tion and defensive subsidization is likely to ployees are women who cannot readily move make its achievement more remote. Finally, it in search of better jobs because of family obli- is essential to develop microeconomic adjust- gations. Faced with competition from develop- ment policies to lower the social costs of transi- ing countries, some firms have little choice but tion and also to redistribute them. In this way, to seek protection if they are to survive, and if the overall functioning of the economy can be they do not, individual lives are disrupted and improved and the resistance to trade-induced earnings lost. change can be reduced. Industrialized economies have handled much The last three lines of action are all the more greater economic shifts in their recent past; important since in one crucial area international for example, in several countries employment agreements are unlikely to be completely effec- in agriculture more than halved between 1950 tive in restraining protectionist actions by indi- and 1970. The problem is that in the present vidual countries: the liberalization of non-tariff context of relatively high unemployment, gov- barriers cannot easily be forced on countries ernments face strong pressures to adopt short- from outside. The protective effects of non-tariff term palliatives. Even though imports displace barriers depend enormously on their qualitative relatively few workers, their visibility invites details and the exact way in which they are ad- protection. Producers favor protection because ministered. For this reason it is particularly de- it is the form of government assistance that sirable to reduce these barriers and, where some entails the least direct government intervention; restrictions are deemed absolutely indispens- 24 able, to switch to more visible instruments such who stay. Finally, whatever the political justi- as tariffs. fication for compensating owners of capital, it may be felt that it is their function to anticipate In designing a better system of adjustment, economic developments. For that reason, it may it can be argued that the market mechanism it- be desirable to limit the sums granted and the self is best equipped to bring about the efficient size of eligible firms. reallocation of resources, if only it is allowed to work. What is needed, therefore, is a policy Existing compensation programs have had that reduces the political resistance to change, mixed results. The US trade adjustment pro- which ultimately manifests itself as protection. gram is perhaps the most interesting example. One possible means of so doing is to compen- It provides the bulk of its benefits in the form sate those directly affected. To diminish the of payments to workers who have lost their political support for protection, any program jobs in import-affected firms. However, the pay- of compensation needs to have a number of ments do not provide full compensation. In characteristics. First, those who are to benefit addition, they create a disincentive to rapid re- must be able to rely on the benefits, which en- employment, since they are not in lump sum tails clear and comprehensible guidelines and form hut depend on the time spent unemployed. speedy administration. Second, compensation Henefits to firms are provided only for moderni- must be generous, approximating the private zation or restructuring rather than for closure costs imposed on those who are denied protec- a feature which may postpone some necessary tion. Third, the program needs to be seen as exits. Furthermore, firm-by-firm examination of fair. Finally, the beneficiaries should probably injury tends to cause delays. Other countries include all, or at least most, of those who bear have assisted those employed in industries major losses and have considerable political designated for support and structural adjust- power, including owners of capital. ment in the face of economic changes. Examples are the United Kingdom's Cotton Industry Act These conditions are not readily satisfied. of 1959, and that part of the programs of the Thus, any program based on a firm-by-firm ex- European Coal and Steel Community which amination of the costs imposed by what has consisted of help to displaced coal miners. In already happened tends to suffer from inevi- the former case, owners of capital were com- table delays, as well as a certain arbitrariness in pensated for closures with some success. How- eligibility criteria and their application. A pos- ever, as with almost all programs that focus on sible solution is to certify those employed in specific industries, there was a certain confu- whole industries as potentially eligible for com- sion of purpose, part of the aim being to mod- pensation, perhaps in connection with petitions ernize and revitalize the industry, which proved for emergency "escape clause" protection or rather difficult to achieve. So far, programs for with decisions to eliminate existing import compensation have had only limited success in restrictions on specific products. Providing blunting the political pressures for increased adequate compensation and defining the bene- protection. ficiaries pose significant practical problems. Vir- A second and fully compatible approach to tually any financially feasible program of com- adjustment policy consists of attempts to lower pensation is likely to be limited to those who the social cost of adjustment, largely by reduc- leave the industry; in contrast, protection bene- ing the period during which displaced produc- fits those who stay. Lump sum payments could tive factors are unemployed. One method is to potentially be given to workers who leave their give direct assistance for the creation of new firms, or whose plants close, based on their age, activities in communities hard hit by plant seniority, and the like, while owners could be closures or large layoffs. Successful programs compensated according to the book value of have been organized in the US by the Defense their assets (allowing for inflation) as these Department's Office of Economic Adjustment, are scrapped. Inevitably, there will be prob- which was established to provide help to com- lems of fairness in setting limits on who will be munities adversely affected by the closure of compensated, not least in regard to industries military bases. More than 200 communities were supplying inputs to the affected industry, and assisted between 1961 and 1975. In the Federal in compensating people who would have left the Republic of Germany, after Volkswagen's lay- industry anyway, while not compensating those offs following its losses in 1974, the govern- 25 ment provided assistance to encourage new ac- for vulnerable industries, either to slow their tivities in the affected region. Looking at wider decline and thus ease the process of adjustment, regional policies, efforts to help backward re- or to provide a "breathing space" and assistance gions should focus on increasing the supply of for modernization and re-equipment in order to skilled labor and not just that of physical capi- make the industry internationally competitive. tal. Among economywide measures, training The goal of slowing down the process of adjust- and retraining programs, especially on the job, ment is a reasonable one, hut it has proved very seem to be a successful approach. A recent rare, in practice, for protection to major indus- evaluation found high returns from programs tries to be short-lived. More commonly, the under the United States Manpower Develop- "temporary" protection has been used for new ment and Training Act; of particular interest are investment in the hope, frequently unfulfilled, the exceptionally high benefits to females, who of restoring competitiveness. Subsequently, are apt to make up a large proportion of em- there has been strong pressure to renew and ployees in industries that are vulnerable to extend protection to make these further invest- imports from developing countries. The Swed- ments viable. The textile and clothing indus- ish National Labor Market Board estimates that tries exemplify this tendency to convert short- 90 percent of its trainees obtain jobs within term relief from import competition into perma- six months. nent protection. An alternative strategy is de- Yet another set of policies consists of remov- liberately to restructure an existing industry in ing obstacles to mobility, such as non-transfer- accordance with a given plan, often negotiated able pensions, rent-controlled housing and among the various affected parties (other than losses on owner-occupied dwellings. The last consumers). While this approach could con- has been a feature of the US Defense Depart- ceivably facilitate adjustment, experience from ment program mentioned earlier, Firms can a number of industrialized nations has revealed be helped by encouragement to locate labor- some severe problems: bringing firms and em- intensive activities overseas, either through ployees together to develop an industrial plan direct foreign investment or subcontracting; is apt to engender a well-organized plea for this is a part of the Netherlands' adjustment pro- protection; if substantial parts of the industry gram. If they are to take advantage of such are unviable, they generate strong pressures for inducements, firms need to be assured of secur- a significant commitment of subsidized funds to ity for their foreign investment. This needs pursue the elusive objective of restoring their inter-governmental negotiation. Finally, the competitiveness; and lastly, within a market dynamism of the entire economic system is economy any industrywide plan tends to be absolutely crucial. Not only does this demand difficult to administer and to become rapidly success with macroeconomic stabilization pol- outdated. Re-equipping firms works best where icy; it also depends upon the rapid development they are well managed, and have strong markets of new and vigorous industries. Apart from gen- rather than declining ones. eral support for research and development, This review of adjustment policies suggests which is characteristic of most industrialized some tentative conclusions. First, programs of country governments, Japan has been particu- adjustment assistance are likely to be more ef- larly successful thus far in picking the "win- fective if they work together with market ners" of the future. forces, rather than when they attempt to swim It is important to recognize here that much against their tide. Second, assistance in finding of what is currently referred to as adjustment alternatives for affected workers and commu- assistance is really strongly defensive. Much nities is more likely to succeed than programs existing manpower policy consists of subsidiz- designed to support declining industries. Third, ing declining industries, and the same is true the efficacy of adjustment programs hinges on of industrial policy. Furthermore, existing in- the details of their design and implementation. vestment subsidies in poor regions often lead Finally, adjustment assistance can only be ex- to the concentration of just those industries pected to supplement and not to substitute for most vulnerable to competition from develop- general economic policies that promote rapid ing countries. growth and high employment, and thus create A third approach to adjustment policy con- overall conditions that facilitate adjustment to sists of temporary protection or direct support imports from developing countries. 26 Developing Countries' Trade With One Another and ects: as Table 21 shows, only about one-sixth of With Centrally Planned Economies this trade takes place within Latin America and If protectionism in the industrialized coun- Africa, the only two regions where these ar- tries were to get still worse, are there ready rangements have been significant in the past. alternatives? One possibility is more rapid ex- Although a great deal of the trade taking place pansion of inter-developing country trade. This under regional arrangements is likely to have trade has been buoyant in recent years. Brazil occurred anyway, the benefits from judiciously now trades more with other developing countries designed regional trading arrangements should than with the United States, and India's exports not be underestimated. to developing countries are increasing faster It is the developing countries' import regimes than its exports to the industrialized nations. and export capabilities that largely determine Trade in manufactures among developing coun- their potential both as markets for, and sup- tries has increased rapidly, roughly keeping pliers to, one another. The expansion of this pace with their manufactured exports to indus- trade tends to be closely related to their overall trialized countries. This has been an impressive export performance, since export earnings accomplishment, since the expansion has in- largely determine the capacity to purchase im- volved chipping away at the numerous ob- ports, including those from other developing stacles, including protective and institutional countries. Furthermore, many products can barriers and weak marketing connections, on only be sold to, or bought from, industrialized many fronts at once. Most of these manufac- countries. Thus, trade with other developing tured exports go from more to less industrial- countries should be seen as a complement to ized developing countries; only about one-fifth trade with industrialized countries, and not as is traded among countries at similar levels of a substitute for it. Excessively inward-looking industrial development. The products exported arrangements made in a quest for "collective are typically characterized by substantial econ- self-sufficiency" pose a danger of technological omies of scale in production, have demanding backwardness and the loss of valuable trading skill and capital requirements, and come from opportunities. However, within a satisfactory industries established mainly to supply local international environment, inter-developing markets. In these respects this trade contrasts country trade can be expected to grow rapidly with many of the typical labor-intensive exports and should, in the process, weaken such com- to richer countries. monly cited barriers as costly shipping and in- Little of the trade in manufactures among adequate institutions. One kind of institutional developing countries depends on regional inte- assistance could be especially helpful: the re- gration involving exchanges of protection, pref- cent growth of capital goods exports from the erential tariff treatment, or joint industrial proj- more advanced developing countries to the less 21. Trade in Manufactures Among Developing Countries, 1976 Total Manufactured Destination of Manufactured Exports (percentage of totalJ Exports Traded East Latin Among Developing To and America Middle East All Countries South and and North Other Southern Developing (billion current From Asia Caribbean Africa Africa Europe Countries US dollars) East and South Asia 26.6' 2.3 11.8 5.5 1.3 47.6 9.0 Latin America and Caribbean 0.4 13.9 0.3 1.0 0.6 16.1 3.1 Middle East and North Africaa 0.9 0.2 7Mb 0.2 0.4 9.3 1.8 Other Africa 0.4 0.4 0.5 3.0 0.5 4.8 0.9 Southern Europe 2.4 4.9 7.2 5.0 2.8 21.2 4.2 All Developing Countries 30.7 21.7 27.4 14.6 5.6 100.0 19.0 Note: Capital surplus oil exporters are included with developing countries in this table, while trade in manufactures excludes SITC 9. Totals may not add due to rounding. alncludes the capital surplus oil exporters; excludes Algeria and Morocco which are counted in "Other Africa". bjncludes substantial re-exports of goods manufactured elsewhere. Sources: Computed from United Notions Yearbook of Internationol Trade Statistics, 1977, Vol. 1, Table B (New York: United Nations, UN Statistical Office), and United Nations Commodity Trade Statistics, Series D (New York: United Nations, UN Statistical Office) for individual countries. 27 developed ones could be further encouraged by Further efforts could be made to clarify and expanded export credit and insurance facilities agree on the process of "graduation" whereby in the exporting nations. special tariff treatment, privileges and immuni- Centrally planned economies buy only 6 per- ties from international trade rules presently cent of the developing countries' manufactured granted to developing countries can be progres- exports, and although both groups would bene- sively reduced as countries develop. For the fit, trade between them is unlikely to expand nations affected, pressures to meet new stan- dramatically. Given their current policy of buy- dards can reinforce the case for desirable but ing technology from leading industrialized difficult policy shifts. Such shifts in policy can countries, their strained payments situations be induced and aided by guarantees of improved and growing foreign debts, centrally planned market access and the provision of additional economies are likely to be more important as capital flows to ease the foreseeable strains on competitors to developing countries in the in- the balance of payments. With the progressive dustrial world than as their trading partners. graduation of some developing nations, those In fact, much of the recent protectionism in the left behind should benefit from a more exclu- industrial nations of Western Europe has been sive status. aimed strongly at the centrally planned econo- Efforts also need to be made to improve the mies of Eastern Europe. Concern over these Multi-Fibre Arrangement and liberalize the as- countries' ability to reduce their export prices sociated trade barriers in textiles and clothing. artificially has contributed to this protectionism. In these industries, after more than 15 years of In the decades ahead, the People's Republic of bilateral quota protection against developing China could become a significant source of com- countries, the system appears too entrenched petition for the developing countries in indus- to be quickly removed or allowed to lapse. In trialized country markets for labor-intensive these circumstances, attention ought to be di- products. rected toward revising and liberalizing non- tariff barriers so as to minimize their damage Priorities for International Action to the poorer and less advanced of the develop- Much of what matters most, in halting and ing countries. What is most needed here is as- rolling back protection, can only be achieved surance of market access over a long period, up within individual industrialized countries and to quite substantial export levels, for what are the European Community. Nonetheless, actions now the less industrialized developing coun- at the international level can play a valuable tries, in order to reopen labor-intensive manu- complementary role. The emerging results of facturing for export as a potential path of the Tokyo Round help to show the extent of development to countries that need it most. what can be achieved in the face of strong pro- Today most of the textile imports and almost all tectionist pressures. It will now be necessary to of the clothing imports from developing coun- push hard to turn these results to the advantage tries come from the more industrialized of the of the developing countries, and all nations, by developing countries; improving market access implementing the new codes and procedures so for the others would carry little immediate threat that they exert a strong positive influence, and of a surge of imports and would not require rapid by building up a body of case law, precedents structural adjustment in importing countries. and procedures that will effectively stand in the Given the spread of textile quotas under a bi- way of abuses. The process of implementation lateral systemEuropean Community quotas offers significant potential for strengthening the or equivalent arrangements now extend to over international machinery for surveillance, en- 35 developing countries and threaten even Lomé forcement and the settlement of disputes. Trade partnersand the great difficulties encountered barriers outside, and contrary to, the frame- in rolling back non-tariff barriers in agriculture, work of the General Agreement on Tariffs and where they have proliferated as well, it is also Trade need to be tackled. There is an urgent crucial to avoid the creation of any similar sanc- need for a moratorium on further trade restric- tioned system of barriers in other industries tions affecting the export prospects of develop- such as footwear or steel. ing countries. In addition, efforts at negotiating External Debt and Capital Flows reductions in existing non-tariff barriers merit The rapid growth in the aggregate indebted- high priority. ness of developing countries after 1973 led to 28 22. Developing Countries: Medium- and Long-term standing International Monetary Fund (IMFJ Debt Outstanding and Disbursed at credits of about US$8 billion. Because of the Year-end, 1970-90 rapid growth in private lending, the proportion (Billion current US dollars) 1970 of debt owed to private creditors increased from 1977 1985 1990 47 percent in 1970 to 60 percent in 1977. Ninety- To Private Creditors 32 155 438 771 four percent of the debt owed to private sources Low Income Countries 2 10 16 19 at the end of 1977 was held by Middle Income Middle Income Countries 30 145 422 752 countries (Table 22). To Official Creditors, Despite the increase in aggregate debt, vari- including Multilateral 37 104 302 507 ous indicators of indebtedness have remained Low Income Countries 15 39 108 183 acceptable. For the Middle Income countries as Middle Income a group, debt service as a percentage of exports Countries 21 66 194 324 did not increase significantly between 1970 and Total 68 258 740 1278 1977, even though there were substantial in- Total at 1975 Prices 113 231 348 449 creases in some country groups (Table 23). Most Gross International of the private debt was owed by relatively few Reserves 22 103 266 441 countries, most of which had good growth pros- Low Income Countries 3 11 23 38 pects and reasonably sound economic manage- Middle Income ment. A somewhat belated recognition of these Countries 19 92 243 404 facts, combined with the reduced current ac- Note: count deficits of the developing countries in Reserves in Months of 1976 and 1977, helped to allay concerns about Import Coveragea 3.0 4.0 3.3 3.1 the aggregate indebtedness of developing coun- Note: Totals may not add due to rounding. aThis measure expresses gross international reserves in tries. However, some countries, such as Peru, terms of the number of months' imports they could pay for, Sudan, Turkey, Zaire and Zambia, have encoun- with imports at the average level for the year in question. tered significant problems of debt management a heightened concern about their debt problems. in this period. In some other nations such as Between 1973 and 1977 their medium- and long- Brazil, Indonesia, Mexico and the Philippines, term debt outstanding and disbursed increased increased borrowings have resulted in higher at 21 percent a year in current prices. But the at- indebtedness and debt service ratios but have tention paid to this rapid growth obscured the caused no significant liquidity problems. The fact that the developing countries' outstanding increases in debt service ratios projected for debt had also doubled in the period 1969-73, and some groups of Middle Income countries indi- that in real terms the debt grew considerably cate the growing challenge that will confront more slowly in 1973-77 than in 1969-73. Me- these nations in managing large flows of external dium- and long-term debt outstanding totaled capital and avoiding liquidity shortages. US$258 billion at the end of 1977. In addition, In addition to the debt problems of individual the developing countries had outstanding short- countries, the principal concerns that have term obligations of US$50-60 billion and out- emerged in recent years with respect to inter- 23. Middle Income Countries: Debt Service Ratios, 1970-90 As Percentage of Exports As Percentage of of Goods and Services Gross National Product 1970 1977 1985 1990 1970 1977 1985 1990 East Asia and Pacific 6.5 5.7 11.6 10.4 2.5 3.1 5.6 5.1 Latin America and Caribbean 15.9 20.9 24.1 24.2 2.5 4.3 4.8 4.7 Middle East and North Africa 10.3 6.7 12.7 15.8 2.0 2.7 4.9 5.7 Sub-Saharan Africa 5.9 8.5 19.9 27.6 1.5 2.9 6.1 7.8 Southern Europe 8.2 13.1 23.6 23.6 1.1 2.5 4.7 5.0 All Middle Income Countries 10.2 11.8 18.3 19.2 2.0 3.3 5.0 5.3 Note: Percentage Shares of Total Debt Service Repayment of Principal 70.7 68.2 74.0 74.6 Interest 29.3 31.8 26.0 25.4 29 national capital flows are the worsening ma- measures should be considered by the interna- turity structure of debt, the prospects for the tional community, first, to forestall liquidity continued growth of commercial lending, the crises, or to reduce their frequency and severity, efficiency with which the international mone- and second, to alleviate their effects when they tary and financial system handles liquidity occur. crises, the prospects for enhanced quantity The maturity structure of the medium- and and quality of Official Development Assistance long-term debt of developing countries has flows and the special needs of the poorest coun- worsened during the 1970s, largely because of tries. In broad terms, the principal concerns of the increasing share of private debt, which typ- many Middle Income countries relate to possi- ically has shorter maturities than official debt. ble liquidity problems; the prospects for com- As a result, nearly 50 percent of the developing mercial borrowing and the mechanisms for countries' total debt outstanding, including that handling liquidity crises are particularly rele- undisbursed, at the end of 1977 was scheduled vant to their situation. The key issue for Low to be repaid during the five years 1978-82. The Income countries is the adequacy of real re- share of private debt to be repaid by 1982 was source transfers, although some of these nations considerably higher, at about 70 percent. Of may also undergo liquidity strains. official debt outstanding, only 24 percent was Sources of Instability scheduled to be repaid by 1982, with another Liquidity crises occur when a country's ex- fourth to be repaid during the subsequent five ternal debt situation worsens as a result of ex- years. ternal factors or domestic policy failures or a These maturity structures imply that the Mid- combination of both, which can then lead to dle Income countries, which account for most reactions that compound the problem and en- of the borrowing from private sources, face a gender the need for debt reorganizations and heavy burden of debt repayment in the next painful adjustments in domestic economic poli- few years. During 1978, this bunching of repay- cies. Various sources of instability can spark ment obligations was relieved to some extent the initial worsening of a debt situation. These through voluntary refinancing of loans arranged include a decline or slackening in the growth of in earlier years. Because the main borrowing foreign exchange earnings, due for example to countries in this group have reasonably strong fluctuations in prices or volumes of commod- long-term growth prospects, their capacity to ity exports, increased barriers in export markets, service external debt over an extended period or declines in workers' remittances. Sharp in- is not really at issue. What causes concern is the creases in foreign exchange expenditures are risk of temporary interruptions in debt service, another source of instability. These may result which in some cases could be associated with from changes in the prices or volumes of im- rescheduling exercises. Most Low Income coun- ports of basic food and fuel, bunched debt tries, by contrast, have more limited growth service payments, or fluctuations in interest prospects and confront a more attenuated pro- payments on loans with floating interest rates. file of debt service obligations, to predominantly Domestic economic measures, such as overly official creditors. Both of these reasons would ambitious government expenditure programs, make it more difficult to enhance their debt ser- or excessive recourse to short-term foreign bor- vicing capacity through deferring current and rowing to finance medium- and long-term devel- near-term obligations to the late 1980s. opment needs, are other frequent initial causes The concern about the maturity structure of of instability. external debt arises not because creditors will In view of the varied causes, solutions to li- be unable to roll over the repayments of prin- quidity problems depend on a wide range of cipal when they become due, but because the policies and institutional mechanisms. Nor can larger the proportion of debt that is subject debt questions be handled in isolation, as they to annual review and recommitment, the greater are inextricably linked to many other economic the danger that initial changes impairing a coun- issues. In a broad sense, successful debt man- try's debt situation could trigger loss of confi- agement calls for sound domestic economic dence and a debt crisis. The concentration of policies and the fostering of mutually beneficial private debt among debtors and creditors makes trade and financial links with industrialized na- lenders sensitive to developments in the major tions. More specifically, a number of issues and borrowing countries. Seven countries (Algeria, 30 Argentina, Brazil, Indonesia, Mexico, Spain and liquidity, slack domestic demand for loans and Yugoslavia) accounted for over half the debt some relaxation of restrictions on international outstanding to private creditors at the end of lending. Japanese banks have limited their lend- 1977. Among US banks, about three-fourths of ing to a few prime creditworthy borrowers, the total claims on developing countries are held because their international branch network is by ten large money-center banks. For the devel- limited, and because of a desire to expand ex- oping countries, shortening maturity structures posure cautiously. Although there may be some increase the degree of uncertainty with respect regulatory concerns and self-imposed limits on to future flows of capital. Lengthening the ma- exposure in individual countries, the Japanese turity structure of debt and achieving greater banks could continue to expand their lending to diversification among lenders and debtors re- developing countries as they acquire greater main desirable objectives in the efforts to experience and broaden their clientele. Swiss strengthen the international financial system. banks have a very limited exposure in develop- Last year's World Development Report noted ing countries, most of which is in short-term another potential source of instability relating trade financing and correspondent banking; any to capital flows, namely the uncertainty about large increases are considered unlikely. the rate of growth of lending from private com- A major impetus for the external borrowing mercial banks. Diversification among lenders by developing countries is the need for inter- was identified as one trend which would en- national reserves to cover normal foreign cur- hance the outlook for stable growth in private rency transactions, to cope with unforeseen lending. During 1977 and 1978, this trend has fluctuations in foreign exchange receipts and been strongly in evidence, with non-US com- obligations and, more recently, in countries such mercial banks expanding their lending much as Brazil, for use as a hedge against adverse de- faster than US banks. Whereas US bank claims velopments in capital markets. As was shown on developing countries grew by only about 10 in Table 22, between 1970 and 1977 the reserves percent in 1977 and by a similar magnitude in of all developing countries increased by more 1978, reflecting such constraints as the ade- than US$80 billion, which was equivalent to quacy of their capital base, portfolio concentra- over 40 percent of the increase in their medium- tion, and changes in the regulatory environment, and long-term debt outstanding. total commercial bank exposure in developing Several aspects of this phenomenon are note- countries is estimated to have increased by over worthy. First, to the extent that the borrowings 30 percent in both 1977 and 1978, with much of undertaken in the past year or two have been the growth coming from German and Japanese anticipatory in character, taking advantage of banks. the relatively liquid state of international finan- Aside from the general growth of interna- cial markets, the interpretation of recent growth tional financial markets, the main factors that in external debt needs to be modified. The over- increased the interest of German banks in lend- whelming bulk of the reserves is held in the ing to developing countries in the 1970s were major money-center banks in industrialized the strength of the German mark, the increase countries. While carrying this additional li- in German direct foreign investment, and the quidity may impose certain costs on the borrow- slackening of domestic demand for credit. Ger- ig countries, it can hardly be argued that the man bank loans tend to be linked to exports, additional debt used to finance reserve accumu- and untied general purpose loans are limited. lation has lowered their debt servicing capacity. The principal constraints on the future growth Second, although this major component of de- of German bank lending to developing coun- veloping country borrowing does not weaken tries are limits set by the banks on their ex- the national "balance sheet" for external fi- posure in individual countries; high portfolio nance, it does add to the need for recommitment concentration in external assets and profits; or roll over of private loan funds. Third, though concerns about creditworthiness caused by re- countries with a strong balance of payments and cent debt difficulties in some developing coun- good growth prospects have managed to accu- tries; and the reluctance of some borrowers to mulate resources through borrowing from pri- accept loans denominated in marks. In Japan, vate sources at market terms, nations in less after low activity in 1975-76, overseas lending favorable circumstances have found it difficult, began to surge in 1977 as a result of abundant and sometimes impossible, to obtain general 31 purpose loans from private capital markets. than they otherwise would have been, that the Greater availability of IMF resources, whether distribution of capital flows among developing in the form of increased access to the Fund's countries is improved, that the funds can be dis- various facilities or through larger allocations bursed rapidly, and that the existing structure of Special Drawing Rights, is important pre- of international capital flows is not weakened. cisely because these resources supplement and Some international discussions have already complement those from private lenders. occurred on measures to increase the access of developing countries to bond markets in indus- International Initiatives trialized countries. Although still small in rela- Uncertainties regarding the availability of tion to their total capital needs, bond issues by commercial bank funds, the implications of developing countries in the Eurobond market worsening maturity structures of debt, and the and the industrialized countries rose from less growing reserve needs of developing countries than US$0.5 billion in 1970 to nearly US$5.5 bil- all highlight the need of these nations for more lion in 1978. Most of the increase has been in stable and longer-term flows of development the Eurobond market and in the national mar- capital. Expansion in financial flows from multi- kets of Switzerland and, more recently, Japan. lateral institutions and official export credit In general, industrialized countries have taken agencies would improve the maturity structure only limited action to provide preferential ac- and stability of overall capital flows. Recent cess to bond issues by developing countries. measures to increase the resources of the IMP Some of the industrial countries regard their and proposals being considered to increase the capital markets as sufficiently liberal already; capital base of the World Bank and other inter- others feel that giving preferential access to national financial institutions will augment the developing countries would not help, because medium- and long-term resources available to bond sales essentially depend on investors' pref- developing countries. erences; while some countries argue that their However, among the official sources of financ- balance of payments situations preclude grant- ing presently available, there is a gap between ing preferential access. the relatively short-term balance of payments Proposals are being discussed to change the accommodation provided by the IMF and the financing facilities available to compensate for long-term project financing available from insti- sharp fluctuations in export earnings. Access to tutions such as the World Bank. The gap relates the Compensatory Financing Facility of the IMF to the substantial, medium-term balance of was liberalized in 1975, since which time there payments support required by many developing has been a substantial increase in the use of the countries to tide them over extended periods of facility by developing countries. Further possi- economic adjustment to major changes in the bilities for liberalizing the facility include en- international economic environment, such as larging its scope to cover fluctuations in exports those of the past few years. During the 1970s of services and in the costs of essential imports this gap has been filled largely by the rapid such as cereals; raising the maximum limits growth in private bank lending. Aside from their on compensatory drawings; and changing the short maturity structure and potential instabil- method of measurement of export shortfalls so ity, commercial loans are frequently not avail- as more accurately to reflect the extent of the able in adequate volume and on appropriate fluctuations around export trends. The enhance- terms to a significant number of developing ment of compensatory financing facilities, and countries. The Extended Facility of the IMF, the implementation of any new international launched in 1974, has helped to address this initiatives that improve the maturity structure problem, but there are strong indications that and stability of medium- and long-term capital more needs to be done. The scope for new ini- flows, would also help to reduce the need of tiatives remains significant. developing countries to hold expensive precau- Various other proposals that seek to enhance tionary reserves. the transfer of capital to developing countries The measures discussed above would im- have been put forward in recent years. To but- prove the maturity structure and stability of tress the chances of success of any such pro- capital flows to developing countries and help gram, it would be desirable to ensure that the to forestall liquidity crises. But improvements funds transferred under it are on better terms are also desirable in the mechanisms and pro- 32 cedures to deal with such situations when they could be used more generally to provide for occur. Though the necessity for some change is later adjustments in the agreed repayment now generally accepted by both creditors and terms if the evolving economic situation so war- debtors, their concerns and priorities differ. De- ranted. Finally, in certain cases, there may be veloping countries consider the multilateral advantages to closer coordination between offi- debt renegotiations through the Paris Club too cial creditors and commercial banks in debt re- limited in coverage, since they pertain to only negotiation exercises. The present system of part of the debt. The terms of repayment are separate renegotiations with official and com- considered to be too short, in most cases, and mercial creditors leads to long delays, resulting not sufficiently attuned to the specific circum- in protracted foreign exchange shortages and stances of the borrowing country. The creditor unnecessarily high costs in terms of forgone countries view the Paris Club as ad hoc meet- growth for the developing nations affected. ings to prevent imminent default threatened by The Low Income countries and some of the bunched repayment obligations; their aim has poorer Middle Income nations will continue to been to provide temporary debt relief, rather rely primarily on Official Development Assist- than to negotiate a long-term adjustment of the ance for their external capital needs. Although debt burden. They also wish to keep debt rene- the projected ODA flows are modest as a per- gotiations separate from the provision of con- centage of donors' GNP, they will still require cessional assistance. Finally, modifications of early and substantial increases in commitments present practices would be complicated by the by the major donors. In recent years, there has fact that an increasing proportion of developing been a marked increase in the concessionality country debt is owed to private sources, and no of ODA, and during the last year various DAC formal mechanism exists to renegotiate such members have announced debt relief measures debt. for the least developed countries, including can- In deciding the coverage and terms of debt cellation of outstanding concessional ODA debt, renegotiations the medium-term prospects of conversion of undisbursed concessional loans individual countries ought to receive greater to grants and, in some cases, the provision of consideration than is commonly given at pres- compensation in the form of grants or soft loans ent. First, as in aid group consultations, Paris for debt service payments due. Detailed ar- Club meetings could, as a matter of course, ask rangements still have to be worked out in many multilateral institutions to present a detailed of these cases and legislative approval will be evaluation of the medium-term prospects and required. Further efforts will also be needed if needs of the country concerned. Discussions these debt relief actions are to add to the ODA have recently been initiated on a proposal of that would have otherwise been available. In this nature. Systematic assessments of medium- addition to increasing the flow of official re- term prospects would serve both as a back- sources, the share of such resources going to ground for the renegotiations and also as a basic Low Income countries needs to be raised. scenario against which the implications of dif- On occasion, disbursements of committed ferent terms of debt renegotiation could be con- ODA project finance have been hampered, for sidered. This would permit, under the auspices a number of reasons, including the complexity of the present ad hoc mechanisms, the debt cov- of projects, especially in relatively new areas ered and its amortization and grace periods to such as rural development and education, and, be adjusted according to the expected balance in some countries, limitations on absorptive ca- of payments situation of the debtor country. pacity. Improvements in technical assistance Moreover, if it was considered warranted in the and aid procedures can help to reduce such dif- particular case, concessional terms of repay- ficulties. Better coordination among different ment could be negotiated to provide resource donor agencies could reduce competition for transfers through debt relief, as has been projects in the same sector and enhance the done for Ghana and Indonesia. Second, bisque complementarity of resource flows. In bilateral clauses,' which were used for Indonesia in 1970, aid programs, more program and sector finance, more finance for local currency expenditures, 'A 'bisque clause" written into the Agreed Minutes of the untying of aid, better technical assistance and debt renegotiations permits the debtor, under certain con- streamlining of aid procedures in donor coun- ditions, some agreed amount of further debt relief without cumbersome renegotiations. tries would all work to increase the rate of aid 33 disbursement. Such measures merit special em- rect managerial control by the parent company is phasis for the least developed nations. being superseded by management participation, Aid from OPEC countries has been substan- technical assistance agreements, production tial, particularly since 1974. Net disbursements sharing and supply contracts. These changes of concessional assistance by OPEC members have resulted partly as a response of multina- amounted to 2.7 percent of GNP in 1975. Since tional corporations to host country controls on then, the decline of OPEC aid as a share of GNP foreign investment, and partly from the growth has reflected the reduction in the current ac- of competition from new suppliers, who are in- count surpluses of these countries. Although the creasingly willing to design arrangements to terms of OPEC aid are somewhat harder than suit host country requirements. The term "pri- those of DAC members, a much greater propor- vate direct foreign investment" as it is currently tion of OPEC aid is untied. The distribution of understoodequity participation by a foreign OPEC aid has widened from a small group of firm with an effective voice in the management recipient countries, and is increasingly being of the enterprisedoes not encompass these channeled through aid institutions that have shifts. Consequently, information based on tra- been established in some OPEC nations. While ditional definitions of equity participation tends general balance of payments support and the to underestimate the role of transnational firms provision of oil on concessional termsthe in capital flows to developing nations in recent dominant forms of OPEC aid in earlier years years. More important, policies based on the continue to be important, there is a growing traditional concepts would not address the new emphasis on project assistance. A striking fea- economic realities. ture of OPEC aid is the significant extent of co- In devising policies to encourage foreign in- financing of projects with other bilateral and vestment and to increase the flow of net benefits multilateral aid agencies. to the host country, a developing nation's over- Private Direct Foreign Investment all economic policies are of crucial importance. Net private direct foreign investment in de- Many case studies confirm that these, together veloping countries was equivalent to about 15 with a country's economic structure and stage percent of the net inflows of medium- and long- of development, are much more important in term loans between 1975 and 1977. During the attracting foreign investment than are special 1960s, direct foreign investment had increased incentives. The latter are costly and frequently by only about 4 percent a year in real terms, ineffectual. Many developing nations deploy reflecting the control of such flows by develop- performance - oriented policies of control on ing countries and regulations by some major foreign investment, for example by requiring industrialized nations. The growth of these foreign firms to use domestic inputs and labor, flows accelerated temporarily in the early 1970s, and controlling access to the local financial because of the rapid economic growth and more market. Sometimes such policies can have ad- pragmatic policies toward transnational firms in verse effects on the host country, for example Middle Income countries, as well as the raw by creating a local labor elite. The effective im- materials boom of this period. Between 1960 plementation of these and other controls on and 1976, France, the Federal Republic of Ger- foreign direct investment poses significant ad- many, Japan, the UK and the US accounted for ministrative burdens, which need to be period- more than 80 percent of the total flows. Nearly ically assessed and weighed against the benefits 40 percent of foreign investment during 1966-76 the controls are designed to secure. In the in- went to Latin America and the Caribbean, and dustrialized countries, where the bulk of foreign about 25 percent to East Asian countries. Sev- investment originates, policies which do not eral developing countries, particularly in Latin discriminate between domestic and foreign in- America and East Asia, have begun to under- vestment would normally be desirable and take direct foreign investment in other devel- would help to deal with the different pressure oping countries. groups involved. International institutions, such The character of links between private trans- as the UN Conference on Trade and Develop- national firms and developing countries has ment and the UN Center on Transnational Cor- been changing in recent years. First, equity porations, are engaged in articulating general participation is being gradually replaced by the rules of conduct, providing technical assistance use of loans and suppliers' credits. Second, di- for some developing nations, and encouraging 34 bilateral action on taxation agreements between creased use of oil substitutes, particularly coal home and host countries. and nuclear power, and, in the longer term, there is potential for using resources such as Energy shale oils, tar sands and solar energy. Second, The Outlook for Commercial Energy increases in domestic energy prices and other Global energy prospects have been exten- types of energy conservation measures taken in sively researched. Estimates of future demand the industrialized countries have slowed the and supply vary considerably, depending on the growth of their energy consumption: prior to assumptions made about resource availabilities, 1973, energy consumption had increased at economic growth, pricing policies, the respon- about the same rate as aggregate output, where- siveness of energy demand and supply to as between 1973 and 1977 their energy consump- changes in prices and incomes, and political and tion increased by only 3 percent, while their environmental factors. The projections in Table GDP expanded by about 9 percent. Third, in- 24 should be viewed not as a forecast but rather creased international energy prices have made as an illustration of the broad orders of magni- the exploration and development of energy re- tude involved. They assume that economies will sources much more profitable. Dramatic oil grow at the rates assumed in the Base scenario finds such as those in Mexico may be unlikely, and that reasonable conservation efforts will be but the prospects for more modest discoveries undertaken. As indicated, after 1985, world and increased exploitation of known resources demand for energy is likely to outstrip supply, are good. adding to upward pressure on the price. The international energy balance is nonethe- However, the increase in the real price of less likely to continue tight, and substantial con- energy during the next decade, above present cerns remain. Heavy dependence on foreign levels, need not be large, if sustained efforts sources of supply makes the majority of coun- are made to develop both oil and non-oil energy tries concerned to ensure access to energy in resources and to restrain demand for energy, the required volumes at reasonable prices and and if there are no major production setbacks on an uninterrupted basis; short-run instability, as a result of political disturbances or oil con- marked by disruptions in supply or temporary servation policies. Several factors support this increases in oil prices, can arise easily, as shown view. First, there are the possibilities for in- by recent events. As the principal source of 24. Commercial Primary Energy Balances, 1960-90 Average Annual Million Barrels a Day of Oil Equivalent Percentage Growth Rate 1976 1985 1990 1960-76 1976-90 Pro- Con- Pro- Con- Pro- Con- Pro- Con- Pro- Con- duc- sump- duc- sump- duc- sump- duc- sump- duc- sump- tion tion tion tion tion tion tion tion tion tion Developing Countriesa 26.5 16.8 41.5 27.3 51.3 38.4 6.7 6.7 4.8 6.1 (Net Oil Exporting Countries) (20.0) (4.2) (28.4) (6.9) (32.8) (9.9) (7.2) (6.9) (3.6) (6.3) (Net Oil Importing Countries) (6.5) (12.6) (13.1) (20.4) (18.5) (28.5) (5.2) (6.7) (7.8) (6.0) Industrialized Countries 46.5 69.8 61.0 91.5 70.7 109.7 2.6 4.1 3.0 3.3 Capital Surplus Oil Exporters 16.1 0.8 23.5 1.5 25.5 2.3 10.7 13.9 3.3 7.8 Centrally Planned Economies 37.9 34.4 54.7 52.1 66.7 64.3 4.4 4.3 4.1 4.6 Bunkers and Others n.a. 5.3 n.a. 6.5 n.a. 7.0 Total 127.0 127.1 180.7 178.9 214.2 221.7 4.5 4.5 3.8 4.1 Note; Primary energy here refers to coal and lignite, crude petroleum, natural gas and natural gas liquids, hydro and nuclear electricity, expressed in barrels a day of oil equivalent. Here, as throughout this report, the group of "developing countries" excludes only the capital surplus members of the Orga- nization of Petroleum Exporting countries. Thus, the energy balances of other OPEC members-Algeria, Ecuador, Gabon, Indo- nesia, Iran, Iraq, Nigeria and Venezuela-are included in those for developing countries. 35 petroleum for many importing nations, OPEC gradual and predictable increases in oil prices production is the critical balancing factor, and would be more advantageous than sharp hence changes in output in OPEC nations can changes at unpredictable intervals. This would significantly alter the global energy balance. facilitate investment planning in alternative Second, bringing new energy sources into pro- energy sources and permit orderly adjustments duction requires large investments with long in the oil importing nations, even though the lead times. Partly because of these long gestation weaker and worst affected oil importing devel- periods, the decline in the share of oil in total oping countries would nevertheless need special world energy consumption is likely to be grad- balance of payments support to permit phased ual, from 45 percent in 1976 to about 40 percent adjustment to the price increases. Conversely, in 1990. Third, there are uncertainties on the the health of the world economy, especially of demand side, the future economic growth of the the major oil importing industrialized nations, industrialized countries being the most crucial is important for maintaining a strong market for factor. Small changes in their rate of growth can the oil sold by the petroleum exporting countries substantially affect world demand for energy. and for preserving the value of the key cur- Finally, energy conservation policies in certain rencies in which the latter hold their financial key oil importing nations have, so far, been wealth. The oil exporting nations constitute sub- weaker than desirable. stantial markets for goods, technology and The energy problem over the next two dec- skills exported by industrialized and develop- ades should be seen as one of transition, in ing nationselements that are necessary for the which countries need to adjust to higher energy development of these oil nations. prices and ensure that their incremental needs Industrialized countries dominate the energy can increasingly be met from sources other than market, accounting for more than a third of oil. World oil production is expected to peak world production and more than half of world around the end of this century. Actions are consumption (Figure 5). Energy production in needed now to assure increased production these nations is expected to increase by about from both oil and non-oil sources in the late 3 percent a year between 1976 and 1990. Coal 1980s and 1990s. Price and non-price measures and nuclear power are each expected to account are also required to control the growth of de- for about 40 percent of the anticipated produc- mand. All the major groups of countries have tion increases, with relatively modest overall their own problems of transition. For the indus- increases in petroleum and natural gas produc- trialized countries, the main issues lie in the tion. Some of the major issues affecting the conservation of demand, improvements in the development of coal and nuclear power are safety of nuclear power and the development environmental preservation, safety, and the un- of synthetic fuels. For the OPEC countries, and certainties related to oil prices. These factors other major oil exporting countries, the princi- have resulted in long delays and cost overruns pal concerns include the determination of the in nuclear power developmentproblems that rate at which to exploit their non-renewable are likely to be exacerbated by recent events in resource, and the design of a development strat- the US nuclear power industry, which have egy that will ease the transition to a post-oil heightened the sensitivity to safety hazards and future. For the oil importing developing coun- increased the costs of insuring against them. In- tries, the priorities are to explore and develop creasing reliance on coal-fired electricity, in- domestic commercial energy sources, to in- cluding the conversion of existing oil-fired crease the efficiency of non-commercial and plants, poses additional problems, since coal non-conventional sources, and to adjust to can be costly to transport and inconvenient to higher energy prices. handle, and, in Japan and Europe, coal will be Though different groups of countries face progressively more costly to extract from deep different sets of transitional problems, virtually underground mines. Non-conventional energy all nations share a strong interest in assuring sources are unlikely to be quantitatively im- that the transition is a smooth one. Oil import- portant in this century. Energy consumption in ing nations need a stable and predictable supply. the industrialized countries is expected to grow To the extent that the preservation of balance more slowly than in 1960-73, partly as a result in the global energy market requires real price of the slower rate of economic growth and increases over the next two or three decades, partly because of demand conservation. OECD 36 estimates indicate that with proven technology, Figure 5 considered economic at present prices, con- Population, Energy Production and servation measures could save 16-20 percent of Consumption, 1976 the total consumption otherwise projected for 1985, with 40 percent of this conservation po- Developing Countries Centrally Planned Economies tential in the transport sector and about 30 percent each in the industrialized and residen- Industrialized Countries Capital Surplus Oil Exporters tial-commercial sectors. Industrialized coun- tries need to devote urgent attention to realizing Shares of World as much as possible of this conservation poten- Population tial, which is equivalent to half of the present oil production of OPEC countries. Since the US consumes about 25 percent more energy per unit of GDP than Western Europe, the scope for conservation is likely to be greater in the US. OPEC countries produce about one-fourth of 4,078 the world's commercial energy. Consequently a 5 percent change in the net energy requirements of the non-OPEC world would imply a 20 per- cent change in OPEC production to meet the needs. For the capital surplus OPEC countries and major oil exporters such as Mexico, rates of production will be determined partly by non- Shares of World economic considerations and partly by the ex- Energy Production pected real rates of return on financial assets. In view of the oil conservation policies being followed by some of the OPEC countries, and the oil reserve situation and technical con- straints on increasing production in others, OPEC oil production is likely to rise much more 127 slowly than in the past. These countries are likely to increase their production and domestic use of natural gas. Like other countries, OPEC members need to channel more public resources to the exploration and development of addi- tional energy resources. Private investment in exploration, and the ratios of proven reserves Shares of World to production, are declining in some of these Energy Consumption countries, while their domestic consumption of oil is rising.2 For the long run, as is argued in Chapter 8 below, all oil exporting countries need to develop the non-oil sectors of their economies, to maintain the growth of income as their oil reserves are depleted. 122 Energy production in centrally planned econ- omies, which account for about 30 percent of world production, is expected to grow more slowly than in the past, primarily because of the slower growth of oil production expected in the USSR, where a growing proportion of output Note: Numbers beside pies indicate world totals. Population is measured in millions; energy production and consumption are in million barrels a day of oil 20i1 reserves are considered proven when exploratory drill- equivalent. Percentages may not add to 100, ing has confirmed the existence of measured quantities of due to rounding. oil that are recoverable from known fields at current prices and costs using presently available technology. 37 increases will have to come from smaller oil commercial energy in broad groups of develop- fields in more difficult terrain. This slowdown ing countries may be gauged from Table 25, is likely to be oniy partly offset by rapid growth which presents estimates for 1976 and 1990. The of coal production in the People's Republic of appropriate combination of energy policies in China and of natural gas production in the USSR. particular countries will depend on their spe- As a group, centrally planned economies are ex- cific energy demand and supply conditions. pected to remain marginal exporters of energy. Here the discussion dwells on three areas of Developing countries account for a relatively general relevance: development of indigenous small share of the world's production and con- resources, possibilities for demand conserva- sumption of commercial energy. The growth of tion measures, and energy pricing. energy consumption in these countries slowed The rise in international energy prices has in- down to an average of about 5 percent a year creased the incentives for developing known during 1973-76, though it was typically faster energy resources in developing countries and than this in oil exporting developing countries. has also justified increased expenditure on re- Electricity consumption continued to increase source exploration and pre-investment activity. rapidly, with its share in total energy consump- However, on the basis of the limited information tion rising from 16 percent in 1960 to 25 percent currently available, it appears that relatively in 1976. In the years 1976 to 1990, the developing few developing countries have significantly in- countries' energy consumption is expected to creased the proportion of national investment grow faster than that in industrialized countries, allocated to energy development. Though this reflecting theirhigher expected economic growth partly reflects the inherently long lead times in rates and rising levels of industrialization and energy sector projects, it is also a consequence urbanization. Moreover, commercial energy is of impediments to energy resource develop- likely to substitute increasingly for non-com- ment in these nations. mercial energy in developing countries. Their Increases in the price of oil and gas have been share in world energy consumption is expected sufficient to cover the cost of exploiting known to rise from under 14 percent in 1976 to about oil and gas reserves that were previously uneco- 17 percent in 1990. Although the developing nomic, because of their small size, the expense countries as a group will remain net exporters of the enhanced recovery methods needed for of energy, oil importing countries are projected low-pressure wells, or high transport costs. Ex- to require increasing amounts of imported ploration for petroleum has also become com- energy. mercially viable in previously unattractive The Base case projections outlined in Chapter areas. A study prepared for the World Bank 2 assumed that the real price of traded energy identified 70 developing countries with a poten- would remain constant at its average level of tial for oil and gas production, of which only 22 1975-78. If the real price of internationally already produce oil and gas or are about to do traded energy is 30 percent higher in 1990 than so. Of the remainder, 38 countries have pros- it was in 19 75-78, then the additional annual bur- pects of finding significant quantities of petro- den on the balance of payments of oil importing leum to help meet their domestic needs, but in developing countries would be an estimated only seven has exploration been adequate, and US$30 billion by 1990 (at current prices). While in another seven moderate.3 Oil importing de- this amount is equivalent to no more than 3 per- veloping countries, which have 2 percent of cent of the projected total exports of these coun- the world's proven oil reserves, may account tries in that year, it is equivalent to about 20 for 15 percent of the world's ultimately recov- percent of the projected net disbursements of erable reserves. Even so, the number of ex- medium- and long-term capital to these nations ploratory wells drilled per thousand square in that year. Moreover, the burden of additional miles in these countries has been only a small payments for energy is likely to be particularly fraction of that in the industrialized countries. severe for some of the poorest developing The main impediments to the exploration and countries. development of the petroleum and gas resources Commercial Energy Development in in developing countries are the scarcity of Developing Countries The relative importance of different energy 3An adequate level of exploration is considered as one that is likely to lead to the early identification of exploitable sources in the production and consumption of reserves. 38 25. Developing Countries: Commercial Primary Energy Balances, 1976 and 1990 (Million barrels a day of oil equivalent) All Developing Countriesa Net Oil Importers Net Oil Exporters 1976 1990 1976 1990 1976 1990 Production 26.5 51.3 6.5 18.5 20.0 32.8 Petroleum 19.5 27.6 1.2 3.8 18.3 23.8 Gas 1.8 8.6 0.4 1.2 1.4 7.4 Coal 3.6 8.4 3.5 8.0 0.1 0.4 Primary Electricity 1.6 6.7 1.4 5.5 0.2 1.2 (of which nuclear) (0.1) (2.4) (0.1) (2.0) (.) (0.4) Consumption 16.8 38.4 12.6 28.5 4.2 9.9 Petroleum 10.0 20.5 7.2 14.6 2.8 5.9 Gas 1.4 3.5 0.4 1.2 1.0 2.3 Coal 3.8 7.7 3.6 7.2 0.2 0.5 Primary Electricity 1.6 6.7 1.4 5.5 0.2 1.2 Net Imports -9.7 -12.9 6.1 10.0 -15.8 -22.9 Petroleum -9.5 -7.1 6.0 10.8 -15.5 -17.9 Gas -0.4 -5.1 (.) (.) -0.4 -5.1 Other 0.2 -0.7 0.1 -0.8 0.1 0.1 Note: Primary energy here refers to coal and lignite, crude petroleum, natural gas and natural gas liquids, hydro and nuclear electricity, expressed in barrels a day of oil equivalent. aHere, as throughout this report, the group of "developing countries" excludes only the capital surplus members of the Orga- nization of Petroleum Exporting Countries. Thus the energy balances of other OPEC members-Algeria, Ecuador, Gabon, Indo- nesia, Iran, Iraq, Nigeria and Venezuela-are included in those for developing countries. risk capital for exploration, inadequate anal- of the increase came from countries with large ysis of the data derived from exploration, and and established coal industries, such as India, a shortage of skilled personnel and institu- the Republic of Korea, Turkey, Yugoslavia and tions to deal effectively with international oil Viet Nam. In the years to come, the production companies. Many developing countries find that of coal in developing nations is expected to in- though they have potentially economic exploit- crease by over 6 percent annually, so that its able resources, they cannot attract international share in their total commercial energy produc- oil companies, either because not enough is tion would rise from less than 14 percent in known about the characteristics of these re- 1976 to over 16 percent in 1990. Developing sources, or because the petroleum deposits are countries are estimated to have nearly 15 per- believed to be too small, or because the contract cent of the world's proven reserves of coal. India terms offered are inappropriate. These coun- accounts for over half of these reserves, and tries would benefit from external capital to Brazil and Yugoslavia for another fourth. About finance exploratory drilling, and from assistance 20 developing countries, including Bangladesh, in training and institution building. The total Bolivia, Cameroon, Honduras and Madagascar investment requirements during 1976-85 of non- have coal resources but had not started produc- OPEC developing countries for the exploration, tion as of 1978, notwithstanding the sharp in- development and production of oil and gas- creases in oil prices in 1973-74. Starting new including installation of crude oil pipelines- coal production anywhere is apt to be a lengthy are estimated at about US$7 billion a year (at and difficult process, but in developing countries 1977 prices). These countries also need help in the difficulties are often compounded by a lack negotiating agreements with international oil of adequate transportation, insufficient invest- companies and in modifying legislation and pro- ment funds and technical know-how, uncertain- cedures to facilitate such cooperation. The ties regarding export demand and, most imme- World Bank's recent decision to expand lending diately, a lack of detailed geological data on and technical support for such activities goes which to base coal investment projects. By con- some way toward meeting these needs. trast with petroleum, the problem is less one of Coal production in developing countries in- identifying the existence of resources, and more creased by 7.6 percent a year between 1973 and of determining their quality and economic vi- 1976, compared with only about 3 percent a ability. During the coming decade, national and year in industrialized countries. Over 90 percent international strategies should be directed main- 39 ly toward detailed exploration and pre-invest- Germany, for example, from 1953-73, the use of ment studies of known coal resources, along energy per unit of industrial output fell by over with investments in coal mines and associated 40 percent; in practically all industries the fall infrastructure where proven and commercially was greater than 10 percent. Energy can be con- viable reserves exist. served in the transport sector by encouraging Hydro-electric power plants already account the use of mass transit, rather than private ve- for 40 percent of the installed capacity for elec- hicles, and through improvements in fuel effi- tricity generation in developing countries, but ciency attained by increased use of trucks with the unexploited hydro potential remains vast. diesel engines, phasing out steam locomotives, It is estimated that in developing countries of and upgrading railroad rolling stock. In the Africa oniy 2 percent of the technically feasible power sector, energy can be saved by encourag- potential has been exploited, while the corre- ing larger system sizesan objective which in sponding proportions in Latin America and Asia some regions, such as West Africa and Central are 6 percent and 12 percent, respectively. These America, would entail the interconnection of proportions are only indicative as they do not national power systems. Higher overall effi- take account of production and distribution ciency can be attained in industrial areas by costs and market potential. The development cogeneration schemes, which supply power of hydro-power has been held back by its high jointly with process steam for industries. Where capital costs, a lack of sufficient preparatory the natural gas byproduct of crude oil extrac- work for formulating projects and, in some tion is flared at present, it can be harnessed cases, disagreements between riparian states, for power generation, industrial uses or re- which limit the use of water resources and the injection for secondary oil recovery; a project export of hydro-power. of this nature is being prepared in Egypt. The A few countries, including Argentina, the Re- conversion of electricity generating plants from public of China, India and Pakistan already have oil to coal, as has been done in Chile, is another nuclear power while others, such as Brazil, Iran possibility to be considered. The potential for and Mexico, are expected soon to become pro- saving energy in the residential sector is lim- ducers. Serious problems remain with respect to ited except in some of the richer Middle Income the disposal of radioactive waste, safety, and countries. environmental considerations. Furthermore, the Despite these possibilities, developing coun- demanding requirements of technical and man- tries have not yet given much emphasis to de- agerial expertise, and the need for plants to be mand conservation measures, partly because in large to be commercially viable, tend to limit many of them the absolute level of energy con- their use to Middle Income and large countries. sumption is low, and partly because conser- Looking beyond the next decade, note should vation measures are difficult to implement and be taken of the very substantial untapped re- require substantial use of scarce capital and sources of shale oils and heavy oils in develop- technical and managerial skills. Greater atten- ing countries. Brazil, the People's Republic of tion will need to be given to demand conserva- China and Zaire, for example, possess substan- tion in the future as energy consumption ex- tial shale oil resources, while Ecuador, Peru and pands with industrialization and urbanization. Venezuela have large deposits of heavy oils. Conservation efforts that focus on improve- These resources can be expected to become ments in urban mass transit systems and in commercially viable in a world of higher petro- energy-intensive industrial activities are likely leum prices and improved extractive technolo- to yield the quickest rewards. gies. Energy pricing is a complex issue. Most de- There are significant possibilities for conserv- veloping countries subsidize different forms of ing energy demand in developing countries, par- energy to pursue a variety of objectives. Kero- ticularly in the industrial and transport sectors, sene is frequently subsidized to benefit poor which together account for 70-90 percent of final consumers. Energy for industry is priced below commercial energy consumption in these na- cost to encourage industrialization. In oil ex- tions. Energy use in industry can be limited by porting countries, domestic consumer prices are adopting the more energy-efficient techniques kept well below international levels, because it developed in industrialized countries, as old cap- is politically difficult to do otherwise, in view of ital stock is replaced. In the Federal Republic of the low costs of production. In a number of 40 countries an inactive energy pricing policy is though they are often bought and sold. Some of based on the belief that the importance of the them are also referred to as non-conventional public sector in production, processing and con- energy sources. Such forms of energy onty sup- sumption of energy blunts the allocative role of ply about 5 percent of world energy consump- energy prices. The complex energy pricing poli- tion. But they account for about half the total cies of many developing countries allow certain energy production of oil importing developing producers and consumers to reap unintended countries, supplying more than 85 percent of the windfall gains, and also distort production in- requirements of rural areas in many developing centives. The subsidization of electricity prices, countries. Some Low Income nations, such as for example, frequently weakens the capacity Mali, Nepal and Tanzania, rely on non-commer- to finance power development and sometimes cial sources for 90 percent of their energy needs. benefits better-off groups in society. The demand for such fuels is dominated by Since the oil price increases of 1973-74, de- household uses, primarily cooking. About half veloping countries have made significant prog- of the world's population today cooks with non- ress in increasing energy prices to domestic commercial energy. users, though scope remains for further price Despite the importance of non-commercial en- rises. Between 1973 and 1977 the prices for the ergy in developing countries, neither national most commonly used petroleum distillates regis- nor international institutions have yet given tered increases averaging over 40 percent in real sufficient attention to the sources and technol- terms in the oil importing developing countries, ogies being used, their economic and environ- compared with an average increase of about a mental consequences, or to the development of third in industrialized nations. Nevertheless, alternatives. The acute scarcity of reliable infor- prices for most petroleum products in develop- mation calls for more attention to data gathering ing countries remain significantly below the and research. However, some of the emerging levels prevailing in industrialized nations. More- problems are so pressing that corrective actions over, electricity prices in developing countries and policies must be initiated on the basis of rose by only about a third of the average in- existing knowledge. crease in energy prices. Policies for the manage- Deforestation and fuelwood shortages have ment of energy resources and uses in developing become a critical problem and are appropriately countries will require attention to elements labeled "the other energy crisis." In Nepal, the other than pricing, such as environmental con- growing demand for fuelwood, fodder and cul- trols, safety standards and strategic require- tivable land is denuding the hillsides and caus- ments. But the potential benefits from further ing severe erosion, which is reducing the fertility reform of energy pricing should not be under- of the soil and its capacity to retain water during estimated. With the future supply and interna- the dry season. If the present rate of deforesta- tional prices of energy subject to so much tion continues, Nepal's hillsides will be com- uncertainty, further efforts are desirable to move pletely bare in 15 years. Deforestation and soil domestic energy prices toward international erosion are also serious problems in other coun- levels, reducing excessive and general subsidies, tries, including El Salvador and Haiti; in the so as to encourage the conservation of demand Sahel and Sudan they have accelerated the proc- and the development of indigenous energy re- ess of desertification. Estimates indicate that at sources. To avoid severe political difficulties the least 12 nations are currently using fuelwood at reforms could be implemented gradually, and an annual rate faster than their forests can sus- selective tightly targeted subsidies for low in- tain. This does not mean that deforestation is come users and infant industries may need to be not a serious problem in other countries. Most retained. nations suffer from severe fuelwood shortages around densely populated areas. This is true Non-commercial and Non-conventional Energy even of nations as rich in timber as Zaire, which The traditional sectors of developing econo- uses only a small fraction of its sustainable for- mies rely heavily on energy from firewood, char- est yield. In many other countries, as fuelwood coal, plant and animal residues, human and becomes more difficult to obtain, the use of other animal effort, solar energy, and, to a lesser ex- fuels, such as animal and crop residues, is in- tent, wind and water power. Many of these creasing, with serious implications for soil fer- sources are referred to as non-commercial, al- tility, crop yields and the availability of 41 livestock feeds. This is of particular significance available technology would cost several hun- in the drier areas of Africa, much of South Asia, dred billion US dollars. It would be more prac- and some parts of Latin America. tical to improve the locally available traditional Programs for afforestation and reforestation fuels while efforts are made to reduce the costs are urgently required. Current progress in this of rural electrification. Similarly, in many places area falls far short of needs. According to rough the immediate introduction of agricultural ma- estimates, the present rate of afforestation in chinery and chemical fertilizers is impractical, developing countries may be less than a tenth of both because of their high monetary costs and that necessary to ensure that these nations are because of the effects of mechanization on the reasonably self-sufficient in fuelwood at the end demand for labor. Efforts to promote the use of of this century. However, the traditional solu- draft animals and traditional fertilizer can help tion of merely planting trees will not work. The to make agriculture more productive without history of failed reforestation projects provides adding to the demand for commercial energy. some cautionary guidance. In particular, it is Several non-conventional energy technologies extremely difficult to prevent trees from being are practical and competitive in developing felled prematurely to satisfy urgent basic needs countries at present prices. The improved wood for fuelwood. It is therefore essential to start stoves already mentioned can be constructed afforestation programs early, before the situa- largely from local materials for about US$5-b tion becomes critical. each; with stronger promotion and the develop- It may also be useful to integrate forestry ment of extension services and artisan training projects in rural development programs, which schemes, the use of these stoves could be greatly are perceived by the rural population to address extended. Charcoal yields can be doubled by their basic needs, and which take account of the introduction of better-designed kilns. Biogas the close interconnections between forestry, plants are in use in various countries, including fodder and food production. Moreover, forestry the People's Republic of China, the Republic of projects could include the promotion of low- China, India and the Republic of Korea. How- cost stoves, which need oniy half as much fire- ever, economies of scale make them more viable wood as open fires. Such provision has already for relatively wealthy families with four or five been made in a number of projects, supported head of cattle and enough land to use the sludge by the World Bank, in countries such as Bu- produced for fertilizer. An Indian subsidy pro- rundi, Niger, Nigeria, Pakistan and Tanzania. gram for biogas plants was discontinued when Afforestation efforts are likely to be more suc- it was found to have increased the effective price cessful if the central government is committed of dung, causing hardship to the poor. Solar to decentralizing control, so that village and dryers can be used to dry crops and can reduce district level administrations can effectively losses in storage. Solar water heaters are eco- participate in managing local resources. With nomical, and solar power is being used to distill proper management, and appropriate fast grow- water in some parts of the world. Windmills of ing species of trees, an area can yield five times traditional and advanced designs are worth con- as much fuelwood as a natural forest. Some sidering in areas with adequate wind and poor countries, including the Philippines and the Re- rainfall. Micro-hydro schemes can be used to public of Korea, have launched promising af- provide electricity in small isolated communi- forestation programs on a large scale. ties. Ethyl alcohol can be readily produced in Though the use of commercial energy tends most developing countries by fermenting and to increase with development and industrializa- distilling agricultural products with a high con- tion, because of its high cost large sections of tent of starch or sugar. The resulting crude alco- the world's population will continue to rely on hol can be used as a fuel for cooking and, after non-commercial sources for the foreseeable dehydration, can be used as an additive to auto- future. Hence in most developing countries motive gasoline, or even as a substitute for it, if plans for energy development should seek to engines are suitably modified. In most cases, improve the availability and efficiency of these however, alcohol from fermented agricultural sources. For example, roughly 300 million house- products remains more costly than gasoline, and holds in developing countries have no electric- production is still small relative to fuel demands, ity. Even if it were technically feasible, to except in Brazil, where an ambitious effort is provide connections to them using presently under way. 42 The opportunities for further development necessary to improve the data base on non- and improvement of non-conventional energy conventional and non-commercial energy uses sources and uses are substantial: existing tech- and technologies, and to assess the environ- nologies need to be systematically evaluated, mental damage that might result from their and new ones developed. The priorities for pol- application. International cooperation and ex- icy in this area depend on the stage of tech- change of information can help to avoid duplica- nological development. Where economically tion of effort. competitive technologies exist, but their current To sum up, the energy outlook for all coun- use is limited, policies should focus on promot- tries in the next two decades is fraught with ing their use and resolving implementation considerable uncertainty. For energy importing problems. Where technologies are at an early nations, rich and poor, it is desirable to err on stage of development, further design efforts and the safe sideoverdoing demand conservation implementation trials are necessary before the and undertaking "excessive" investments for new technologies can be propagated in homes increased energy productionbecause the dis- and communities. At present, research and de- ruptive effects of shortfalls can be serious. In velopment concentrate disproportionately on the long run, such risk-averse behavior by en- mechanical power and electricity; more wide- ergy importing nations is also in the interests spread benefits may be gained from shifting the of today's energy exporting nations, which stand emphasis to cooking needs and the more efficient to gain from rapid and non-inflationary growth use of draft animals. Systematic research is in the world economy. 43 PART II: STRUCTURAL CHANGE T Figure 6 AND DEVELOPMENT POLICY Aspects of Structural Transformation Transformation of Production (Percentage shares of GDP, at 1977 prices) 60 50 Services The economic growth of nations has been 40 associated with far-reaching changes in their Primary social and economic structure. Modern econom- 30 - Production ic development comprises a set of interrelated processes that transform essentially rural, agri- 20 cultural societies into more urban, industrialized Industry 10 nations. Of particular significance are the proc- esses of industrialization, urbanization and the 0 I I I sectoral redeployment of labor. The pace and Transformation of Labor character of structural change vary greatly (Percentage shares of labor force) across countries according to their size, resource 80 endowments, demographic trends, sociopolitical histories and, perhaps most important of all, the 70 - development policies they pursue. But when 60 their past experience is viewed as a whole, some Primary Production 50 broad patterns emerge. Figure 6 illustrates average patterns of change 40 in the composition of production as per capita 30 income increases. The central feature is the in- 20 Services crease in the share of industry in total output and the decline in the share of primary produc- 10 - - lndustry tion (agriculture and mining) as countries de- 0 I I I velop. The poor countries of Asia and Africa are Urbanization at present in the early part of the transforma- (Percentage shares of population) tion, followed by the Middle Income nations of 100 Latin America, East Asia and the Mediterranean 90 region, while in the industrialized countries, 80 where income per capita is highest, the rising 70 share of services in the economy is accommo- 60 dated by stabilization and eventual decline in 50 the share of industry. This pattern of industrial- ization is the product of mutually interacting 40 changes in supply and demand that accompany 30 economic development. On the supply side, the 20 accumulation of capital and skills augments the 10 productive capabilities of an economy. The re- 0 sulting increases in per capita income bring 100 200 400 600 1,000 2,000 6,000 about important shifts in the composition of Gross National Product Per Capita, in 1977 US Dollars aggregate demand which, in turn, guide the sec- (Semi-log scale) toral composition of incremental output. Food Source: Based on Ilollis Chenery and Moises Syrquin, consumption, for example, which accounts for Patterns of Development, 1950-1970 (Oxford: Oxford University Press for the World Bank, 1975). The curves two-fifths of aggregate demand in an economy shown apply to Countries of medium size population. at US$150 per capita, accounts for less than a fifth of demand in an economy at Us$3,000 per capitaa decline that explains much of the re- 44 duction in the share of primary production as activities benefit greatly from the economies of the economy grows. agglomeration, and as these activities increase The evolving composition of production is their shares in production and the labor force, reflected in similar changes in the deployment of they spur the growth of urban centers. productive factors, notably labor. As develop- The broad trends outlined above also reflect ment proceeds, the work force moves from agri- other socioeconomic changes that are part of the cultural to non-agricultural occupations, while development process, including demographic within each sector productivity is increased by changes, shifts in foreign trade patterns, tech- new technologies, greater division of labor, and nological development, increasing specialization the accumulation of capital and skills. Though among economic activities, and the dramatic the underlying patterns are similar, the sectoral growth of institutions. Furthermore, the future transformation of the labor force has histori- pace and pattern of structural change may differ cally lagged behind the transformation of pro- substantially from that observed in the past be- duction, partly because in most countries indus- cause of the powerful influence of population trial development has been relatively capital growth and changes in the age structure of the intensive, so that labor productivity is higher in population. Though the rate of growth of world industry than in agriculture, but also because of population is believed to have peaked in the the unprecedented growth of the labor force in early 1970s, the consequences of earlier growth recent decades, which has far exceeded indus- will include an unprecedented expansion in the try's capacity to absorb labor. As a result, while labor force of developing countries in the next industry and primary production account for two decades, with pervasive implications for equal shares of total output when the economy the future character of structural change. reaches an income level of just under US$700 It must also be emphasized that the develop- per capita, parity in labor force shares is not ment patterns sketched above are illustrative achieved until average income is more than averages, not predetermined paths of develop- twice that level. ment for individual countries. In any country, These changes in the sectoral composition of the trajectory of development and structural output and the labor force are closely related change depends to a large extent on the choice to shifts in economic activities from rural to of development policies. These policies are the urban locales. Modern industrial and service principal subject of the chapters that follow. 45 Chapter 4: Employment Trends and Issues Scope and Nature of the Employment Challenge whereas that in the developing countries is cur- Because average labor productivity is lower rently growing at more than 2 percent a year. It in agriculture than in industry or services, the took 90 years for the labor force to double in the sectoral restructuring of the labor force initially industrialized countries; it now takes less than proceeds more slowly than that of production. 30 years in the developing countries. As a result, agriculture so far remains the pre- Such differences in the pace of labor force dominant source of employment not only in Low growth have significant implications for the Income countries but also in many Middle In- transformation process. Relative to the size of come countries. the total labor force, industrial employment ex- 26. Structure of the Labor Force, 1950-70 Percentage of Labor Force in Agriculture Industry Services 1950 1960 1970 1950 1960 1970 1950 1960 1970 Low Income Countries 78 77 75 8 9 10 14 14 15 Middle Income Countries 65 59 50 14 17 20 21 24 30 Industrialized Countries 25 17 10 36 38 38 39 45 52 The large number of workers remaining in panded at roughly the same rateabsorbing agriculture in developing countries has increas- between 0.3 percent and 0.4 percent of the labor ingly raised doubts about the adequacy of the force a yearin the European industrialized industrialization process as a source of remu- countries at the turn of the century and in the nerative employment. Only in a few developing Low Income countries in the 1960s. The Middle countries has there been an absolute decrease Income countries absorbed a substantially in the agricultural labor force in response to the higher proportion in the 1960s: about 0.7 per- growing demand for industrial labor. Even in cent a year. Relative to the annual increments the Republic of Korea, where extremely rapid in the labor force, however, the outcomes have growth of total output and industry between been very different. Whereas the industrialized 1950 and 1970 was accompanied by a large de- European nations could absorb almost half of cline in the share of agriculture in the total labor their incremental labor force into industry each forcefrom 70 percent to 50 percentthere year, the Low Income countries, because of their was still an increase in the absolute numbers very much higher labor force growth rate, have employed in agriculture. During the same period, absorbed less than 20 percent of their additional the agricultural labor force in Bangladesh in- workers into industry each year, and the Middle creased by over 6 million, agriculture's share of Income countries, notwithstanding their rapid total employment remaining about 85 percent. industrialization, have absorbed less than 35 Although the developing countries vary con- percent. The sectoral transformation of the labor siderably in this regard, in many of them the force in the developing countries has been much sectoral transformation of the labor force is dis- slower than the European historical experience, appointingly slow. not because of unusually slow expansion in in- Compared with the historical experience of dustrial employment, but because of unusually the industrialized countries, today's transforma- fast growth in the labor force. tion efforts must contend with much more rapid The most visible consequence of modern in- labor force growth: throughout the nineteenth dustry's inability to provide adequate employ- century the labor force in European industrial- ment for such a rapidly growing labor force is ized countries grew at less than 1 percent a year, the emergence of underemploymenta state of 46 low labor productivity, sporadic employment ployment in, for example, Argentina, Chile, and depressed earnings-as a significant phe- India and Venezuela. In some countries, part of nomenon, not only in agriculture but also in the the expansion in public sector employment has traditional segments of the industrial and serv- represented excessive hiring by governments ice sectors. Although precise estimates of their seeking to defuse social tensions stemming from numbers are not available, the underemployed unemployment and underemployment. Although are usually understood to comprise most of the measured productivity is frequently higher in rural landless, many small farmers, many of the services than in either agriculture or industry, urban self-employed and most employees of many service activities, especially in petty trad- small-scale urban enterprises. While some are ing and domestic service, are indeed appropri- not fully employed because of such factors as ately characterized as low-productivity jobs. seasonal variation in the demand for agricul- The demise of these activities has been retarded tural labor, others work long hours throughout by the continued excess supply of cheap un- the year but earn very little from their low- skilled labor in many developing countries. productivity jobs. Their common characteristic A second consequence of the rapid increase -low income-identifies them as the core of in the labor force combined with insufficient the poverty problem. growth in industrial employment is the high rate Frequently, the expansion in service sector of unemployment experienced by first-time en- employment observed in many countries is re- trants to the urban labor market, especially garded as a further manifestation of the failure those who have primary or secondary educa- of industry to create enough jobs. This view is tion. Unemployment rates of over 20 percent oversimplified, however, in that it neglects the have been recorded for the age group 15-24 in great variety of activities in the service sector the urban areas of countries as diverse as and underemphasizes the extent to which their Colombia, Kenya, the Philippines and Sri Lanka. expansion is induced by economic growth. The concentrated incidence of unemployment Intermediate services-transport, communica- on such a politically vocal group makes this an tions, commerce, banking, finance and profes- especially pressing social issue. Unlike under- sional services-respond and contribute to suc- employment, however, unemployment is not cessful industrial and agricultural development, necessarily associated with low income, because rather than merely serving as a sump for re- only those with access to unearned income are sidual, unproductive employment. Many of the able to finance a period of unemployment while social goals espoused by developing country they search for a job they consider satisfactory. governments entail increases in employment in The poor, on the other hand, cannot afford to be the service sector. Education and health pro- unemployed; they are obliged to accept under- grams and, in most developing countries, expan- employment. sion in the role played by government in other In many countries, increasingly rapid growth sectors, have contributed substantially to the in the labor force will make the creation of ade- observed increase in employment in services. quate employment opportunities more difficult In the early 1970s, the public sector accounted in the future than it was in the past. Although for more than 15 percent of the total wage em- changing labor force participation rates may 27. Growth of the Labor Force, 1960-2000 Average Annual Percentage Growth Rate 1960-70 1970-80 1980-90 1990-2000 East Asia and Pacific 2.4 2.6 2.3 2.0 Low Income Asia 1.7 2.0 2.0 1.9 Latin America and Caribbean 2.4 2.7 3.0 2.7 Middle East and North Africa 1.9 2.6 2.9 2.2 Sub-Saharan Africaa 2.2 2.2 2.5 2.6 Southern Europe 0.8 1.3 1.3 1.2 All Developing Countries 1.8 2.2 2.2 2.1 Industrialized Countries 1.2 1.2 0.7 0.5 1n all tables and figures in this chapter and in Chapter 6, the term "Sub-Saharan Africa" includes Low and Middle Income countries. 47 Figure 7 Labor Force Estimates and Projections, 1950-2000 World Labor Force Increment in Labor Force Increment in Labor Force 1950 1950-1975 1975-2000 Capital Surplus Oil Exporters Industrialized Countries Centrally Planned Economies Developing Countries 0 300 600 900 1,200 1,500 Millions Developing Countries Southern Europe Middle East & North Africa East Asia & Pacific Latin America & Caribbean Sub-Saharan Africa Low Income Asia 100 200 300 400 500 600 700 Millions modify the relationship somewhat, labor force Africa, the Middle East and North Africa, and growth is determined mainly by past population Low Income Asia will be surpassed in the future growth with a lag of about 15 years. Conse- (Table 27). quently, the high, and in some countries increas- The immensity of future expansion in the ing, rates of population growth of the late 1960s labor force is illustrated in Figure 7. In Low and 1970s will not be reflected in labor force Income Asia, the labor force increased by about growth rates until the 1980s and 1990s. Although 125 million people between 1950 and 1975; be- already high by historical standards, the recent tween 1975 and 2000, despite a projected slight annual rates of labor force growth reported for decline in the participation rate, it is expected Latin America and the Caribbean, Sub-Saharan to increase by almost 250 million to approxi- 48 mately 630 million. While not so overwhelming, increasing proportion of incremental expendi- the projected increments in the labor force for ture is allocated to non-farm commodities and the last quarter of the century in Sub-Saharan services. Policies to improve agricultural in- Africa (120 million) and Latin America and the comes thus not only benefit the underemployed Caribbean (100 million) are nevertheless daunt- small farmer directly, but also create a demand ing. The remainder of this chapter discusses the for non-agricultural labor through expenditure policy measures required to cope with this un- linkages. These linkages are especially impor- precedented expansion in the supply of labor. tant in Low Income countries in view of indus- The analysis puts its main emphasis on the crea- try's dependence on a growing domestic market; tion of remunerative employment opportunities the production of consumer goods and agricul- through the promotion of appropriate agricul- tural implements and the processing of agri- tural and industrial development strategies and cultural produce, as well as related activities the creation of a more skilled and better edu- such as construction, transport and wholesale cated labor force. These efforts can be reinforced marketing, depend critically on development in by labor market policies that facilitate the geo- agriculture. graphical and occupational mobility of workers Rural small-scale enterprise has demonstrat- and improve the sectoral allocation of labor. The ed a remarkable capacity to respond to increases discussion ends with an analysis of a policy in demand and to provide jobs for rural labor. instrumentpopulation planningthe signif- In the Republic of Korea, for example, employ- icance of which lies in its potential to reduce ment in rural manufacturing grew at an annual labor force growth in the medium and long term. rate of nearly 6 percent in the 1960s; in the Republic of China, employment in the rural Development Strategies for Expanding manufacturing sector grew at an even faster Employment and Improving Skills annual rate-7.4 percentin the decade 1956 Agricultural Policy to 1966. Non-farm activities are the main source While rapid population growth has been a of employment for between 20 percent and major reason for the slow sectoral transforma- 30 percent of the rural labor force in Chile, tion of the labor force, other factors have de- Colombia, India, Indonesia, Iran, Kenya, the pressed the growth of employment and income- Philippines and Venezuela, and are an important earning opportunities in agriculture. Policies secondary source of income for many small that discriminate against agriculture in general farmers, especially during agricultural slack and agricultural labor in particular have exac- seasons. In Egypt and Malaysia, for example, erbated rural underemployment and poverty, many small farm households devote 30 percent and contributed to the increase in rates of rural- to 40 percent of their labor to off-farm activities. urban migration. The inherent dynamism of rural non-farm en- The role of agriculture during the process of terprise can be enhanced by public assistance industrialization is discussed in Chapter 5. Here in the form of improved infrastructure, rural it is simply noted that appropriate policies to- electrification and the extension of credit facili- ward investment and pricing can have signifi- ties. The People's Republic of China, for ex- cant implications for the growth of agricultural ample, by actively stimulating investment in production. Policies in these areas have even rural industry, has created new employment more important implications for poverty and opportunities and simultaneously provided agri- employment, especially in the Low Income culture with a valuable source of inputs to countries, where more than 70 percent of the enhance productivity, ranging from chemical labor force depends directly on agriculture and fertilizers to drainage machinery. will continue to do so in the foreseeable future. Several countries have used public works In addition to their immediate, first-round bene- programs to provide slack-season employment fits within agriculture, increases in agricultural for rural labor. Most of these programs have production and incomes will generate new de- emphasized temporary employment and income mands for non-agricultural output. In Sri Lanka, generation rather than the creation of assets for example, where agriculture still accounts for designed to increase productivity permanently. almost 40 percent of GDP, one-third of the The Instruksi Presiden (INPRES) programs in country's non-agricultural gross output is pur- Indonesia, for example, are reported to have chased by rural households. As income rises, an provided employment for almost 1 percent of 49 the country's total labor force. This is a remark- ment seed and fertilizer programs and exten- able achievement and has undoubtedly brought sion services, and are usually inadequately at least temporary benefits to those employed; connected to the main markets. Since the culti- nevertheless, the construction of physical infra- vation techniques required by the new varieties structure has not been quite as successful. In are relatively labor intensive, failure to ensure poor countries, public works programs should their widespread distribution limits the growth be increasingly designed to create infrastructure of both agricultural output and employment. that is economically justified, rather than simply Unequal land distribution and policies that to generate temporary employment. Minor irri- discriminate against the small farmer have re- gation and drainage schemes and land reclama- sulted in bimodal agrarian structures, in which tion, for example, are highly labor-intensive a well supported, large-scale, commercial, but activities which can be undertaken in the agri- relatively small, subsector of farms coexists cultural slack season, and which can be ex- with a large backward subsistence sector. Coun- pected to stimulate increases in production by tries such as the Republic of China, Israel and raising yields and making larger areas viable Malaysia, in all of which land is relatively even- for cultivation. ly distributed, have achieved a more broadly Other policies within the agricultural sector based development of agriculture by distribut- have an influence on labor demand and income ing government-supported servicesinfrastruc- distribution. Of particular concern in this re- ture, irrigation, creditthroughout the sector. spect is the common provision of subsidized Although experience varies, some countries fol- credit to large farmers and the exclusion of lowing such a unimodal strategy have achieved small farmers from the formal credit market. agricultural growth rates at least as high as With the notable exceptions of the Republic of those of countries with a bimodal structure, and China and the Republic of Korea, institutional have enjoyed a considerably more egalitarian credit in developing countries rarely reaches distribution of the benefits of growth. more than one-fourth of the farm population; Many studies have demonstrated that small most of it is usually secured by large farmers, farms typically use more labor per unit of land often at very low or even negative real rates of than large farms. In 1960, Colombian farms of interest. Subsidized credit programs have often less than three hectares used 20 times as much had the unintended effect of encouraging mech- labor per hectare as farms in the range of 50 to anization. In the early 1960s, farms of more 500 hectares. Since the more intensive applica- than 50 hectares accounted for over 90 percent tion of labor is also associated with higher of all tractors in Chile, over 60 percent in yields, achieving a more equitable distribution Colombia, and for over 70 percent of all farm of land ownership offers the prospect not only machinery in Mexico. The significance of this of improving rural equity, but also of increasing observation is that studies in Asia and Latin output and labor demand. Several countries America have consistently demonstrated the the Republic of China, Egypt and the Republic lab or-displacing effect of mechanization. Selec- of Koreaby combining land reform with credit tive mechanization may be appropriate where and other types of assistance, have successfully output is limited by seasonal shortages of labor, enabled the participating farmers to increase but its general encouragement through subsi- productivity. Tenancy reform, to fix rents and dized credit is unwarranted, especially in poor guarantee security of tenure, has facilitated the countries. adoption of innovations by tenants in, for ex- Small farms receive relatively few institu- ample, Ecuador and Sri Lanka. Supervised credit tional loans and are forced to rely on informal programs and technical assistance for small credit markets where real interest rates higher farmers, such as Operacao Tatu in Brazil, the than 50 percent are not unusual. As a result, Small Farmer Development Agencies in India, these farms rarely use credit to finance techno- and Kenya's Small Farmer Credit Program have logical improvements such as the introduction also stimulated the adoption of new techniques of high-yielding varieties of seed, inorganic fer- which have increased the labor intensity of pro- tilizers or chemical pest and weed controls, but duction and resulted in higher yields. resort to borrowing mainly in emergencies such Promoting agricultural growth and encour- as crop failure. Moreover, small farms generally aging the efficient use of rural labor are the most have less contact than large farms with govern- important means of reducing underemployment 50 in the Low Income countries. This conclusion tries Bank to small- and medium-sized indus- applies with almost the same force to the Middle tries; by 1977, these loans accounted for almost Income countries, many of which still have half 40 percent of the total lending to industry. their labor force in agriculture. Though some of Among other countries that have fostered the the Middle Income countries have industrialized development of small-scale enterprises, India rapidly, agriculture remains the single most im- has reserved some consumer goods for exclusive portant source of employment; it provides a manufacture by the small-scale sector. In certain large market for industrial output and can, given circumstances, such as the possibility of wide- the appropriate support, relieve the pressures of spread unemployment as a result of technologi- rural-urban migration. For these and other rea- cal change, the temporary use of quantitative sons, greater attention to agriculture is of im- controls and other special measures to assist portance not only in the Low Income countries small-scale industry merit consideration. In gen- but also in Middle Income nations. eral, however, the appropriate approach toward the small-scale sector is the removal of policies Industrial Policy that impair its competitiveness, rather than the Despite their obvious abundance of labor, creation of an incentive structure biased against many developing countries have encouraged large-scale enterprises. Measures that enhance capital-intensive industrialization, either di- the exploitation of potential linkages between rectly, through public sector projects, or indi- small and large units are also important. The rectly, by artificially lowering the price of promotion of subcontracting, for example, capital to the modern private sector. Subsidized assures a market for the output of small-scale interest rates, allowances for accelerated depre- enterprises, encourages the transmission of ciation, tax holidays, overvalued exchange rates, technical expertise, and provides a low-cost and facilities for duty-free imports of capital source of inputs for large firms. have enhanced the profitability of capital- Foreign trade policy is an equally important intensive investments and often encouraged en- component of a successful employment-generat- terprises to economize on labor rather than ing industrial strategy. While selective protec- on capital. tion is likely to be essential in early phases of Access to institutional credit and capital sub- industrial development, the small size of the sidies for industry is commonly confined to domestic market limits the gains from prolonged large-scale modern enterprises. Traditional and recourse to import-substitution policies. Par- small-scale enterprises, unable to take advan- ticularly in the middle and later phases of devel- tage of these subsidies, have pursued more opment, industrial output and employment have labor-intensive paths of expansion. Their devel- grown more slowly in countries that have relied opment, however, has been constrained by the heavily on tariffs and quantitative restrictions to overly bureaucratic administration of industrial foster import substitution, than in countries that licensing schemes and by the unreliability and have provided incentives of similar magnitude high cost of credit in the informal "curb" mar- to both import substitutes and exports. The kets. The generation of income, both wages and elimination of the policy bias against exports profits, is thus restricted in that part of the econ- normally accelerates industrial labor absorption omy where a large number of the poor seek in two principal ways. First, there is a shift of their livelihood. The elimination of subsidized credit, relaxa- 28. Growth of Industrial Production and Labor Force in Selected Developing Countries, 1960-70 tion of administrative requirements for indus- (Average annual percentage growth rates) trial licenses, and the expansion of government- Value Labor backed credit facilities to encompass small-scale Added Force operations are some of the measures that would Export Promoting Countries enhance the overall efficiency of the industrial Korea, Republic of 17.2 11.2 sector in many developing countries. The pro- China, Republic of 16.4 6.3 vision of adequate financial resources to small- Singapore 12.6 5.6 scale enterprises will usually require govern- Import Substituting Countries ment initiative and support. The Republic of Mexico 9.3 4.5 Korea, for example, guarantees loans from the Colombia 6.0 3.7 Citizens' National Bank and the Medium Indus- Philippines 6.0 2.5 51 resources into export production, rather than improvements in industrial policies are none- production of import substitutes; this increases theless likely to be small relative to the annual labor demand because exports, especially in the increase in the labor force: if the rate of growth early phases of industrialization, are usually in industrial employment in the Low Income more labor intensive than import substitutes. countries were suddenly doubled, the industrial Second, the overall improvement in industrial sector would still only absorb about a third of efficiency induces higher rates of investment the annual increment in the labor force. Ration- which, in turn, further increase the demand for alization of industrial trade policy should be labor. Employment thus benefits both from more encouraged, but improved agricultural strate- labor-intensive methods of production and a gies are likely to be quantitatively more signifi- more rapid expansion in the stock of national cant for these countries. capital. The Republic of Korea has been strikingly Education and the Acquisition of Skills successful in export promotion. Between 1960 Improvement in the abilities of the labor force and 1970, industrial output and employment is a fundamental feature of development. Tech- grew at annual rates of 17 percent and 11 per- nological advance continuously demands new cent, respectively; the capital stock in manufac- industrial skills. Most countries have recog- turing increased fourfold between 1960 and nized this and have expanded educational facil- 1973, and gross investment expanded from 11 ities very rapidly. By 1976 in many Low Income percent of GDP in 1960 to 27 percent in 1975. countries more than 50 percent of the primary These developments were reflected in annual school age children were in school. Universal growth rates of both GNP per person and real primary enrollment had been achieved, or was wages in manufacturing of around 7 percent be- within sight, in most Middle Income countries tween 1960 and 1976, and a decrease in the un- and some Low Income countries, such as Kenya employment rate from 9 percent in 1960 to less and Zaire. At the secondary level, enrollment than 5 percent in 1970. The increase in employ- rates were lower than 20 percent in many Low ment has enabled the benefits of a high growth Income countries, although Sri Lanka had rate to be dispersed through the labor market to achieved a rate of over 50 percent. In the Mid- a significant proportion of the population; thus dle Income countries, secondary enrollment the export-promoting strategy has furthered rates varied from a low of 4 percent in the both economic growth and the alleviation of Yemen Arab Republic to a high of 85 percent in poverty. Portugal, with the rates in almost half the coun- Production for the domestic market, as well tries falling between 30 percent and 60 percent. as for export, can be rendered less efficient by In many countries, education has made work- inappropriate tariff structures or by unduly ers more geographically mobile and increased heavy reliance on quantitative import restric- their range of possible occupations; those able tions. The pursuit of such policies in India dur- to obtain school places have later benefited ing the 1960s contributed to the slow annual substantially from the better earning opportu- growth in the industrial labor force (1.6 percent) nities available to educated workers. In some and in output (5.5 percent). Rationalizing trade countries, however, educational expansion has policy is an important component of an employ- resulted in high rates of unemployment among ment strategy even if the domestic market re- recent graduates, especially at the secondary mains the main outlet for industrial production. level. In the early 1970s, for example, almost How great an impact a more trade-oriented 20 percent of Sri Lanka's secondary school industrial strategy would have on employment graduates were unemployed. In part, such high rates will vary among countries. In semi-indus- rates reflect the success of these countries in trialized countries that are still following im- raising enrollment rates at a time when the port-substitution policies, this impact could be school age population was itself increasing: the substantial. In the Low Income countries, exist- consequent increase in the supply of educated ing trade policies may not be the sole constraint labor exceeded demand, resulting in unemploy- on exports, and improvements in such policies ment. However, they also reflect the failure of may have their greatest effects on the efficiency the labor market to adjust to this imbalance: of industrial production for the domestic mar- wage differentials between educated and un- ket. Increases in employment resulting from educated workers have not diminished suffi- 52 ciently to eliminate the excess supply. Since the times had limited success because they lacked public sector is often the largest employer of strong links to the labor market. In these coun- educated labor, the unemployment problem tries, on-the-job training is still the most com- highlights the importance of ensuring that pub- mon way in which workers acquire skills. Some lic sector pay scales are responsive to develop- countries have deliberately sought to stimulate ments in the labor market. Current unemploy- on-the-job training and to make vocational insti- ment among the educated also emphasizes the tutions responsive to labor market conditions, need for a critical review of future plans to with considerable success. The Industrial Train- expand higher educational facilities in these ing Board in Singapore, for example, was estab- countries. lished expressly to promote and coordinate in- Because education offers one of the few dustrial training, within a highly flexible and chances for the poor and disadvantaged to responsive framework. It offers a variety of escape from poverty, efforts to ensure the equi- training courses which combine formal instruc- table distribution of educational opportunities tion and on-the-job training in different propor- are extremely important. In this respect, the tions, and which are tailored to meet industry's high unit costs of secondary relative to primary rapidly changing requirements. The Board also education, and the need to widen access to pri- supervises the Joint Government-Industrial mary education, suggest a reallocation of limited Training Scheme and the Industrial Training educational budgets in favor of the latter. The Grants Scheme, both of which are designed to location of adequate primary schools in rural encourage industry's participation in training areas and the provision of grants and scholar- programs, either in conjunction with the gov- ships to compensate poor students for the loss ernment or independently through the provision of earnings while attending school are impor- of grants. Brazil's National Service for Industrial tant aspects of an education strategy to benefit Apprenticeship is another institution responsive the poor. to the needs of industry. It relies on periodic In economies where the modern sector has surveys of the labor market to provide a basis expanded very rapidly, a shortage of workers for forecasting the quantitative and qualitative with secondary education can be expected. needs of business, and on careful job analyses Such a shortage is being felt in oil exporting to identify the technical requirements of specific countries such as Saudi Arabia, where educa- tasks. The one-percent payroll tax used to fi- tional facilities are not yet widely spread, and nance this scheme also serves as an incentive to in rapidly growing economies such as Brazil, employers to undertake their own on-the-job where the secondary school enrollment rate is training programs, since employers who do so less than 20 percent. For these countries further are exempted from payment. Although their de- early development of secondary education is tails vary, the programs in Singapore and Brazil warranted on economic grounds. are similar in their determination to involve the The appropriate combination of academic and business community in training and in their ef- vocational training for the labor force is crucial forts to monitor, and respond to, changing labor during industrialization; in many developing market conditions. countries the skills supplied by the educational system may not match the skills demanded by Labor Market Policies industry. The most important feature of a suc- The principal means to the more rapid expan- cessful industrial training program is a direct sion of productive job opportunities lies in the link with the labor market. In the traditional ap- choice of appropriate policies for agricultural prenticeship schemes of West and East Africa, and industrial development. But, as a growing training is linked to the labor market in the per- proportion of the labor force comes to depend son of the master craftsman. This system is on wage employment, a significant supplemen- useful in imparting certain types of skills, but tary role can be played by policy intervention in in an economy in the process of rapid transfor- the labor market. As developing economies shift mation, it is unlikely to be adequate. out of agriculture, land gradually yields its place Attempts to provide vocational training to labor and reproducible capital as the predomi- through the formal education system, as in nant sources of income. At the same time, the Kenya's secondary technical schools and Co- extent of wage employment increases relative lombia's comprehensive schools, have some- to self employment. In most Low Income coun- 53 tries, with some exceptions such as Sri Lanka, to moderate wage demands through wage more than 60 percent of the labor force remains boards, industrial tribunals and labor courts. self-employed, whereas in the industrialized The Republic of China, the Republic of Korea countries around 80 percent relies on wage and Singapore have exercised wage restraint by employment. circumscribing the power of trade unions. In other countries, such as Afghanistan, Ghana, Dualism in the Labor Market Indonesia, Sudan and Thailand, governments As formal labor market transactions increase, have either used minimum wage legislation the institutional structure of the market devel- sparingly or else not intervened in the market ops in a number of respects. Labor is more able at all. Countries such as Brazil and Mexico have to form, organize and maintain trade unions. elaborate minimum wage legislation, but its im- Similarly, the public sector assumes an increas- plementation leaves it with relatively little effect ingly important role in determining wages, both on the labor market. as an employer in its own right and as an arbiter Dualism is more apparent in the labor markets of private sector wage rates through legislation of countries such as Nigeria, Sri Lanka and and the pronouncements of wage tribunals. The Tanzania where effectively enforced minimum expansion in wage employment also facilitates wage legislation or excessive increases in public the introduction of social security legislation sector pay scalesespecially when coupled with and payroll taxation. a tendency toward substantial overmanning in The motivating force behind these develop- public employmenthave accelerated wage in- ments is the improvement of working conditions creases. It is also apparent in countries such as and incomes and the provision of security for Chile, Venezuela and Zambia where important, the employed. In most developing countries, sometimes foreign-owned, mining enclaves have however, the state of institutional development acceded to the demands of well organized severely limits the coverage of such programs, unions, and granted large wage increases which and often effectively confines them to the public have percolated through the rest of the modern sector and the modern industrial, extractive or sector. Since these enclaves are usually small, plantation sectors. As a result, overly vigorous successful percolation requires public sector pursuit of improvements in conditions of em- support in the form of upward adjustment in ployment can help to cause labor market dual- public pay scales and legislated minima, and ismthat is, a situation in which workers of more generous wage awards. The distinguishing similar abilities are paid substantially different feature of these countries, therefore, lies in the wages, depending on the sector of employment. source of the wage increases rather than in the Such a situation is an inherent danger of tech- mechanism that secures their extension to the nological dualism, which is apt to worsen as the rest of the modern sector. Since the maintenance gap widens between the traditional labor- of relatively high and protected wage levels for intensive modes of production and the capital- some people can retard the expansion of pro- intensive technologies of the modern sector. ductive income earning opportunities for many The economic consequences of labor market more, both groups of countries could promote dualism include disruption of the efficient allo- growth and alleviate poverty by reassessing cation of labor, and encouragement of capital- their wage policies. intensive investment in the high-wage sector. Social security programs and payroll taxation Since both of these effects serve to limit the can reinforce labor market dualism in certain creation of modern sector jobs, attempts to in- circumstances. Most of the countries with major crease the incomes and improve the working programs are in Latin America, with a few in conditions of those within the public sector's Asia and Africa. Colombia, Malaysia, Mexico, immediate purview can conflict with efforts to Sri Lanka, Venezuela and Zambia allocate 3 to extend remunerative employment opportunities 4 percent of GDP to social security, but some to as many people as possible. As a result, dual- countries, such as Chile, allocate as much as the ism is often cited as one of the major causes of industrialized countriesaround 15 percent. In underemployment and unemployment. Latin America, again with exceptions such as The severity of labor market dualism, how- Chile, 15 to 20 percent of the labor force is usu- ever, varies considerably among countries. In ally covered by insurance. Australia, Canada, India, for example, the government has sought Sweden and the UK finance a large part of their 54 social security payments from general revenue, take time to develop, the public sector can foster but other industrialized countries and most de- this process by establishing the legal framework veloping countries rely more heavily on payroll and administrative procedures for voluntary taxation. In the latter, taxation rates of around collective bargaining. Third, the public sector 5 percent on employees and 10 percent on em- can strive to ensure that its own pay scales and ployers are not unusual. Where employers are the decisions of its wage tribunals and indus- able to shift their portion of the tax on to labor, trial courts reflect, rather than determine, trends its impact on labor costs and hence on labor de- in the labor market. The principal objective here mand is relatively slight. In this event, social should be to keep public sector salaries com- security payments and payroll taxes serve pri- petitive in order to ensure an adequate supply marily to redistribute income from relatively of well trained manpower for the civil service. well paid, employed persons to relatively poor, Fourth, where the demand for labor is ad- inactive persons. But where the tax is borne by versely affected by payroll taxation, the possi- the employer, labor costs are increased and, bility of financing social security payments from other things being equal, the demand for labor alternative sources may be investigated. Fifth, is accordingly reduced. information services, labor exchanges and job- The most appropriate set of policies for secur- placement agencies could be improved and ex- ing an orderly development of the labor market panded to provide more assistance to the un- varies among countries, but certain broad guide- employed in their search for suitable jobs. In a lines merit consideration. In doing so, it is im- world where the supply of educated workers portant to recognize that in any country these is increasing rapidly and technological develop- general guidelines for labor market policies de- ments are transforming the skills needed by signed to reduce dualism and expand productive industry, better flows of information can be of employment will have to contend with practical great help to first-time job seekers in evaluating political constraints and broader non-economic and adjusting to changing market conditions. objectives. Government policies toward trade unions, for example, cannot be formulated in Migration narrowly economic terms, but must also reflect Mobility is an essential attribute of a well the wider political and social role and sig- functioning labor market. High rates of domes- nificance of these organizations in pluralistic tic and international migration attest to work- societies. ers' responsiveness to geographical variations First, where minimum wage legislation is en- in income earning opportunities. In most devel- acted, it should be used mainly to counteract oping countries, more than 30 percent of the the concentrated market power of employers in additions to urban population during the 1960s the labor market by establishing a "floor" for the were migrants from rural areas; in some coun- wage structure; the use of legislated minima as triesGhana, the Republic of Korea, Tanzania standard-setting rates for a large part of the migration accounted for over 60 percent of modern sector labor force should be avoided. urban growth, and in a few countries, notably Thailand's legislation in 1974 and 1975 exempli- Ivory Coast and Uganda, it accounted for over fies the successful use of minimum wages: it 70 percent. International labor migration de- secured a wage increase for low-paid female pends on the proximity of foreign demand. textile workers, without impeding the overall Southern Europe and Northern Africa, for ex-. efficiency of the market for unskilled labor. ample, supply more than six million temporary Second, the ability of trade unions to engage workers to the industrialized countries of in voluntary collective bargaining should be Northern and Western Europe; several million strengthened wherever employers exert undue illegal migrants from Mexico and other Latin control over wage determination. With the im- American countries are believed to be working portant exception of the mining unions, few in the United States; and over two million con- unions in developing countries are able to en- struction workers from the non-oil Arab coun- gage in across-the-table bargaining with em- tries and South Asia are employed in capital ployers who dominate the market, and instead surplus oil exporting countries such as Kuwait are obliged to rely on public sector mediation. and Saudi Arabia. Other main international des- Since the essentials for effective bargaining tinations of temporary migrant workers include organizational skills and financial strength the prosperous agricultural economies on the 55 West African coast and the mines of the Repub- be shown in policies that influence the spatial lic of South Africa. distribution of income earning opportunities. International migration is tacitly or explicitly The encouragement of industry relative to agri- encouraged by most labor exporting countries, culture, which has been a common feature of even though in some cases the loss of the many development strategies, has concentrated emigrants' skills offsets much of the gains new job opportunities in urban areas. Rural- from their remittances. While some countries urban migration has been the natural conse- Malawi and Mozambique, for examplehave quence. Redressing the balance between incen- curtailed migration for political reasons, the tives to industry and agriculture may not reverse majority regard repatriated earnings as an im- rural-urban migration, but it will reduce the portant source of foreign exchange: in 1975, movement to more manageable dimensions and remittances equaled about one-fourth of Tur- alter the spatial requirements for infrastructure key's import bill, 20 percent of Yugoslavia's, and other services. The interactions between and 9 percent of Pakistan's. International migra- migration, the spatial distribution of the popula- tion also provides jobs for a substantial propor- tion, and the costs of urbanization are discussed tion of the labor force in some labor exporting in Chapter 6. countries. In 1975, over 10 percent of Algeria's labor force and over 5 percent of Yugoslavia's Population Planning were employed abroad. International migration In the short and medium term, economic pol- is a less important source of employment for icies must be designed to contend with rapidly populous countries like Pakistan, less than 1 per- increasing numbers of new entrants to the labor cent of whose labor force is employed abroad. force. In the longer run, however, population Official reaction to high rates of internal mi- policy is fundamental to any strategy that seeks gration has been less sanguine, most countries to raise productivity and incomes by transform- expressing concern that rural underemployment ing the sectoral structure of the labor force. Of is being transformed into urban unemployment. the projected increase in world population be- This concern is frequently exaggerated. Evi- tween 1975 and 2000 of approximately 2 billion, dence from several countriesArgentina, Brazil, more than 1.5 billion will be citizens of develop- Chile, the Republic of Korea, Peru, Tanzania and ing countries. The areas of greatest population Thailandindicates that most urban migrants expansion will be Low Income Asia (680 mil- find work within one month of arrival, many lion), Sub-Saharan Africa (330 million) and migrants moving only when they are assured of Latin America (250 million). an urban job; most increase their income and The main determinant of future population improve their employment status as a result of growth is the level of fertility; with few excep- their move. Despite the very obvious poverty of tions, mortality decline will not be an important some urban migrants, the majority consider factor. In parts of Latin America and East Asia, themselves better off than their rural counter- mortality rates are already approaching those of parts and evince no desire to return to their rural the industrialized countries. In Low Income existence; many in fact are sufficiently well off Asia, mortality is higher, but given its current to help support their rural kin. Where migrants level, future declines will have a smaller impact have chosen to remain unemployed in order to on population growth than those of the past. search for high-paying jobs, the fault lies not Although high mortality remains a major prob- with the process of migration but with dualistic lem in Africa, the prospects for a rapid decline wage structures and inadequate flows of infor- are not encouraging. With respect to fertility, mation about job opportunities. The appropriate declines in the crude birth rate between 1960 policy responses to migrant unemployment, and and 1977 in excess of 30 percent have occurred to urban unemployment in general, are those in a number of East Asian countriesthe Re- outlined in the previous section. public of China, Hong Kong, the Republic of Concern with migration has caused a few Korea, Singapore and Thailandand in Chile, countries, such as the People's Republic of China Colombia, Costa Rica, Trinidad and Tobago, and Indonesia, to implement measures restrict- Tunisia and Turkey. There have been smaller ing the rural-urban flow. But since migration is but nevertheless significant decreases in India, motivated mainly by the desire for better em- Indonesia, Malaysia, the Philippines and Sri ployment, this concern might more effectively Lanka, in some Latin American countries such 56 as Jamaica, Panama and Venezuela, and in Greece, Portugal and Yugoslavia. In the remain- FigureS ing Low Income Asian countries and virtually Population Estimates and all countries in Africa (the main exception being Projections, 1950-2000 Egypt) and in the Middle East, fertility has either (Billions) remained constant or else shown only a modest World decline. In these countries, population growth 7 rates of well over 2 percent a year can be ex- pected throughout the remainder of this century. These rates are substantially higher than the 0.4 percent a year projected for the industrialized countries and the 1.2 percent a year projected for the developing countries of Southern Europe. 'While much of the observed fall in fertility can be attributed to general improvements in Oevelo9ing social and economic conditions, which increase Countries the incentives for families to limit their size, most countries experiencing significant declines in crude birth rates had adopted public programs in the 1960s designed to reduce fertility Family planning programs have taken a variety of forms, ranging from policies of persuasion (such as the public promotion of small families in In- donesia), to tax incentives (for example, reduc- Centrally Planned ing the benefits accruing to large families in the Economies Philippines and Singapore) to measures such as raising the minimum legal age for marriage in 'Countries India and the Republic of Korea. Most programs IIndustrialized _Capital Surplus concentrate on providing information about 0 - Oil Exporters contraception and supplying contraceptive ser- vices, including sterilization at or below market Developing Countries cost. 4 Declining fertility rates are also associated with increased urbanization, improved educa- 29. Contraceptive Use and Crude Birth Rates in 3 Selected Developing Countries, 1977 _Low Income Asia Percentage of Married Women Crude Birth of Child-bearing Rate Per Age Using Thousand 2 Contraceptivesa Population Kenya 4 51 _Sub-Saharan Africa Pakistan 6 45 Indonesia 19 37 Latin America Mexico 21 38 and Caribbean Egypt 21 36 East Asia and Pacific Thailand 32 32 Middle East & NOrth Africa Malaysia 34 29 -Southern Europe Sri Lanka 44 26 Colombia 49 30 1950 1960 1970 1980 1990 2000 Hong Kong 64 19 These data refer to the latest available information covering the period 1975-77. 57 tion and more extensive participation of women The potential significance of declines in fertil- in the labor force. These factors alone, however, ity for the size of the labor force in the long term may not guarantee a rapid decline in the birth may be illustrated by some rough simulations. rate; family planning programs offer an impor- If fertility rates in developing countries had sud- tant complementary means of limiting future denly been halved in 1975, by the year 2000 the labor force growth by making the public more total male labor force would be approximately aware of the benefits of birth control and by an eighth smaller than it is otherwise projected providing contraceptive supplies and informa- to be; however, the male labor force under 25 tion. If natural fertility is equated with a crude the group who usually display the highest inci- birth rate of approximately 50 births per thou- dence of unemployment and underemployment sand of the population a year, experience to date would be only half the size that is presently indicates that the rate declines by about one projected. By the year 2020, such a fertility de- birth for every 2 percent of the women in the cline would be felt even more dramatically: the child-bearing age group who practice effective total male labor force would be nearly 40 per- contraception (Table 29). cent smaller, while the male labor force under The development of population policies is 45 would be only half the size that is presently particularly important in the Low Income coun- projected. Slower population growth would not tries of Africa where fertility rates have not yet only help to contain the future dimensions of started to decline, and in some Middle Income the employment problem; without it, for many Latin American countries where population countries, the immense demands for social and growth rates are above 3 percent. Few countries economic infrastructure are likely to pose a in either group have yet introduced population crippling burden on public budgets and plan- policies to any significant extent. ning capacities. 58 Chapter 5: Industrialization The share of industrial production in the into their own. These later-stage activities tend economy is an important indicator of the stage to be more important in the industrial structure a country has reached in the process of struc- of large countries, which are normally better tural transformation. In Middle Income coun- positioned than small ones to exploit economies tries, the high rates of industrial growth of scale in process industries. Among small sustained since 1960 have raised the share of in- countries the industrially specialized economies dustry from 32 percent of gross domestic prod- diversify earlier into these sectors than the pri- uct in 1960 to 37 percent in 1976. Industrial mary exporting countries. Figure 9 illustrates output has grown somewhat more slowly in the these average patterns of change with respect Low Income countries, but the share of industry to the metal products sector.1 in their GDP has risen more, because the other The industrialization patterns of countries sectors, agriculture and services, have grown show some systematic differences with respect even more slowly than in the Middle Income to their size and specialization in international nations (Table 30). trade. At a given level of average income, large 30. Structure and Growth of Production, 1960-76 (Percentages) Distribution of Gross Domestic Product (at current prices) Agriculture Industry Services 1960 1976 1960 1976 1960 1976 Low Income Countries 50 38 17 24 33 38 Middle Income Countries 22 15 32 37 46 48 Industrialized Countries 6 4 40 38 54 58 Average Annual Growth Rate, 1960-76 (at 1975 prices) Agriculture Industry Services Low Income Countries 2.1 6.0 5.2 Middle Income Countries 3.1 7.6 6.7 Industrialized Countries 1.3 4.9 4.2 Shared Patterns and Problems countries such as Brazil and Turkey, which rely Since countries at similar levels of average predominantly on domestic markets, have tend- income have much in common in what people ed to attain higher levels of industrialization buy and what local industries can make, there than small nations, which rely more on inter- tend to be marked similarities in the evolution national trade for their development. Among of industrial structure. For example, food proc- small countries, those poor in natural resources, essing is typically an important subsector in such as the Republic of China and Hong Kong, countries at low income levels, particularly in which specialize in manufactured exports, have small nations specializing in primary products, industrialized more rapidly than those such as but it becomes less significant as incomes rise Costa Rica, Iraq and Malaysia that have ex- (Figure 9). Other labor-intensive activities, such as textiles, also are important at early stages of development. As development progresses, more MetaI products refers to items in the International Stan- capital- and skill-intensive sectors like rubber dard Industrial Classification Divisions 38 and 39: fabri- cated metal products machinery, equipment and miscella- products, chemicals and metal products come neous manufactures. 59 ploited their natural resource endowments to Figure 9 specialize in exports of primary products. Many developing countries deviate substan- The Pattern of Structural Change tially from these average patterns of industrial- (Percentages of gross domestic product, at 1977 prices) ization, not least because of the different policies with which they have responded to similar Small/Primary Exporters initial conditions. But though these responses Small/Manufactured Goods Exporters differ, many of the key problems and choices encountered by industrializing nations are simi- Large Countries lar. It is these shared problems and issues of Metal Products industrialization that are the subject of this chapter. 12 The problems of industrialization are particu- 11 larly onerous in the early stages of development, when incomes are low and skills scarce, but a 10 wide range of new institutions and activities needs to be established and coordinated, and 9 crucial choices have to be made with respect to 8 the sector, scale and timing of investments. Successful industrialization has generally re- 7 quired substantial and efficient investment in supporting infrastructure. In industries that 6 compete with imports, difficult choices usually 5 need to be made as to how, and how much, they should be protected against foreign competition: 4 while too much protection stunts learning and 3 productivity growth and nurtures vested inter- ests, too little could prevent an industry from 2 starting at all. In many industrial products characterized by economies of scale, the most economically efficient plant size is significantly Food Processing larger than that which the initial domestic mar- 12 ket will justify. The timing and phasing of such "lumpy" investments thus raises important 11 issues, since building plants that are sub-optimal 10 in scale can often result in unnecessarily high costs. The financing and management of large 9 plants and complex production systems are frequently beyond the capacity of the local pri- 8 vate sector, making it necessary to consider the 7 alternatives of public enterprises or foreign transnational firms; each of these institutional 6 modes poses fresh challenges for policy. Per- 5 haps the foremost shared problem at early stages of development is how to foster a stable 4 and consistent policy framework that supports 3 industrialization without discouraging the de- velopment of the most important sector of the 2 economy, agriculture. As industrialization proceeds beyond the initial stages, other issues come to the fore for 300 500 700 1,000 2,000 4,000 6,000 policy consideration. Growing attention needs Gross National Product Per Capita, in 1977 US Dollars to be paid to expanding the opportunities for indigenous managers and entrepreneurs, partic- 60 ularly with respect to learning to produce, mand for non-agricultural goods and services export, and market manufactured goods in an and hence the incomes of those providing the internationally competitive environment. Fre- goods and services. Moreover, the evidence in- quently, this requires a substantial liberalization dicates that the multiplier effects of increases of the industrial policy framework. At the same in smallholder incomes are, if anything, greater time it becomes increasingly necessary to en- than those of comparable increments in the large the pooi of technological expertise, so that incomes of large farms, suggesting that a small- the country can adapt and innovate industrial holder-oriented agricultural development stra- technologies appropriate to its endowment of tegy would enhance the expansion of a domestic natural resources, capital and labor. The grow- market for industry. ing depth and interdependence in the domestic Limited and stagnant rural purchasing power industrial structure calls for complex invest- is a particularly severe constraint on the indus- ment planning and coordination, particularly trial development of the large poor countries of with respect to the intermediate and capital Asia, which have to rely principally on domestic goods producing sectors. markets for their industrialization. Where sig- nificant increases in agricultural yields and in- The Role of Agriculture comes have loosened this constraint, as for Debates over development strategy have often example in the Indian states of Haryana and swirled around the relative importance to be Punjab over the past two decades, rapid gains assigned to industry versus agriculture. Histor- in industrialization have been recorded. In such ical evidence suggests that this dichotomy is cases, while much of the increase in industrial frequently overdrawn. In particular, the notion output has occurred in textiles and other con- that rapid industrialization entails a neglect of sumer goods purchased by rural households, agriculture is misplaced; it underestimates the part of the increment reflects the expansion of importance of the mutually beneficial links be- fertilizers, pesticides, agricultural implements, tween agricultural and industrial development. tractor parts and other intermediate manufac- Indeed, in most developing countries successful tured products, which have, in turn, made agri- industrialization has been supported by sus- culture more productive and highlighted the tained and broadly based agricultural growth. potential for mutually reinforcing links between This is hardly surprising in view of the fact that the two sectors. Furthermore, when agricultural in the overwhelming majority of developing growth has been broadly based, the increments nations, including most Middle Income coun- in purchasing power have induced the expan- tries, more people earn their livelihood from sion of labor-intensive industrial activities, agriculture than any other major sector of the many of them in small-scale enterprises located economy. A buoyant and productive agricultural close to rural markets. sector stimulates domestic demand for indus- In the early stages of development, when agri- trial goods, supplies cheap food for industrial culture dominates the economy, it is inevitable workers and raw materials for agro-processing that some of the resources for industrialization industries, earns foreign exchange to finance come from agriculture. But the manner and imports of capital and intermediate goods for amounts in which such resources are trans- industrialization, and facilitates the develop- ferred can have profound consequences. All too ment of labor-intensive small- and medium- often the methods deployed have included scale industrial units in small towns and rural artificially low prices to agricultural producers, areas. taxation of agricultural exports, an overvalued Increases in agricultural productivity and exchange rate, heavy protection for manufac- incomes are particularly important for generat- tured goods, including those purchased by the ing domestic demand for industrial products at rural sector, and other measures which have the early stages of development, when agricul- turned the domestic terms of trade against agri- ture provides employment for well over half of culture and dampened the incentives for its a country's labor force. Detailed micro-studies development. Frequently these policies have of farm household behavior in several countries, been compounded by deficiencies in transporta- including Malaysia and Sri Lanka, show that tion and marketing infrastructure, and ineffi- increments in rural incomes have powerful ciencies in agro-processing industries, which multiplier effects, in that they increase the de- have levied further implicit tolls on agricultural 61 incomes. From an economic viewpoint, land growing Middle Income countries, including the taxation and the mobilization of rural savings Republic of China, the Republic of Korea, through financial institutions are more desirable Mexico and Nigeria, the sharp increases in means of transferring resources from agricul- effective demand for agricultural products offer ture to industry; these played a significant role significant opportunities for stimulating domes- in the early development of Japan. More re- tic agriculture, especially on small farms, and cently, the Republic of China, the Republic of effecting a wider dispersion of the benefits of Korea and the Indian state of Punjab, among fast growth. others, have achieved considerable success in using financial institutions to channel rural sav- Government Support for Industrialization ings to other sectors. Infrastructure, Planning and Finance Agriculture remains important to the indus- In most developing countries governments trialization process for nations in the middle have played a crucial role in initiating and sup- income range. In many of these countries, agri- porting the early stages of industrialization. culture still accounts for well over half of They have been mainly responsible for the merchandise export earnings, which are nec- building of roads, railways and port facilities essary to finance the burgeoning imports of which have reduced transport costs, integrated intermediate and capital goods for industrial markets, and made development possible. State production. With a growing proportion of the undertakings have usually been created to pro- labor force employed outside agriculture, Mid- duce and distribute the power, water, sewerage dle Income countries need to produce food and telecommunications services essential to efficiently if they are to escape the unwelcome the growth of industrial activities and the con- consequences of massive food import bills, or comitant development of towns. The economies the inflationary pressure on industrial wages of scale inherent in the provision of these utili- exerted by high food costs. Countries such as ties typically entailed large-scale projects that the Republic of China, the Republic of Korea were beyond the capabilities of the local private and Malaysia, which invested heavily in irriga- sector at early stages of development; moreover, tion, land improvements, other rural infrastruc- the widespread practice of subsidizing these ture and agricultural research in their early basic services could not have been pursued by stages of development, have been reaping the private companies. However, in many develop- benefits of high agricultural productivity and ing countries, policies for underpricing public incomes, and cheap food. In contrast, nations utilities have outlived their original justification such as Chile, Jamaica and Zambia, which paid of nurturing modern industrial activity; contin- insufficient attention to agricultural develop- ued reliance on such policies strains national ment in earlier years, are finding that high food budgets, undermines the financial and manage- import bills severely limit the foreign exchange rial autonomy of the utilities concerned, and available for industrial development. Appropri- gives misleading signals for investment deci- ate agricultural pricing policies are equally sions. Finally, government investments in trans- important. In West Africa, for example, the port infrastructure and public utilities have Ivory Coast's concern to provide adequate in- generated substantial demands for equipment centives for producers has been rewarded with and for construction materials and services, decreasing dependence on food imports, where- which have created significant opportunities for as the unattractive producer prices adopted in local industrial expansion, even though much Ghana have contributed to a substantial decline of the demand was initially met from abroad. in food production per capita. The state's role in early industrialization In many Middle Income countries, rural pur- efforts has extended beyond the provision of chasing power remains fundamental to the expensive large-scale physical infrastructure. domestic market for industrial goods. This is Following World War II, growing numbers of particularly true in larger countries such as developing nations espoused industrialization Brazil and Turkey, which need to give greater as a prime goal of government economic policy priority to broadly based agricultural develop- and launched a broad array of initiatives in its ment, especially if protection in international pursuit. Much of the impetus for development markets reduces the potential for selling indus- planning came from and was focused on the trial products abroad. Conversely, in rapidly requirements of industrialization. The large 62 investment and foreign exchange requirements managers, entrepreneurs, administrators and of industrial and infrastructure projects, and industrial technicians. In nations where the his- the high degree of interdependence among torical legacy of such skills was particularly them, spurred governments to draw up compre- scarce, as in many countries of Sub-Saharan hensive and detailed medium-term projections Africa, programs have been established for the and plans for economic activity. These early transitional use of expatriate personnel in pri- efforts at development planning highlighted the vate and public industrial ventures. Such poli- inherently interconnected nature of government cies have not been free of difficult issues such fiscal, monetary and foreign trade and payments as salary disparities between expatriate and policies, and nurtured a coordinated approach indigenous staff, the appropriate rates of to development strategy. Investment planning "citizenization" of jobs held by expatriates, also catalyzed the identification and appraisal charges of neo-colonialism, and other vicissi- of alternative projects, provided early warn- tudes of post-colonial cross-cultural coopera- ings on emerging bottlenecks in production and tion; nonetheless they have usually permitted manpower supplies, and permitted the implica- more rapid and efficient industrialization than tions of alternative policy packages to be as- would have been possible otherwise. sessed. Governments have channeled finance to in- Some governments went further and at- dustry through a number of means, including tempted to use development plans as detailed direct lending and equity participation in indus- blueprints for the central direction of economic trial enterprises and the creation of industrial activity. In several countries, particularly those development banks, which act as conduits for at low levels of development, the volume and domestic and foreign financial savings. Beyond quality of central planning and detailed state supplying medium- and long-term finance to intervention required for such a strategy out- industry, the development banks provide a wide stripped the capacity of their planning and im- array of technical services and propagate the plementation apparatus: coordination was often application of modern investment appraisal faulty; projects were delayed by lack of com- criteria. In some developing countries, including plementary inputs; cost overruns were frequent; India, the Republic of Korea, Mexico and Tan- plans were too rigidly adhered to in the face of zania, the major government-supported devel- unforeseen events; and the capacity for decen- opment banks have become pivotal institutions tralized decision making was stunted. These ex- in industrial development. In most developing periences have increasingly led to the use of economies, governments have also been active more decentralized and flexible planning pro- in delineating and monitoring the role of foreign cedures such as "rolling plans" and multi-year transnational firms in transferring capital, skills budgets, which attempt to bridge the exigencies and technology to local industry. The means of short-term economic policies and the me- they have used range from defining investment dium-term planning needs on which investment and tax codes for private foreign investment to decisions must be based. In developing coun- assisting domestic private and public entities tries with more advanced industrial structures, to negotiate contracts with foreign firms. the high and growing capital costs of mini- mum-scale plants, the growing interdependence Public Enterprises in Industry among industrial activities, recent advances in One set of public institutions for furthering complex analytical techniques and the availabil- industrialization in developing countries merits ity of skilled analysts combine to offer cost- special attention. These are industrial enter- saving opportunities from the planned timing, prises owned and operated by government. scale, location and phasing of investments in Such enterprises have been created in many industries such as fertilizers, petrochemicals developing countries for diverse reasons, in- and mechanical engineering. cluding the desire to launch and control large Besides providing infrastructure and a coordi- capital-intensive plants producing fertilizers, nated policy framework, developing country petrochemicals or steel, which might not have governments have spearheaded efforts to mar- been undertaken by the private sector or would shal skills and financial resources and direct require regulation of monopolistic profits if they them to industry. Numerous specialized insti- were; the goal of deploying state economic tutes have been created to train indigenous power to balance that of domestic industrialists 63 and foreign transnational firms; the need to in- where an extended learning period can reason- crease the supply of trained managers and tech- ably be expected. But all too often the explana- nical staff; and nationalization of existing pri- tion lies with the framework of policies and vate units to take over the "commanding incentives within which state enterprises oper- heights" of the economy, or, alternatively, to ate. Frequently, public enterprise managers are forestall bankruptcies and layoffs in private granted very little discretion regarding pricing, enterprises of marginal profitability. In many wages, hiring practices and investment deci- Low Income countries, particularly in Africa, sions. Wage and salary scales are narrowly where the dearth of indigenous private indus- bound by legislation, product prices are con- trial entrepreneurs frequently narrows the trolled by other state agencies, and investment choice of institutional modes to state enter- decisions are subject to detailed and dilatory prises or foreign firms, the former are often scrutiny by the central government, which also preferred. intervenes in the day-to-day operation of the Some of these underlying objectives have undertakings. Overmanning at all levels is com- been fulfilled. Large-scale industrial projects mon since public undertakings are often viewed beyond the capacity of the local private sector as employers of last resort; hiring decisions fre- have been set up in many countries. In India quently result from the exercise of political public enterprises have made pivotal contribu- patronage while dismissal procedures are cum- tions to the establishment of a domestic capital bersome and ineffectual. Furthermore, state en- goods manufacturing sector and the evolution terprises are often favored targets for labor of a professional cadre of industrial managers. strikes. In the Republic of Korea, public enterprises These practices lead to frequent losses which played a key role in the development of inter- are almost invariably financed from the national nationally competitive fertilizer and iron and treasury or the banking system; bankruptcy is steel industries. Turkish state enterprises facili- rare. The prevailing environment provides little tated the introduction of new manufacturing incentive to workers and managers to improve technologies and modern sales organizations, their performance and thus tends to perpetuate while the training programs of these firms sup- the existing problems. The costs of poor per- plied substantial numbers of managers and formance extend beyond the state enterprises, skilled workers to other industrial units. Public especially in countries where they produce a sector management of nationalized units has large proportion of industrial output. The cumu- sometimes been more dynamic and far-sighted lative losses burden the national treasury and than that of their private predecessors. In a preempt credit which could have otherwise number of countries, negotiations and joint ven- gone to more productive users. In some coun- tures with foreign firms have been aided by the tries, such as Mali and Turkey, the funding of existence of public industrial units; this is par- public enterprise losses by the banking system ticularly true of sectors engaged in processing has been a significant source of inflation and petroleum and non-fuel minerals. macroeconomic instability. However, in most countries there is growing It is easier to diagnose the difficulties, many concern about the low profits and operational of which are shared by some state units in inefficiencies of many state enterprises. Most industrialized countries, than to devise and im- public undertakings in developing countries plement solutions, especially since the latter operate in monopolistic domestic markets pro- will depend to a large extent on political fac- tected from international competition by tariffs tors. However, the experience from a number and quotas, and receive significant benefits from of countries suggests some broad guidelines. tax exemptions and priority allocations of First, large industrial projects in the public sec- scarce foreign exchange and domestic credit. tor merit particularly careful pre-investment Yet substantial losses are common and high scrutiny, since once they are initiated the prac- profits are exceptional. Their history of poor tical possibilities of reversing a mistake through profitability stems partly from their pursuit of permitting bankruptcy are limited. Second, the other, social, objectives, such as employment non-commercial objectives of a state enterprise and the development of backward regions, and need to be limited and specified, if they are not partly from the fact that many of these enter- to be used as blanket justifications for inade- prises are recent ventures in difficult sectors quate performance. The experience between 64 1950 and 1970 of Italian public enterprises Similar, though less dramatic, gains have been under the holding company, the Institute for recorded in many successful industrial firms in Industrial Reconstruction, provides an example. other sectors and countries. Agreement on the nature and scale of a par- Developing countries still depend heavily on ticular social objective was arrived at between industrialized nations for new industrial pro- the government, the holding company and the cesses and techniques. The overwhelming ma- individual enterprise, which then received ear- jority of these originate in developed countries marked funds, at predetermined levels, to pur- including European centrally planned econo- sue the specific social objective. The company mies), which are estimated to account for over was not expected to compromise its quest for 95 percent of world spending on research and profits. development. New technology is transferred to Experience from Mexico and Italy indicates developing nations through diverse channels, that competition between private and public including the capital goods imported by these firms tends to make both more efficient in indus- countries, direct investment by foreign trans- tries where economies of scale and the size of national companies, engineering consultancy, the domestic market limit the number of units. education and training, turnkey projects, licens- In sectors where public firms occupy near- ing agreements, management contracts, and a monopoly positions, competitive discipline can variety of informal business links. Countries at be exerted through more liberal import policies. early stages of industrialization tend to rely The benefits of competitive pressure are more more heavily on transfer mechanisms, such as likely to be reaped if measures are taken to grant foreign private direct investment, that combine public enterprise managers greater autonomy technology, capital, skills, marketing and man- with respect to product pricing, financial man- agement in one package, while nations with agement, employment practices and investment more developed industrial structures are better decisions, coupled with greater accountability positioned to define and contract for their spe- for their performance. The historical evidence cific technology needs. Over time, the growing also suggests that the dynamism of state enter- sophistication of technology buyers and in- prises is likely to be enhanced through joint creased competition among the proliferating ventures with private domestic and foreign suppliers of technology have induced a general firms. Finally, a number of countries, including tendency toward the more specific. unpackaged Argentina, Brazil, Japan, the Republic of Korea forms of technology transfer. The trend has and Singapore, have successfully followed the been slower in high technology industries, such practice of selling public enterprises to the pri- as petrochemicals, motor vehicles, precision vate sector once the pioneering role of the gov- machine tools and computers, where develop- ernment has been discharged. In this way, the ing country buyers lack the requisite expertise government's limited managerial and financial and the sources of supply are few. resources can be used sequentially to pioneer The international market for industrial tech- new ventures and promote competition within nology is an imperfect one, and a complex arena specific monopolistic industries. for buyers from developing countries, especially the less advanced among them. The costs of Technology for Industrial Development acquiring technology are frequently bloated by Successful industrialization requires the ac- the manipulation of prices for transactions be- quisition and mastery of new technological pro- tween constituent units of transnational com- cesses and the development of capacity to adapt panies; technology contract clauses that restrict and innovate technical and organizational the buyer's exports and require purchases of im- changes that will raise productivity in develop- ported inputs from the supplier; and by certain ing country conditions. Much of the technical developing country policies, including exces- progress in developing country industries has sive industrial protection, unduly generous tax been achieved through experience accumulated inducements to foreign investors and indis- on the job, and through small changes in physi- criminate, sometimes duplicative, acceptance of cal plant, layout and organization. Such gradual technology contracts. changes more than doubled the annual produc- A more open, stable and competitive environ- tion capacity of a Brazilian steel plant in seven ment for industrial trade and investment and the years, with very little new physical investment. elimination of unnecessary tax inducements in 65 some developing countries could substantially have won turnkey contracts in steel manufac- reduce the costs to developing countries of ac- ture. The competitiveness of these technology quiring technology. In recent years several exports is founded on a history of learning, im- countries, including Argentina, Colombia, India, proving, and adapting technological processes the Republic of Korea and Mexico, have estab- and products imported from industrialized na- lished national technology registers and similar tions, the relatively low cost of highly skilled agencies to screen prospective technology con- manpower, the suitability of the technologies tracts between foreign and domestic firms, with for developing country conditions, and their a view to reducing the excessive costs of dupli- presentation in relatively unpackaged forms so cation, unduly high payments and severely that buyers can specify their needs. Such tech- restrictive clauses. According to preliminary nology exports are still small in the global con- evaluations, the Colombian and Mexican pro- text, but they presage significant and growing grams have had significant success in reducing opportunities for trade and technological links costs and acquainting domestic entrepreneurs among developing nations. with cheaper alternative technologies. Recent The experience of these few technologically international initiatives have also led to negotia- more advanced developing nations highlights tions on international codes of conduct for tech- the significance of the domestic engineering and nology transfer and transnational corporations. metal-working sectors in furthering the devel- Costs are not the only concern of developing opment of technological expertise and industrial country purchasers of industrial technology. efficiency. In developing countries with rela- Frequently the industrial processes designed tively advanced industrial structures and a siz- and developed in the relatively capital-rich in- able skilled labor force, there are strong reasons dustrialized countries are too capital intensive for encouraging the production of machinery. for developing nations, and their indiscriminate Exports of machinery and transport equipment adoption aggravates unemployment and under- are projected to continue as the most dynamic employment in these countries. Studies indicate element of world trade in manufactured goods. that developing countries could significantly Much of the increase in demand for these prod- increase both employment and output by adopt- ucts is likely to come from developing countries, ing more appropriate technologies. Individual which in 1976 absorbed over 30 percent of firms in these countries rarely have ready access world exports, but supplied less than 5 percent to information on profitable alternative technol- of the total. Development of machinery man- ogies. Recognizing this, a number of countries, ufacturing could increase a country's exports including Ghana, India, Indonesia and Mexico, of machinery and engineering consultancy serv- have founded institutes for research and dis- ices, augment its ability to adapt and innovate semination of such information. Of potentially industrial processes suited to indigenous re- greater significance for the long term is the re- sources and conditions, and enhance its capac- cent emergence of technology exports from a ity to choose and negotiate technology pur- few industrially more advanced developing chases from abroad, as well as creating sub- countries. These exports could significantly stantial employment opportunities for skilled widen the array and terms of technology acqui- and semi-skilled labor. Furthermore, unlike sition available to other developing nations. process industries such as steel, fertilizers and During the present decade a few countries, other chemicals, machinery production does not including Argentina, Brazil, the Republic of require large, capital-intensive, vertically-inte- China, India, the Republic of Korea and Mexico, grated firms. Relatively small firms can secure have begun to export capital equipment, turn- the economies of scale necessary for efficient key plants and engineering consultancy serv- production through product specialization, ices, and to undertake transnational corporate tight production scheduling and careful con- investments. India has been exporting capital trol of inventories. equipment for textiles, sugar processing and In most developing countries where machin- cement for some time; its more recent exports ery production is a sizable sector, its efficiency have included a growing range of machine tools is currently hampered by a number of factors, and other engineering products. Argentina has including uncertainties in the supply of raw exported turnkey plants for meat refrigeration materials such as steel, inadequate training of and fruit processing, while Brazil and Mexico operatives, too little sharing of the managerial 66 and engineering experience accumulated in the Foreign Trade and Competition sector, a lack of standardization in materials Trade Policies: Costs and Benefits and parts, insufficient expenditure on research Growth in the international exchange of and development, weak marketing arrange- goods and services has contributed significantly ments and instability in the demand for the to the economic development of trading nations. sector's products, caused by fluctuations in eco- The basic principle of foreign tradethat spe- nomic growth and sudden changes in trade and cialization and exchange increase the overall industrial policy. availability of commoditiesallows all parties Government action can help to alleviate some to benefit from international transactions. The of these problems. Programs for vocational extent to which countries have recognized and training or to subsidize in-plant training can adhered to this principle has been a key factor make labor more productive. Plants may be in the success of their industrialization efforts. made more efficient through government-spon- Countries that have used foreign trade oppor- sored extension services in which experienced tunities to capitalize on natural advantages, engineers and production personnel advise on such as their location and plentiful supplies of the use of machines, layout and flow of work. cheap labor, or on acquired advantages such as The Republic of Korea is launching such a pro- skills and technical capabilities, have developed gram. Production and exports could also gain more quickly and avoided cyclical foreign ex- from the establishment of a centralized engi- change crises more successfully than similarly neering consultancy service for the conception, endowed countries that have excluded foreign establishment and operation of turnkey plants, competition and protected domestic production such as that operated by Engineers India, Lim- beyond the initial creation of an industrial base. ited. The state could take the lead in introducing Experience suggests that only a limited phase national standards for materials, industrial fas- of protection is required in the early stages of teners and other parts. Fluctuations in the sup- industrialization. All of the currently industrial- ply of raw materials and in demand for the izing countries, with the sole exception of Hong sector's products could be reduced through Kong, have protected domestic production to planned phasing of investment in the industries some extent. Frequently, however, protection supplying the sector and using its products, as has been introduced as a means of limiting im- well as through flexible and liberal import pol- ports in response to balance of payments crises, icies to allow unforeseen shortfalls in raw rather than as a conscious effort to encourage materials to be offset. Machinery exports would the rational development of industry. Among benefit from the provision of longer-term export the unforeseen consequences of the ensuing credit and insurance facilities, better dissemina- reliance on quotas, indiscriminately imposed tion of international marketing information, and tariffs, and administrative control of foreign ex- the institution of centralized quality control change are the misallocation of resources in facilities. Machinery firms in developing coun- favor of large-scale, capital-intensive produc- tries undertake little research and development, tion, reduced incentives to export, and the though this is necessary to sustain productivity creation of vested interests in the protected gains and spur innovations in design that best industries. Initially, however, despite the ineffi- exploit the availability of indigenous resources. ciency of the protective devices used in many Governments could offer firms tax incentives countries, the encouragement of import-substi- for research and development expenditures, tuting industries has generally secured a rapid establish institutions to undertake contract re- expansion in manufacturing output. In the 1950s search for industry, and reverse the current bias and 1960s Mexican manufacturing, for example, in the funding of research and development that grew at annual rates above 7 percent; Brazil, the favors basic research over development work. Philippines and Turkey, among other countries, Finally, policies that assure high and stable rates have also achieved considerable rates of growth of investment in the economy and facilitate the in manufacturing through import substitution. evolution of small- and medium-scale machin- The development of the manufacturing sector ery firms will aid the development of the has in turn helped to create and spread indus- machinery sector and broaden the country's trial and entrepreneurial skills, and in some technological capacity. countries, such as Brazil and India, has resulted 67 in the emergence of substantial domestic tech- could also be made available to new industries nological capacity. to encourage them subsequently to enter world The early stages of import substitution usu- markets. Japan and the Republic of Korea, for ally involve labor-intensive, non-durable con- example, have demonstrated that very high sumer goods, the production of which is levels of initial protection need not prevent an technically simple and also efficient even at low industry from becoming internationally compe- levels of output. To encourage import substitu- titive within 10 or 15 years, provided that all tion in these products, many countries have concerned are given clearly to understand that afforded the highest levels of protection to con- protection is to be temporary. In Low Income sumer goods, giving successively lower levels countries, low-skill, labor-intensive products to intermediate and capital goods and primary are the most appropriate initial focus for indus- commodities. While the details vary, this broad trialization efforts; technologically more sophis- pattern of protection is common to countries as cated products may need to await the develop- diverse as Chile, Colombia, India, Indonesia and ment of adequate supplies of skilled labor and Pakistan. technological capacity. At the same time, do- Once early import substitution opportunities mestic demand for industrial products can be have been fully exploited, a continued reliance stimulated by maintaining incentives to agri- on protection imposes increasingly higher costs culture at levels which secure the continued on the economy, because the production of growth of agricultural incomes. goods associated with later stagesintermedi- Where domestic markets are relatively small, ate goods, capital goods and durable consumer the pursuit of import-substituting policies be- goodshas relatively advanced technological yond the early stages of industrialization should requirements, is more demanding of skilled be viewed with caution. Several countriesthe labor, and needs to be organized on a relatively Republic of China, Israel, the Republic of Korea large scale if it is to use resources efficiently. and Singaporehave demonstrated that the Limited domestic markets and a structure of continued development of industry can be se- incentives that discourages exports have con- cured by an alternative approachnamely, a demned capital-intensive industries to inef- switch to production for export. Apart from ficient levels of production in countries maintaining and even accelerating the rate of in- Colombia, Ghana and Pakistan, for example dustrialization, the policy switch allowed these that have pursued import-substitution strategies countries to avoid the costly mistakes associ- for too long. Even in larger economies, such as ated with excessive import substitution and to Brazil (at least until 1965), India, Mexico and reap a number of benefits. In particular, since Turkey, the prolonged use of protective meas- manufactured exports tend at first to be more ures has contributed to the development of labor-intensive and less skill-intensive than high-cost, inefficient domestic industries. More- import substitutes, these countries were able to over, an important corollary of the protection economize on skills and capital and simultane- afforded to manufacturing is its disincentive ously to increase job opportunities for unskilled effect on agricultural production. Import-sub- labor. Opportunities for acquiring technical and stitution policies have tended to limit agricul- managerial skills were also expanded, and in- tural growth, and hence domestic demand for dustry, no longer constrained by domestic de- manufactured goods, while simultaneously mand, was able to take advantage of economies keeping industrial production dependent on of scale and to increase capacity utilization. The internal purchasing power. resulting growth in their manufactured exports Experience suggests some guidance for the was phenomenal: between 1961 and 1976, for future. Low Income countries still in the early example, the manufactured exports of the Re- stages of industrialization can successfully de- public of China and the Republic of Korea ploy protective measures while skills are ac- increased at annual rates of about 25 and 50 quired and the necessary infrastructure is percent respectively. established. Such protection, however, should Experience demonstrates that a successful be of limited and clearly specified duration and, export drive depends crucially on easy access where possible, should rely more on tariffs than to duty-free imported inputs, through, for ex- on quantitative restrictions. Adequate promo- ample, special export-processing zones or effi- tional incentivessubsidies and information- cient systems of bonded warehouses and tax 68 rebates, arid on the maintenance of export price Spain indicates that success is feasible and that incentives that are comparable to those ac- the resulting benefits are substantial. In Brazil, corded production for the domestic market. An for example, manufactured exports increased existing industrial base is also a prerequisite, from about US$300 million in 1967 to about although countries such as the Republic of US$2 billion in 1974 (at 1975 prices) despite a China, Israel, the Republic of Korea and Singa- prior history of almost exclusive reliance on pore began to compete successfully in the world import substitution. market for manufactures when their industrial The range of countries that have now moved sectors were quite small. In the Republic of toward a trade regime less biased against ex- Korea, for example, industrial value added was ports indicates that such a step can be con- only about US$1 billion (at 1975 prices) in 1964, templated in a wide variety of economic cir- and yet this was the year in which the highly cumstances and policy environments: export successful export drive took off. A significant success has been achieved in poor and rich number of Low Income countries already have countries, in small and large countries, and in industrial bases of comparable size and are countries well advanced in import substitu- therefore in a position to embark on their own tion as well as those still in its initial stages. export drive. This range of experience, including a number Regional economic integration offers an al- of failures, constitutes an important empirical ternative means of participating in the benefits basis for the development of policy guidelines of trade, but international experience with such for countries yet to embark on the transition. efforts has been mixed. While member coun- Although the basic ingredients of the policy tries enjoy access to each other's domestic mar- packagedevaluation, inducements for exports, kets, they forgo the possibility of purchasing and reduction of quantitative restrictions and of extra-regional commodities that may be cheaper tariffs on importsare reasonably well under- than those available within the region. A poten- stood, their implementation poses many prob- tially more significant field for regional coopera- lems. Frequently, such a policy change has been tion is the phasing of large-scale investments initiated in the midst of a foreign exchange cri- so as to avoid excess capacity. The Association sis; sometimes it has been a direct response to of South East Asian Nations, for example, has pressure from aid donors. Absence of a strong recently embarked on the construction of re- national commitment to export promotion has gional nitrogen fertilizer plants in Malaysia and sometimes meant that export incentives have Indonesia. been unsatisfactory, and inadequately main- tained. This, compounded by a lack of adequate Transition to an Outward-Looking Trade Regime external financial support over a difficult transi- The Republic of China, the Republic of Korea tional period, appears to have hampered some and Singapore switched to export promotion devaluation efforts, such as those of Brazil in relatively early in the industrialization process. 1957 and India in 1966. In several countries en- Many other countries, recognizing the limita- gaged in trade policy reform, inflation-induced tions of prolonged reliance on import substitu- erosion of international competitiveness has tion, have also redressed, at least partially, a constrained the expansion of exports. This, to- bias against exports. Their experience suggests gether with the improved access to, and conse- that the transition to more outward-looking quent growth in, imports has often led authori- trade policies increases in difficulty with the ties to reinstate quantitative restrictions and duration and extent of import-substitution poli- increase tariffs to defend a deteriorating trade cies. Countries that are still in the preliminary balance. In some cases the policy reforms have phases of import substitution are well advised been thwarted by a lack of adequate external to initiate their policy transition before the financing to support the balance of payments emergence of politically vocal, and strongly en- during the transitional period before exports re- trenched, vested interests. Countries that have spond to the new trade incentives. already entered the later stages of import sub- Although policy changes introduced in re- stitution behind protective barriers face more sponse to crises are apt to run into difficulties, severe problems in securing a smooth transi- the adjustment to a more outward-looking trade tion. But, at the same time, the recent experi- policy will perforce often have to be initiated in ence of nations such as Brazil, Colombia and unfavorable circumstancesespecially in coun- 69 tries that are already far along the import-sub- taming support from additional foreign capital stitution route and have highly distorted trade inflows can help to lower the risks of recession systems. Experience suggests that in such cases somewhat. Even so, the transition from a se- a gradual approach is most appropriate; giving verely distorted trading environment to a more initial emphasis to expanding exports rather outward-looking trade regime will involve a po- than reforming the import regime, except to the litically difficult redistribution of income, away extent that the latter directly inhibits exports. from some of the existing import-substituting Strong incentives to expand and diversify ex- activities toward the newly emerging export ports are particularly important where a short- sectors. These difficulties underscore the im- age of foreign exchange is restraining indus- portance of retaining control over the timing of trialization. Devaluation is usually essential for the transition: beginning the policy switch from this purpose. In addition, exporters of manufac- a position of strength, perhaps deriving from tures must be assured of access to duty-free good harvests or improved terms of trade, and imported inputs and convinced of official com- before the commitment to import substitution mitment to export promotion. Export-process- has become excessive, renders the transition ing zones have been important in the early both economically more feasible and politically expansion of exports in a number of countries. more palatable. Resort to certain temporary expedients also merits consideration: for example, it may be Industrial Licenses and Price Controls useful to tie the distribution of import licenses Even if a successful transition is made to a and access to foreign exchange to export per- more open trade regime, the competitiveness formance, even though the ultimate goal is the of the foreign trade sector may be diminished removal of import licensing and exchange con- if administrative controlsindustrial licensing trols. It is more important, however, to ensure and price regulationshinder the functioning that over the long term, production for export of domestic markets. Such measures are usually remains as profitable as production for the do- introduced for specific purposes, but difficulties mestic market; for this purpose, the exchange of implementation have frequently prevented rate may need to be adjusted frequently in order them from attaining their immediate objectives, to offset differential rates of domestic and inter- and have often imposed severe costs on other national inflation. sectors of the economy. Industrial licensing As exports rise, attention can be turned to schemes, for example, frequently fail to con- import liberalization. Remaining quotas can sider issues of plant location and size, the timing then be eliminated and tariff structures rational- of investments, or the choice of technology, ized with less fear of a foreign exchange crisis, while they have rarely achieved their main ob- although even here a gradual approach may be jectives of regional balance and control of mo- most appropriate. Israel, for example, began nopoly power. Industrial licensing in Brazil did liberalization by reducing tariffs on imports that not secure regional balance; the licensing sys- did not compete with domestic industries; the tem in Spain only achieved a limited regional additional step of eliminating quotas and reduc- dispersion of industry, and that at the cost of ing tariffs on competing imports took another building plants that were too small to be effi- seven years. cient. Efforts at monopoly control through Reforming a trade and exchange rate regime industrial licensing also have met with limited in the midst of a crisis runs the risk of a reces- success, primarily because, as in India, the well sion. Apart from the hardship caused by the loss informed, larger and better organized enter- of output and employment, the ensuing dissolu- prises have been able to take advantage of the tion of efficient and promising manufacturing licensing system at the expense of their smaller activities also retards industrialization. The competitors, thus stifling rather than promoting avoidance of recession is difficult since, unless competition. exports are highly responsive, or sufficient ex- Price controls on industrial products have ternal financing is made available, deflationary also had many unintended results and often measuresfiscal austerity, tight monetary con- have proven costly to the economy. The ubi- trol and high interest ratesare required. quitous cost-plus pricing system, for example, Avoiding the premature liberalization of im- provides little incentive for efficiency or cost ports, encouraging domestic savings, and oh- minimization; moreover, because it limits the 70 profits available for reinvestment in production minimize uncertainties and delays. The loosen- capacity, the system has often resulted in criti- ing of price controls and industrial licensing, cal shortages of output. Pakistan, for example, and their replacement, where necessary, by ap- has experienced chronic shortages of fertilizer propriate fiscal incentives, may best be com- partly as a result of this system. Further, since menced in low-priority sectors and then ex- in many countriesincluding Egypt, India, tended to the more strategic sectors. The Tanzania and Turkeypublic sector firms are achievement of regional balance and the con- not normally permitted to go into liquidation, trol of monopoly power can be sought through the losses resulting from price controls have taxes and subsidies and the provision of infra- necessitated substantial government subsidies. structure, rather than licensing systems. The Countries that have a long history of direct alignment of domestic prices and real economic controls can rarely abandon them immediately; costs following price decontrol will usually im- the transition is likely to he facilitated if, as in prove the allocation of resources and make the the foreign trade sector, it is initiated in favora- reforms of foreign trade policy more effective. ble economic circumstances and the controls Since these transitions entail significant adjust- are dismantled progressively over a specified ment costs, countries may be well advised to period. Prior announcements of the forthcoming limit their reliance on administrative controls administrative reforms could also be made to during the earlier stages of industrialization. 71 Chapter 6: Urbanization: Patterns and Policies Key Features of Urbanization in Developing The rate of urban population growth in these Countries countries is likely to decline after 1975, but it Urbanization has been a worldwide phenome- is expected to remain three to four times as high non during much of this century.' Between 1920 as the urban growth rates of the industrialized and 1970, the proportion of the world popula- countries in this period (Table 31). tion living in towns and cities increased from The number of very large cities in the develop- 19 to 37 percent, and by the year 2000 over half ing world is expanding rapidly: in 1950, only the world's population is likely to be living in one city in these countries (Greater Buenos urban areas. This shift in the balance between Aires) had a population over 5 million, while five rural and urban sectors is closely linked to in- cities in the industrialized countries had reached dustrialization and changing patterns of em- or exceeded that size. By the year 2000, the de- ployment, and to rapid changes in cultural, veloping world will have about 40 cities of or social and political conditions throughout the above this size, compared with only 12 in the world. industrialized countries. Eighteen cities in de- The features of contemporary urbanization in veloping countries are expected to have more developing countries differ markedly from those than 10 million inhabitants, and one at least- of historical experience. Whereas urbanization Mexico City-may well have triple this number. in the industrialized countries took many dec- The net additions to city populations are even ades, permitting a gradual emergence of eco- more striking. For example, in each year of the 31. Urbanization Rates and Urban Population Growth, 1950-2000 Urban Population as Percentage Average Annual Percentage of Total Population Growth of Urban Population 1950 1975 2000 1950-60 1970-80 1990-2000 Developing Countries 20.6 31.1 45.8 4.0 4.0 3.5 Industrialized Countries 62.4 74.4 83.6 2.0 1.2 0.8 Capital Surplus Oil Exporters 16.9 55.5 77.9 7.9 7.1 3.1 Centrally Planned Economies 20.7 34.4 49.2 5.2 2.7 2.4 World 29.0 39.3 51.5 3.5 2.8 2.6 nomic, social and political institutions to deal mid-1970s, Mexico City and Sao Paulo each with the problems of transformation, the proc- grew by over half a million people, while such ess in developing countries is occurring far cities as Jakarta and Seoul grew by over a quar- more rapidly, against a background of higher ter of a million people. population growth, lower incomes, and fewer The differences in the characteristics of ur- opportunities for international migration. The banization among developing countries can be transformation involves enormous numbers of exemplified by some broad regional groups people: between 1950 and 1975, the urban areas (Figure 11). The first of these groups comprises of developing countries absorbed some 400 mil- the highly urbanized Middle Income countries lion people; between 1975 and 2000, the increase of Latin America. In this group, more than half will be close to one billion people (Figure 10). the population already lived in urban areas in 1975, and three-fourths are expected to do so lThe level of urbanization is defined as the percentage of the total population of a country living in urban areas. This by the year 2000. Although the rate of rural- report relies mainly on UN estimates of urbanization levels. urban migration is likely to slow down consid- Since different countries use different definitions of "urban," cross-country comparisons of these estimates should be erably as this high degree of urbanization is interpreted cautiously. reached, cities will continue to grow rapidly as 72 Figure 10 Urban Population Estimates and Projections, 1950-2000 World Urban Population Increment in Urban Increment in Urban 1950 Population 1950-1975 Population 1975-2000 Capital Surplus Oil Exporters Industrialized Countries Centrally Planned Economies Developing Countries 0 0.5 1 .0 15 2.0 Billions Developing Countries Southern Europe Middle East & North Africa East Asia & Pacific Latin America & Caribbean Sub-Saharan Africa Low Income Asia 0 100 200 300 400 500 600 MU Sons long as natural population growth is not cur- In the second group are the predominantly tailed. The pattern of urbanization in these rural countries of Sub-Saharan Africa, where countries is characterized by a heavy concen- urban growth is a relatively recent phenomenon tration of economic activities and wealth in a but is now very rapid, because of high natural few very large urban centers, providing a stark population growth and massive rural-urban mi- contrast to the economic stagnation and much gration. In these countries the proportion of lower average incomes in many of the periph- people living in urban areas will remain small eral regions. Although average urban incomes through the remainder of this century in com- are relatively high, poverty remains a serious parison with those in the first country group, problem in many cities. and most of the cities are of moderate size by 73 Figure 11 Urbanization Estimates and Projections for Developing Countries, 1950-2000 Urbanization Levels Increment in Increment in Urbani- Urbanization Level Urbanization Level zation Level 1950 1950-1975 197 5-2 000 Southern Europe Middle East & North Africa East Asia & Pacific Latin America & Caribbean Sub-Saharan Africa Low Income Asia 0 20 40 60 80 100 Urban Population as Percentage of Total Population Average Annual Growth of Urban Population Growth Rate Growth Rate Growth Rate 1950-1960 1970-1980 1990-2000 Percent 6 Southern Midd e East & East Asia Latin America Sub-Saharan Low Income Europe Nor h Africa & Pacific & Caribbean Africa Asia 74 international standards. Urban poverty is a rela- activity and wealth in a few regions of the coun- tively minor problem when compared with these try, and the high capital cost of urban infra- countries' rural poverty. Since this group of structure. Related to this set of problems, but countries is still in the early stages of a very often seen separately, is the concern with pov- rapid urbanization process, the policies for erty and inefficiency within cities. Lack of re- guiding the transformation take on special munerative employment, housing and public importance. services for a large number of urban dwellers, The third pattern of urbanization is encoun- as well as congestion and pollution, are the main tered in Low Income Asia. Though they have manifestations of this second set of problems. some of the world's largest cities, the countries These are real problems which need to be con- in this group are predominantly rural, and de- fronted. Urbanization, however, also presents spite intense population pressures on agricul- important opportunities for increases in produc- tural land, the level and rate of urbanization are tivity and incomes, and for a reduction in the expected to remain low. This is mainly because incidence of poverty. The present chapter con- cities generally do not offer more attractive siders these problems and opportunities asso- working and living conditions than do rural ciated with urbanization, discussing first the areas; indeed, the incidence of poverty is as se- policy issues relating to the spatial distribution vere in urban as in rural areas. Nevertheless, the of economic development at the national level, absolute size of the urban population in this and then those relating to the growth of a spe- region is already very large; in 1975 the urban cific city. It is important to bear in mind, how- population of India, for example, exceeded the ever, that these two sets of issues are highly combined urban population of Argentina, Brazil interrelated aspects of one and the same trans- and Mexico. formation process. The urbanization patterns of countries of Southern Europe, East Asia, the Middle East and National Spatial Development: North Africa lie somewhere between the trends Determinants and Policies noted in Latin America and those observed in Determinants of Urbanization and Spatial Concentration Sub-Saharan Africa and Low Income Asia. The On the surface, the main determinant of the countries of Southern Europe, the Middle East pace and pattern of urbanization in developing and North Africa approach levels of urbaniza- countries appears to be rural-urban migration. tion similar to those in Latin America, while The flow of migrants is often blamed for causing East Asia is as yet much less urbanized. The rural stagnation and excessive urban growth, as rates of urban (and total) population growth in well as urban unemployment and poverty. How- Southern Europe are substantially lower than ever, this is at best a partial and at worst a mis- in any other group of developing countries, and leading view. First, natural population growth, urban population growth is slowing down in the rather than migration, is the major source of Middle East and North Africa, and especially in urban population increases in many developing East Asia. Most of the countries of these three countries, particularly in Latin America. Second, regions will be predominantly urban by the turn the view that cities are burdened with a flood of of the century, with rural-urban migration con- uneducated, unskilled and unmotivated mi- tinning to play a major role in the transforma- grants is incorrect. Studies show that migrants tion process. Compared with Latin American from rural areas are well educated and moti- nations, these countries are less troubled by vated relative to those who stay behind, and that regional disparities in economic activity and within cities they are not represented dispro- income, though important pockets of urban pov- portionately among the poor or the unemployed. erty and regional stagnation exist in some na- Third, although the inflow of migrants usually tions such as the Philippines and Turkey. imposes additional financial burdens on public Though urbanization patterns differ, policy services, these burdens could be alleviated if the makers concerned with urban growth in devel- services were more appropriately priced and oping countries usually have two concerns in distributed. They are not an inevitable conse- common. First, they believe that urbanization is quence of migration as such, since the costs per excessively rapid, concentrated and costly, and person of providing essential services are not they take as evidence the large numbers of rural- necessarily higher in urban than in rural areas. urban migrants, the concentration of economic Fourth, migrants move mainly in response to 75 better employment and educational opportuni- choice of agricultural technology, the demand ties, rather than in reaction to the proverbial for agricultural products, and the availability of bright lights of the city or other amenities of credit, fertilizers and technical assistance. Cli- urban life. The true determinants of urbaniza- mate and the availability of land are usually tion and spatial concentration in developing immutable constraints. The Sahel region of countries are therefore found in the forces that Africa, where recurrent droughts in recent years determine the location of employment oppor- have spurred migration and urbanization, pro- tunities: the nature and pattern of industrializa- vides an extreme example of the effects of cli- tion, the pace of agricultural development, and mate. In some developing countries, particularly the growth of transportation and communica- in Latin America and Africa, new land can still tions networks. be brought into agricultural use, but in most The pace and pattern of industrial develop- there is little scope for increased agricultural ment is the most important of these determi- employment and earnings based on newly culti- nants of urbanization and spatial concentration. vated land. The other factors impeding the Industries locate themselves in urban areas, expansion of agricultural employment can more especially in larger cities, because there they can readily be influenced by policy. Highly unequal benefit from ready access to capital and labor, distribution of land ownership, especially in as well as to specialized needs such as financial, Latin America, slow growth and premature legal and technical support services. Cities offer mechanization of agricultural production, and markets for industrial products, and provide market barriers in industrialized nations, have convenient access to other domestic and inter- made it difficult for the sector to absorb the national markets through the established trans- growing rural labor force, and increased the portation systems. The spatial concentration of rate of rural-urban migration. Policies that pro- economic activity and the emergence of large tect domestic industries from foreign competi- cities is therefore a necessary adjunct of a de- tion, and give more favorable incentives to in- velopment process which relies predominantly dustry than to agriculture, agricultural credit on the growth of modern industry rather than on that is biased toward machinery instead of agriculture. However, public policies commonly labor, and neglect of rural extension and train- bias this basic spatial development pattern to- ing services, all tend to hamper rural develop- ward more rapid urbanization and more extreme ment and employment, pushing the rural spatial concentration. population into urban areas, and to favor the Foreign exchange policies, tariffs and indus- growth of cities over that of small towns. trial incentives often support activities of the The different experiences of the Republic of type located in the major urban centers more China and the Republic of Korea help to illus- than those located in economically less progres- trate the influence of the pace and pattern of sive regions, as has happened, for example, in rural development on the concentration of eco- Brazil and Nigeria. Governmental regulation of nomic activities and population. In the Republic transport tariffs and energy prices often favors of Korea, agriculture is not naturally well en- large cities, as do public investment and sub- dowed. Lacking special support from govern- sidies for urban services that influence the in- ment policies it did not share commensurately centives for the location of industries. The in the growth of the Korean economy during the importance of face-to-face contacts with central 1950s and 1960s. Since basic infrastructure was government authorities dispensing trade li- inadequate everywhere but in the larger cities, censes, credits, and regulations further provides industrial growth was concentrated around a strong pull for industry toward the capital city. these cities and attracted large flows of mi- The effects of these policies on industrial loca- grants. By the late 1960s, the government intro- tion are difficult to quantify, but there is little duced measures that improved the agricultural doubt that the attraction of large cities is signifi- terms of trade and enhanced rural welfare, re- cantly enhanced by them. ducing rural-urban migration. The fact that land Urbanization is also influenced by the pace had been very evenly distributed since the land of rural development. The ability of the agricul- reform of 1949 contributed to the success of the tural sector to absorb a growing rural labor policy switch. The Republic of China, by con- force depends on such factors as the climate, trast, is more richly endowed with agricultural the availability and distribution of land, the resources, and agro-industries were the founda- 76 tion of its economic development. When rapid tural amenities of urban life. In any event, eco- industrialization began, the rural infrastructure nomic efficiency is not the only aspect of was more developed and more evenly distrib- urbanization with which governments are con- uted than that in the Republic of Korea, and cerned. In most developing countries, particu- greatly encouraged the dispersion of industrial larly those with distinct regional or ethnic activities across the island. political interests, it is extremely important to Finally, transportation and communications maintain balance between regions and between networks are important determinants of the rural and urban development; hence some at- spatial pattern of development, since they in- tempt to slow down the urbanization process fluence the movement of people, commodities and to spread economic development more and information between regions. Public invest- evenly across regions may be politically neces- ment, taxation, pricing and regulation of a coun- sary, even if its economic desirability is not try's transport and communications system can obvious. easily bias spatial development in favor of cer- The policies required to improve the alloca- tain locations. If domestic transport systems are tion of resources among regions and cities and left at a rudimentary stage of development, in- to achieve a more balanced spatial development dustries will be encouraged to locate in cities, pattern differ across countries, but some general usually the large ports or capital cities, that have principles apply. One such principle is the im- relatively good links to international and domes- portance of bringing down birth rates in order tic markets. But if unaccompanied by other to slow down population growth in general, and measures, improvements in domestic transporta- urban growth in particular. In Sub-Saharan tion and communications may in fact accentuate Africa and Low Income Asia, family planning the concentration of economic activity in the efforts in rural areas are important to reduce largest cities, since they lower the natural migration to urban areas. In Latin America, protection of industries located in smaller pro- slowing down the natural growth rate of the vincial centers, and reduce the barriers to mi- urban population holds the most direct hope gration. If the development of transport and for reducing the explosive growth of cities. communications is to play a major role in reduc- These efforts need to be complemented by the ing spatial concentration and developing back- removal of national policies that bias the spatial ward regions, it must be planned as part of a pattern of development toward large cities. broader strategy to achieve those goals. Sound agricultural policies are most important at low levels of urbanization, where the farm Appropriate Policies for Spatial Development sector provides a large share of national produc- Rapid urbanization and the concentration of tion and employment. Excessive urban concen- economic activity in a few locations are likely tration is difficult to correct once it has occurred. to be the inevitable outcome of industrial devel- In the more highly industrialized and urbanized opment, but, as the preceding paragraphs have countries, particular attention should be given indicated, various policy biases have tended to to the removal of policy biases resulting in in- reinforce the prevailing trends and patterns in dustrial development that is overly concentrated many developing countries. Unfortunately it is in the largest cities. The elimination of subsidies extremely difficult, if not impossible, to deter- in the provision of urban services, and the con- mine the optimal rate of urbanization and the trol of congestion and pollution in large cities best spatial distribution of economic activity in are important; so is the reduction of biases in any given country. Information on the relative credit allocation and public sector investment, costs and benefits of urban versus rural devel- in public administrative and hiring practices, opment, and of the growth of large versus small and in the allocation of fiscal resources to state cities, is woefully inadequate. As a result it is and local authorities. Many of these policy difficult to judge whether the high capital costs biases are not generally recognized to have of providing urban infrastructure, and the in- implications for the spatial pattern of de- creasing congestion and pollution in large cities, velopment, but their effects on urbanization are being offset by the benefits of continued city and regional concentration are likely to he growth: lower costs and higher productivity in much more important than those of the policies industry, easier provision of social services such used explicitly to influence the location of as education and health, and the social and cul- development. 77 Even if these implicit policy biases are cor- tial decentfalization a few points need to be rected, urbanization and spatial concentration borne in mind. First, to be effective, decentrali- will continue, though at a more moderate pace. zation policies must be applied consistently over Explicit policies to balance regional and urban extended periods. A stop-go approach provides development may therefore be necessary in the private investors with ambiguous signals and interests of interregional equity, political cohe- reduces their willingness to move from the larg- sion and national security. The range of effec- est cities. Second, unless carefully designed, tive policy instruments available for this pur- decentralization policies may increase the con- pose is, however, quite limited. Direct controls centration of income within the favored region, on migration have rarely been found effective since the wealthier groups may be in the best in reducing, let alone stopping, the flow of mi- position to reap the benefits of special support grants to large cities, except where extreme measures. Third, the costs of alternative decen- forms of coercion were applied. Experience in tralization schemes, such as subsidies or public Jakarta has shown that residence registration investment in infrastructure, must be assessed requirements are difficult to enforce, while the and compared, in order to achieve the desired bodily removal of slum dwellers and their balance in spatial development with the least shacks from cities has imposed hardships, but possible loss of production and growth in the has not prevented their overnight return. As economy as a whole. Finally, national policies to long as cities offer favorable job prospects, improve balance in spatial development cannot migrants will keep coming. The creation of job substitute for better internal management of city opportunities through increased private and growth. For example, urban congestion or public public investment in locations other than the service shortages in large cities cannot be rem- largest cities is therefore the main expedient for edied by fostering the development of small or influencing the location of development. intermediate-size cities or of backward regions. To counterbalance the growth of the largest Policies need to be brought to bear directly on cities effectively, it is necessary to support the these problems within each city to increase the development of a few existing cities that show efficiency and equity of its growth. potential for expansion. These are most likely to be cities of intermediate size with ready access Policies for Efficient and Equitable Growth to major transportation corridors. The construc- of Cities tion of new towns, other than satellite towns Urban Policy Problems close to large cities, has virtually always re- The cities in developing countries will con- sulted in failure, because of their high cost and tinue to grow, even if national policy biases their small scale relative to the large cities. In favoring urbanization are corrected and vigor-- deciding to promote the development of spe- ous decentralization measures are deployed. cific sectors, such as different branches of man- Metropolitan areas such as Bombay, Buenos ufacturing, or agriculture, tourism, or natural Aires, Jakarta, Mexico City, Sao Paulo and Seoul resources, the sectoral development potential already have populations comparable to those of particular cities and regions should be care- of medium-sized developing countries. In terms fully evaluated. To encourage private invest- of income and production, these large cities are ment at selected locations, it may be necessary even more important. Consequently, the degree to upgrade infrastructure and institutional sup- of efficiency with which cities allocate their re- port, including making local authorities more sources will increasingly determine the overall efficient, and providing access to credit, techni- economic performance of the developing coun- cal assistance and training. All these facilities tries. Moreover, while the incidence of poverty are usually rudimentary outside the largest in developing countries tends to be higher in cities. Favorable tax treatment and subsidized rural than in urban areas, the absolute numbers interest rates, by themselves, have usually had of poor people living in cities and towns are little influence on private location decisions; very large. In Manila, for example, 1.5 million sometimes, indeed, they have given incentives people were judged to be living in absolute pov- to use unduly capital-intensive technologies in erty in the early 1970s; in Brazil some 600,000 investments that would have been made currently live below the poverty threshold in anyway. Rio de Janeiro and Sao Paulo, and some 1.7 mil- In considering these explicit policies for spa- lion live in absolute poverty in other urban 78 areas. A policy to reduce poverty must there- opment of cities, without a conflict between fore come to grips with the poverty problem these goals. Second, accessible and well ser- in urban areas, where it is particularly visible viced land for industrial, commercial and resi- and politically troublesome due to its high dential use is essential to the efficient and concentration. equitable growth of urban areas. The manage- Despite the obvious manifestations of urban ment of urban land in its manifold dimensions poverty, urban policies are often designed to land transfer and tenure regulation, public make cities serve more effectively the prefer- investment decisions, taxes and user charges, ences of the better-off, who tend to view the to name but a fewis therefore an important growing slums as an infringement on the beauty element of an effective urban policy package. of their city who regard street vendors, pedes- trians and overcrowded buses as nuisances im- Urban Transportation peding the mobility of private automobiles; Urban transportation plays a central role in and who perceive educational and health care the development of cities as the essential link needs in terms of unmet requirements for higher between residence and employment, and be- education and curative medicine. The policies tween producers and users of goods and serv- that follow from this diagnosis of the urban ices. As cities grow over time, the combination problem include the bulldozing of slums; the of increased city area, lower population den- construction of high-cost public housing, limited sity and greater use of motorized transport typ- access highways and subways; the banning of ically requires substantial increases in transport street vendors and traditional transport modes facilities, including road space and mass transit. from public places and major streets; and the It is therefore not surprising that urban trans- expansion of subsidized universities and mod- port places a considerable financial burden on ern city hospitals. urban authorities. In Bombay and Calcutta, for If, instead, increased efficiency and the allevi- example, public investments programmed for ation of poverty were adopted as the goals of the transport sectors for 1972-78 respectively urban policy, the diagnosis would focus on the accounted for 26 and 48 percent of these cities' insufficiency of remunerative employment op- total planned investment. Traffic congestion in- portunities for the rapidly growing numbers of evitably occurs as cities grow: transport facili- unskilled workers, and on the inadequacy of ties cannot be expanded enough to maintain basic urban services, especially transportation, mobility, partly because of resource constraints housing, and education and health services, in and partly because urban transport demand is meeting the needs of large segments of the ur- not curtailed by pricing or regulation. The pri- ban population. Policies would therefore be de- vate automobile takes roughly nine times more signed to raise the demand for unskilled urban road space per passenger than does a bus. The workers, improve the functioning of the urban explosive increase in automobiles in the cities labor market, and curb the growth of the urban of developing countries, at rates two to five labor supply through family planning programs times those of city populations, therefore exerts and accelerated rural development. These em- tremendous demands on the existing urban road ployment policies must largely be pursued at the space, and is a major cause of severe congestion national rather than at the city level, and were and pollution problems, especially in the cities discussed in Chapter 4 above. The remaining of the Middle Income countries. sections of the present chapter are concerned The urban poor suffer disproportionately if with the question of how the supplies of urban urban transport services are inadequate, since transport, housing and social services can be they tend to be pushed to locations to which rationed efficiently and equitably at the city access is most difficult, costly and time-consum- level, while extending the delivery of these serv- ing. For the very poor, such costs may become ices more rapidly, especially to the urban poor so high that in order to secure and keep employ- who are most disadvantaged in their access to ment, they must accept minimal standards of available supplies of urban amenities. shelter (or no shelter, as in the case of street Two general arguments are of recurring im- dwellers) in central locations. Whether a neigh- portance in the discussion that follows. First, borhood is accessible by road also determines to many urban policies can be designed to improve a considerable extent whether other urban serv- both the efficiency and the equity of the devel- ices, such as water, electricity, sewerage and 79 drainage, solid waste collection, police and fire city has successfully experimented with sepa- protection are made available, and whether rating slow moving non-motorized traffic, in- schools and health care are within reach of the cluding cycle-taxis, from motorized traffic in inhabitants. Better roads for poor neighbor- different lanes, thus reducing congestion with- hoods therefore often have far-reaching effects out banning non-motorized traffic. In many on the welfare of the residents. Finally, urban other Asian cities, more supportive policies to- transport provides employment for a significant ward unconventional modes of mass transit, proportion of urban dwellers, including the such as the mini-buses in Kuala Lumpur, are poor, particularly where traditional non-motor- gaining ground. ized vehicleslike the cycle-taxis in many Improvements in transport investment pol- Asian countriesare still in use, or where labor- icies need to be complemented by improvements intensive motorized mass transport has been in transport pricing practices. Road users, espe- allowed to develop, such as the "jeepneys"- cially automobiles, are generally not made to jeeps converted for urban passenger transport bear the costs which they impose on society by in Manila. adding to urban traffic coilgestion. As a result, Prevailing policies in the cities of developing roads and urban land are used inefficiently. Sub- countries have generally done little to make sidies on public transport impose severe fiscal their transport systems operate efficiently and burdens on the government, often lead to poor meet the needs of the poor. Urban transport in- public service, and generally have not induced vestments have served mainly to increase the car riders to use public transport. The invest- road capacity for automobiles, often at the ex- ment costs of urban transport facilities are usu- pense of travel modes used by the poor. In the ally borne by taxpayers at large, rather than by larger cities of Southeast Asia, for example, the beneficiaries, thus adding to the fiscal prob- cycle-taxis have progressively been banned to lems of national and local authorities. Examples make way for automobiles. A few large cities of effective urban transport pricing schemes are, Buenos Aires, Mexico City, Sao Paulo and Seoul however, to be found in some cities, and can have attempted to solve their transportation serve as useful lessons elsewhere. Singapore in problems by constructing subways, but the cap- 1975 successfully introduced a congestion pric- ital and operating costs of these systems have ing system, consisting of time- and area-specific been so high that the poor cannot afford to use license charges for automobiles, and central city them unless they are highly subsidized. Such parking fees. Unsubsidized private and public subsidies in turn place severe burdens on pub- bus companies provide good service in many lic budgets. Moreover, it is becoming increas- cities without constituting a drain on public ingly evident that a bus system can achieve budgets. In some countries, taxes are levied on roughly the same objectives as a subway, and landowners who benefit from urban transport much more cheaply. investments, providing an equitable and effec- In some encouraging instances transport in- tive means of financing such investments. In vestment policies have been adapted to the real Colombia, for example, such charges have facil- needs of cities in developing countries. The Bra- itated the rapid expansion of urban infrastruc- zilian authorities have begun to favor improve- ture, especially roads, even in poor neighbor- ments in urban bus systems over the further hoods. construction of subways. Many recent urban These and other examples indicate that there transport projects supported by the World Bank, is considerable scope for revising conventional for example in Abidjan, Bombay, Kuala Lum- practices of urban transport investment, pricing pur, Tunis and a number of Brazilian cities, have and regulation, which would not only make ur- upgraded the conventional bus systems, through ban transport more efficient, but would also improvements to the bus fleets and in the lay- help to conserve energy, foreign exchange and out of routes, reserving street lanes for buses, public resources, increase employment, and im- and giving preferential treatment to buses at in- prove services for the urban poor. Such changes tersections. This approach is usually comple- are certain to be opposed vigorously by the mented by support for bicycle and pedestrian beneficiaries of traditional urban transport poli- traffic and the construction of low-cost access cies, particularly car owners, bus users, and routes for buses and service vehicles in poorer property owners. Thus the success of any major neighborhoods. One medium-sized Indonesian change in urban transport policy will depend to 80 a large extent on how it is implemented: for ex- plementation of public housing projects based ample, increased bus fares should be matched on such standards readily confirms the impres- by improved services, where bus subsidies are sion of urban housing needs as a bottomless pit, eliminated; improved public transport should be since the investments in high-cost, subsidized provided where the use of automobiles is re- public housing do not satisfy even a small part stricted through congestion charges; and exten- of the needs that are identified. In fact, these sive publicity campaigns should make the public investments have often aggravated the housing aware of the broad benefits from improved deficiencies of the majority of the poorer urban urban transport policies. households, since they tie up scarce resources in a small number of housing units, usually for Urban Housing the benefit of the better-off. Moreover, they Housing is essential for welfare and economic have frequently involved the bulldozing of development, particularly when the concept of slums, and thus the destruction of housing housing is broadly defined to cover not only stock. buildings, but also the land on which the build- A different and more appropriate view of the ings stand and the services provided for their urban housing problem in developing countries residents. Together with food and clothing, has recently been gaining ground. Housing housing is one of the most important items in shortages, overcrowding, poor infrastructure household spending throughout the world; new services and steeply climbing housing prices are residential construction accounts on average for seen to result from the failure of the supply of some 20 percent of the fixed capital investment land, services and shelter to expand in step with in developing countries. Housing is a major out- the rapid increases in housing demand. The poor let for private household savings and generates are particularly adversely affected, since they employment at low foreign exchange costs. It do not have the resources or influence to bid for can provide substantial private and social bene- scarce housing supplies. Furthermore, the poor fits in offering shelter from the elements, space tend to suffer from higher rents rather than to for work and leisure, and, depending on its loca- benefit from increased housing values, to the tion, access to sanitation, education and health extent that they do not own houses. The supply services, and to employment opportunities. of land, services and finance is crucially influ- Housing is of special concern in urban areas: enced by public policy. rapid urban population growth puts great stress Frequently, more unused urban land could on the existing stock of shelter and service infra- be made available for residential use if it were structure, and frequently has deleterious effects not for institutional constraints: the subdi- on health and environmental conditions. In vision of urban land, the assembly of small many cities of developing countries, more than central-city plots, and the conversion of land for half of the population lives in slums and squat- different uses are impeded by restrictive zoning ter settlements; between one-fourth and one- regulations, cumbersome land registration re- third of the urban population in these countries quirements, high land transfer taxes, and dis- has no access to safe water supply and no puted land titles. The poor are least able to facilities for the disposal of human waste. The overcome these institutional barriers. If they are high concentration and visibility of deficiencies not willing to accept overcrowded living con- in urban housing make this one of the most ditions, they must engage in various forms of urgent problems facing developing countries in illegal land deals, such as invasion or illegal their transition from rural to urban societies. purchase and development. If they do so, they Assessments of the urban housing problem in suffer from insecure tenure, and this in turn developing countries frequently begin by defin- limits their ability and willingness to improve ing standards of adequacy in terms of space, their shelter. Examples such as a slum upgrad- structure and services, usually at levels com- ing project in Manila have shown that the poor parable to those of middle income housing, bilt are able and willing to pay for urban land and beyond the ability and willingness of the poor secure tenure, and that they make dramatic im- to pay. Estimates of housing needs based on provements to their housing once their tenure such standards inevitably imply huge invest- is secured. Public ownership of urban land, as ment requirements, which cannot possibly be in Tanzania and Zambia, by itself does not mean met either from private or public resources. Tm- that the urban poor will have access to land. 81 Administrative costs and political constraints labor-intensive mode of solid waste collection place severe limits on the ability of governments and disposal in Cairo and Alexandria is only to manage large urban landholdings for residen- about one-fourth that of establishing a mech- tial development. Indeed, public land banking anized collection and composting system. The or nationalization of urban land will not gen- practicability of low-cost technologies varies, erally make more land available for housing and cities in Middle Income countries can afford unless it is accompanied by a judicious relaxa- higher average standards than can those in Low tion of land regulations and controls, improve- Income nations. Nevertheless, the propagation ments in the legal and registration systems, and of low-cost technologies is crucial if essential public efforts to clarify land titles and provide services are to be provided to all urban dwellers. secure tenure. Extensive subsidization and the resulting fi- Urban land used for housing should provide nancial drain have further confounded efforts access to essential services such as water and to expand urban services. In Jakarta, for exam- energy suppiy, human waste disposal, and trans- ple, failure to collect charges to cover its costs portation. Low income households, in particu- put the municipal water company in a dire fi- lar, value improvements in these services very nancial situation, preventing it from providing highlymore highly in fact than improvements a safe and reliable service to its customers, let in the quality of the buildings in which they live. alone expanding the service to new ones. Since In most cities in developing countries, these customers were less willing to pay for such poor services are publicly provided, to take advan- service, a vicious circle developed, as happens tage of economies of scale, and also because frequently where urban services are highly sub- they yield benefits to society over and above the sidized. In contrast there are cases, for exam- private benefits reaped by the individual con- ple in Colombia and the Republic of Korea, sumer, particularly as regards environmental where beneficiary charges have been quite effec- and health conditions. Even without subsidies, tive in recovering urban service costs, and the cost savings from access to public services where as a result it has been possible to expand can be significant for a poor household. For ex- services rapidly throughout urban areas. ample, the price of a gallon of water from a Extensive reforms of service charges, espe- vendor is often ten times that of water from a cially where public service subsidies are large public tap or a private house connection. and widespread, have to be introduced gradu- Since the benefits from public services are ally to permit the development of institutions to substantial and private initiative cannot easily implement the charging systems, and to gain substitute where the public sector fails to act, it public acceptance. Moreover, selective subsi- is particularly troublesome that public agencies dies may need to be retained where costs of have not been able to meet the service needs of metering and fee collection are high, or where the rapidly growing urban population. Past in- the poorest are clearly the beneficiaries, as is vestment and pricing policies have often com- the case with water standpipes. pounded the difficulties of a task already of Where land and services are available, lack major dimensions. Investment in public services of finance probably is the primary reason for the has tended to emphasize high-cost technologies diffictilties poor households encounter in their borrowed from the industrialized countries, efforts to build or improve shelter structures. such as costly water connections to houses, Financial markets are underdeveloped, particu- water-borne sewerage systems, and mechanized larly for housing finance, and are hampered by solid waste disposal techniques. Conventional government regulations limiting interest rates house connections for water supply, for exam- and the conditions under which funds may be ple, can be eight times more expensive to install lent. The poor are the first to be excluded from per household than s!andpipes, although some such a capital market, especially where disputed low-cost distribution systems have been de- land titles make it impossible to use land as col- signed which significantly reduce this cost dif- lateral in borrowing. Capital markets could be ferential. Water-borne sewerage systems are improved in most developing countries by per- five to eight times more expensive than up- mitting interest rates commensurate with the graded pit latrines suitable for urban areas, even cost of capital, by clarifying land tenure and once operating and maintenance costs are al- improving its security, and by strengthening fi- lowed for. The cost of improving a traditiona] nancial institutions. Even if such changes are 82 successful, however, for most of the poor the results. Since such improvements can often be construction of houses will remain a gradual afforded by the poorest urban residents, invest- process of improvement and upgrading depend- ment and operating costs can be recovered from ing on their intermittent ability to buy materials the beneficiaries to finance similar programs in or to pay contractors. the future. Difficulties remain, especially be- Private initiatives for building houses can be cause the institutional capacity to handle large- further supported by the elimination of rent scale urban development programs is often control, a reduction in the impediments result- limited. But the basic strategy holds out hope ing from zoning regulations and building codes, for an eventual alleviation of the urban housing and an emphasis on public and private upgrad- problems in developing countries. ing, rather than demolition, of slum housing. Investment in housing structures, however, is Education and Health rarely an efficient use of public resources, espe- On average, urban households are more edu- cially when compared with such activities as cated, healthier, and better served by public and the provision of public services, measures to private education and health facilities than their provide security of tenure, and capital market rural counterparts. The urban poor, however, improvements. The success of large-scale public are considerably worse off than the average housing schemes in Singapore and Hong Kong statistics suggest. Schools are scarce in squatter is due to a number of exceptional factors, in- and slum areas, attendance rates are low and cluding the high average incomes in these two drop-out rates are high. For example, in Greater cities, the unusually well developed managerial Cairo primary school places are available to and administrative capacity of the executing only 20 percent of the school age population in agencies, the acute scarcity of land, and the cul- the low income fringe areas, though the city- tural and social acceptability of high-rise, high- wide average is 75 percent. In Manila, the pri- density housing. Virtually everywhere else, mary school drop-out rate is 20 percent in the most notably in Brazil, similar approaches have non-squatter areas, but 35 percent in squatter failed to make any substantial improvement in areas. Again in Manila, the incidence of infant the urban housing problem. mortality, tuberculosis, gastroenteritis, malnu- An appropriate urban housing strategy in de- trition and anemia is two to eight times as high veloping countries would thus focus on how in squatter areas as in non-squatter areas. public policy can stimulate the private sector Within Calcutta and Madras there are similar to improve the housing supply: by eliminating differences in health and nutrition conditions. impediments to private initiative and by provid- In Kingston, the incidence of tuberculosis has ing those elements of housing supply which the increased in recent years; in Sao Paulo, infant private sector is least able to supply by itself. mortality is rising, there is a resurgence of ma- The elements of such a strategysites and serv- laria and bubonic plague, and in 1974, menin- ices schemes, slum upgrading, provision of se- gitis reached epidemic proportions. cure tenure and construction loanshave been The urban poor usually only have limited ac- introduced into some of the recent urban hous- cess to private or public health care, due to the ing policies and projects in developing countries high costs of medical attention and drugs, lack with considerable success. In projects with of information, and the physical as well as cul- these elements, the investment costs per house- tural inaccessibility of modern curative care. Iii- hold have been as much as 80 percent lower fant malnutrition and mortality in urban slums than those of conventional urban housing proj- are aggravated by the fact that mothers increas- ects, while many of the essential benefits of ingly switch from breast feeding to commercial improved housing are preserved. As a result, the baby foods, frequently diluted with unsafe benefits from public intervention have reached water. large numbers of the urban poor, where previ- The urban poor, as much as their rural coun- ously only a few of the better-off had gained. terparts, are therefore trapped in a vicious circle In Jakarta, for example, almost two-thirds of all in which low incomes ensure poor education, slum areas have been upgraded through low- nutrition, and health, which in turn lead to low cost infrastructure investments over the last ten productivity and incomes. A comprehensive re- years. More widespread availability of services form of education and health policies is re- and reduced overcrowding are the most notable quired, involving a movement away from the 83 common emphasis on subsidized higher educa- land use, and the extension of the road and tion and modern curative health care. Education public utilities networksand hence concerted can often be made more efficient, and brought to planning and implementation throughout a met- a larger number of people, by a greater empha- ropolitan area are very important. Such coordi- sis on basic education, functional training, and nation is frequently hampered because responsi- special efforts to reduce the out-of-pocket ex- bility is scattered among numerous public penses education involves for the poor. Im- agencies. Geographic fragmentation of local au- proved sanitation and housing, nutrition pro- thorities is not, as yet, an overriding problem in grams for pregnant women, lactating mothers, most cities of the developing countries, although and infants, as well as health education and some, most notably Calcutta aild Manila, have preventive health care, are essential for better suffered from a proliferation of municipal juris- health and nutrition and are much more cost- dictions within their metropolitan areas, and effective than curative medicine in reducing the others have begun to spill over their traditional incidence of ill health and malnutrition among boundaries. To avoid future problems, national the poor. The framework of the basic health care governments should be quick to respond to city system in Jamaica provides a good example of growth by extending municipal boundaries an attempt to develop a community-based through annexation or amalgamation of local health system. It relies primarily on out-patient jurisdictions. treatment in small health centers; it emphasizes Of much greater concern is the widely preva- preventive health care and education, improved lent fragmentation of public responsibility along sanitation, maternal and infant care, immuniza- hierarchical and functional lines: responsibility tion, family planning, and nutrition programs; for providing and regulating urban services is and it is supported by a relatively inexpensive typically shared by national, state and local but effective paramedical staff. governments, and at each level of government While the major responsibility for providing there commonly exist numerous autonomous and financing social services generally rests with public agencies with overlapping servicing, tax- national rather than local authorities, the latter ing or regulatory functions. In Bogota, for exam- frequently play an important role in the deliv- ple, some 15 independent local public agencies, ery of social services in urban areas. Initiative as well as various national government minis- at the local level and integration with other tries and agencies, are involved directly or indi- urban service programs are therefore important rectly in transportation, housing, education and elements in an overall strategy to provide urban health. In such circumstances, the objectives social services. and priorities of individual agencies rarely Urban Government: Administration and Finances match, and at times conflict with each other, Urban government presents very difficult often resulting in poor coordination, delays, tasks under the best of circumstances; in the or contradictory actions. The anecdotes about cities of developing countries the problems streets repeatedly excavated, to lay first one faced by urban authorities are monumental, utility line, and then the next, and then a third, while the resources to deal with them are ex- are not without foundation. In such an environ- ceedingly scarce. But since the public sector has ment of fragmented responsibility, urban de- a pervasive role in managing urban growth, the velopment programs with a comprehensive benefits from making urban governments more approach to a city's needs for services and infra- effective will be substantial. Even the best urban structure have to be preceded by extensive lob- development strategy comes to naught unless bying of numerous public agencies at all levels there are institutions that can implement it. Im- of government, with hard-won agreements al- provements in the institutional framework are ways threatened by subsequent breaches by one therefore a prerequisite for more efficient and or the other agency. equitable urban growth. The problems of urban public administration The high density of urban settlements inevi- are frequently compounded by the fact that lo- tably requires the public provision of physical cal governments' responsibility for expendi- and social infrastructure and some regulation of tures exceeds their power to raise revenues. In human interactions. Many of the governmental most cities, with the exception of a few special activities in urban areas are highly interrelated capital districts such as Bogota, Mexico City for example, the planning and regulation of and Seoul, local governments have been left 84 with revenue sources that fail to grow with pop- fined statutory functions and its own resource ulation, economic development and inflation, base, permitting it to collect and disseminate even where they are properly administered. Fi- information throughout the metropolis, to de- nancial transfers from higher level governments velop plans for action and financing, and to are generally unpredictable; they are the first to enforce inter-agency agreements. The metro- be cut under general fiscal pressures and the last politan authorities recently created in Calcutta, to be restored. At the same time, the expendi- Manila and Tunis indicate that such reforms are ture needs of local governments in urban areas feasible and help to improve urban administra- have grown rapidly as urban populations have tion and management. multiplied and demands for better and more Second, whether local authorities carry out a costly urban services have expanded. Few at- large or a small range of functions, they must be tempts are made by higher level authorities to encouraged to raise their own financial re- help local governments in urban areas to de- sources to meet their tasks. Charges related to velop their capacity to deal with the important the costs and benefits of urban services are par- and growing tasks of urban service delivery, ticularly important revenue instruments, since planning and regulation. Management, budget- they not only raise revenues but can also im- ing and accounting practices are generally very prove the efficiency and equity of service provi- poor; structures of taxes and fees tend to be an- sion, and avoid the danger of budgetary biases tiquated, and their local administration and in favor of urban against rural areas, or in favor collection badly neglected, partly for lack of of large cities against small towns. However, political will, and partly because of the inade- most cities will still need to rely on general local quacy of trained personnel, technical assistance, taxes and on transfers from national budgets, or incentives from higher government levels. All particularly for the financing of social services. too often, the national ministries in charge of These revenue instruments should be designed local governments develop adverse relation- so as to avoid biases in favor of urban areas ships with their local counterparts, and confine and to ensure the efficient use of funds by local themselves to supervision and control, rather authorities. than developing a spirit of cooperation, support Third, technical assistance for financial and and assistance. personnel management, land use planning, in- The choice of a strategy to improve urban frastructure investment and operation has been public administration and finances necessarily found useful. Manpower training and more com- depends on the objectives of those in charge of petitive local government salaries are further reform. Those who believe in strong central ingredients of local government reform. One control by a unified national executive will want successful model for this type of assistance has to reduce local government autonomy in favor been the Venezuelan Municipal Development of direct administration by the national govern- Agency (FUNDACOMUN), an autonomous pub- ment. In contrast, those who believe that local lic agency that has provided technical assistance governments have an important role to play in and training for improvements in accounting articulating people's demands for public action and budgeting, in the cadastral and property tax in a pluralistic society will favor strong and in- system, and in local regulatory and planning dependent local authorities. But in either case, procedures. Finally, there is an urgent need to good urban government has a number of basic increase coordination and cooperation between ingredients. First, it is important that a unifying municipal and national authorities for finance, element be created at the city level to assist in planning and other functions germane to urban coordinating the many governmental functions resource management. The scope and dimen- within a metropolitan area. Usually this will in- sions of the growing tasks of urban management volve either a strong metropolitan government, require commensurate policy attention from the as in Bombay, Jakarta, Seoul or Singapore, or, highest decision making bodies in developing at a minimum, a planning agency with well de- countries. 85 PART III: COUNTRY DEVELOPMENT EXPERIENCE AND ISSUES The World Development Report, 1978 concen- plays a much less important part in their econ- trated on the development issues facing the omies. They share many features and problems Low Income nations of Asia and Sub-Saharan with Low Income countries; most of the "min- Africa. The next two chapters of the present eral economies" would not be in the Middle report dwell mainly on development perspec- Income category but for their mineral wealth, tives and priorities in Middle Income countries. while the "predominantly agricultural coun- The term Middle Income encompasses a set of tries" have, as their name suggests, arrived in nations with very different socioeconomic con- the Middle Income ranks by specializing in agri- ditions, resources, development potential and cultural production. problems: the policy concerns of Liberia are A few points need to be emphasized with inevitably very different from those of Brazil respect to these distinctions. First, the groups or Yugoslavia. To better reflect this under- are far from mutually exclusive; certain coun- lying diversity in the discussion of develop- tries could be classified in more than one group. ment experience and priorities, three broad Second, not all Middle Income countries can types of Middle Income countries have been be comfortably accommodated within these distinguished. three groups and, conversely, some countries The first group of countries includes some 16 which are not treated as Middle Income in this "semi-industrialized" nations in which manu- analysis could be appropriately included. The facturing accounts for a relatively large share capital surplus oil exporting nations, for ex- of production and merchandise exports. The ample, share many of the development concerns present Middle Income status of most of these of other mineral-dominated countries. Finally, countries is not greatly dependent on the exploi- while countries within a group have much in tation of natural resources. The other two common, the diversity among them should not groups, jointly referred to as primary producing be underestimated. Despite these qualifications, countries, owe their present income levels in however, the chosen grouping focuses on com- large measure to the utilization of minerals or mon issues and helps to enrich the discussion agricultural land, and manufacturing activity of country development policy. 86 Chapter 7: Growth and Equity in Semi-industrialized Nations Development Patterns in Semi-industrialized population growth, moderate to fast GDP Countries growth, and a relatively high incidence of pov- Some of the more advanced Middle Income erty. Several relatively large countriesBrazil, countries can aptly be described as semi- Colombia, Egypt, Mexico, the Philippines and industrialized, since in several respects their Turkeyare prime examples of this pattern. economies are more akin to those of industrial- The Republic of Korea and the smaller East ized countries than to those of other developing Asian nationsthe Republic of China, Hong countries. To illustrate their development ex- Kong and Singaporetypify a second pattern. perience, 16 countries have been selected, in Although with the exception of Singapore their each of which manufacturing accounts for about populations are still growing at 2 percent a 20 percent or more of gross domestic product year, they have clearly entered the declining- and merchandise exports. Although few in num- fertility phase of the demographic transition; ber, the 16 countries account for about 70 per- they have also achieved remarkably fast GDP cent of the total GDP and over half of the total growth and have virtually eliminated absolute population of the Middle Income countries, and poverty. The Southern European countries have per capita income levels ranging from Greece, Portugal, Spain and Yugoslaviaexem- about US$320 in Egypt to over US$3,000 in plify a third pattern, whose distinguishing char- Spain. Several of these countries have achieved acteristica very low rate of population growth high levels of per capita income even though is largely a consequence of their having main- they are not richly endowed with natural tained comparatively high living standards over resources. an extended period. Their maintenance of mod- Among the semi-industrialized countries, erately fast GDP growth over a relatively long three broad patterns of development can be period has also enabled these countries virtu- identified. The first is marked by very rapid ally to eradicate absolute poverty. Argentina 32. Basic Indicators for Selected Semi-industrialized Countries Average Percentage Annual Percentage Percentage of Manufac- GNP Percentage of Manufac- of Labor tures in Population Per Capita Growth turing in Force in Merchandise (millions) (US dollars) 1960-77 GDP Agriculture Exports GNP Per 1977 1977 Capita GDP 1960 1977 1960 1977 1960 1976 Brazil 116.1 1,360 4.9 8.0 26 52 42 3 25 China, 16.8 1,170 6.2 9.1 22 37 56 34 85 Republic of Greece 9.2 2,810 6.2 6.7 16 19 56 40 10 49 Israel 3.6 2,850 4.8 8.0 23 30 14 8 61 78 Korea, Republic of 36.0 820 7.4 10.0 12 25 65 44 14 88 Philippines 44.5 450 2.5 5.5 20 25 61 51 4 24 Spain 36.3 3,190 5.2 6.4 27 30 42 19 22 69 Turkey 41.9 1,110 4.1 6.4 13 20 78 62 3 24 16 Semi- industrialized Countries 494.2 1,315 4.4 6.3 25 28 54 39 22 58 a1976 87 and Israel complete the group of 16 countries. that of the other developing countries, it also Although their development patterns are not surpasses the 4.3 percent annual growth rate easily accommodated in the threefold classifi- achieved by the industrialized countries (Figure cation given above, the richness of their individ- 12). Not all of the semi-industrialized countries, ual experience warrants their inclusion in the however, have been equally successful in this analysis. respect. With the exception of the Philippines, The diversity of experience among the semi- the East Asian countries recorded the highest industrialized countries can yield insights into growth ratesaround 9 percent a year. The the process of structural transformation that can other countries achieved annual growth rates be used to guide countries yet to embark on a from 5 to 8 percent, the sole exception being major industrialization program. The emphasis Argentina whose economy grew at less than in this chapter, however, is on the lessons to 4 percent. be gleaned for future development within the Because of the marked variation in popula- semi-industrialized countries. In particular, it tion growth among countries, these rates of examines the possibility of further reducing GDP growth had very different implications for poverty and assesses the prospects for sus- per capita output. For example, although taining rapid economic growth in a less expan- Mexico and Greece experienced very similar sionary international environment. rates of economic growth between 1960 and 1977 (6.5 percent and 6.7 percent respectively), Growth and Equity: The Record Mexico's population was growing at 3.3 percent Economic Growth and Structural Transformation a year, so that its per capita output rose by about Many of the semi-industrialized countries 70 percent, while Greece, with population have achieved impressive rates of economic growth of only 0.6 percent a year, increased its growth. Between 1960 and 1976, the combined per capita income by as much as 170 percent. GDP of the 16 countries increased at an annual This example epitomizes the differences be- average rate of 6.4 percent. Not only is this tween the Southern European and some of the growth performance considerably superior to Latin American countries. The former and Figure 12 Semi-Industrialized Countries: Comparative Growth of Gross Domestic Product and Population, 1960-76 (Average annual percentage growth rates) GOP Population GOP Per Capita Low Middle Indus- Semi- Income Income trialized Industrialized Countries Countries Countries Countries 88 Argentina have virtually completed the demo- 60 percent of the total labor force. graphic transition: their low death rates (around The number of people dependent on agricul- 10 deaths per thousand of the population) are ture, however, is declining both relatively and associated with low birth rates (around 20 births absolutely in many of these countries. This per thousand of the population) and hence slow trend sets them apart from other developing population growth. Brazil and Mexico have at- countries, in which the absolute size of the agri- tained equally low death rates, but their birth cultural labor force is still increasing, and it has rates are double those in Southern Europe and significant consequences for the growth of labor unlike those of the East Asian countries productivity in agriculture, as is illustrated in have barely started to decline. Table 33. Between 1960 and 1976 agricultural Economic growth is rapidly transforming the production grew about 50 percent faster in the structure of production in the semi-industrial- ized countries. In virtually all of them industry 33. Semi-industrialized Countries: Comparative in general, and manufacturing in particular, Growth of Agricultural Production, Labor Force have been the most dynamic sectors. In the and Productivity, 1960-76 (Average annual percentage growth rates) 1970s, manufacturing grew at an annual rate of Value Labor Labor nearly 20 percent in the Republic of Korea, and Added Force Productivity at more than 12 percent in the Republic of Low Income China. In the remaining countries, annual manu- Countries 2.1 1.5 0.6 facturing growth rates ranged from 5 to 9 per- Middle Income cent, with the exception of Argentina where Countries 3.1 0.8 2.3 the annual rate was only 3 percent. By 1977, Industrialized manufacturing accounted for between 20 and Countries 1.3 4.1 5.4 40 percent of GDP in the semi-industrialized Semi-industrialized countries, compared with 10 to 20 percent in Countriesa 3.1 0.2 3.3 the other Middle Income countries and only 10 Excludes Brazil, Israel and Hong Kong for lack of data on percent in most Low Income countries. growth in agricultural value added. Notwithstanding their impressive rates of semi-industrialized countries than in the Low industrialization, agriculture remains the major Income countries, whereas agricultural labor source of income for a significant proportion of productivity grew more than five times faster the population in most of the semi-industrial- in the former than in the latter group. ized countries. Most of them have achieved im- Expansion of international trade has been pressive rates of agricultural growth. Disregard- an important ingredient of growth in several ing the city-states of Hong Kong and Singapore, semi-industrialized countries, especially in the many of them expanded agricultural production smaller ones. Those economies in which pro- at annual rates close to 3 percent or more be- duction for export has expanded more quickly tween 1960 and 1977; only in Portugal was the than production for the domestic market have rate less than 1 percent. Only Argentina, Hong generally enjoyed the fastest rates of overall Kong, Israel, Singapore and Spain had less than growth. The Republic of China, the Republic 20 percent of their labor force in agriculture in of Korea and, to a lesser degree, Greece, Hong 1977; the range for most of the remaining coun- Kong, Israel and Spain have benefited substan- tries was 30 to 50 percent, the extreme case tially from rapid export growth. Much of this being Turkey where agriculture accounted for growth reflects the interaction between rapid 34. Semi-industrialized Countries: Comparative Growth and Structure of Merchandise Trade, 1960-77 (Percentages) Average Annual Growth Exports as Manufactures as 1960-77 Share of GDP Share of Exports Exports Imports 1977 1976 Low Income Countries 3.8 3.6 12 23 Middle Income Countries 7.7 8.9 19 33 Industrialized Countries 8.4 7.6 15 75 Semi-industrialized Countries 11.3 9.5 14 58 ABased on 14 Low Income countries, which account for nearly 90 percent of the total GDP of Low Income countries. 89 industrialization and limited domestic markets: A common characteristic of poor households the small semi-industrialized countries quickly is their large size. Rough estimates suggest that exhausted the possibilities for efficient import the poorest 20 percent of households in Colom- substitution and switched to production for bia, for example, support almost 30 percent export in order to maintain the pace of indus- (approximately 2 million) of all children under trialization. As a result, the share of manufac- age 10. Although crude, such figures indicate tures in merchandise exports has changed dra- the especially severe incidence of poverty matically in some of these countries: in the among children, and highlight the importance of Republic of Korea, for example, it increased directing government programs toward the alle- from below 20 percent in 1960 to almost 90 per- viation of poverty, and poverty-induced defi- cent in 1976. Apart from the Republic of China ciencies, among children. They also emphasize and Hong Kong, no other country can match the desirability of extending family planning this performance; nevertheless, in Israel, Portu- facilities to the poor in both urban and rural gal, Spain and Yugoslavia manufactures now areas. account for two-thirds or more of total mer- Other measures of wellbeing such as life ex- chandise exports. In the remaining semi- pectancy, child death rates and adult literacy industrialized countries, manufactures typically rates provide further indications of social and make up 20 to 30 percent of merchandise ex- economic progress. Between 1960 and 1977, for ports. The growth of exports in general, and of example, life expectancy at birth increased by manufactured exports in particular, highlights between five and ten years in most of the semi- the extent to which future expansion in the industrialized countries; the average citizen of semi-industrialized countries depends on a the richer nationsArgentina, Greece, Hong favorable international trading environment. Kong, Israel, Portugal, Singapore, Spain and Yugoslaviahad achieved an expected life span Poverty and Basic Needs of more than 65 years by 1977. These same coun- In the wealthier semi-industrialized countries tries reduced their child death rates during this Argentina, Greece, Hong Kong, Israel, Portu- period to three or fewer deaths per thousand gal, Singapore, Spain and Yugoslaviafew in the age group 1 to 4 years. In 1975 more than people remain seriously impoverished. Even in 75 percent of adults were literate in all semi- countries such as the Republic of China and the industrialized countries, with the notable excep- Republic of Korea, whose annual per capita in- tions of Egypt, Portugal and Turkey. comes are around US$1,000, a relatively egali- Economywide statistics, however, conceal tarian distribution of income ensures that very considerable variation within some countries. few people are in absolute poverty. In Brazil, Life expectancy in rural Northeast Brazil, for Colombia, Egypt, Mexico, the Philippines and example, is reported to be about 20 years less Turkey, however, poverty remains a serious than in Sao Paulo. In Brazil as a whole, more problem: rough estimates suggest that 15 to 30 than 70 percent of children aged 7 to 14 were in percent of their populations subsist below a school in 1974, but in the rural Northeast, the poverty line defined as the minimum income enrollment rate was less than 50 percent. In necessary to purchase basic requirements of Turkey almost one-fifth of the population was food, clothing and shelter. estimated to consume less than 75 percent of The majority of the poor in these countries the recommended daily calorie intake, though live in rural areas. In Brazil, for example, around the country's supply of calories was more than 70 percent of the poor live in rural areas, a large adequate to meet the population's needs. Nutri- proportion of them in the Northeast. Many of tional deficiencies are often more apparent, and them depend on the labor market for their in- are always most harmful, among children: for come, either solely, because they have no land, example, it is estimated that less than half of or partially, because their smallholdings yield all Brazilian children attain the normal body inadequate incomes. In urban areas, the poor weight for their age. usually seek their livelihood in the traditional These disparities in welfare reflect both the service and manufacturing sectors. Although maldistribution of personal income and the in- few are unemployed, most are confined to low- equitable supply of public services. Health, edu- productivity jobs where long hours of labor are cation, water supply, sanitation and housing are required simply to subsist. important determinants of individual wellbeing 90 35. Semi-industrialized Countries: Some Comparative Indicators of Welfare Life Expectancy Child Death Percentage at Birth Rate Per of Adults Who (years) Thousanda Are Literate 1960 1977 1960 1977 1960 1975 Low Income Countries 42 50 30 19 29 36 Middle Income Countries 53 60 19 11 51 69 Industrialized Countries 69 74 1 1 99 Semi-industrialized Countries 57 64 13 7 64b The child death rate is the number of deaths among children 1-4 years of age, per thousand children in the same age group, in a given year. bExciudes Singapore. eExcludes Greece and Spain. and environmental quality. The public provision Income Growth for the Poor of these services, however, is usually much How far the poor participate in the benefits more extensive and effective in urban than in of growth depends to a large extent on the rural areas. Over 80 percent of Colombia's choice of industrialization strategy, with its im- urban population, for example, had access to plications for employment. The employment- safe water and excreta disposal facilities in creating attributes of the Korean strategy of 1975, compared with about one-third of the export promotion, described in Chapter 4, have rural population. There are similar disparities been noted and partially emulated by several in the distribution of health services and edu- other semi-industrialized countries. The Bra- cation. Even within urban areas, however, zilian industrialization experience is of par- access to public services is generally unevenly ticular interest since it both exemplifies the distributed among income groups. Frequently, transition from import substitution to export the urban poor are unable to afford the high-cost promotion and demonstrates the importance of piped and treated water systems and housing trade policy even for countries whose domestic units provided by the public sector. Despite markets are relatively large. their income levels of more than US$1,000 per Before 1964, production in Brazil was heavily person, Brazil, Mexico and Turkey have neither protected by tariffs and quantitative restric- eliminated absolute poverty nor ensured uni- tions: during the 1950s and early 1960s, average versal access to basic services. rates of net protection for all internationally traded goods oscillated between 50 and 100 per- Approaches to Poverty Elimination cent, but were very much higher for manufac- Augmenting and encouraging the efficient use tures than for other traded commodities. Ex- of the productive assets owned by the poor ports were discouraged by the much overvalued labor and landis the most desirable approach exchange rate: implicit net export taxes aver- to eliminating poverty since it simultaneously aged 30 to 40 percent, those on manufactures contributes to growth. In those countries where being considerably higher. Under this policy the structure of incentives has encouraged regime the economy performed well in certain both employment creation and broadly based respects. Between 1947 and 1962, GDP increased agricultural expansion, the benefits of growth at an annual rate of 6 percent, manufacturing have been relatively evenly distributed. Public output grew at 10 percent, and agriculture ex- investments to increase the productivity of panded at more than 4 percent, mainly as a labor and landeducational expansion, the result of increases in the area cultivated. construction of irrigation systems and physical The limitations of import substitution were infrastructurehave helped both to stimulate becoming apparent by 1960. Imports had been growth and to reduce poverty. Investments in reduced to only 4 percent of the total supply social infrastructure, such as health facilities of manufactures and only 10 percent of that of and water supply, though less directly related to capital goods, while exports of manufactures productivity, have also improved the wellbeing amounted to only 3 percent of domestic produc- of the poor in a number of countries. tion. Even more significant in the present con- 91 text, however, was the very low rate of labor other country and have reaped the benefits of absorption in manufacturing (under 3 percent a rapid growth in production and remunerative year) and the negligible rate of growth in agri- employment. A number of countries, including cultural labor productivity. Moreover, the use Argentina, Brazil, Colombia, Greece, the Philip- of low-interest loans and subsidized inputs, pines, Spain and Yugoslavia have provided intended to offset the bias against agriculture some degree of encouragement to exports over implicit in strategies of import-substituting in- the past decade, but in most of them further dustrialization, largely served to encourage efforts in this direction are warranted. large landowners to introduce labor-displacing In some countries the task of creating ade- mechanization. The failure of the import- quate employment opportunities has been substituting strategy to create adequate employ- eased by slow population growth. In Yugoslavia, ment in either industry or agriculture, and its for example, where the population growth rate inability to stimulate smallholder agriculture, is less than 1 percent a year, the labor force implied a failure to expand the income sources increased at an annual rate of less than 1 per- upon which the poor were most dependent. cent between 1960 and 1977. Foreign demand for In 1964, Brazil began a major shift in policy. Yugoslav workers, the strong growth of demand Significant devaluations between 1964 and 1968, for non-agricultural labor, and slow labor force and "crawling-peg" adjustments to the exchange growth combined to secure a decrease in the rate thereafter, combined with fiscal incentives agricultural labor force of more than one mil- for exports and reductions in protection, estab- lion between 1960 and 1977. Slow labor force lished a realistic exchange rate and virtually growth also eased the problem of employment eliminated the bias against exports. Increases in creation in Argentina, Greece, Portugal and public sector expenditure on infrastructure and Spain. For example, while Spain and Mexico investment in manufacturing helped to acceler- had roughly the same size labor force in 1960, ate growth: between 1967 and 1974 GDP (at 11 the increment in Spain during 1960-70 was only percent a year), manufacturing (at 13 percent), about 250,000 workers, compared with an in- and agriculture (at 5 percent), all expanded crease of 3.5 million in Mexico. even faster than in the earlier phase of rapid The effect of rapid population growth on growth based on import substitution. the age structure of the population has signifi- The switch in policies not only secured a sig- cant implications for dependency ratios: the nificant increase in exports but also promoted average member of the Portuguese labor force, the growth of employment. Manufacturing em- for example, supported about 1.5 dependents in ployment, for example, rose by over 6 percent 1970, whereas his Mexican counterpart was re- a year between 1968 and 1973. Real wages in- sponsible for almost 2.5 dependents. The con- creased and considerable numbers of workers centration of large families among the poor in moved to better-paying jobs. A large shift of Brazil, Colombia, Mexico, the Philippines and labor out of agriculture was accommodated Turkey has been an important factor limiting the without an increase in unemployment, while at equitable distribution of incremental income. the same time the productivity of agricultural Most semi-industrialized countries that have labor increased, partly as a result of the more not yet succeeded in eliminating rural poverty favorable exchange rate and partly as a result possess dualistic agricultural structures. Since of movements in world prices. On balance, the relatively high agricultural growth rates the policies associated with export promotion achieved by Brazil, Colombia and Turkey, for proved more successful than those of import example, are largely the product of expansion in substitution in stimulating growth and in secur- a commercialized subsector, large portions of ing significant increases in the incomes of their agricultural populations remain severely the poor. impoverished. In countries such as the Republic Many of the semi-industrialized countries of China and the Republic of Korea, by contrast, have switched their policies away from heavy a relatively egalitarian distribution of landhold- reliance on import substitution toward the pro- ings has ensured that the benefits of agricultural motion of exports. Hong Kong and Singapore growth are widely dispersed. and their East Asian neighbors, the Republic of The experiences of the Republic of China and China and the Republic of Korea, have pursued Mexico illustrate the interaction among the dis- export promotion more vigorously than any tribution of land ownership, the diffusion of 92 public support for agriculture and the eradica- ample, have benefited from the demand by tion of rural poverty. Throughout the 1950s and small farmers for both agricultural inputs and 1960s, these countries achieved equally high consumer goods, as well as from public efforts annual rates of agricultural growth, at approxi- to improve rural infrastructure. By 1970, 70 per- mately 4 percent. In the Republic of China, cent of this country's farm households derived however, the productivity of labor and land in- some income from non-farm employment, and creased at 3 and 4 percent a year respectively, almost 30 percent earned more from their non- whereas in Mexico they increased at less than farm jobs than from farming. In bimodal agri- 2 percent. Moreover, the Mexican productivity cultural systems, however, the demands of the and yield increases were concentrated in a rel- modern sector are largely for items such as atively small modern sector, where increased tractors and high-value consumer goods which mechanization and more intensive use of ferti- are usually only available from urban or foreign lizer significantly expanded wheat and cotton suppliers. production. The large traditional sector, com- Surveying the experience of the 16 countries, prising small private farms and most ejidos1 and the crucial obstacles to eliminating absolute accounting for 70 percent of the agricultural poverty are the failure to create enough non- labor force, stagnated. The growth that did oc- agricultural jobs, fast population growth, and cur in the output of such crops as corn and beans the inequitable development of agriculture. Un- largely came from newly cultivated land. Thus less population growth rates among the poor yields and labor productivity in traditional agri- are reduced and employment and agricultural culture failed to show any marked improvement. opportunities are expanded, available estimates A significant difference between the experi- indicate that continued GDP growth will suc- ences of the Republic of China and Mexico lies ceed in reducing the percentage of the popula- in the distribution of land and other inputs and tion in poverty but will have little impact on the the diffusion of technical knowledge. In the absolute numbers of people in poverty. Republic of China, land reform had conferred rights of ownership within an existing, fairly Provision of Public Services even distribution of operational units. A sub- The wealthier semi-industrialized countries stantial part of the total cultivated land was Argentina, Greece, Hong Kong, Israel, Portu- irrigated, fertilizer use was widespread, and gal, Singapore, Spain and Yugoslaviahave technical innovations and credit were effective- rapidly extended the provision of education, ly disseminated through farmers' associations. health services and water supply. Achieve- In Mexico, however, land reform involved the ments in the other semi-industrialized countries expropriation and redistribution of only part of vary. The Republic of China and the Republic the total agricultural area, while irrigation facil- of Korea, for example, have attained a relatively ities were not provided to most small farmers, even distribution of public services, whereas and research and extension, with some excep- some of the larger countries have failed to pro- tions, were concentrated primarily on irrigated vide adequate services in depressed regions agriculture. Northeast Brazil, Southern Mexico, and Eastern Land reform is a highly sensitive political Turkey. The relatively high per capita incomes issue, but in the absence of further efforts at in these countries suggest that they are now reform, extreme poverty will remain a promi- in a position to expand the flow of services. nent feature of rural Brazil, Colombia, Mexico Equally important, however, is the possibility and Turkey. The stimulus given to rural indus- of reorienting existing services, to reach peo- try by a more egalitarian distribution of land ple in poverty more consistently. Although the holdings is an important ancillary benefit, and appropriate recommendations will vary among one of special significance in these economies, countries, some of the illustrative policy meas- where the landless constitute a substantial pro- ures described below contain elements of gen- portion of the rural labor force. Non-farm rural eral validity. enterprises in the Republic of China, for ex- Educational programs provide a prime ex- ample of the scope for reorientation. The low lEjidos are agricultural communities based on redistributions enrollment rate among children aged 7 to 14 of land since the 1910 revolution. Members have the right to the products of the land and pass on that right to their heirs, in Northeast Brazil, for example, may be due but the land cannot legally be sold or rented to others. less to the insufficiency of school places than to 93 the insufficiency of demand for them: parents America, for example, followed from the rise in are reluctant for their children to attend school living standards and better social conditions, because of the earnings they will forgo in doing rather than from improved medical care; the so. Providing incentives to attend school is one incidence of cholera and typhoid fell in the UK possible solution. In the state of Goias, experi- and the US long before effective methods of mental programs of free school meals increased treatment were available for these diseases. school attendance rates from below 80 to around Similar results have been observed in the devel- 90 percent, and helped to improve the nutri- oping countries: in the Philippines, for example, tional status of school children. Higher salaries improved water supply and sanitation have re- are also required to attract better-trained duced the incidence of cholera by about 70 teachers to rural areas. Such efforts could be percent. Significant improvements in the health financed from within existing educational bud- status of the poor may not be forthcoming until gets, by gradually reducing subsidies to higher water supply and sanitation are adequate. education, which often constitute one of the Efforts to provide information on nutrition most inequitable transfers of income. Since and family planning services to the poor are public expenditure on higher education is about especially important given their large family half that on primary education in most coun- sizes. General improvements in socioeconomic tries, a substantial amount of public funds could conditions may not reduce birth rates suffi- be released by introducing tuition fees for ciently, especially in countries such as Brazil higher education. and Mexico where the distribution of income Health systems in many countries are biased is highly uneven, Colombia, despite a much toward urban rather than rural areas, and to- lower level of per capita income, successfully ward curative medicine, which generally meets initiated a comprehensive family planning pro- the requirements of the rich, rather than preven- gram in the 1960s. Relying heavily on paramedi- tive medicine, which can reach more people at cal workers and lay "outreach" field workers, lower cost. The annual subsidy from the Colom- Colombia reduced its crude birth rate from 46 bian public health system to households in large births per thousand of the population in 1960 to cities is estimated to be more than twice that 30 in 1977. The Colombian experience is espe- to rural households. In Brazil, the expansion in cially pertinent for the other countries in Latin health expenditure from 1 to 2.5 percent of GDP America where population growth remains ex- between 1949 and 1975 reflects an increasing tremely high. Pregnant and lactating women and bias toward curative medicine; whereas preven- children with nutritional deficiencies also bene- tive medicine accounted for almost 90 percent fit from the services provided at Colombian of total health expenditure in 1949, by 1975 it health care centers. Since the learning capacity accounted for less than 30 percent. Rough esti- of children, and hence their subsequent earning mates indicate that a health care system that ability, can be seriously impaired by inadequate emphasized preventive rather than curative nutrition, such programs are an especially im- medicine could serve the entire Brazilian popu- portant part of efforts to help the poor escape lation without any increase in total health ex- their poverty. penditures. Restructuring the health system in Some of these programs can be financed by favor of preventive health care, especially in the appropriate reallocation of expenditure within rural areas, could significantly improve the existing budgets, but additional revenue will be health of the poor. Brazil has already begun required in many cases. In oil producing coun- efforts in this direction: the Program for Inter- tries such as Colombia and Mexico, elimination iorization of Health and Sanitation Actions in of the subsidy on the domestic consumption the Northeast (PIASS) emphasizes preventive of oil products could increase government rev- and simple curative medicine at the community enue by the equivalent of about 3 percent of level, with a well developed arrangement for the GNP. In most countries, the introduction of referral of more complicated cases to health more realistic user charges, especially for urban centers and regional hospitals. services, could significantly reduce the outflow The health of the population also benefits of public funds and ensure a more efficient use substantially from improvements in nutrition of public services. In Colombia, the valuation and sanitation. The secular improvement in of property at market prices could yield an addi- health standards in Western Europe and North tional 1 percent of GNP in property taxes, 94 Eliminating income tax exemptions on the im- port-substituting policies, and pursued these puted rent for owner-occupied dwellings, a policies for several decades, with unfortunate highly regressive subsidy used in many coun- results for economic growth and stability; ex- tries, could yield equally substantial increases port stagnation, inefficient domestic industries in revenue. The preferred combination of serv- and recurrent balance of payments crises ices, expenditure reallocation and revenue gen- resulted in slow and very irregular economic eration will vary among countries. In raising growth. Turkey's import-substituting approach revenues to finance basic services, the poorer to industrialization has been characterized by of the semi-industrialized countries, such as similar stop-go cycles, and the most recent crisis Egypt and the Philippines, may have few op- has yet to be surmounted. Other countries tions but to reallocate public expenditures. But Brazil, Colombia, Mexico and the Philippines countries such as Brazil, Mexico and Turkey, which relied heavily on import substitution, where annual per capita income exceeds also experienced cyclical balance of payments US$1,000, could afford both to raise additional problems though of a less severe nature. The fiscal resources and to reallocate existing funds historical evidence suggests that the pursuit of to finance the equitable provision of these serv- industrialization through import-substitution ices. policies is not always a satisfactory response to temporary slowdowns in the expansion of world Sustaining Economic Growth in a demand for exports. Changing World Moreover, continued growth in the semi- The future success of the semi-industrialized industrialized countries is crucially dependent countries in sustaining rapid growth will depend on their capacity to import, and hence on their crucially on their policy responses to changes ability to earn foreign exchange. Two points are in world trading conditions and to structural particularly noteworthy in this regard. First, the changes within their own economies. The pros- move to increased protection in the industrial- pect of increased protection in the industrialized ized countries is concentrated on those manu- countries, the decelerating rate of growth in facturesclothing, textiles, and footwearthat world trade, rising domestic labor costs, a con- have constituted an important part of the recent tinuing shift out of agriculture, and a worsening expansion in exports from the developing coun- foreign debt position are the main issues con- tries. Second, the semi-industrialized countries fronting them. have now established sizable industrial bases; Industrialization and Trade Policy their labor forces are relatively skilled; and In 1973-77 the annual rate of growth in world some of them are losing their competitive edge trade fell to less than half the 9 percent recorded in traditional, labor-intensive exports as a con- between 1965 and 1973. The annual growth rate sequence of rising real wages. of developing country exports recorded com- These points suggest that the more advanced parable setbacks, declining from 6.4 percent to semi-industrialized countries are now at the 3.6 percent, largely as a result of slower growth stage where both external and internal develop- in the industrialized countries and increased ments warrant a gradual shift into more capital- protection, especially against manufactures. intensive and skill-intensive lines of production. These trends raise important issues for coun- Such a move would be consistent with the his- tries for which expansion in manufactured ex- torical experience of Japan, where changes in ports has been the prime stimulus for GDP the relative profitability of different manufac- growth, as well as for countries where export- tured goods, induced by rising real wages for promotion policies have had an important salu- unskilled labor and an expanding supply of tary effect on industrial efficiency and agricul- skilled workers, led to a reorientation of exports tural growth. away from labor-intensive products such as tex- There is a danger that the prospect of slower tiles and clothing and toward capital-intensive world economic expansion may induce the and skill-intensive items such as steel, ship- semi-industrialized countries to retreat to the building and car manufacturing. extensive use of import-substitution policies, in Recent trends in international trade herald a the hope of maintaining the pace of industrial- movement to greater concentration on capital ization. Faced by a crisis in world trade during goods exports in the total exports of develop- the Great Depression, Argentina adopted im- ing countries. During the 1970s the growth of 95 their machinery exports has far exceeded that particularly the larger ones. In 1976, agricultural of their traditional exports. Although these na- commodities made up more than half the total tions have exploited the fast growing markets merchandise exports of Argentina, Brazil, Co- for capital goods in the industrialized countries, lombia, the Philippines and Turkey, whereas in in 1976 over 40 percent of developing country smaller nations such as the Republic of China, exports of machinery and transport equipment Hong Kong, Israel and Singapore, and in most went to other developing nations. The bulk of of the richer Southern European countries, the these exports are of relatively low-technology share was less than 30 percent. Food comprised goods such as small electric motors, cables, elec- less than 15 percent of merchandise imports in tric meters, television receivers and powered all countries of the group except Egypt, Hong hand tools, but the semi-industrialized countries Kong and Portugal. Agriculture's ability to gen- have begun to diversify their exports into more erate foreign exchange, either directly through complex lines of industrial machinery. Brazil, exports or indirectly through food production, for example, has been exporting textile equip- is and will remain crucial to the growth of ment, machinery for making pulp and paper, semi-industrialized countries. Furthermore, in construction and mining equipment, and power an increasingly protectionist environment the transformers to the US and Europe; Singapore's buoyancy of the domestic market will come to exports include ball and roller bearings, con- depend more heavily on healthy, broadly based struction and mining equipment, pumps and agricultural growth. centrifuges, powered tools and mechanical han- The broad macroeconomic approach to ex- dling equipment; and in the Republic of China change rate policy, agricultural pricing issues, the production of sewing machines, agricultural and the sectoral allocation of investment influ- machinery, bicycles and textile equipment has ences the relative profitability of agricultural helped the development of a dynamic machine production and exports, and hence the overall tool industry. rate of agricultural growth. The significance of The development of a capital goods sector in the general macroecononiic framework for agri- the semi-industrialized countries depends criti- culture has been described in Chapter 5, and is cally on the maintenance of export-promoting readily apparent in the individual experiences policies, given the limited, albeit expanding, do- of the semi-industrialized countries. The Re- mestic markets for these goods. Although some public of China and the Republic of Korea, for protective tariffs or other modes of subsidiza- example, maintained the profitability of agricul- tion may be necessary for the establishment of ture through exchange rate and agricultural a capital goods industry, continued reliance pricing policies and by the adequate provision on such supportive measures could be self- of infrastructure. At the other extreme, the dis- def eating. Other forms of public action may also appointing performance of Argentinian agricul- be required, such as vocational training pro- ture throughout the 1950s and 1960s, despite grams and the subsidization and organization of the country's rich resource endowment, was schemes for in-plant training; public support for primarily due to the implicit and explicit taxes industrial research, through tax incentives and on agriculture and the fluctuating and generally government contracts; and efforts to centralize unfavorable exchange rate. The slow growth marketing and product-testing facilities. Finally, of agriculture was, in turn, an important factor the indivisible nature of investments in the contributing to the country's persistent foreign sectors using capital goods, and the need for exchange shortage. correspondingly large and discontinuous expan- Since the maintenance of an appropriate sions in the capital goods-producing sector macroeconomic framework has been discussed itself, justify some degree of indicative macro- elsewhere, this section concentrates on policies economic planning in order to reduce uncer- toward agriculture that are most relevant to tainty and avoid costly errors. those semi-industrialized countries whose agri- cultural labor force has started to decline. Priorities in Agriculture Where slow population growth is accompanied Apart from its important role as a source of by a rapidly expanding demand for non-agricul- employment and labor income, agriculture re- tural labor, efforts to enhance agricultural labor mains a significant earner and saver of foreign productivity become increasingly important. exchange in most semi-industrialized countries, To meet these productivity requirements, the 96 availability and timely dissemination of new expansion in the output of livestock products, and improved technologies are essential. Coun- fruits and vegetables, and development of pro- tries such as the Republic of China and the Re- cessing, packaging and marketing facilities. public of Korea, which invested in agricultural Self-sufficiency in staple crops may become research at an early stage of their development, more difficult and less necessary as increased were subsequently able to achieve substantial emphasis is given to the production of high increases in agricultural production and labor value export and industrial crops. productivity. Until the early 1970s, chemical technology was the main factor raising agri- Resource Mobilization and Debt Management cultural yields in the Republic of Korea, but The semi-industrialized countries have main- since 1972 the development and dissemina- tained high and increasing rates of investment, tion of high-yielding varieties of rice also has ranging in 1977 from 19 percent of gross domes- been an important stimulus to yields. In recent tic product in Argentina to above 30 percent in years, mechanical equipment has been gradu- Singapore and Yugoslavia. In some countries, ally, but increasingly, substituted for labor: be- such as Brazil and Turkey, public investment tween 1965 and 1976, the use of labor per har- has been an important part of total capital for- vested hectare of rice decreased from 1,400 mation, but in other countries, such as the Re- hours to 1,040 hours, while the capacity of farm public of China, the Republic of Korea and the machinery per hectare of cultivated land in- Philippines, the private sector has been the main creased from about 0.2 to 0.9 horsepower. Ris- source of fixed investment. In the exceptional ing labor costs in some of the more advanced case of Yugoslavia, worker-managed enter- semi-industrialized countries have signaled the prises have been responsible for a significant need to increase the use of farm machinery, proportion of total capital formation. especially at planting and harvesting time. The method of financing investment has var- The crucial policy issues during this phase of ied considerably among countries. High interest development are the provision of appropriate rates and development of the capital market, for pricing signals to private agriculture, and the example, were important in the Republic of efficient development of industries that supply China and the Republic of Korea. Major tax inputs to agriculture and process its outputs. In reforms and improvements in tax administra- Turkey, the development behind protective tion and collection in the mid-1960s helped to measures of a domestic tractor industry, com- finance the Brazilian expansion in public in- bined with subsidized credit for tractor pur- vestment. Some countriesnotably Argentina chases, resulted in premature mechanization: and Turkeyhad recourse to involuntary sav- the number of tractors in use trebled between ings enforced by inflation, but often at the cost 1962 and 1972, although unemployed and under- of serious foreign exchange crises. Private employed workers were readily available. This direct foreign investment has been important in experience highlights the deleterious effects of Singapore and, to a lesser extent, in Brazil, Hong efforts to force the pace of both industrializa- Kong, Mexico and Spain. tion and agricultural mechanization. Many of the semi-industrialized countries Finally, the changing pattern of demand for faced severe problems in adjusting their bal- agricultural products entails corresponding ad- ances of payments to the oil price increases of justments in the commodities produced, with 1973-74, and the slackening in the demand for 36. Semi-industrialized Countries: Comparative Investment and Debt Service Ratios, 1960-77 (Percentages) Gross Domestic Debt Service as Share 0fa Investment as Exports of Share of GDP GNP Goods and Services 1960 1977 1970 1977 1970 1977 Low Income Countries 14 21 1.3 1.8 12.4 7.6 Middle Income Countries 21 25 1.7 2.4 9.1 9.2 Semi-industrialized Countries 21 24 1.5 2.2 11.4 11.7 aDebt service on external public and publicly guaranteed medium- and long-term loans only. 97 their exports that resulted from the recession in East Asian semi-industrialized countries, a industrialized nations in 1974-75. Most of these limited capacity to purchase imports, resulting countries turned to foreign capital markets in from weak export performance and increased an attempt to sustain their economic growth; debt service burdens, meant that economic indeed, much of the increase in the total for- growth was significantly slower. The East Asian eign debt of developing countries that occurred countries' ability to adjust to changing external in 1974 and 1975 reflects the borrowing activi- conditions and to develop and diversify their ties of semi-industrialized countries. As a result, exports has been crucial to their continued suc- some of these countries now have high debt cess. The East Asian experience, combined burdens. A few of them, including Portugal with the need of all countries to preserve a and Turkey, have already experienced signifi- stable climate for commercial capital flows and cant debt problems, while others, such as Brazil, to avert balance of payments crises, under- the Republic of Korea and Mexico, have avoided scores the importance of further expansion and liquidity crises even though their debt burdens diversification of manufactured exports by are sizable. Latin American and Southern European semi- Their increased foreign borrowing, especially industrialized countries. Unless these countries in private capital markets, allowed the semi- can improve their export performance and in- industrialized countries to finance the imports crease their domestic savings rates, their exist- they required to maintain the pace of economic ing debt burdens will limit their room for growth through 1976. In the following two years, maneuver, with potentially serious conse- however, with the important exception of the quences for their economic growth. 98 Chapter 8: Development in Primary Producing Countries Broadly defined, the term primary producing ing nations and a few Low Income countries countries refers to virtually all developing (Angola, Guinea, Indonesia, Mauritania, Sierra countries with the exception of the semi- Leone, Togo and Zaire), mostly with GNP per industrialized ones, which were the subject of capita above US$200, the mineral economies the previous chapter. The common distinguish- are Middle Income nations. All except Indonesia ing feature of primary producing countries is and Nigeria have populations of less than 40 their relatively low degree of industrialization, million, and most have less than 15 million. as measured by such indicators as the share of A number of structural features associated manufactured goods in total production and in with the historical, technical and institutional merchandise exports. Two subgroups of pri- development of the mining industry distinguish mary producing countries are analyzed in this the mineral economies from other developing chapter: a group of "mineral economies" and countries, especially from the predominantly another composed of predominantly agricul- agricultural nations, and present these coun- tural nations. In each case, the emphasis is on tries with a special set of development oppor- Middle Income countries. tunities and problems. Historically, the inter- national mining industry has been shaped by the highly uneven geographical distribution of Development Issues in Mineral Economies minerals, the enormous uncertainty associated The mineral economies are characterized by with exploring and exploiting exhaustible large shares of minerals in their domestic pro- natural resources, and the highly capital- duction and merchandise exports.1 Excluding intensive nature of mining technology. These those with populations of under one million, this features have engendered the dominance of group of countries comprises a dozen that de- large, vertically integrated international mining pend principally on non-fuel mineral produc- firms. The highly capital-intensive and histori- tion, and 14 economies dominated by petroleum cally foreign-dominated nature of mining in- production. The ranks of the latter have swelled dustries in most developing countries is the significantly in the past decade. Most of the principal cause of the prevailing pattern of mineral economies are in three parts of the limited production and consumption linkages world: Sub-Saharan Africa (for example, An- between the mining sector and the rest of the gola, Guinea, Liberia, Mauritania, Nigeria, Sierra economy, as well as the associated dualism be- Leone, Togo, Zaire and Zambia); Latin America tween a modern enclave dominated by mining and the Caribbean (for example, Bolivia, Chile, and an underdeveloped poverty-ridden hinter- Ecuador, Jamaica, Peru, Trinidad and Tobago land. On the other hand, the large rents2 realized and Venezuela); the Middle East and North from the sale of scarce non-renewable resources Africa (for example, Algeria, Iran, Iraq, Kuwait, have presented developing country govern- Libya, Saudi Arabia and Syria). A number of ments with substantial opportunities to raise mineral economies with populations under one finances. Over the last two decades, these op- million, such as Bahrain, Botswana, Gabon, portunities have increasingly been pursued Guyana, Oman, Qatar and the United Arab through various forms of mineral taxation and Emirates, also fall in these three regions. With through government participation in mining the exception of the capital surplus oil export- enterprises, but their realization has been corn- iThe thresholds, which have been applied with some dis- cretion, are that the share of minerals averaged 10 percent or more of gross domestic product in 1967-75, and 40 percent 2The concept of economic rent, indispensable to the analysis or more of merchandise exports in 1973-76. As with any of exhaustible resources, refers to the surplus earned by country groupings not based strictly on geography or in- factors of production over and above the minimum earnings come, the distinctions are sometimes hard to apply. necessary to induce their employment. 99 plicated by the oligopolistic character of the with per capita income increases averaging 1.9 international mining industry and the fluctua- percent a year. tions and uncertainties associated with mineral Of the many mineral exporting countries in prices. Finally, for their development over the the contemporary developing world, few have long term, mineral economies need to adapt had a long history as mineral-dominated econo- their economic structures, building up other mies, and thus the basis for drawing insights sources of income as their mineral resources and lessons is limited. Nevertheless, the long dwindle and eventually are exhausted. mineral histories of countries such as Bolivia, Chile, Iran, Peru, Venezuela and Zambia, and Development Experience of Mineral Economies the more recent experiences of many more na- Between 1960 and 1976, the mineral econo- tions, permit some tentative generalizations. mies grew at an average rate of 6.5 percent a The essential advantage of the mineral econ- year, which compares with an average growth omies over other developing countries lies in rate of 6.3 percent recorded by all Middle In- their possession of a resource that is readily come countries (Figure 13). This aggregate per- converted into a large financial flow. A large formance masks significant differences in the mineral sector yields both foreign exchange and growth rates of two subgroups of mineral econ- domestic tax resources, which are normally two omies. The oil exporting countries, which bene- of the key constraints at early stages of devel- fited from unprecedented increases in petro- opment. The differences between mineral econ- leum prices and exports, grew at an average rate omies and others are striking: in the early 1970s, of 6.9 percent a year, with per capita incomes in mineral economies as a group, the ratio of growing at 4.3 percent a year. In contrast, the export earnings to gross domestic product was non-fuel mineral economies faced more cyclical about twice as high as that recorded by all other conditions for their main exports and were Middle Income countries, while the ratio of tax able to achieve an average economic growth revenues to production was about 50 percent rate of only 4.4 percent over the same period, higher. These extraordinary flows of foreign Figure 13 Mineral Producing Countries: Comparative Growth of Gross Domestic Product and Population, 1960-76 (Average annual percentage growth rates) GOP Population GDP Per Capita Oil Non-Fuel Mi nera Middle Exporting Mineral Producing Income Countries Countries Countries Countries 100 exchange and tax receipts have permitted min- highly dualistic development of many mineral eral economies to sustain much higher levels economies has been associated with relatively of aggregate consumption and investment than inegalitarian distributions of household income other countries at comparable stages of devel- and a much more limited diffusion of education opment. Indeed, most of the mineral economies and health facilities than in other countries at have reached Middle Income status primarily comparable levels of average income. because of the incomes generated in mining An issue of central importance for mineral Large mineral earnings have not, however, economies is thus how to convert a wealth of been an unmixed blessing. Experience indicates physical resources into a labor force with the that the development of a large mining industry skills, education and experience required to run as the leading sector in a developing country a highly productive, fully developed economy poses special challenges and problems for eco- after the mineral wealth has been exhausted. It nomic management, perhaps foremost among appears to be much more difficult for these which are the implications of a leading sector economies to upgrade their human resources that is highly capital intensive. The mining in- than to improve their physical infrastructure. dustry has been highly capital intensive and is Very few of them had an adequate nucleus of becoming increasingly so, while mineral process- well educated people and reasonably good ing and related industries are also among the schools when mineral wealth was first opened most capital-intensive manufacturing activities. up. Especially in Africa and the Middle East, Thus the growth of a large mining industry has even the economies richest in minerals have had tended to sharpen the technological dualism be- to build on a labor force with low literacy rates tween that sector and the rest of the economy. and a population with weak educational tradi- Too often this technological dualism has tions. To find suitable teachers and strengthen spawned dualism in wages, with those in the the educational system rapidly in such a situa- mining sector being very much higher than in tion, it may be necessary to bring in foreigners other parts of the economy. In several countries, and foreign influences on a large scale, but, as high wages in mining are due not only to the Iran's experience helps to illustrate, doing so capital intensity of mining operations and the can be socially and politically disruptive. The associated high productivity of mining labor, alternative of building from within involves a but also to the historical and social forces that slow process of educational improvement over have shaped the mining sector. In the last years generations, not unlike that in any other devel- of the colonial era, and subsequently, foreign oping economy, with the pace of advance and mining companies generally found it expedient the quality of results held back by the initial to meet the demands for increased wages from conditions. The closely related task of improv- local unionized mining labor, especially in coun- ing the health of the population, though by no tries such as Jamaica and Zambia where the min- means easy, appears somewhat more tractable ing labor unions were at the forefront of national with heavy public investment. A handful of independence movements. The growth of gov- mineral economies, notably Jamaica, Kuwait, ernment participation in the mining companies and Trinidad and Tobago, have already in the post-colonial period has not significantly achieved levels of life expectancy close to those altered the political difficulty of controlling min- in industrialized countries, though others lag ing wages. far behind. In over a dozen mineral economies, In some mineral economies wage dualism has including Saudi Arabia, life expectancy remains had severe consequences. First, the high mining at 50 years or less. wages have acted as a goal, in labor negotia- The second major set of problems besetting tions, for all other wage employees in the modern the mineral economies springs from their tend- and relatively formal segment of the economy, ency to neglect the development of non-mineral including government workers, and thus im- sectors, especially agriculture, which remains parted a strong upward bias to the entire wage the largest employer of labor in all but a few structure in the formal sector. This, in turn, has of them. The ready availability of foreign ex- induced rapid rates of rural-urban migration change and fiscal resources from the mining sec- and high rates of open unemployment in the tor has made it less urgent to develop other cities, as aspirants queue in the lottery for productive activities. Typically, the high in- scarce high-paying jobs. Not surprisingly, the comes earned in the mining-based modern sec- 101 tor fueled consumption demands which were bility in export earnings. Partly for this rea- met through imports or domestically produced son, as well as more general problems of eco- import substitutes. Like many other developing nomic management, some mineral economies, countries, most mineral economies nurtured including Peru, Zaire and Zambia, have been import-substituting industries behind strong prone to external debt problems. One particular protective barriers. But unlike most of these aspect of sudden changes in mineral export other nations, the mineral economies could, be- earnings deserves special mention. If a sudden cause of their mineral exports, afford to bear surge in export receipts is transformed too the growing costs of excessive protection for swiftly into increases in aggregate domestic de- much longer, postponing the transition to a more mand, the resulting bottlenecks and inflationary outward-oriented trade policy. The structure of consequences can be severe, as the experience incentives in such countries as Zaire and Zambia of Iran and Nigeria between 1973 and 1976 was biased heavily against agriculture, and exemplifies. most mineral economies did little to compensate for such biases through investments in agricul- Development Priorities for the Future tural infrastructure, extension, research or Investment Strategy credit. Food crops were particularly neglected. The long-term development priorities of min- In some countries, such as Guyana, Jamaica, and eral economies flow from the fundamental fact Trinidad and Tobago, agricultural production that their mineral wealth is exhaustible. Invest- was further impeded by shortages of rural labor, ments made during the mineral-exploitation which were partly attributable to the severe stage of a nation should be such as to leave in wage dualism in these economies. place a growing, self-sustaining economy when The abundance of mineral exports permitted the mineral rents wither away. Thus the appro- many countries to maintain an exchange rate priate sectoral choice and sequencing of invest- that was appropriate for the high productivity ments is of paramount importance. Furthermore, mining sector, but which, in view of wage dis- because mineral rents accrue to a nation largely tortions and other factors, offered little incen- through the tax system or government par- tive for the production or export of non-mineral ticipation in mining, the role of the state in goods. As a result, these countries achieved implementing investment priorities acquires par- little export diversification (Table 37). In some, ticular significance. Despite their important simi- including Chile and Nigeria, agricultural exports larities, mineral economies vary enormously actually dwindled from the levels of pre- with respect to the size of population, extent of mineral years. mineral wealth, stage of mineral exploitation, The growing dependence on mineral exports agricultural potential, the level of human re- in some mineral economies of recent origin, the source development and the endowment of slow diversification of exports in some of the economic and social infrastructure, to mention mineral economies of long standing, and the only a few key features. Investment priorities characteristics of the international markets for vary accordingly. Some flavor of the pattern and their products, make many of the non-fuel min- variation of investment priorities among the eral economies particularly vulnerable to insta- mineral economies may be gained by paying particular heed to two features: population size 37. Mineral Producing Countries: Export and mineral wealth per capita. (The latter is a Diversification, 1960 and 1976 useful notion for illustrative purposes, though it (Percentages) is a very rough one, in view of the enormous un- Shares of Total Merchandise Exports certainties pertaining to the size of mineral de- Minerals posits, the future behavior of mineral prices, All Primary (Including changes in mining technologies, and possible in- Commodities Fuels) novations of substitutes for certain minerals.) 1960 1976 1960 1976 Countries with small populations and large Mineral Economies 95 98 59 94 mineral wealth, such as Kuwait, Libya and Petroleum Economies 99 99 57 95 Saudi Arabia, have the best prospects for a Non-fuel Economies 86 89 67 72 strategy of resource-based, capital-intensive in- Non-mineral Middle dustrialization built around the domestic pro- Income Countries 83 50 cessing of minerals and related industries. As 102 many of these industries are technologically some support from the recent record of mineral very sophisticated and require highly skilled economies. A few countries such as Algeria, manpower, the strategy demands early and Iraq and Venezuela, which have deployed their careful planning and investment in education, mineral earnings to invest in human resources training, and research and development. Since and not neglected agriculture, have strength- investments in education have a long gestation, ened the basis for diversifying their economies. at early stages it will generally be necessary to Nations such as Bolivia, Zaire and Zambia, by rely quite heavily on foreign expertise. These contrast, have tended to neglect their non- economies could also become profitable interna- mineral sectors, resulting in low and erratic tional financial centers. In most other countries growth punctuated by periodic balance of pay- industrialization based primarily on mineral ments crises, and little economic diversification. processing is unlikely to be a successful strat- egy. However, selective opportunities exist, Policies to Appropriate Mineral Rents conditioned by such factors as the raw material The importance of investment strategy, espe- cost shares of such industries, the availability cially public investment strategy, in mineral of essential complementary inputs such as na- economies derives in part from one of their tural gas and hydro-electric power, and barriers more distinctive features: the potentially strong to entry in prospective foreign markets. These fiscal linkage between mining and the rest of the last are of particular concern in iron, steel, economy. The strength of this fiscal linkage in aluminum and copper. practice depends on the willingness and ability The sharpest contrast to the small, richly of developing country governments to tax or endowed countries is offered by the large na- otherwise participate in the incomes originating tions with low mineral wealth per capita, no- in mining. The mining industry in most develop- tably Indonesia, Nigeria and Zaire. In these ing countries is characterized by the presence countries, agriculture remains the largest source of large transnational corporations and by the of incomes and employment, indicating corre- existence of a substantial element of rent in the spondingly high priorities for investment in market value of minerals. These two facts imply agricultural infrastructure, extension, research that mineral economies must pay particular and credit. Large and growing numbers of non- heed to mineral taxation, participation in the agricultural workers and potentially large do- mining industry, and negotiations with trans- mestic markets for manufactures also indicate national mining corporations. These complex the need for rapid development of labor- tasks constitute special challenges. intensive industry. These are also the countries In theory, the objective of mineral economies that can least afford to emulate the past policies is simple: it is to maximize, in the long run, the followed by some mineral economies, in which appropriation of all rents, while allowing the incentives, wages and consumption have been investor to earn the return necessary to induce allowed to evolve as if mineral resources were him to invest. In practice, this objective is ex- not depletable. tremely difficult to achieve. In the first place, The investment priorities of other mineral the identification of mineral rents is hampered economies fall between these two extremes. by a number of factors, including the oligopolis- Few can afford to neglect agriculture. The larger, tic nature of the international mining industry better endowed countries, such as Iran and Mo- and the associated lack of open markets for rocco, can expect greater opportunities for the many minerals; developing countries' limited development of efficient import-substituting in- knowledge of the mining industry and mineral dustries, while the smaller, relatively mineral- reserves; difficulties in evaluating investors' poor nations, such as Peru and Syria, will need perception of risks; and uncertainty with re- to give greater attention to developing labor- spect to future mineral prices and technologies. intensive manufacturing for export, if they are Second, even if these problems did not exist, to achieve the transition to a growing and diver- choices would still remain as to the rate of min- sified post-mineral economy. Virtually all min- eral exploration and exploitation, and how these eral economies need to make vigorous efforts to should be conducted in a given institutional en- widen and deepen their limited stocks of social vironment. Mineral economies have adopted and economic infrastructure. very different approaches to these pressing pol- These views on sectoral priorities receive icy issues. As with investment strategy, there 103 is no single, universally applicable set of desired importance of improving the appropriation and policies, but experience suggests some guide- investment of mineral earnings in these econ- lines for the future. omies. The agenda of development concerns In principle, the simplest way to capture all and policies does not cease there. Many of them, rents is for a mineral economy government to such as the need to mobilize more domestic sav- own and run the mines. But few mineral econ- ings and the desirability of extending low-cost omies currently possess the managerial, tech- basic education and health services more rap- nical and marketing skills needed to substitute idly to the rural and urban poor, are shared by fully and efficiently for the transnational cor- other developing countries and have been dis- porations that have historically dominated the cussed elsewhere in this report. This is also true industry. As these skills are developed over of the need for more rapid and broadly based time, governments are likely to participate in- agricultural growth if rural poverty is to be al- creasingly in mining. Such participation speeds leviated. This section thus confines itself to the necessary accumulation of knowledge about some concerns seen to be of particular signifi- the industry, the nation's mineral reserves, and cance to mineral economies. its long-term needs and capacities for mineral As was argued above, in a number of mineral exploration and exploitation. The acquisition of exporting countries excessively high wages in practical knowledge on mining and mineral the mining sector have widespread distortionary processing can also be accelerated through effects. Two distinct elements of this situation greater exchange of information among devel- call for policy intervention. First, wage in- oping economies and joint research and devel- creases in mining and mineral processing need opment efforts. Meanwhile, the role of transna- to be moderated. Second, wages in other modern tional corporations is likely to remain significant formal sector activities should reflect produc- in most of these countries, and so, too, is that tivity trends in those sectors, and be oniy min- of mineral taxation. imally influenced by wage developments in Mineral taxation takes many forms. The oldest mining. Both these objectives may be pursued royaltieshas a number of serious defects, through clearly defined incomes policies. The but its assurance of stable revenues and its ease enormous political difficulties of implementing of administration argue strongly for its use as a such policies have been demonstrated by past supplement to other forms of taxation. Taxes on experience in countries such as Bolivia, Jamaica, income and excess profits can be more finely Trinidad and Tobago, and Zambia. But the se- calibrated to capture mineral rents, and entail rious economic costs of failing to do so justify few distortions in the allocation of productive continued efforts. Incomes policy initiatives factors. These features commend the greater use may yield particularly high dividends in those of such instruments in a number of mineral countries with relatively short mineral histo- economies that have so far neglected them. The ries, where mining industry labor has not yet spirit of income and profits taxes is maintained, established strongly articulated vested interests. while the advantages of private operation and The other policy instrument that exerts a per- reduced political risks are retained, in produc- vasive influence on the mineral economies is tion sharing and production contracting arrange- the exchange rate. It was noted earlier that the ments such as those used in Indonesia and Peru; exchange rate warranted by the mineral sector however, these arrangements are not finely and the general balance of payments situation tuned to rents and require extremely skillful typically dominated by mineral exportsnor- negotiation and supervision. Finally, recent mally does not provide adequate incentives for problems of absorptive capacity in countries the development of non-mineral production and such as Iran and Nigeria emphasize the need for exports. To provide such incentives there are a judicious assessment of the rate of mineral several possible permutations of exchange rate exploitation, and, possibly, for investing mineral policy and foreign trade taxes, the appropriate earnings in financial or real assets abroad in- choice of which can only be made in specific stead of using them immediately to fuel con- country contexts. The fundamental objective of sumption. such a choice, however, should be a foreign trade and exchange rate regime that facilitates Other Development Measures the diversification of exports and production. The preceding discussion has emphasized the Such a diversification will be essential for most 104 mineral economies if they are to move success- majority are Middle Income, some Low Income fully into a dynamic post-mineral future. nations have been retained in the set, since in Finally, some mineral economies are particu- some cases their present per capita income larly vulnerable to instability in their export levels are more a reflection of past lost oppor- earnings and fiscal revenues. Part of the remedy tunities than of markedly different initial condi- lies with the compensatory financing schemes, tions around 1950. Furthermore, much of the like that of the International Monetary Fund development experience of the Middle Income and Stabex, as well as with international members of the group can provide useful in- buffer stock arrangements that are presently sights for the Low Income ones. being discussed in international forums. In ad- Shared Development Problems and Varying Responses dition, individual mineral economies can insti- tute reserve funds, which are accumulated when The development performance of these coun- export prices are high and drawn down during tries has varied tremendously, with 1960-77 recessions. average annual growth rates ranging from 2 to 3 percent in such countries as Burma and Ghana, Structural Change in Predominantly to 7 to 8 percent in others, notably Ivory Coast, Agricultural Nations Malaysia and Thailand. Such contrasts result The predominantly agricultural developing partly from differences in initial sociopolitical countries include some of the Middle Income conditions and resource endowments, partly nations of West Africa, Southeast Asia and from the varying incidence of changes in the in- Latin America, the smaller countries of South ternational trade and payments environment, Asia, the Low Income nations of Sub-Saharan and partly from clear differences in the nature Africa and the large densely populated coun- and quality of their policy responses. tries of Low Income Asia. Since the develop- Initial Conditions and Common Problems ment issues facing the last two groups were By 1950, most of these economies had clearly extensively discussed in World Development established themselves as specializing in agri- Report, 1978, they receive little attention here. cultural exports. In most of them exports were Instead, this section dwells on the development equivalent to one-fifth or more of gross domestic experience and priorities of countries such as product. Typically one or two commodities Burma, El Salvador, Ghana, Guatemala, Hon- dominated merchandise exports in each coun- duras, Ivory Coast, Malaysia, Paraguay, Sri try: for example, rice in Burma, cocoa in Ghana, Lanka, Sudan and Thailand. Apart from Burma coffee and cocoa in Ivory Coast, rubber and tin and Thailand, these nations are small, with pop- in Malaysia, tea and rubber in Sri Lanka, and ulations of less than 20 million. While the cotton in Sudan. In most cases, the export spe- 38. Basic Indicators for Selected Predominantly Agricultural Countries Average Percentage Annual Percentage Percentage of Manufac- GNP Percentage of Manufac- of Labor tures in Population Per Capita Growth turing in Force in Merchandise (millions) (US Dollars) 1960-77 GDP Agriculture Exports GNP Per 1977 1977 Capita GDP 1960 1977 1960 1977 1960 1976 Burma 31.5 140 0.9 3.1 8 9 68 55 1 1 El Salvador 4.2 550 1.8 5.3 15 15 60 47 6 Ghana 10.6 380 0.3 2.1 10 iia 64 54 10 1 Guatemala 6.4 790 2.8 5.8 67 57 3 Honduras 3.3 410 1.5 4.4 13 17 70 63 2 10 Ivory Coast 7.5 690 3.3 7.2 7 12 89 82 1 8 Malaysia 13.0 930 3.9 6.9 9 18 63 44 6 16 Sri Lanka 14.1 200 2.0 4.1 11 15 56 54 2 14 Thailand 43.8 420 4.5 7.7 11 20 84 77 2 19 a1974 105 cialization reflected several decades of cash ing the extent and form of state intervention in crop development, taking advantage of abun- the economy. dant fertile land and often under colonial rule. While some of this development was based on Policy Responses and Experiences plantations, especially for tree crops, in the ma- It is perhaps no coincidence that the countries jority of countries smallholders had already that developed fastest were those which chose established a substantial role in cash crop pro- to deepen and broaden their specialization in duction by the middle of this century. The bulk agriculture. This was not because the gloomy of modern economic activity, private and public, predictions about commodity prices were was generally built around the export trade in proven wholly false by events, All too often cash crops. Domestic manufacturing industry they were accurate. Rather, countries that con- was relatively undeveloped, usually amounting tinued to give priority to agriculture managed to less than 10 percent of domestic production. to expand production and exports, to more than Though the countries differed in their stocks of compensate for the income lost due to adverse indigenous educated and skilled labor and entre- movements in their commodity terms of trade. preneurs, none was abundant in such human Their continued specialization in agriculture resources. was accompanied by deliberate and sustained During the 1950s, many of these predomi- diversification and modernization within the nantly agricultural countries faced formidable sector. tasks of nation building as they gained inde- Malaysia and Ivory Coast are prime examples. pendence from colonial rule. Foremost among In Malaysia, replanting and new planting in- the development challenges and choices they creased the output of rubber from smallholdings faced was whether to continue specializing in at an average annual rate of about 7 percent export agriculture or to shift their priorities and between 1960 and 1975, while at the same time resources in favor of industry. For some of major programs of diversification into oil palm them, primary export specialization held unpal- and timber were carried out. In Ivory Coast in- atable associations with the old, colonial, divi- creases in the production of the traditional sion of labor. Furthermore, the tremendous exports, coffee and cocoa, were accompanied by variation in international commodity prices dur- substantial diversification into timber, oil palm, ing the Korean War and its aftermath empha- rubber, coconut, pineapple and bananas. Nor sized the uncertainties associated with reliance did these countries neglect smallholder food on these markets. Many countries feared a sec- crops. In Malaysia, new investments in paddy ular decline in their commodity terms of trade. production, introduction of new high-yielding Second, with steady or rising fertility, combined varieties and a favorable producer price policy with declining mortality rates, the growth of enabled the country to supply an increasing population accelerated, swelling the need for proportion of its rice consumption: from about jobs, for food, and for investment in social infra- 60 percent in 1957 to over 90 percent in 1972. In structure. The case for purposive population both countries, and other more modestly suc- policies gathered strength. The growth of pop- cessful nations such as Guatemala and Thailand, ulation and associated concerns with food the key elements of successful agricultural di- supply accentuated the need to reverse the his- versification and modernization have been torical neglect of food crops and traditional heavy public investment in irrigation and new agriculture in the policies and programs of many land development, maintenance of remunerative of these nations. Third, the burgeoning demand producer prices, and well staffed, dynamic insti- for educated and skilled people meant that tutions for agricultural research, credit and dis- choices had urgently to be made on the priorities tribution of inputs. for expenditure on education and training. In contrast, countries such as Burma, Ghana Where indigenous technical, managerial and en- and Sri Lanka tended to neglect their existing trepreneurial skills were in particularly short agricultural assets and achieved little success supply, the merits of relying on foreign skills in diversifying into new cash crops or support- and firms (or on those of local ethnic minorities) ing the traditional food crop sector. Burma's rice became a significant policy issue. Finally, as ac- sector languished from policy neglect while the celerated development became an avowed goal country's rich potential for timber remained un- of all governments, crucial issues arose regard- derdeveloped. Cocoa production in Ghana suf- 106 fered from declining incentives and food crops a favorable trade and fiscal policy environment, received little policy support. Inadequate pro- and development finance institutions. Finally, ducer incentives and policy uncertainties hurt industrialization in these countries benefited the tree crop sector in Sri Lanka, resulting in from the cumulative dimension to success: high little new investment or replanting of tea, rub- and steady economic growth rates have per- ber or coconut. This neglect of agriculture was mitted a steady rise in domestic savings which, not offset by any substantial diversification into together with external capital, could finance the manufacturing, even though in some countries investment necessary for balanced growth of rapid industrialization was a key policy objec- agriculture and industry. The slower pace of in- tive, as in Ghana. Indeed, a striking feature of dustrialization in other predominantly agricul- the development experience of the predomi- tural countries has been largely due to the nantly agricultural countries is the fact that absence of some or all of these features. those nations that made the best use of their The growth of population accelerated in the agricultural potential were also the ones which 1950s in all the predominantly agricultural coun- forged the strongest mutually beneficial links tries. Population growth rates remained high between agriculture and industry and achieved during the period 1960-77, with a continued ac- the swiftest structural transformation. celeration in some countries. The demographic Several factors underlay the relatively suc- trends showed marked geographic differences. cessful industrialization efforts of Ivory Coast, The characteristically high birth rates in African Malaysia and Thailand. First, the rapid and countries showed little change and, coupled broadly based expansion of agriculture gener- with continued declines in mortality, led to an ated substantial increases in rural incomes. acceleration in population growth. There were These provided a ready and buoyant market for larger declines in fertility in the predominantly manufactured consumer goods and agricultural agricultural Latin American nations, but as inputs such as fertilizer and farming equipment, these were usually outweighed by sharper falls which in turn contributed to increases in agri- in death rates, the rate of population growth cultural productivity. Second, the growing sup- went up. The Asian countries, notably Burma, ply of low-cost agricultural produce sustained Malaysia, Sri Lanka and Thailand, experienced the rapid development of such processing indus- the sharpest declines in fertility, and in the last tries as sawmilling and other wood products, three countries there was an associated decline food processing, rubber goods and palm oil in the rate of population growth. production. Third, the rapid growth in primary The observed fertility declines have been at- export earnings was able to finance the growing tributed to several factors, including improve- requirements for capital and intermediate goods ments in general social and economic conditions imports of an expanding industrial sector. and the spread of family planning services, Fourth, the protection offered to manufacturing though it is not possible to assess the relative activities was relatively modest and discriminat- significance of these factors with any precision. ing, avoiding most of the costs of excess protec- Except for Ghana, none of the African and Latin tion so frequently incurred in developing coun- American countries of this group had instituted tries. Comparatively outward-looking trade government family planning policies by 1970; policies have facilitated the rapid growth of El Salvador and Guatemala did so in 1974 and manufactured exports in recent years. Fifth, 1975, respectively. Malaysia and Sri Lanka these countries recognized the importance of launched their family planning programs in the high level skills and entrepreneurship and, by mid-1960s, though much of the dramatic reduc- and large, fostered a policy environment that per- tion in fertility in Sri Lanka is generally attrib- mitted these to flourish, even when the requisite uted to the rapid diffusion of improvements in skills came from abroad or from local ethnic mi- education, health and nutrition, which resulted norities. Sixth, while these nations had relied from the country's heavy emphasis on mass- heavily and successfully on public investment oriented social expenditures. Though the gov- and other forms of government support for their ernment family planning program in Thailand agricultural development, they desisted from was not begun until the early 1970s, by 1977 setting up numerous state-run manufacturing over 30 percent of the married women of child- enterprises, preferring to support the growth bearing age were estimated to be contraceptive of industry through infrastructure investments, users. 107 Challenges for the Future Honduras and the acceleration of efforts to sup- In predominantly agricultural nations that port smallholder development in Guatemala. have tended to bias incentives and resource In several agricultural countries, the manu- flows against broadly based agricultural devel- facturing sector is highly protected and subject opment, the key priority is to reverse this his- to very detailed and comprehensive licensing torical tendency. The policies best suited to regulations and price controls, which have effect this change will vary greatly across coun- tended to spawn high trading profits and inhibit tries, according to their resource endowments industrial efficiency. Some reduction in protec- and sociopolitical conditions. For example, tion and regulations could open up this sector countries such as Burma or Sudan, where land to greater competitive pressures and facilitate is relatively abundant, can seek substantial pro- the growth of small- and medium-scale enter- duction increases through acreage expansion. prises, which frequently forge strong mutually Their main concern will be to ensure that large beneficial links with the agricultural sector. In capital-intensive agricultural schemes do not countries where government-owned manufac- preempt resources and markets from traditional turing enterprises are important, there is a clear smallholders. In economies with little unused need for greater cost consciousness, autonomy arable land, such as Sri Lanka, agricultural pol- and accountability among managers. icies will have to stress the efficient intensive Those economies that have developed slowly use of the existing cultivated area. Output in- are in greater need of active population policies. creases may be sought through investments in For one thing, these countries cannot rely on irrigation, feeder roads and research, the spread significant declines in fertility stemming from of improved seeds, fertilizer and pesticides, and rapid overall development. For another, these the inculcation of better cropping practices. are the nations which can least afford to feed, Some of the Central American republics face particularly difficult tasks of reducing the tradi- house, educate and employ a rapidly growing population. The recent successes of the Indone- tional dualism between the large commercial sian family planning program indicate that well farms producing cotton, sugarcane, beef and conceived and vigorously implemented popula- bananas on fertile coastal lands and the rela- tion policies can significantly reduce fertility, tively neglected peasant sector, engaged largely even in relatively difficult social and economic in subsistence farming on poor upland soils. conditions. To the extent that the spread of Rural poverty and population pressure in the basic education and health services speeds the upland areas of El Salvador, Guatemala and decline in fertility, as appears to have been the Honduras have exacerbated problems of soil case in Sri Lanka, the arguments for low-cost erosion and deforestation. Greater emphasis on provision of these basic public services are re- programs to support smaliholder development inforced. would reduce rural poverty and ease the for- midable task of conserving and managing the Nations that have already exploited their agri- valuable forest resources of these countries. cultural potential to advantage face a somewhat Some recent changes augur well for the fu- different set of challenges in the future: while ture. In many of these countries there have been there is still a strong need to maintain the dy- marked increases in producer prices in the last namism of agriculture, the large non-agricultural five years, though the effects of such increases segment of the economy also commands atten- on farm incomes and incentives have been tion. Within agriculture it is increasingly impor- greatly reduced by general inflation. In Ghana, tant to orient policies and programs in favor of two large projects for rehabilitating and replant- smaliholders and others of the rural poor. ing cocoa have recently been launched, while Though these groups have benefited from the since 1972 the government has improved incen- past growth and diversification in agriculture, tives for other crops including food. The incen- substantial numbers of them remain in poverty, tives for agricultural exports have improved in and as the average incomes in these countries Burma as a result of the recent devaluation, in- continue to increase, the poor merit greater at- creases in producer prices and a partial decen- tention from public policy. tralization of the state monopoly for export Ivory Coast, Malaysia and Thailand have al- trade. The mid-1970s saw the enactment of new ready made great strides in industrialization and laws for agrarian reform in El Salvador and manufactured exports. As their industrial struc- 108 tures grow more complex they will need more The search for manufactured export markets sophisticated skills. With time they can increas- will continue to require dynamism and per- ingly diversify their manufacturing sectors from severance, especially if the international trading agricultural processing and simple labor-inten- environment becomes clouded by increased pro- sive manufacturing into more demanding, skill- tectionist actions in the industrialized world. and technology-intensive areas of production. These predominantly agricultural countries still This suggests giving early attention to the crea- face significant export opportunities in proc- tion of the requisite skills and to the options for essed timber and other wood products, leather judicious encouragement of the domestic pro- goods and rubber products, and opportunities in duction of capital goods. Now that the manufac- textiles and clothing could expand if industrial- turing sector is well established, these countries ized country protection in these categories were can contemplate reductions in the modest pro- reduced. In sum, the prospects for further indus- tection conferred by their present trade and fis- trialization in these countries are intimately cal policies, though the case for selective special linked to developments in the international trad- treatment of infant industries will remain valid. ing arena. 109 Chapter 9: Conclusions The central objectives of economic develop- Within agriculture, sustained programs of insti- ment remain the growth of incomes and the al- tutional, technical and infrastructural support leviation of absolute poverty. This report has for small farmers offer the best hope for increas- assessed the problems and prospects that arise ing employment and alleviating poverty. Small in the pursuit of these objectives in four prin- farms generally use labor much more intensively cipal areas: than large ones. Nor are small farmers laggards The scope and nature of the employment chal- in adopting high-yielding seed varieties and as- lenge facing the developing countries, and the sociated labor-intensive cultivation techniques, programs and policies that offer the best hope once they are granted ready access to essential of creating jobs and raising incomes in differ- inputs such as credit, fertilizers and extension ent groups of developing countries; advice, and can count on markets for their pro- The importance of achieving balance and corn- duce. Too often, the distribution of such govern- plementarity between agriculture and indus- ment-supported services is skewed in favor of try, to facilitate sustained economic growth larger farms or is otherwise inadequate. Invest- and a wide diffusion of its benefits; ments in irrigation works, large and small, are The unprecedented rate of urban growth in particularly promising as they not only augment developing nations and the massive new tasks agricultural productivity and incomes, but can posed by the shift of population to cities and also create a substantial number of off-farm jobs towns; and in construction and maintenance. The need to restore a more supportive inter- In addition to the immediate first-round bene- national environment for trade, capital flows fits within agriculture, increased agricultural and energy development. production and incomes generate new demands for non-agricultural output and employment. Policies to Increase Productive Employment Rural non-farm enterprises have demonstrated and Alleviate Poverty a remarkable capacity to respond to increases in The dimensions of the employment challenge demand and to provide a growing number of are unprecedented. Between 1975 and 2000, the rural jobs. Their inherent dynamism can be labor force in developing countries is expected greatly enhanced by government assistance in to increase by about 550 millionover twice the the form of improved infrastructure, rural elec- increment of the previous quarter of a century. trification and expanded credit facilities. More Given the already high levels of underemploy- generally, sustained and broadly based agricul- ment and absolute poverty, the scale of the task tural growth is extremely important for success- of expanding productive employment and in- ful industrialization in the Low Income coun- come opportunities cannot be overdramatized. tries, especially the larger ones, whose indus- In the Low Income countries, the key to more tries must rely primarily on growing domestic rapid employment expansion, swifter allevia- markets. The manufacture of clothing, textiles tion of poverty and a more robust basis for the and other mass consumption items, the produc- long-term structural transformation of the econ- tion of intermediate manufactured inputs for omy lies in improving performance in the rural agriculture, the processing of agricultural pro- economy. More than 70 percent of the labor duce and the expansion of related activities in force is directly dependent on agriculture and construction, transport and wholesaling, depend will remain so for the foreseeable future; in ad- heavily on developments in agriculture. Con- dition, many millions of jobs in small-scale rural versely, the efficient manufacture and distri- enterprises depend on agricultural production bution of rurally purchased consumer goods and incomes. As a first priority, investment, enhances rural living standards, while the avail- pricing and trade policies that presently discrim- ability of low-cost fertilizers, pesticides, agri- inate against agriculture need to be reversed. cultural implements and other intermediate 110 inputs augments the technical productivity of tions, such as export credit agencies, while mak- agriculture, thus forging mutually beneficial ing existing ones, including public enterprises, links between industry and agriculture. more responsive to cost and market pressures; The promotion of agricultural development in and to mastering the design, production and general, and small farms in particular, will be marketing of new manufactured exports. Some fundamental to the expansion of employment of these nations are particularly well placed to and the alleviation of poverty in most Middle In- supply the growing developing country markets come countries, many of which still have half for machinery and other capital equipment or more of their labor force in agriculture. In with products tried and tested in developing addition, most Middle Income nations need to countries. implement industrial and trade policies that During the next two decades, the main re- promote a rapid expansion of production and sponses to the unprecedented employment chal- employment in industry. Almost all developing lenge in developing countries must come from nations have, to varying degrees, followed im- the design and implementation of appropriate port-substituting policies in their early stages of agricultural and industrial strategies. But if the industrialization. While in many instances poi- dimensions of growth in the labor force are to be icies of tariff protection and import quotas have more manageable in the early years of the undoubtedly assisted the establishment of in- twenty-first century, population policies have a dustrial activities, prolonged recourse to such central role to play. Much has already been ac- measures has all too often hampered the con- complished. Between 1960 and 1977, declines in tinued expansion of industrial production and crude birth rates of more than 30 percent oc- employment. By and large, countries that have curred in a number of East Asian countries and shifted their industrial policies, to reward ex- a few others. Smaller but significant decreases ports with incentives comparable to those for have been observed in other nations, including domestic sales, have achieved faster growth in two of the largest Low Income ones, India and industrial production and employment than Indonesia. While the decline in birth rates is those whose policies have remained inward partly due to general improvements in economic looking. Countries in the latter group stand to and social conditions, a significant role has been benefit from the implementation of policies that played by family planning programs begun dur- give greater inducements to manufactured ex- ing the 1960s. This lends additional force to the ports. As these exports tend to be more labor argument for encouraging more active popula- intensive than industrial import substitutes, em- tion policies in those countries, notably in parts ployment is likely to grow faster. In addition, of Latin America and Sub-Saharan Africa, the increase in industrial efficiency aild output where population growth rates remain in the normally associated with more outward-looking neighborhood of 3 percent a year and little at- policies should facilitate a more rapid expansion tempt has yet been made to curb them. The need of the national capital stock, and hence further for action is particularly acute in Africa, where augment the demand for labor. The gains from a combination of factors is expected to hold an open industrial policy depend crucially on back the growth of aggregate income to rela- the international environment for trade: the tively modest levels. more liberal this environment, the greater are While the rapid expansion of productive em- the likely gains from undertaking the indicated ployment opportunities and slower growth in policy reform, or, for those developing coun- the labor force can be expected to be the princi- tries that have already reduced their policy pal vehicles for alleviating absolute poverty in bias against exports, from maintaining their developing countries, much can be done to raise existing outward-oriented trade and industrial the living standards of the poor through ex- policies. panded provision of appropriately designed low- In some of the semi-industrialized Middle In- cost public services, in the form of education, come countries, as well as in a few Low Income health care, water supply and sanitation. The countries with large and sophisticated industrial opportunities are particularly great in some of sectors, the further growth and deepening of the the richer Middle Income countries where, at industrial structure calls for increased attention present, a disproportionate share of publicly to acquiring, learning and adapting new indus- provided amenities benefits the wealthier seg- trial technologies; to establishing new institu- ments of the population. These countries can 111 afford to channel greater flows of public ex- ous decentralization measures are deployed. penditures to benefit their poor. To the extent Modern industrial and service activities benefit that these increments are used to finance pre- from the economies of agglomeration, and to ventive rather than curative health facilities, the extent that industrialization and structural primary rather than higher education, and public change are a necessary adjunct of economic standpipes rather than costly water connections development, the impetus for urban growth is to houses, the dispersion of benefits among the well-nigh inexorable. The central task facing poor is likely to be greater. national and urban planners is thus to devise and implement policies to encourage the ef- Urbanization: Priorities for Action ficient and equitable growth of cities. Instead of The urban populations of developing coun- bulldozing slums, banning street vendors and tries are growing at explosive rates. Between traditional modes of transport from public 1950 and 1975, urban communities in develop- places, and building high-cost public housing, ing countries had to absorb about 400 million subways and limited-access highways, all of additional inhabitants; in the subsequent 25 which primarily serve the interests of wealthier years, the increment is likely to be close to one residents, urban investment and regulation pol- billion people. The number of very large cities icies should be designed to assist the expan- is also increasing rapidly. In 1950, these coun- sion of those forms of transportation, housing, tries had only one city larger than 5 million peo- sanitation and other services which meet the ple. By the year 2000, some 40 cities are likely to needs of the majority of the urban population, be at or above this size, while about 18 are ex- including the poor, at low cost. pected to hold more than 10 million inhabitants. Where past urban transport investments have This pace of urban growth is posing unprece- served mainly to increase the road capacity for dented challenges for national and municipal the growing swarms of private automobiles, the policy makers. priorities need to be shifted in favor of expand- To some extent, the rate and pattern of ur- ing bus fleets and routes, making traditional banization can be influenced through policy forms of transportincluding bicycles and measures. The main determinants of urbaniza- walkingeasier, and constructing low-cost ac- tion and spatial concentration are the pace and cess routes for buses and service vehicles in structure of economic development and the poor neighborhoods. Better roads for these areas rate of natural population growth. Policies that often bring far-reaching benefits to residents, accelerate broadly based agricultural develop- since the provision and maintenance of other ment and improve living conditions in rural urban services, such as water, electricity, sewer- areas can be expected to slow the migration to age, waste collection, and police and fire protec- towns and cities. In the long run, measures that tion, frequently depend on road accessibility. reduce the natural rate of population growth The past response to urban housing needs has will slow the growth of urban populations, both too often been limited to the construction of a directly, and indirectly, through lessening the few costly public housing schemes, which are of demographic pressures on rural resources and little consequence in relation to requirements. incomes and hence helping to reduce migration A more appropriate public policy would focus to towns. In most developing countries, a wide on eliminating impediments to private initiative array of current policies reinforces the concen- and providing those elements of housing supply tration of economic activity in existing large sites, low-cost water, sanitation and other cities, especially national capitals. The elimina- services, security of tenure and construction tion of large-city biases in government policies loanswhich the private sector is least able to with respect to public investment, foreign trade supply. Similar shifts in favor of low-cost, repli- and exchange controls, and transport and energy cable delivery systems may be necessary if edu- pricing could help to achieve a more balanced cation and health services are to reach the pattern of urban growth. This could be further majority of urban dwellers. Both the scale of the aided by positive measures to encourage the urban resource management problem and the growth of medium-sized cities. need for fresh initiatives and policy directions The cities in developing countries will con- require concerted efforts: to delineate the re- tinue to grow even if national policy biases sponsibilities and functions of urban authorities favoring urbanization are eliminated and vigor- clearly; to ensure that these authorities coordi- 112 nate their activities effectively within a given may enjoy the benefits of cheap imports, fast city or town; to upgrade their planning and growing, skill-intensive export industries, technical capacities; and to improve the coordi- healthy growth of international capital flows, nation between urban and national authorities and other benefits that stem from more liberal for finance, planning and other relevant trade. functions. Industrialized nations need to undertake spe- cial efforts to curb protection and ease market Improving the International Environment for access for imports from developing countries. Development Not only is this essential for accelerating growth The progress developing countries can make and employment generation in developing coun- in increasing production, expanding employ- tries; it is also in the long-term interest of the ment and reducing poverty will partly depend industrialized nations, which stand to gain from on the international climate for trade and capital cheap imports and the rapid expansion of major flows. The impressive advances made by many markets for their exports. In 1976, developing of these countries in the 25 years afterWoridWar countries purchased 28 percent of the total mer- II were greatly assisted by the unprecedented chandise exports of industrialized nations and expansion in world output, trade and capital 31 percent of their manufactured exports. flows that took place during this era. The slow- Developing countries, for their part, need to down in the growth of world production and resist the temptation to adopt inward-looking trade since the early 1970s has raised the central trade policies, or to delay a transition to more issue of this decade: is the retardation simply a export-oriented policy regimes, in response to temporary setback resulting from the coincid- current difficulties in the international trading ence of adverse events, or does it presage a pro- environment. Despite recent protectionist ten- longed period of slow growth and unsettled in- dencies, important export opportunities exist ternational economic conditions? This report for countries that are willing to risk investing takes the view that the health of the world in export industries. The more advanced devel- economy is less a product of inexorable histor- oping countries can strengthen the basis for ical processes and more the result of policy more liberal trade if they are willing progres- choices and actions in key industrialized and de- sively to surrender their present privileges and veloping nations of the world. The boom in immunities from international trading rules, and world output and trade during the 1960s and if they participate more actively in future multi- early 1970s was, in large measure, the result of lateral trade negotiations and agreements. deliberate and successful international efforts Where this involves a substantial reduction in to reduce restrictions on international trade. trade protection, a transition to more liberal Similar rewards could accrue from reversal of policies may be aided by guarantees of im- the recent surge in protectionist actions and proved market access and the provision of addi- from a more determined pursuit of growth in key tional medium-term capital flows from official nations. Conversely, the continuation of the sources, to ease the foreseeable strains on the recent disappointing trends in world trade and balance of payments. production would retard growth in developing More buoyant economic conditions in indus- countries, and jeopardize any reduction in the trialized countries should also facilitate the number of people condemned to live in absolute necessary expansion of Official Development poverty. Assistance. Net disbursements of ODA from Trade liberalization and output growth are members of the Development Assistance Com- mutually reinforcing processes. Containing and mittee of OECD are estimated to have amounted reversing protectionist tendencies and reaping to only 0.32 percent of donors' GNP in 1978 the benefits of the Tokyo Round multilateral far short of the international target of 0.7 per- trade agreements would be greatly aided by the cent of GNP endorsed by the Uflited Nations restoration of higher growth in the industrial- General Assembly in 1970. Only Denmark, ized countries. In addition, these nations can France, the Netherlands, Norway and Sweden undertake an array of small, but cumulatively had exceeded or were close to that proportion significant, policy initiatives to reduce the costs by 1977, while net ODA from the three largest to groups adversely affected by international economies, the Federal Republic of Germany, competition and imports, so that society at large Japan and the United States, remained signifi- 113 cantly under half the 0.7 percent target. The term prospects and needs of the debtor coun- expansion of concessional resource transfers is tries concerned, so that the need for recurrent particularly important to the Low Income coun- debt rescheduling exercises is reduced. tries, which rely on these sources for about 70 As recent events have shown, the balance in percent of their net inflows of medium- and the world demand and supply of energy still long-term capital. Relatively small percentage hinges on what happens in a few key oil export- increases in real ODA flows could, if directed ing countries. In these circumstances, disrup- toward the Low Income countries and the tions in the supply of oil, accompanied by poorer Middle Income nations, have a substan- temporary increases in its real price, can be tial impact on absolute poverty. precipitated by events in a single country. How- Over two-thirds of the net disbursements of ever, if prolonged production setbacks in key medium- and long-term capital to Middle In- countries can be avoided, if strong conservation come countries comes from private sources, measures are pursued in major consuming na- predominantly commercial banks. Though the tions, and if sustained efforts are made to find international private capital market has been and develop new energy resources, then the remarkably responsive and flexible in meeting increases in the real price of internationally the capital requirements of these countries, re- traded energy need not be large. cent experience and projections for the next Viewed in a longer perspective, the next two decade give some causes for concern. First, the decades may be seen as a critical transitional relatively short maturity structure of private period during which the world has to adjust to commercial loans, and the attendant need for higher energy prices and increasing use of more frequent refinancing, lead to high stocks of out- costly energy substitutes for oil. While different standing debt and increase the fragility of the groups of countries face different sets of prob- structure of capital flows. Recent measures to lems in accomplishing this transition, all share increase the resources of the International Mon- a strong interest in assuring that the transition is etary Fund, and proposals being considered to a smooth one. In the industrialized countries, increase the capital base of the World Bank and the main transitional tasks lie in the conserva- other international institutions, will strengthen tion of demand, improving the safety of nuclear the international financial system. Nonetheless, power, the pricing of domestic energy supplies there remains considerable scope for renewed and the development of synthetic fuels. The efforts and fresh initiatives to expand the flow principal concerns of the major oil exporting of official medium-term capital to developing nations include the determination of how rap- countries, to assist them in adjusting to major idly to exploit their non-renewable resource, shifts in the international economic arena and and the design of a long-term development strat- in undertaking desirable but risky reforms of egy that will ease the transition to a post-oil their trade and industrial policies. future. For other developing countries, the main Second, though the projections do not point priorities are to explore and develop domestic to a general debt problem for developing coun- commercial energy potential, to increase the effi- tries, from time to time individual countries may ciency of non-commercial and non-conventional experience liquidity crises, like those in recent energy sources, and to adjust to higher energy years in Peru, Turkey and Zaire. To the extent prices. If the maintenance of equilibrium in the that international initiatives succeed in improv- global energy market requires real price in- ing the maturity structure of aggregate capital creases over the next two decades, it would be flows and debt, such liquidity strains will occur advantageous for all to have gradual and pre- more rarely. Liberalization and expansion of dictable oil price increases rather than sharp international compensatory financing facilities unforeseen changes. This would facilitate in- would help to allay the liquidity strains that can vestment planning in alternative energy sources be caused by unforeseen shortfalls in export and permit oil importing countries to adjust earnings. Improvements are also desirable in their economies gradually; in the weaker and methods to deal with liquidity crises when they worst affected of the non-oil developing coun- occur. In particular, the existing procedures for tries, such adjustments would require increased multilateral renegotiations of official debt under balance of payments support. For their part, the the auspices of the Paris Club could benefit from oil exporting nations stand to gain from the more systematic consideration of the medium- orderly evolution of world output, trade and 114 capital flows that is more likely to be associated the efficiency of energy use from traditional with a smooth transition. sources. Developing countries face major challenges As the decade of the 1970s approaches its end, in developing their very substantial unexploited the interdependence in the world economy is resources of commercial energy. Most of these becoming increasingly apparent. International countries need to increase investment and aug- trade, capital flows and energy developments ment their technical, planning and management are some of the strands in the web of economic systems in the energy sector. International sup- ties and mutual interests that link nations to- port with finance and technical expertise, such gether. A break in one strand jeopardizes others: as the World Bank's recent initiative to support for instance, increased protectionism toward oil production, can greatly aid this effort. De- their exports reduces the debt servicing capacity veloping nations also need to direct greater of developing nations, and weakens the global attention to their use of non-commercial energy financial system. In a fundamental sense, inter- sources. About half of the energy produced in dependence goes deeper than shared economic oil importing developing countries comes from interests. All nations stand to gain from further- traditional fuels, such as firewood, charcoal, and ing a course of development that will lift the animal and crop residues. In many parts of the blight of absolute poverty from this planet and world, where unchecked reliance on such provide meaningful jobs and security to its in- sources has led to grave ecological problems of habitants. The international community faces deforestation and desertification, there is an the challenge of undertaking informed policy urgent need for well designed afforestation pro- initiatives to realize the underlying mutual inter- grams. At the same time, development and dis- ests of nations and to protect those interests semination of improved cooking stoves, biogas from ill advised actions in pursuit of ephem- plants and charcoal kilns could greatly improve eral gains. 115 Annex World Development Indicators Index of Countries Reference Reference Reference N urn be ra N urn bera N urn bera Afghanistan 20 Guinea 26 Panama 76 Albania 115 Haiti 27 Papua New Guinea 51 Algeria 69 Honduras 42 Paraguay 59 Angola 35 Hong Kong 87 Peru 65 Argentina 82 Hungary 121 Philippines 48 Australia 102 India 16 Poland 123 Austria 98 Indonesia 36 Portugal 83 Bangladesh 3 Iran 85 Rhodesia 52 Belgium 103 Iraq 81 Romania 119 Ben in 24 Ireland 93 Rwanda 11 Bhutan Israel 90 Saudi Arabia 111 Bolivia 55 Italy 94 Senegal 46 Brazil 79 Ivory Coast 56 Sierra Leone 22 Bulgaria 120 Jamaica 72 Singapore 91 Burma 14 Japan 97 Somalia 8 Burundi 9 Jordan 57 South Africa 78 Cambodia 2 Kenya 31 Spain 92 Cameroon 39 Korea, Republic of 62 Sri Lanka 25 Canada 106 Korea, Democratic Republic of 116 Sudan 34 Central African Empire 30 Kuwait 113 Sweden 109 Chad 10 Lao People's Democratic Switzerland 110 Chile 74 Republic 4 Syrian Arab Republic 67 China, People's Republic of 114 Lebanon 73 Tanzania 23 China, Republic of 75 Lesotho 28 Thailand 45 Colombia 58 Liberia 43 Togo 37 Congo, People's Republic Libya 112 Trinidad and Tobago 86 of the 50 Madagascar 29 Tunisia 66 Costa Rica 77 Malawi 15 Turkey 70 Cuba 118 Malaysia 68 Uganda 33 Czechoslovakia 124 Mali 6 United Kingdom 96 Denmark 104 Mauritania 32 United States 107 Dominican Republic 64 Mexico 71 Upper Volta 12 Ecuador 60 Mongolia 117 Uruguay 80 Egypt, Arab Republic of 38 Morocco 54 Union of Soviet Socialist El Salvador 53 Mozambique 17 Republics 122 Ethiopia 5 Nepal 7 Venezuela 88 Finland 99 Netherlands 100 Viet Nam, Socialist Republic of 19 France 101 New Zealand 95 Yemen Arab Republic 47 German Democratic Republic 125 Nicaragua 63 Yemen, People's Democratic Germany, Federal Republic of 105 Niger 18 Republic of 40 Ghana 41 Nigeria 44 Yugoslavia 84 Greece 89 Norway 108 Zaire 13 Guatemala 61 Pakistan 21 Zambia 49 a In the tables, countries will be listed within their group in ascending order of income per capita. The reference numbers indicate that order. 118 World Development Indicators Contents Page Introduction 123 Key to Tables 125 Table 1: Basic Indicators 126 Population, Mid-1977 Area Gross National Product Per Capita, 1977 Growth of Gross National Product Per Capita, 1960-77 Average Annual Rate of Inflation, 1960-70 and 1970-77 Adult Literacy Rate, 1975 Life Expectancy at Birth, 1977 Index of Per Capita Food Production, Average 1975-77 Table 2: Growth of Production 128 Growth of Gross Domestic Product, 1960-70 and 1970-77 Growth of Agriculture, 1960-70 and 1970-77 Growth of Industry, 1960-70 and 1970-77 Growth of Manufacturing, 1960-70 and 1970-77 Growth of Services, 1960-70 and 1970-77 Table 3: Structure of Production 130 Agriculture as a Percentage of Gross Domestic Product, 1960 and 1977 Industry as a Percentage of Gross Domestic Product, 1960 and 1977 Manufacturing as a Percentage of Gross Domestic Product, 1960 and 1977 Services as a Percentage of Gross Domestic Product, 1960 and 1977 Table 4: Growth of Selected Demand Aggregates 132 Growth of Public Consumption, 1960-70 and 1970-77 Growth of Private Consumption, 1960-70 and 1970-77 Growth of Gross Domestic Investment, 1960-70 and 1970-77 Table 5: Structure of Demand 134 Public Consumption as a Percentage of Gross Domestic Product, 1960 and 1977 Private Consumption as a Percentage of Gross Domestic Product, 1960 and 1977 Gross Domestic Investment as a Percentage of Gross Domestic Product, 1960 and 1977 Gross Domestic Savings as a Percentage of Gross Domestic Product, 1960 and 1977 Exports of Goods and Non-Factor Services as a Percentage of Gross Domestic Product, 1960 and 1977 Resource Balance as a Percentage of Gross Domestic Product, 1960 and 1977 Table 6: Industrialization 136 Percentage of Value Added in Food and Agriculture, 1975 Percentage of Value Added in Textiles and Clothing, 1975 Percentage of Value Added in Machinery and Transport Equipment, 1975 Percentage of Value Added in Chemicals, 1975 Percentage of Value Added in Other Manufacturing, 1975 Value Added in Manufacturing, 1970 and 1975 Gross Manufacturing Output Per Capita, 1970 and 1976 119 Page Table 7: Energy 138 Growth of Energy Production, 1960-74 and 1974-76 Growth of Energy Consumption, 1960-74 and 1974-76 Per Capita Energy Consumption, 1960 and 1976 Energy Consumption Per Dollar of Gross Domestic Product, 1960 and 1976 Energy Imports as a Percentage of Merchandise Export Earnings, 1960 and 1976 Table 8: Growth of Merchandise Trade 140 Export Values, 1977 Import Values, 1977 Growth of Exports, 1960-70 and 19 70-77 Growth of Imports, 1960-70 and 1970-77 Terms of Trade, 1960 and 1977 Table 9: Structure of Merchandise Exports 142 Fuels, Minerals and Metals Exports as a Percentage of Merchandise Exports, 1960 and 1976 Other Primary Commodity Exports as a Percentage of Merchandise Exports, 1960 and 1976 Textiles and Clothing Exports as a Percentage of Merchandise Exports, 1960 and 1976 Machinery and Transport Equipment Exports as a Percentage of Merchandise Exports, 1960 and 1976 Other Manufactures as a Percentage of Merchandise Exports, 1960 and 1976 Table 10: Structure of Merchandise Imports 144 Food Imports as a Percentage of Merchandise Imports, 1960 and 1976 Fuel Imports as a Percentage of Merchandise Imports, 1960 and 1976 Other Primary Commodity Imports as a Percentage of Merchandise Imports, 1960 and 1976 Machinery and Transport Equipment Imports as a Percentage of Merchandise Imports, 1960 and 1976 Other Manufactures as a Percentage of Merchandise Imports, 1960 and 1976 Table 11: Destination of Merchandise Exports 146 Percentage of Merchandise Exports to Developed Countries, 1960 and 1977 Percentage of Merchandise Exports to Developing Countries, 1960 and 1977 Percentage of Merchandise Exports to Centrally Planned Economies, 1960 and 1977 Percentage of Merchandise Exports to Capital Surplus Oil Exporters, 1960 and 1977 Table 12: Trade in Manufactured Goods 148 Percentage of Manufactured Exports to Developed Countries, 1963 and 1976 Percentage of Manufactured Exports to Developing Countries, 1963 and 1976 Percentage of Manufactured Exports to Centrally Planned Economies, 1963 and 1976 Percentage of Manufactured Exports to Capital Surplus Oil Exporters, 1963 and 1976 Manufactured Export Values, 1963 and 1976 Table 13: Balance of Payments and Debt Service Ratios 150 Current Account Balance Before Interest Payments on External Public Debt, 1970 and 1977 Interest Payments on External Public Debt, 1970 and 1977 Debt Service as a Percentage of Gross National Product, 1970 and 1977 Debt Service as a Percentage of Exports of Goods and Services, 1970 and 1977 Table 14: Flows of External Capital 152 Gross Inflow of Public Medium- and Long-term Loans, 1970 and 1977 Repayment of Principal on External Public Debt, 1970 and 1977 Net Inflow of Public Medium- and Long-term Loans, 1970 and 1977 Net Inflow of Direct Private Investment, 1970 and 1977 Table 15: External Public Debt and International Reserves 154 External Public Debt Outstanding and Disbursed, 1970 and 1977 External Public Debt Outstanding and Disbursed as a Percentage of Gross National Product, 1970 and 1977 Gross International Reserves, 1970 and 1977 Gross International Reserves Measured in Months of Import Coverage, 1977 120 Page Table 16: Net Flows of Official Development Assistance from Members of the OECD and OPEC 156 Official Development Assistance Measured in US Dollars, 1960-77, and Estimated, 1978-81 Official Development Assistance from OECD Measured in National Currencies, 1960-77 and Estimated, 1978-79 Official Development Assistance as a Percentage of Donors' Gross National Product, 1960-77, and Estimated, 1978-81 Table 17: Historical and Projected Population Growth, and Hypothetical Stationary Population 158 Population, Mid-1977 Growth of Population, 1960-70 and 1970-77 Projected Population in Year 2000 Hypothetical Size of Stationary Population Table 18: Demographic and Fertility-Related Indicators 160 Crude Birth Rate, 1960 and 1977 Crude Death Rate, 1960 and 1977 Percentage Change in Crude Birth Rate, 1960-77 Percentage Change in Crude Death Rate, 1960-77 Total Fertility Rate, 1977 Percentage of Women in the Reproductive Age Group, 1977 Percentage of Married Women Using Contraceptives, 1970 and 1977 Table 19: Labor Force 162 Percentage of Population of Working Age, 1960 and 1977 Percentage of Labor Force in Agriculture, 1960 and 1977 Percentage of Labor Force in Industry, 1960 and 1977 Percentage of Labor Force in Services, 1960 and 1977 Growth of Labor Force, 1960-70, 1970-77, and Projected, 1977-2000 Table 20: Urbanization 164 Urban Population as a Percentage of Total Population, 1960 and 1975 Growth of Urban Population, 1960-70 and 1970-75 Percentage of Urban Population in Largest City, 1960 and 1975 Percentage of Urban Population in Cities of Over 500,000 People, 1960 and 1975 Number of Cities of Over 500,000 People, 1960 and 1975 Table 21: Indicators Relating to Life Expectancy 166 Life Expectancy at Birth, 1960 and 1977 Infant Mortality Rate, 1960 and 1977 Child Death Rate, 1960 and 1977 Table 22: Health-Related Indicators 168 Population Per Physician, 1960 and 1976 Population Per Nursing Person, 1960 and 1976 Percentage of Population with Access to Safe Water, 1975 Daily Per Capita Calorie Supply, 1974 Daily Per Capita Calorie Supply as a Percentage of Requirement, 1974 Table 23: Education 170 Numbers Enrolled in Primary School as a Percentage of Age Group (Total, Male, and Female), 1960 and 1976 Numbers Enrolled in Secondary School as a Percentage of Age Group, 1960 and 1976 Numbers Enrolled in Higher Education as a Percentage of Population Aged 20-24, 1960 and 1975 Adult Literacy Rate, 1960 and 1975 Table 24: Income Distribution 172 Percentage Shares of Household Income, By Percentile Groups of Households Technical Notes 175 Bibliography of Data Sources 187 121 Introduction World Development Indicators is designed to measures, both among indicators and among provide information of general relevance about country groups. the main features of economic and social devel- The Technical Notes at the end of the volume opment. The present volume largely follows the should be referred to in any use of the data. format of the 1978 edition. However, it takes These notes outline the concepts, definitions, account of comments received after the publica- methods, and data sources used. The Bibliog- tion of that edition, and includes six new tables, raphy gives details of the data sources. Although as well as additional information on trade flows. the statistics presented are drawn from sources The data fall into the following broad areas: na- generally considered the most authoritative and tional accounts, industrialization, energy, ex- reliable, some of them, particularly those de- ternal accounts and aid flows, demography and scribing social features, may be subject to con- the labor force, urbanization, social indicators, siderable margins of error. Users are urged to and income distribution. The indicators in Table exercise care in comparing indicators across 1 give a summary profile of countries. Informa- countries. Though the data presented are useful tion has been drawn from the data files and pub- to indicate trends, and characterize certain ma- lications of various international agencies, in- jor differences among countries, variations in cluding the World Bank's data bank. For ease of national practices mean that the data in certain reference, ratios and rates of growth are shown; instances may not be completely comparable. absolute values are reported only in a few in- The data on income distribution in Table 24 must stances. be treated with extreme caution, for reasons de- The country groups used in the tables are: tailed in the Technical Notes. In most countries Low Income developing countries, with per the collection of such data has not been sys- capita income of US$300 and below in 1977; tematically organized and integrated into the Middle Income developing countries, with per official statistical system for reporting national capita income above that level; Industrialized accounts. countries; Capital Surplus Oil Exporting coun- The present volume incorporates a number of tries; and Centrally Planned Economies. Within important revisions to indicators shown in last each group countries are listed in order of their year's handbook. These result from revisions per capita income in 1977, starting with the made to many of the main data sources during poorest. The alphabetical index on the page the past year. They affect the data in four main preceding the Table of Contents shows the ref- areas: national accounts, reflecting the revisions erence number of each country which is used in made to the historical series of many member all tables. Countries with populations less than countries by national statistical offices; the 1 million are not reported upon in the tables, growth of trade, reflecting revisions by UNCTAIJ largely for lack of comprehensive data. Key in- to the underlying data; population and associ- dicators for 29 small countries that are members ated indicators, reflecting the new, provisional, of the United Nations and/or the World Bank assessments by the UN Population Division in are shown in the Technical Notes to Table 1. early 1979; and social indicators, reflecting re- Summary measures - averages and median visions made by WHO and Unesco in the light of valueshave been calculated for the country new data supplied by the reporting countries. groups where appropriate. Since the coverage of While this volume is not designed as an ex- countries is not uniform for all the indicators, haustive statistical compendium, it is hoped that and since the variation around the central ten- policymakers will find it a useful source for dencies is generally very large, users should ex- ready reference. It is intended to update the ercise due caution in comparing the summary handbook annually. 123 Key to Tables Figures in the brown bands are summary statistics for each group of countries. The methodology used for them is given in the Technical Notes. w weighted average 9 = group average m = median value Not available. (.) Less than half the unit shown. All growth rates are shown in real terms. Italics: Figures in italics refer to years other than those specified, as explained in the footnotes to the tables in question. 125 Table 1: Basic Indicators Popula- Area GNP Per Capita Average Annual Adult Life Ex- Index of Per tion Average Rate of Inflation Literacy pectancy Capita Food (thousand Annual Ratec at Birth Production, square Growth 1969-71 kilo- (US (per- = 100 (millions) meters) dollars) cent) (percent) (percent) Mid-1977 1977 1960-77 1g6070a 1970-77b 1975 1977 Av. 1975-77 Low Income Countries (w) 170 1.4 36 50 98 1 Bhutan 1.2 47 80 -0.2 .. 41 99 2 Cambodia 8.4 181 .. .. 3.8 .. . 48 59 3 Bangladesh 81.2 144 90 -0.4 3.7 17.4 22 47 96 4 Lao PDR 3.2 23] 90 .. .. .. .. 42 98 5 Ethiopia 30.2 1,222 110 1.7 2.1 3.3 10 39 85 6 Mali 6.1 1,240 110 1.0 5.0 7.6 10 42 91 7 Nepal 13.3 141 110 0.2 8.5 7.7 19 45 95 8 Somalia 3.7 638 110 -0.4 4.5 10.2 50 43 88 9 Burundi 4.2 28 130 2.2 2.8 9.9 10 45 99 10 Chad 4.2 1,284 130 -1.0 4.6 6.6 15 43 83 11 Rwanda 4.4 26 130 1.0 13,1 13.0 23 46 103 12 Upper Volta 5.5 274 130 0.6 1.3 6.1 5 42 94 13 Zaire 25.7 2,345 130 1.1 29.9 22.4 .. 46 96 14 Burma 31.5 677 140 0.9 2.7 15.0 67 52 95 15 Malawi 5.6 118 140 3.0 2.4 9.2 25 46 101 16 India 631.7 3,288 150 1.3 6.9 8.9 36 51 99 17 Mozambique 9.7 783 150 0.9 2.8 8.8 .. 46 85 18 Niger 4.9 1,267 160 -1.4 2.3 5.5 8 42 79 19 Viet Nam 50.6 330 160 .. .. .. 87 62 100 20 Afghanistan 14.3 64] 190 0.2 11.9 4.1 12 42 102 21 Pakistan 74.9 804 190 3.0 3.3 15.2 21 51 101 22 Sierra Leone 3.2 72 190 1.3 2.9 9.8 15 46 96 23 Tanzania 16.4 945 190 2.6 1.8 12.0 66 51 93 24 Benin 3.2 113 200 0.2 1.9 8.5 11 46 92 25 Sri Lanka 14.1 66 200 2.0 1.8 11.8 69 113 26 Guinea 5.0 246 220 1.3 1.7 4.9 .. 44 86 27 Haiti 4.7 28 230 0.1 4.1 13.3 23 51 96 28 Lesotho 1.3 30 240 5.8 2.5 11.1 40 50 97 29 Madagascar 8.1 587 240 -0.2 3.2 10.1 50 46 95 30 Central African Emp. 1.9 623 250 0.2 4.2 8.3 .. 46 103 31 Kenya 14.6 583 270 2.5 1.5 12.4 40 53 89 32 Mauritania 1.5 1,031 270 3.6 0.8 10.8 17 42 70 33 Uganda 12.0 236 270 0.7 3.0 18.4 .. 53 93 34 Sudan 16.9 2,506 290 0.1 3.7 4.0 20 46 106 35 Angola 6.6 1,24] 300 2.3 3.3 22.1 .. 41 89 36 Indonesia 133.5 2,027 300 3.3 .. 22.0 62 48 104 37 Togo 2.4 56 300 3.8 1.] 8.6 16 46 62 Middle Income Countries (w) 1,140 3.6 69 60 105 38 Egypt 37.8 1,001 320 2.1 3.5 7.0 44 54 97 39 Cameroon 7.9 475 340 2.9 3.7 9.8 .. 46 101 40 Yemen, PDR 1.] 333 340 -4.8 .. .. 27 4] 107 41 Ghana 10.6 239 380 -0.3 7.6 30.9 30 48 85 42 Honduras 3.3 112 410 1.5 3.0 6.5 57 57 80 43 Liberia 1.7 111 420 1,8 1.9 9.7 48 108 44 Nigeria 79.0 924 420 3.6 2.6 15.2 .. 48 92 45 Thailand 43.8 514 420 4.5 1.9 9.3 82 61 110 46 Senegal 5.2 196 430 -0.3 1.6 12.1 10 42 104 47 Yemen Arab Rep. 5.0 195 430 .. .. 16.0 13 47 100 48 Philippines 44.5 300 450 2.5 5.8 14.3 87 60 112 49 Zambia 5.1 753 450 1.5 7.6 4.3 39 48 108 50 Congo, People's Rep. 1.4 342 490 1.1 5.4 10.3 50 46 99 51 Papua New Guinea 2.9 462 490 3.4 3.6 7.2 32 48 103 52 Rhodesia 6.7 391 500 1.8 1.3 8.2 .. 52 102 53 El Salvador 4.2 21 550 1.8 0.3 9.3 62 63 111 54 Morocco 18.3 44] 550 2.2 2.2 8.9 28 55 78 55 Bolivia 5.2 1,099 630 2.3 3.5 24.3 63 52 113 56 Ivory Coast 7.5 322 690 3.3 2.8 12.3 20 46 116 57 Jordan 2.9 98 710 1.8 1.1 9.6 59 56 71 58 Colombia 24.6 1,139 720 2.7 11.9 21.4 81 62 107 59 Paraguay 2.8 407 730 2.4 3.0 12.8 80 63 104 60 Ecuador 7.3 284 790 3.1 .. 15.2 74 60 100 61 Guatemala 6.4 109 790 2.8 0.1 10.4 46 57 106 62 Korea, Rep. of 36.0 99 820 7.4 16.7 17.4 91 63 113 63 Nicaragua 2.4 130 830 2.5 1.9 11.0 57 55 103 64 Dominican Rep. 5.0 49 840 3.6 2.1 8.6 67 60 92 65 Peru 16.4 1,285 840 2,3 9.9 18.3 72 56 93 66 Tunisia 5.9 164 860 4.3 3.7 7.2 38 57 130 67 Syrian Arab Rep. 7.8 185 910 2.3 1.8 18.5 53 57 146 126 Popula- Area GNP Per Capita Average Annual Adult Life Ex- Index of Per tion Average Rate of Inflation Literacy pectancy Capita Food (thousand Annual Ratec at Birth Production, Growth 1969-71 square kilo- (US (per- = 100 (millions) meters) dollars) cent) (percent) (percent) Mid-1977 1977 1960-77 1g6g7ga 1970_77b 1975 1977 Av. 1975-77 68 Malaysia 13.0 330 930 3.9 -0.3 7.1 60 67 113 69 Algeria 17.0 2,382 1,110 2.1 2.3 13.7 35 56 87 70 Turkey 41.9 781 1,110 4.1 5.5 19.9 60 61 107 71 Mexico 63.3 1,973 1,120 2.8 3.5 16.5 76 65 97 72 Jamaica 2.1 11 1,150 2.1 3.8 15.9 86 70 100 73 Lebanon 2.9 10 .. 1.4 .. 65 87 74 Chile 10.6 757 1,160 1.0 32.9 267.8 88 67 98 75 China, Rep. of 16.8 36 1,170 6.2 4.1 11.0 82 72 76 Panama 1.8 76 1,220 3.5 1.6 8.3 78 70 100 77 Costa Rica 2.1 51 1,240 3.2 1.9 15.6 88 70 113 78 South Africa 27.0 1,221 1,340 2.1 3.1 .. 60 95 79 Brazil 116.1 8,512 1,360 4.9 46.0 28.7 76 62 118 80 Uruguay 2.9 176 1,430 0.8 51.1 68.3 94 71 99 81 Iraq 11.8 435 1,550 3.8 1.7 .. .. 55 78 82 Argentina 26.0 2,767 1,730 2.7 21.8 107.3 93 71 108 83 Portugal 9.6 92 1,890 6.0 3.0 13.9 70 69 95 84 Yugoslavia 21.7 256 1,960 5.6 12.6 16.5 85 69 116 85 Iran 34.8 1,648 2,160 7.9 -0.5 24.3 50 52 109 86 Trinidad and Tobago 1.1 5 2,380 1.6 3.2 22.8 95 70 95 87 Hong Kong 4.5 1 2,590 6.5 2.3 8.0 90 72 60 88 Venezuela 13.5 912 2,660 2.7 1.3 12.2 82 66 97 89 Greece 9.2 132 2,810 6.2 3.2 13.6 .. 73 122 90 Israel 3.6 21 2,850 4.8 6.0 27.5 88 72 114 91 Singapore 2.3 1 2,880 7.5 1.1 7.0 75 70 101 92 Spain 36.3 505 3,190 5.2 6.3 13.9 73 119 Industrialized Countries (w) 6,980 3.4 99 74 106 93 Ireland 3.2 70 2,880 3.1 5.2 14.7 98 73 125 94 Italy 56.5 301 3,440 3.7 4.4 14.0 98 73 101 95 New Zealand 3.1 269 4,380 1.9 3.3 11.0 99 72 107 96 United Kingdom 55.9 244 4,420 2.5 4.1 14.1 99 73 107 97 Japan 113.2 372 5,670 7.7 4.8 9.6 99 76 99 98 Austria 7.5 84 6,130 4.2 3.6 7.6 99 72 106 99 Finland 4.7 337 6,160 4.2 5.6 13.2 100 72 108 100 Netherlands 13.9 41 7,150 3.7 5.3 8.8 99 74 116 101 France 53.1 547 7,290 4.2 4.1 9.3 99 73 104 102 Australia 14.1 7,687 7,340 2.9 3.1 12.8 100 72 115 103 Belgium 9.8 31 7,590 4.0 3.6 8.6 99 72 103 104 Denmark 5.1 43 8,040 3.1 6.0 9.8 99 74 99 105 Germany, Fed. Rep. 61.4 249 8,160 3.3 3.2 5.9 99 72 99 106 Canada 23.3 9,976 8,460 3.6 3.1 9.4 98 74 108 107 United States 220.0 9,363 8,520 2.4 2.8 6.8 99 73 112 108 Norway 4.0 324 8,550 3.9 4.2 8.6 99 75 106 109 Sweden 8.3 450 9,250 2.9 4.3 9.3 99 75 111 110 Switzerland 6.3 41 9970 2.1 4.6 6.6 99 74 107 Capital Surplus Oil Exporters 111 Saudi Arabia 7.6 2,150 6,040 6.7 .. 32.9 .. 48 92 112 Libya 2.6 1,760 6,680 6.6 4.9 25.1 45 55 149 113 Kuwait 1.1 18 12,270 -3.1 0.6 31.3 60 69 Centrally Planned Economies (w) 1,160 3.4 66 110 114 China, People's Rep. 885.6 9,597 390 5.1 .. .. 64 110 115 Albania 2.5 29 630 4,3 .. .. 70 104 116 Korea, Dem. Rep. 16.7 121 670 5.1 .. .. 63 124 117 Mongolia 1.5 1,565 830 0.8 . 63 100 118 Cuba 9.6 115 910 -0.4 .. 96 72 86 119 Romania 21.5 238 1,580 8.5 .. 98 70 135 120 Bulgaria 8.8 111 2,580 4.4 .. .. 72 107 121 Hungary 10.6 93 2,580 2.9 98 70 122 122 USSR 258.9 22,402 3,020 3.7 99 70 106 123 Poland 34.7 313 3,150 4.1 98 71 106 124 Czechoslovakia 15.0 128 3,890 2.6 71 113 125 German Dem. Rep. 16.9 108 4,680 3.2 73 122 a Figures in italics in this column refer to 1961 -1 970 rather than 1960-1970. b Figures in italics in this column refer to 1970-i976 rather than 1970-1977. ' Figures in italics are for years other than 1975. See Technical Notes. 127 Table 2: Growth of Production Average Annual Growth Rates (percent) GDP Agriculture Industry Manufacturing Services 196O7Oa 1970-77b 1 960_70a 1 970-77b 1 96O70a 1 970-77b 1 96O-7O 1 970-77b 1 g6O7Oa 1 970-77b Low Income Countries (w) 3.9 3.2 1 Bhutan .. 0 2 Cambodia 3.8 .. 2.3 .. 6.9 .. 8.1 .. 4.1 3 Bangladesh 3.6 2.3 2.7 1.0 7.9 4.2 6.6 4.1 3.8 4.5 4LaoPDR .. .. .. .. .. .. 5 Ethiopia 4.4 2.5 2.2 0.7 7.4 1.1 8.0 1.7 7.8 5.0 6 Mali 3.3 3.5 -0.8 .. 8.9 5.5 7 Nepal 2.5 2.8 .. 8 Somalia 1.0 1.2 -1.5 .. 3.3 .. 14.3 .. 2.5 9 Burundi 4.5 1.4 1.0 4.3 .. 1.1 10 Chad 0.5 0.8 11 Rwanda 2.7 3.9 .. 12 Upper Volta 3.0 3.3 3.2 7.0 .. 1.8 13 Zaire 3.6 1.9 .. 2.2 .. 1.6 .. 2.4 .. 2.0 14 Burma 2.6 3.7 4.1 3.0 2.8 3.] 3.3 3.8 1.5 4.3 15 Malawi 5.0 6.3 .. 4.3 6.2 .. .. .. 4.6 16 India 3.6 3.0 1.9 4.1 5.5 2.6 4.8 4.1 5.2 (.) 17 Mozambique 4.6 -5.0 2.1 -1.3 9.5 -9.1 6.6 -9.8 6.3 -8.3 18 Niger 2.7 1.8 3.3 -2.7 11.1 9.4 .. 0.6 (,) 19 Viet Nam .. 20 Afghanistan 2.0 4.5 21 Pakistan 6.7 3.6 4.9 1.8 10.0 3.6 9.4 2.2 7.0 5.1 22 Sierra Leone 4.2 1.9 2.3 -3.2 .. .. 5.0 23 Tanzania 6.0 4.5 3.2 2.9 .. 4.6 5.6 24 Benin 2.6 2.0 .. .. .. .. .. 25 Sri Lanka 4.6 3.1 3.0 1.6 6.7 2.8 6.3 1.6 5.0 4.3 26 Guinea 3.2 5.3 2.1 3.2 2.3 10.2 .. .. 6.2 3.9 27 Haiti 0.1 3.8 -0.6 2.4 0.4 8.7 -0.1 7.0 1.6 1.6 28 Lesotho 4.5 5.2 .. .. . 29 Madagascar 2.9 -0.3 .. 0.7 .. (.) -0.4 .. -1.2 30 Central African Emp. 1.2 0.9 0.8 1.9 5.5 4.7 .. 0.1 -1.8 31 Kenya 6.0 6.2 2.9 11.0 .. 11.0 6.5 32 Mauritania .. 2.3 -2.3 2.1 . . 7.6 33 Uganda 5.9 -0.1 .. 1.3 .. 8.0 .. .. -1.7 34 Sudan 1.3 5.0 .. .. .. .. .. 35 Angola 4.8 -10.4 4.0 -11.5 11.0 -3.7 7.2 -12.8 4.2 -12.7 36 Indonesia 3.5 7.7 2.5 4.2 5.0 12.9 3.3 11.3 8.0 4.5 37 Togo 8.5 3.1 Middle Income Countries (w) 6.2 6.1 38 Egypt 4.5 7.9 2.9 3.1 5,4 5.2 4.7 5.7 5.1 11.7 39 Cameroon 4.] 3.4 3.5 .. 5.2 .. 6.6 .. 2.6 40 Yemen, PDR .. 5.1 .. ., 41 Ghana 2.1 0.4 .. -0.] .. 0.8 .. .. .. 1.6 42 Honduras 5.1 3.5 5.7 0.8 5.2 6.0 4.0 5,6 4.5 4.4 43 Liberia 5.1 2.7 .. 6.2 .. 0.3 .. 7.4 .. 4.5 44 Nigeria 3.1 6.2 -0.5 -1.5 13.8 10.3 9.1 13.4 5.6 2.9 45 Thailand 8.2 7.1 5.5 4.4 11.7 10.3 11.0 11.2 8.5 6.8 46 Senegal 2.6 2.8 1.9 5.2 3.7 4.8 4.6 10.2 2.8 1.1 4] Yemen Arab Rep. .. 7.8 .. 6.8 9.8 .. .. 8.5 48 Philippines 5.1 6.4 4.3 4.8 6.0 8.7 6.7 6.8 5.2 5.6 49 Zambia 5.0 2.8 .. 2.1 .. 2.6 3.7 .. 4.1 50 Congo, People's Rep. 2.7 5.6 1.0 0.2 6.9 12.7 1.8 3.4 51 Papua New Guinea 6.5 5.0 52 Rhodesia 4.3 3.3 53 El Salvador 5.9 5.1 3.0 2.8 8.5 6.] 8.8 5.6 5,4 4.9 54 Morocco 4.1 4.8 4.2 0.6 4.2 7.8 4.0 5,7 3,9 5,5 55 Bolivia 5.2 6.0 3.0 4,7 6.2 6.1 5.4 7.1 5.5 6.3 56 Ivory Coast 8.0 6.5 4.2 3.5 11.6 7.9 10.0 7.7 57 Jordan 6.6 7.0 5.0 9,9 6.4 58 Colombia 5.1 6.4 3.5 4.9 6.0 5.9 5,7 7.5 5.7 8.7 59 Paraguay 4.3 7.2 6.1 8.4 6.2 .. 7.4 60 Ecuador 9.2 5.4 13.2 10.2 .. 8.9 61 Guatemala 6.0 4.3 5,7 7.8 7.3 8.2 5.5 3.7 7.1 62 Korea, Rep. of 8.5 10.4 4.5 5.0 17.2 17.0 17.2 19.3 8,4 8.5 63 Nicaragua 7.2 5.8 6.] 5.4 11.0 7.3 11.1 6.3 5.7 5.0 64 Dominican Rep. 4.4 9.1 2.2 3.5 6.2 13.7 5,0 9.4 5,0 8.9 65 Peru 5.4 4.6 1.9 0.6 5.5 5.1 7,2 .. 6.2 5.4 66 Tunisia 4.6 8,4 2.0 6.9 6.7 9.5 12.2 4.2 10.3 67 Syrian Arab Rep. 5.7 7,0 4.4 6.4 5,9 11.1 4.4 7.5 6.3 5.4 128 Average Annual Growth Rates (percent) GDP Agriculture Industry Manufacturing Services 1 g6070a 1970-7Th 1 960_l0 1 970-77b 1 96o_7oa 1 970-llb 1 960_lOa 1 970-77b 1 960_7Q 1 970-77b 68 Malaysia 6.5 7.8 .. 5.4 .. 9.3 12.3 .. 8.6 69 Algeria 4.6 5.3 0.4 0.2 12.9 5.9 7.7 6.9 3.0 5.5 70 Turkey 6.0 7.4 2.4 3.4 9.4 8.9 10.7 .. 7.0 9.5 71 Mexico 7.3 5.0 3.9 1.1 9.3 6.2 9.4 6.0 7.1 5.0 72 Jamaica 4.6 (.) 1.5 1.2 5.6 -2.0 5.6 0.6 4.8 1.5 73 Lebanon 4.9 .. 6.3 .. 4.5 .. 5.0 .. 4.8 74 Chile 4.5 0.1 2.5 2.2 5.0 -1.5 5.5 -3.6 4.5 0.9 75 China, Rep. of 9.2 7.7 3.4 1.5 16.4 12.2 17.3 12.5 7.8 4.5 76 Panama 7.8 3.5 5.7 10.1 10.5 7.6 77 Costa Rica 6.5 5.7 78 South Africa 5.9 79 Brazil 5.3 98 58 107 99 80 Uruguay 1.2 1.6 1.9 0.2 1.1 2.9 1.5 2.7 1.0 1.2 81 Iraq 6.2 10.8 5.7 -1.5 4.7 12.2 5.9 11.5 8.3 13.5 82 Argentina 4.2 2.9 2.3 2.7 6.0 2.8 5.7 3.0 3.3 3.0 83 Portugal 6.2 5.3 1.3 -0.9 8.8 4.8 8.9 5.0 5.9 3.8 84 Yugoslavia 5.8 7.1 3.3 5,5 6.3 9.2 5.7 6.9 5.4 85 Iran 11.3 7.8 4.4 5.8 13.4 3.4 12.0 16.7 10.0 16.8 86 Trinidad and Tobago 3.9 3.4 -0.1 2.8 -1.1 4.0 87 Hong Kong 10.0 8.2 -0.2 6.8 6.3 9.6 88 Venezuela 5.9 5.7 5.7 3.7 4.5 3.0 6.2 6.8 7.2 7.9 89 Greece 6.9 5.0 3.5 2.2 9.4 5.1 10.2 7.0 7.1 5,9 90 Israel 8.2 5.9 .. 6.6 .. 5.3 .. 6.1 .. 5.4 91 Singapore 8.8 8.6 5.0 1.6 12.6 8.6 13.0 9.0 7.7 9.5 92 Spain 7.3 4.8 2.5 1.9 9.4 4.9 9.7 7.2 4.9 Industrialized Countries (w) 5.1 3.1 93 Ireland 4.2 3.4 0.9 .. 6.1 .. .. .. 4.3 94 Italy 5.3 2.9 2.8 1.8 6.2 2.6 7.2 3.4 5.1 3.7 95 New Zealand 3.9 2.0 ,. ,, ,. ,. ,. .. - 96 United Kingdom 2.9 1.5 2.3 0.1 3.1 0.5 3.4 0.7 2.7 2.3 97 Japan 10.5 5.3 4.0 3.0 10.9 5.7 11.0 5.7 11.7 5.3 98 Austria 4.5 4.0 1.2 1.9 4.9 3.6 4.8 3.6 4.4 4.6 99 Finland 4.6 3.4 0.6 -2.0 6.3 3.6 6.2 3.3 5.3 4.7 100 Netherlands 5.5 3.1 2.9 3.3 6.8 3.0 6.6 3.6 5.1 3.3 101 France 5.7 3.8 1.8 -0.4 6.4 4.2 6.6 4.1 5.7 4.4 102 Australia 4.1 3.8 2.7 1.3 4.6 3.9 5.6 3.9 4.0 3.9 103 Belgium 4.8 3.7 -0.5 -0.5 6.0 4.0 6.2 3.8 4.6 3.1 104 Denmark 4.7 2.8 0.2 .. 5.5 .. 5.4 .. 4.9 105 Germany, Fed. Rep. 4.4 2.4 1.5 1.4 5.2 2.1 5.4 2.0 4.2 3.3 106 Canada 5.6 4.7 2.5 1.3 6.8 3.8 6.7 3.7 5.5 5.3 107 United States 4.3 2.8 0.3 0.7 5.2 2.3 5.3 2.4 4.2 3.3 108 Norway 4.9 4.8 0.1 2.4 5.5 5.0 5.3 2.5 5.0 5.0 109 Sweden 4.4 2.0 0.6 -0.9 6.2 1.6 6.2 1.4 3.9 2.7 110 Switzerland 4.3 0.2 Capital Surplus Oil Exporters 111 Saudi Arabia 12.9 3.7 13.9 4.1 12.1 112 Libya 24.8 -0.3 14.0 -4.0 15.3 13.6 113 Kuwait 5,7 -1.3 Centrally Planned Economies (w) 5.2 4.6 114 China, People's Rep. 6.6 5.8 115 Albania 7.3 5.8 116 Korea, Dem. Rep. 7.8 8.9 117 Mongolia 2.8 3,7 118 Cuba 1,1 2.9 119 Romania 9.0 10.9 120 Bulgaria 5.9 4.3 121 Hungary 3.8 3.1 122 USSR 5.2 4.0 123 Poland 4.3 6.0 124 Czechoslovakia 3.1 3.1 125 German Dem. Rep. 3.1 3.4 a Figures in italics in these columns refer to 1961-1970 rather than 1960-1970. b Figures in italics in these columns refer to 1970-1 976 rather than 1970-1 977. 129 Table 3: Structure of Production Distribution of Gross Domestic Product (percent) Agriculture Industry (Manufacturing)a Services 1960b 19ll 1960b 19ll (1960b 1977C) 1960b 1977 Low Income Countries (w) 50 37 17 25 11 13 33 38 1 Bhutan 2 Cambodia .. 3 Bangladesh 61 55 8 13 6 7 31 32 4 Lao PDR 63 -. 13 3 24 5 Ethiopia 65 52 12 15 6 10 23 33 6 Mali 55 38 10 17 5 11 35 45 7NepaI 68 9 23 8 Somalia 45 17 2 38 9 Burundi 64 14 .. 10 22 10 Chad 55 52 12 14 5 10 33 34 11 Rwanda 81 7 1 12 12 Upper Volta 55 37 13 14 8 32 49 13 Zaire 30 25 27 25 13 8 43 50 14 Burma 33 47 12 11 8 9 55 42 15 Malawi 58 47 11 18 6 12 31 35 16 India 50 37 20 25 14 16 30 38 17 Mozambique 55 56 9 12 8 6 36 32 18 Niger 66 47 10 17 4 24 36 19 Viet Nam 20 Afghanistan 21 Pakistan 46 33 16 23 12 16 38 44 22 Sierra Leone 40 19 6 41 23 Tanzania 57 45 11 16 5 10 32 39 24 Benin 38 15 10 47 25 Sri Lanka 38 39 16 21 11 15 46 40 26 Guinea 27 Haiti .. .. .. 28 Lesotho 30 15 2 55 29 Madagascar 37 40 10 19 4 14 53 41 30 Central African Emp. 45 37 12 36 6 23 43 27 31 Kenya 38 35 18 20 9 12 44 45 32 Mauritania 26 37 11 37 33 Uganda 52 55 13 8 9 7 35 37 34 Sudan 58 15 5 2] 35 Angola 50 49 8 23 4 3 42 28 36 Indonesia 54 31 14 34 8 9 32 35 3] Togo 55 23 16 31 8 29 46 Middle Income Countries (w) 22 15 32 36 22 24 46 49 38 Egypt 30 28 24 30 20 24 46 42 39 Cameroon 32 21 13 47 40 Yemen, PDR 24 7 69 41 Ghana 41 39 19 22 10 40 39 42 Honduras 37 32 19 27 13 17 44 41 43 Liberia 40 30 37 40 5 23 30 44 Nigeria 63 34 11 43 5 9 26 23 45 Thailand 41 27 18 29 11 20 41 44 46 Senegal 30 28 20 24 12 50 48 4] Yemen Arab Rep. 35 14 5 51 48 Philippines 26 29 28 35 20 25 46 36 49 Zambia 11 14 63 41 4 18 26 45 50 Congo, People's Rep. 23 11 17 34 10 9 60 55 51 Papua New Guinea 49 33 13 26 3 9 38 41 52 Rhodesia 18 35 17 47 53 El Salvador 32 30 19 21 15 15 49 49 54 Morocco 29 21 24 31 12 12 4] 48 55 Bolivia 26 1] 25 29 15 13 49 54 56 Ivory Coast 43 25 14 20 7 12 43 55 57 Jordan 16 12 14 23 8 70 66 58 Colombia 34 26 24 29 16 19 42 45 59 Paraguay 36 35 20 22 17 16 44 43 60 Ecuador 33 20 19 36 14 17 48 44 61 Guatemala 62 Korea, Rep. of 40 27 19 35 12 25 41 38 63 Nicaragua 24 23 21 26 16 20 55 51 64 Dominican Rep. 2] 20 23 21 17 19 50 59 65 Peru 26 16' 29 31 17 19 45 53 66 Tunisia 24 17 18 32 8 11 58 51 67 Syrian Arab Rep. 25 17 21 14 16 54 69 130 Distribution of Gross Domestic Product (percent) Agriculture Industry (Manufacturing)a Services 1960b 19l7C 1960b 1977C (1960b 1977c) 1960b 1977C 68 Malaysia 37 26 18 29 9 18 45 45 69 Algeria 21 8 33 57 10 11 46 35 70 Turkey 41 28 21 25 13 20 38 47 71 Mexico 16 10 29 36 23 28 55 54 72 Jamaica 10 9 36 37 15 19 54 54 73 Lebanon 12 20 .. 13 .. 68 74 Chile 11 10 38 29 23 20 51 61 75 China, Rep. of 28 12 29 46 22 37 43 42 76 Panama 23 .. 21 .. 13 56 77 Costa Rica 29 21 19 25 12 17 52 54 78 South Africa 12 .. 42 .. 23 46 79 Brazil 16 12 35 3] 26 49 51 80 Uruguay 19 12 28 36 21 29 53 52 81 Iraq 17 8 52 69 10 7 31 23 82 Argentina 1] 13 38 45 31 37 45 42 83 Portugal 25 14 36 45 29 36 39 41 84 Yugoslavia 24 16 45 45 36 31 39 85 Iran 29 10 33 55 11 13 38 35 86 Trinidad and Tobago 8 3 46 62 24 14 36 35 87 Hong Kong 4 2 34 31 25 26 62 67 88 Venezuela 6 6 22 17 .. 72 7] 89 Greece 23 17 26 31 16 19 51 52 90 Israel 11 7 32 40 23 30 57 .53 91 Singapore 4 2 18 35 12 25 78 63 92 Spain 21 9 39 38 27 30 40 53 Industrialized Countries (w) 6 4 40 37 30 27 54 59 93 Ireland 22 26 .. .. 52 94 Italy 13 8 41 43 31 34 46 49 95 New Zealand 12 31 22 .. 57 96 United Kingdom 4 3 43 37 32 25 53 60 97 Japan 13 5 42 41 33 30 45 54 98 Austria 11 5 49 42 38 30 40 53 99 Finland 18 10 35 39 24 27 4] 51 100 Netherlands 9 4 44 34 34 25 4] 62 101 France 10 5 39 3] 30 27 51 58 102 Australia 12 5 37 32 26 19 51 63 103 Belgium 6 2 41 38 30 27 53 60 104 Denmark 14 .. 39 .. 30 47 105 Germany, Fed. Rep. 6 3 53 49 40 38 41 48 106 Canada 6 4 34 31 23 18 60 65 107 United States 4 3 38 34 29 24 58 63 108 Norway 9 6 36 35 25 20 55 59 109 Sweden 7 4 40 33 27 24 53 63 110 Switzerland Capital Surplus Oil Exporters 111 Saudi Arabia .. 1 .. 83 .. 5 16 112 Libya 14 3 9 71 9 3 7] 26 113 Kuwait .. Centrally Planned Economies (w) 114 China, Peoples Rep. 115 Albania 116 Korea, Dem. Rep. 117 Mongolia 118 Cuba 119 Romania 31 53 .. 16 120 Bulgaria 121 Hungary 122 USSR 123 Poland 124 Czechoslovakia 125 German Dem. Rep. a Manufacturing is a part of the industrial sector, but its share of GDP is also shown separately since it is typically the most dynamic part of the industrial sector. b Figures in italics in these columns refer to 1961 rather than 1960. C Figures in italics in these columns refer to 1976 rather than 1977. 131 Table 4: Growth of Selected Demand Aggregates Average Annual Growth Rates (percent) Public Private Gross Domestic Consumption Consumption Investment 1 9607Oa 1 970-77b 1 960_lOa 1 970-77b 1960l0 1970-77b Low Income Countries (m) 5.4 2.4 3.5 3.0 5.7 2.3 1 Bhutan 2 Cambodia 2.6 3 Bangladesh C C 3.4 1.7 11.1 -7.8 4 Lao PDR 5 Ethiopia 4,-, 5.7 -0.9 6 Mali 6.2 2.8 3.5 7 Nepal 8 Somalia -c 4.3 9 Burundi 19.2 2.4 3.1 6.0 8.0 10 Chad 4.4 -0.7 2.3 11 Rwanda 1.1 0.2 2.8 3.4 3.5 17.6 12 Upper Volta 13 Zaire 8.5 -0.2 3.9 -1.7 9.6 2.3 4 Burma C C 2.8 3.6 3.6 1.2 15 Malawi 5.4 -1.9 4.3 4.7 13.3 4.5 16 India -1.7 0.8 4.2 2.3 5.6 2.1 17 Mozambique 6.8 -5.1 4.4 -3.0 8.3 -11.0 18 Niger 1.9 3.5 3.0 19 Viet Nam 20 Afghanistan 2 3.0 -1.o 11.1 21 Pakistan 7.3 3.3 7.1 4.0 6.9 -0.7 22 Sierra Leone 6.0 .. 1.5 .. -2.5 23 Tanzania 8.2 C 47 33 9.8 2.7 24 Benin 1.7 -1.9 4.9 1.2 4.2 7.0 25 Sri Lanka C C 3.5 2.9 6.6 0.9 26 Guinea 27 Haiti -d i.ó i'. 28 Lesotho 0.3 13.2 6.0 12.2 18.5 24.1 29 Madagascar -1.4 .. -1.5 .. -3.2 30 Central African Emp. 2.5 .. 1.9 .. 1.8 31 Kenya 10.0 5.5 4.6 6.1 7.0 -2.7 32 Mauritania 17.7 .. 4.4 9.7 5.1 33 Uganda 5.9 0.5 5.6 0.3 9.8 -11.5 34 Sudan 12.1 -0.8 .. -1.3 35 Angola 9.1 4.0 9.7 36 Indonesia 1.0 11.6 3.4 8.1 4,8 16.6 37 logo 6.7 14.9 7.6 1.7 11.1 8.4 Middle Income Countries (m) 6.4 7.4 5.3 5.4 7.6 8.1 38 Egypt 10.3 3.3 4.2 3.9 3.1 23.6 39 Cameroon 8.9 4.3 3.4 2.9 8.4 6.3 40 Yemen, PDR 41 Ghana 42 Honduras 4.6 -1.5 7.7 2.0 4.6 2.1 4.0 -3.2 11.0 - 4.7 43 Liberia 5.6 1.5 0.4 3.2 -4.5 16.2 44 Nigeria 10.0 26.9 0.9 4.8 6.5 22.9 45 Thailand 9.6 7.8 7.0 6.1 15.4 6.3 46 Senegal 4.6 -1.4 2.4 1.2 -1.0 3.4 47 Yemen Arab Rep. 48 Philippines 5.0 9.9 4.8 4.4 8.2 11.7 49 Zambia 11.0 5.0 5.8 0.3 10.6 -5.9 50 Congo, People's Rep. 5.0 7.4 0.4 7.8 2.9 6.1 51 Papua New Guinea 6.5 -2.3 6.9 1.7 21.2 -8.6 52 Rhodesia 53 El Salvador 5.7 6.0 6.1 5.6 3.6 11.8 54 Morocco 4.4 8.2 3.7 3.1 9.1 18.2 55 Bolivia 8.9 10.4 4.1 6.7 9.6 7.8 56 Ivory Coast 11.8 8.6 7.5 5.0 12.7 9.0 57 Jordan 8.9 . . 5.4 9.9 58 Colombia 5.5 2.6 5.5 6.5 4.5 3.6 59 Paraguay 6.9 5.3 4.5 5.7 5.8 22.1 60 Ecuador .. 6.7 9.9 .. 12.1 61 Guatemala 4.7 5.0 4.7 5.4 7.9 10.2 62 Korea, Rep. of 5.9 8.3 7.3 6.9 23.1 12.4 63 Nicaragua 3.6 12.7 6.8 4.9 10.7 8.6 64 Dominican Rep. 1.9 -0.9 6.1 6.2 11.4 13.5 65 Peru 8.8 6.3 6.7 6.2 2,4 7.1 66 Tunisia 5.5 8.9 3.0 8.9 4.5 13.6 67 Syrian Arab Rep. 14.1 7.5 13.5 132 Average Annual Growth Rates (percent) Public Private Gross Domestic Consumption Consumption Investment l96O7O 197o-77b 196O_70a 1970-77b 1 960_70a 1 970-77b 68 Malaysia 7,4 6.0 4.2 10.0 7.2 10.0 69 Algeria 1.7 4.0 4.6 9.4 1.9 13.6 70 Turkey 6.7 5.3 5.1 7.4 8.8 12.7 71 Mexico 8.8 11.0 6.7 4.5 9.5 8.1 72 Jamaica 8.6 11.1 3.2 2.3 7.8 -3.7 73 Lebanon 5.9 4.4 .. 6.2 74 Chile 4.7 29 4.7 -0.7 4.2 -8.9 75 China, Rep. of 4.5 4.6 8.3 6.7 16.2 9.1 76 Panama 7.8 6.2 6.7 3.0 12.4 -1.0 C 6.8 77 Costa Rica 7.2 6.1 4.0 7.1 78 South Africa 7.0 5.5 .. 9.3 79 Brazil 3.6 C 5.4 9.1 5.3 12.6 80 Uruguay 4.4 C 0.7 -0.7 -1.8 3.7 81 Iraq 8.1 4.9 .. 3.0 82 Argentina 1.0 C 4.1 2.9 4.1 1.6 83 Portugal 7.7 5.5 .. 7.7 84 Yugoslavia 0.6 9.4 7.0 4.7 7.8 85 Iran 16.0 23.0 7.4 14.3 12.2 22.6 86 Trinidad and Tobago 6.2 10.4 4.3 -0.3 -2.8 5.3 87 Hong Kong 8.7 8.5 8.9 7.9 7.4 9.7 88 Venezuela 6.3 8.6 4.9 7.6 7.3 9.8 89 Greece 6.6 8.0 7.1 5.3 10.4 -0.1 90 Israel 13.8 7.1 7.4 5.6 5.7 2.2 91 Singapore 12.6 5.9 5.5 7.4 20.5 5.7 92 Spain 5.5 6.2 7.0 4.7 10.5 4.4 Industrialized Countries (m) 4.8 4.2 4.3 3.4 5.8 1.7 93 Ireland 3.9 6.3 3.7 2.7 8.8 1.7 94 Italy 3.9 3.3 6.1 3.0 3.8 0.1 95 New Zealand .. .. .. 96 United Kingdom 2.2 3.2 2.3 1.1 5.0 0.1 97 Japan 6.4 5.3 9.0 5.9 14.0 2.4 98 Austria 2.9 4.2 4.4 4.7 5.6 4.5 99 Finland 5.7 5.3 4.3 3.8 4.3 1.7 100 Netherlands 3.1 2.6 6.1 3.4 6.8 -1.4 101 France 3.4 3.3 5.5 4.6 7.3 2.2 102 Australia 6.8 6.0 2.7 4.9 6.2 1.5 103 Belgium 5.7 4.8 3.8 4.5 6.0 2.5 104 Denmark 6.0 4.4 4.3 3.0 6.7 0.1 105 Germany, Fed. Rep. 4.1 4.2 4.6 2.8 4.1 -1.0 106 Canada 6.2 3.5 4.9 6.0 5.8 5.6 107 United States 4.1 1.6 4.4 3.3 4.8 0.7 108 Norway 6.4 5.4 4.1 4.4 5.1 7.1 109 Sweden 5.4 3.1 3.8 2,6 5.0 1.8 110 Switzerland 4.8 2.2 4,3 1.4 4.1 -2.9 Capital Surplus Oil Exporters 111 Saudi Arabia C 15.3 49.3 112 Libya 21.6 19.0 15.2 113 Kuwait Centrally Planned Economies (m) 114 China, People's Rep. 115 Albania 116 Korea, Dem. Rep. 117 Mongolia 118 Cuba 119 Romania 120 Bulgaria 121 Hungary 122 USSR 123 Poland 124 Czechoslovakia 125 German Dam. Rep. a Figures in italics in these columns refer to 1961-1970 rather than 1960-70. b Figures in italics in these columns refer to 1970-1976 rather than 1970-77. Separate figures are not available for public consumption, which is therefore included in private consumption. 133 Table 5: Structure of Demand Distribution of Gross Domestic Product (percent) Exports Gross Gross of Goods and Public Private Domestic Domestic Non-factor Resource Consumption Consumption Investment Savings Services Balance 1960a jg77b 19602 1977b 19602 1977b 19602 1977b 19602 1977b 1960 1977b Low Income Countries (w) 9 1 Bhutan .... 11 80 .... 71 14 21 11 18 10 14 33 2 Cambodia 3 Bangladesh 19 6 .. C 69 86 .. 101 20 7 .. 6 12 8 .. 14 10 .. 6 8 7 1 1 1 4 Lao PDR .. 21 .. 58 .. 40 .. 21 2 .. 19 5 Ethiopia 8 14 81 77 12 10 11 9 9 13 6 Mali 7 Nepal 12 3 18 C 79 94 74 95 14 8 19 9 8 5 12 .. 20 5 11 5 5 8 Somalia 9 Burundi 20 .. 73 .. 15 10 .. 3 7 .. 21 8 .. 8 12 10 Chad 11 Rwanda 3 13 10 13 C .. 92 82 82 80 103 .. 11 6 6 11 15 .. 53 5 8 9 .. 13 23 12 13 28 .. 6 18 2 12 Upper Volta 17 25 87 99 10 17 4 24 9 15 14 31 13 Zaire 14 Burma 15 Malawi 18 16 C 18 C 13 62 89 88 62 91 77 12 12 10 26 13 16 4 20 11 20 9 10 55 20 32 7 28 14 14 8 3 21 16 India 17 Mozambique 18 Niger 7 11 13 14 .. 79 81 79 78 79 .. 17 10 8 21 13 .. 14 8 8 22 7 .. 5 14 10 8 11 .. 26 (.) 1 19 Viet Nam 20 Afghanistan 21 Pakistan C C 87 89 16 13 13 11 4 13 3 2 ] 11 22 Sierra Leone 23 Tanzania 11 .. 11 16 84 .. 81 78 12 .. 19 14 5 .. 6 8 8 .. 10 20 ..8 3 24 Benin 25 Sri Lanka 9 16 14 15 12 10 72 75 75 68 83 70 14 15 15 20 17 17 19 9 11 17 20 5 31 12 30 22 27 23 6 4 12 5 3 26 Guinea 2] Haiti 14 C .. 8 79 93 .. 83 5 9 18 7 7 9 23 20 .. 21 292 6 5 3 28 Lesotho 17 21 108 168 2 26 12 21 29 Madagascar 20 16 75 72 11 15 5 12 12 22 30 Central African Emp. 19 .. 68 .. 18 13 24 .. 31 Kenya 32 Mauritania 11 .. 17 38 72 .. 58 55 20 .. 21 44 17 25 7 31 .. 34 41 3 .. 37 4 33 Uganda 9 C 75 92 11 6 16 8 26 11 5 2 34 Sudan 6 .. 85 .. 9 9 12 .. (.) 35 Angola 9 26 77 56 12 7 14 19 20 40 2 12 36 Indonesia 12 10 80 68 8 21 8 22 13 22 (.) 1 3] Togo 8 1] 88 82 11 32 4 1 19 .. 31 Middle Income 1 1 Countries (w) 38 Egypt 39 Cameroon 11 1] 14 13 22 14 69 71 72 63 63 6] 21 13 11 25 24 22 20 12 14 24 15 19 16 20 29 20 20 31 19 33 40 Yemen, PDR 41 Ghana 42 Honduras 10 11 13 14 73 77 82 68 24 14 6 24 17 12 5 18 28 22 8 38 21 7 6 43 Liberia 44 Nigeria 45 Thailand 7 6 12 15 65 87 57 56 21 13 27 31 28 7 31 29 42 15 62 32 62 7 5 5 46 Senegal 4] Yemen Arab Rep. 10 13 .. 11 15 12 73 73 .. 68 85 88 16 15 .. 26 16 2 17 14 21 0 17 39 .. 22 31 1 1 .. 16 2 48 Philippines 49 Zambia 8 11 11 31 76 50 64 48 16 24 30 26 16 39 25 21 0 11 56 S 19 40 (.) 15 5 5 50 Congo, People's Rep. 23 35 98 70 45 21 21 41 51 Papua New Guinea 28 30 70 51 14 18 2 19 17 45 12 1 52 Rhodesia 53 El Salvador 11 10 .. 11 66 79 .. 68 23 16 22 23 . 21 . 20 40 51 (.) 73 11 54 Morocco 13 17 75 76 11 29 12 7 27 21 22 1 55 Bolivia 7 11 86 72 14 20 7 17 13 20 56 Ivory Coast 4 14 79 60 15 25 17 26 3] 39 2 1 57 Jordan 28 .. 90 .. 17 13 58 Colombia 59 Paraguay 7 8 7 68 75 22 1] 21 25 18 16 16 13 3 60 Ecuador 61 Guatemala 10 8 7 10 6 76 74 84 75 64 76 14 10 25 29 20 16 16 8 18 26 18 18 17 13 21 26 24 2 1 2 3 2 62 Korea, Rep. of 63 Nicaragua 64 Dominican Rep. 15 9 13 13 8 5 85 79 68 62 73 73 11 15 12 26 25 25 (.) 12 19 25 19 22 3 24 24 40 33 22 36 7 3 65 Peru 8 15 68 74 22 15 24 11 24 17 2 66 Tunisia 17 17 76 61 17 32 7 22 20 29 10 10 6] Syrian Arab Rep. .. 25 .. 65 .. 30 .. 10 .. 21 20 134 Distribution of Gross Domestic Product (percent) Exports Gross Gross ofGoodsand Public Private Domestic Domestic Non-factor Resource Consumption Consumption Investment Savings Services Balance 196O 1977b 196O 1977b l96O 1977b 196O 1977b l96O 1977b 196O 1977b 68 Malaysia 69 Algeria 70 Turkey 11 16 17 17 62 50 52 45 14 42 23 49 27 34 31 38 54 28 50 33 8 3 11 13 8 8 71 Mexico 72 Jamaica 11 6 7 13 12 22 76 76 67 71 68 66 16 20 30 24 20 11 13 18 26 16 20 12 3 10 34 5 10 32 2 4 (.) 1 73 Lebanon 74ChiIe 10 11 .. 12 85 75 .. 80 16 17 .. 9 14 5 .. 8 27 14 .. 17 3 11 7 1 75 China, Rep. of 76 Panama 77 Costa Rica 19 11 10 17 14 16 68 78 76 52 31 65 20 16 18 27 22 23 13 11 14 31 15 19 11 31 22 54 38 33 57 44 4 78 South Africa .. .. .. 1 6 10 9 64 22 27 30 5 79 Brazil 80 Uruguay 81 Iraq 12 9 C C .. 6] 39 48 88 87 .. 22 18 22 14 .. 21 12 34 12 13 .. 5 14 8 20 .. 1 82 Argentina 18 9 C 71 77 20 22 19 20 23 42 10 13 214 4 83 Portugal 84 Yugoslavia 85 Iran 11 19 10 15 C 21 37 49 69 75 74 38 19 37 1] 25 33 30 12 32 21 10 26 41 17 14 19 17 18 .. 7 5 15 4 7 11 86 Trinidad and Tobago 87 Hong Kong 88 Venezuela 9 7 14 7 61 92 53 73 28 19 25 25 30 1 33 20 37 79 47 98 18 5 2 8 89 Greece 14 12 15 16 53 77 48 68 21 19 32 26 33 11 37 16 32 9 33 16 8 10 13 12 16 5 90 Israel 91 Singapore 92 Spain 18 8 7 37 10 10 68 89 70 56 61 69 27 11 21 23 34 23 14 3 23 3 29 21 14 163 10 36 160 15 85 22 Industrialized Countries (w) 15 1 59 17 63 62 21 22 22 21 12 18 1 93 Ireland 12 19 77 65 16 25 11 16 31 52 94 Italy 95 New Zealand 96 United Kingdom 12 13 17 14 17 21 64 65 66 66 58 59 24 24 19 21 28 19 24 22 17 20 25 20 15 23 21 26 28 31 2 2 3 (.) 1 1 9] Japan 9 11 57 57 34 32 34 32 11 14 (.) (.) 98 Austria 99 Finland 13 13 17 20 59 58 57 51 28 30 29 27 28 29 26 29 24 23 35 31 (.) 1 3 2 100 Netherlands 14 18 57 58 27 23 29 24 50 54 101 France 102 Australia 13 10 16 16 61 65 61 59 24 29 24 28 26 25 23 25 15 15 20 16 4 3 2 2 1 1 103 Belgium 104 Denmark 105 Germany, Fed. Rep. 13 12 14 17 24 20 69 66 5] 62 56 56 19 23 22 23 18 22 21 20 33 34 48 29 13 1 1 106 Canada 107 United States 14 17 20 18 65 64 57 66 27 23 18 22 23 18 29 21 19 24 23 16 19 18 5 26 24 8 2 2 2 (.) 2 2 1 108 Norway 109 Sweden 110 Switzerland 14 16 9 19 28 13 58 60 62 56 54 64 30 25 29 36 20 21 28 24 29 25 18 23 41 23 29 40 28 37 12 (.) 2 Capital Surplus Oil Exporters 111 Saudi Arabia .. 18 .. 12 .. 23 .. 70 .. 78 47 112 Libya .. 21 28 .. 26 .. 51 .. 5 25 113 Kuwait 16 .. 23 10 .. 61 69 51 Centrally Planned Economies (w) 114 China, People's Rep. 115 Albania 116 Korea, Dem. Rep. 117 Mongolia 118 Cuba 119 Romania 120 Bulgaria 121 Hungary 122 USSR 123 Poland 124 Czechoslovakia 125 German Dem. Rep. a Figures in italics in these columns refer to 1961 rather than 1960. b Figures in italics in these columns refer to 1976 rather than 197/. C Separate figures are not available for public consumption, which is therefore included in private consumption. 135 Table 6: Industrialization Distribution of Value Added, 1975 (percent) Value Added Gross Machinery in Manufacturing Manufacturing Textiles and Output Per Food and and Transport Other (million 1970 Capita (1970 Agriculture Clothing Equipment Chemicals Manufacturing US dollars) US dollars) 1970 1975 1970 1976 Low Income Countries 1 Bhutan 2 Cambodia 3 Bangladesh 324 283 11 4 Lao PDR 5 Ethiopia 1, 6 Mali 26 40 7 Nepal 78 8 Somalia 11 6 9 Burundi 19 24 10 Chad 18 23 11 Rwanda 6 4 12 Upper Volta 34 47 13 Zaire 4 22 155 184 14 Burma 43 13 44 225 251 15 Malawi 73 9 18 38 53 29 16 India 14 30 12 11 33 7,093 8,280 51 17 Mozambique 68 13 4 15 104 87 28 18 Niger 40 66 19 Viet Nam 20 Afghanistan 21 Pakistan 40 43 9 8 1462 1,645 59 22 Sierra Leone 22 26 23 Tanzania 116 146 27 24 Benin 44 38 18 19 45 25 Sri Lanka 17 23 9 51 208 228 26 Guinea 27 Haiti H iè 28 Lesotho 2 2 29 Madagascar 91 9 119 131 40 30 Central African Emp. 31 69 24 32 47 31 Kenya 18 13 19 8 42 174 311 55 106 32 Mauritania 18 211 33 Uganda 53 47 108 87 34 Sudan 41 36 3 11 9 252 328 51 35 Angola 67 33 80 49 36 Indonesia 46 18 36 854 1,489 28 31 37 Togo 24 28 Middle Income Countries 38 Egypt 1] 34 11 13 25 1,326 1,651 146 39 Cameroon 64 36 119 162 40 Yemen, PDR 7 13 41 Ghana 75 25 253 457 58 42 Honduras 53 15 3 28 91 115 43 Liberia 15 22 44 Nigeria 91 9 529 941 17 45 Thailand 45 17 15 1,034 1,754 132 46 Senegal 56 15 - 16 13 110 140 98 47 Yemen Arab Rep. 14 24 48 Philippines 41 12 6 17 24 1,579 2,208 108 49 Zambia 54 8 6 5 27 179 244 107 50 Congo, People's Rep. 68 32 32 40 60 51 Papua New Guinea 52 Rhodesia 'I.' 4° 308 53 El Salvador 49 29 .. 11 11 194 250 54 Morocco 42 14 5 7 32 421 551 55 Bolivia 35 22 5 4 34 151 209 56 Ivory Coast 200 500 57 Jordan 55 33 58 Colombia 33 18 10 12 27 1,143 1,636 127 171 59 Paraguay 47 16 3 4 30 99 129 60 Ecuador 32 17 8 4 39 271 420 61 Guatemala 5° 37 4 9 62 Korea, Rep. of 17 24 23 8 28 1,431 3,385 111 282 63 Nicaragua 64 26 10 159 211 64 Dominican Rep. 68 5 (.) 4 23 275 428 laa 1 65 Peru 31 10 13 14 32 982 1,408 177 206 66 Tunisia 65 10 22 3 115 212 90 157 67 Syrian Arab Rep. 46 36 3 15 238 341 117 100 136 Distribution of Value Added, 1975 (percent) Value Added Gross Machinery in Manufacturing Manufacturing Textiles and Output Per Food and and Transport Other (million 1970 Capita (1970 Agriculture Clothing Equipment Chemicals Manufacturing US dollars) US dollars) 1970 1975 1970 1976 68 Malaysia 30 5 10 10 45 543 931 178 69 Algeria 29 18 11 6 36 735 913 70 Turkey 48 22 .. 30 1,896 3,426 104 247 71 Mexico 21 14 19 14 32 8,636 11,633 72 Jamaica 86 14 221 247 348 73 Lebanon . .. .. .. 202 74 Chile 18 9 7 4 62 2,373 1868 423 75 China, Rep. of .. .. .. .. 1,873 3,401 76 Panama 40 7 3 3 47 166 190 276 403 77 Costa Rica 42 12 6 10 30 133 78 South Africa 16 12 17 12 43 3,959 .. 432 79 Brazil 15 10 30 12 33 9,972 17,312 229 80 Uruguay 40 21 3 9 27 515 556 81 Iraq 34 25 3 38 325 503 77 144 82 Argentina 16 13 24 13 34 6,777 8,635 83 Portugal 1] 19 24 9 31 1,847 2,323 .. 708 84 Yugoslavia 9 14 24 10 43 3,235 6,168 411 991 85 Iran 11 26 26 6 31 1,501 3,240 140 86 Trinidad and Tobago 59 .. 4 37 184 155 87 Hong Kong 98 2 899 1,047 88 Venezuela 29 12 11 6 42 1,827 2,434 .. 423 89 Greece 15 27 10 7 41 1,642 2,365 498 782 90 Israel 11 17 26 6 40 1,101 1,517 833 91 Singapore 8 5 46 7 34 388 638 764 1,085 92 Spain 22 8 18 9 43 9,339 15,234 868 1,510 Industrialized Countries 93 Ireland 33 16 12 9 30 94 Italy 12 13 27 11 37 29,059 31,763 1,251 1,372 95 New Zealand 26 15 12 5 42 .. 96 United Kingdom 13 9 32 11 35 34,317 35,004 1,493 1,589 97 Japan 8 7 36 11 38 70,628 91,770 1,753 2,470 98 Austria 16 12 22 8 42 5,056 5,916 1,770 2,234 99 Finland 13 10 25 6 46 2,788 3,446 1,731 2,057 100 Netherlands 21 6 22 17 34 9,192 10,846 2,137 101 France 13 6 35 8 38 40,502 49,380 .. 2,245 102 Australia 17 9 25 8 41 8,498 .. 1,712 103 Belgium 19 10 29 9 33 8,226 9,938 104 Denmark 25 8 26 7 34 4,218 4,587 2,020 2,149 105 Germany, Fed. Rep. 9 7 33 11 40 75,765 79,071 2,184 2,430 106 Canada 15 8 26 8 43 16,802 20,311 1,947 2,366 107 United States 12 8 31 11 38 252,000 264,195 2,586 2,866 108 Norway 13 5 26 6 50 2,442 2,829 1,606 109 Sweden 9 5 35 6 45 8,863 9,860 2,413 2,611 110 Switzerland 11 7 42 13 27 Capital Surplus Oil Exporters 111 Saudi Arabia 372 453 .. 112 Libya 82 154 88 142 113 Kuwait 106 .. 199 Centrally Planned Economies 114 China, People's Rep. 115 Albania 116 Korea, Dem. Rep. 117 Mongolia .. 118 Cuba 72 28 119 Romania 15 18 32 9 26 120 Bulgaria 23 15 25 5 32 121 Hungary 12 11 32 5 40 122USSR 12 6 .. 7 75 123 Poland 18 16 26 10 30 124 Czechoslovakia 8 11 36 7 38 125 German Dem. Rep. 11 12 36 11 30 137 Table 7: Energy Average Annual Energy Per Capita Energy Energy Imports Growth Rates (percent) Energy Consump- as a Consumption tion Per Percentage of Dollar GDP Merchandise (kilograms (kilograms Export of coal of coal Earnings Production Consumption equivalent) equivalent) l96074a 1974-76 196074a 1974-76 1960 1976 1960 1976 1960 1976 Low Income Countries (g) 6.8 6.3 5.7 4.6 113 166 0.9 1.1 9 19 1 Bhutan 2 Cambodia (.) 31 16 .. .. 9 3 Bangladesh 5.4 9.7 . . 33 .. 0.3 . . 29 4 Lao PDR -1.0 13.4 (.) 18 61 .. 5 Ethiopia 14.1 2.0 14.7 -10.3 8 27 0.1 0.3 11 27 6 Mali . . 19.7 5.5 5.4 15 27 0.2 0.3 13 25 7 Nepal 23.2 8.2 12.3 1.3 5 11 (.) 0.1 8 Somalia .. .. 7.4 10.1 19 47 0.2 0.4 . 1 9 Burundi 19.6 .. 0.3 .. 12 .. 0.1 10 Chad 7.2 10.5 10 23 0.1 0.2 11 Rwanda 3.0 .. 11.3 .. 17 .. 0.2 11 12 Upper Volta . . . 6.5 5.1 5 18 0.1 0.2 19 13 Zaire 3.0 54.4 4.3 -6.4 87 62 0,9 0.7 3 16 14 Burma 4.8 8.2 3.6 0.5 55 49 0.5 0.4 4 12 15 Malawi .. 17.5 .. 9.8 .. 56 .. 0.4 18 16 India 4.4 9.8 4.9 7.0 142 218 1.3 1.6 11 26 17 Mozambique 3.2 32.1 5.7 0.8 114 133 0.4 0.5 11 28 18 Niger 14.3 8.4 5 35 C.) 0.2 19 Viet Nam .. .. .. .. .. 124 20 Afghanistan 39.7 -6.0 9.4 2.9 15 41 6. d. 21 Pakistan 10.0 1.1 5.9 1.0 61 181 1.3 1.2 -. 22 Sierra Leone . - -. 10.3 -3.5 31 112 0.3 0.5 11 10 23 Tanzania 10.6 29.6 10,4 12.9 41 68 0.3 0.4 .. 22 24 Benin .. -. 8.8 -11.2 39 49 0.2 0.3 .. 43 25 Sri Lanka 10.4 0.7 6.2 -1.9 107 106 0.7 0.5 8 24 26 Guinea 16.1 (.) 3.2 1.6 65 93 0.3 0.4 7 27 Haiti 18.6 2.8 4,3 36 28 0.2 0.1 .. 14 28 Lesotho .. .. . - .. .. -. . . 29 Madagascar 6.8 4.3 8.9 4.4 38 66 0.2 0.3 9 22 30 Central African Emp. 14.2 2.0 7.4 7.4 37 41 0.1 0.2 12 1 31 Kenya 9.3 19.6 4.2 1.2 143 152 0.8 0.6 18 54 32 Mauritania ,. ,, 16.8 2.9 18 102 0.1 0.4 39 6 33 Uganda 5.2 -6.3 9.5 -6.0 30 48 0.1 0.2 5 4 34 Sudan .. 20.2 13.2 -2.7 52 143 0.2 0.6 8 26 35 Angola 35.8 -26.6 8.8 -6.6 86 166 0.2 0.5 6 2 36 Indonesia 8.5 6.1 4.2 22.1 129 218 0.8 0.9 3 5 37 logo 12.5 11.9 23 85 0.1 0.3 10 19 Middle Income Countries (g) 7.6 0.8 7.6 5.2 393 916 0.7 1.2 10 22 38 Egypt 9.8 45.1 2.7 20.3 298 473 1.7 1.8 12 15 39 Cameroon 1.1 6.4 4.0 7.6 55 98 0.2 0.3 7 10 40 Yemen, PDR .. -13.6 24.4 299 324 . - 1.6 41 Ghana .. 1.2 6.6 -4.1 106 157 0.2 0.3 7 18 42 Honduras 29.5 9.8 8.9 1.4 155 264 0.5 0.7 10 12 43 Liberia 31.8 2.0 19.3 -5.1 86 418 0.2 1.0 3 12 44 Nigeria 37.4 -3.5 10.2 5.8 34 94 0.1 0.2 -. . - 45 Thailand 28.0 21.4 16.9 4.4 64 308 0.3 0.8 12 28 46 Senegal 4.6 5.5 121 156 0.3 0.4 8 15 47 Yemen Arab Rep. .. 12.7 38.9 7 41 . - 0.3 - - 48 Philippines 5.6 9.1 9.6 7.7 147 329 0.6 0.8 -. 49 Zambia .. 6.0 .. 10.1 - - 548 .. 1.3 .. 5 50 Congo, People's Rep. 15.7 -9.6 5.2 -2.0 119 142 0.3 0.3 25 8 51 Papua New Guinea .. .. .. .. 51 289 0.2 0.6 52 Rhodesia 1.9 -1.0 .. -0.7 ,. 634 - - 1.2 .. -. 53 El Salvador 5.1 17.6 7.7 10.1 127 260 0.4 0.6 6 10 54 Morocco 1.9 -0.2 7.7 2.7 148 273 0.4 0.6 9 23 55 Bolivia 17.2 -1.8 7.0 12.4 147 318 0.5 0.7 4 1 56 Ivory Coast 9.7 17.1 15.5 3.9 76 380 0.2 0.4 5 10 57 Jordan .. .. 6.5 20.8 197 527 0.7 1.0 79 54 58 Colombia 3.4 -2.4 6.3 3.6 491 685 1.3 1.2 3 2 59 Paraguay .. 21.2 8.5 7.6 87 189 0.2 0.3 -. 60 Ecuador 19.0 2.7 8.3 15.6 201 455 .. 0.7 2 7 61 Guatemala 9.9 6.3 6.1 7.7 174 257 0.4 0.4 12 15 62 Korea, Rep. of 6.3 3.4 13.2 6.7 258 1,020 1.2 1.7 70 23 63 Nicaragua 26.6 4.8 10.0 5.6 174 478 0.4 0.6 .. . - 64 Dominican Rep. 4.4 -3.5 14.6 2.4 157 683 0.3 0.9 .. 24 65 Peru 3,5 2.0 6.2 5.7 445 642 0.8 0.7 - . -. 66 Tunisia 73.4 -4.8 9.5 5.4 190 456 - - 0.6 15 23 67 Syrian Arab Rep. 86.2 25.9 9.0 18.2 321 744 0.] 1.0 16 16 138 Average Annual Energy Per Capita Energy Energy Imports Growth Rates (percent) Energy Consump- as a Consumption tion Per Percentage of Dollar GDP Merchandise (kilograms (kilograms Export of coal of coal Earnings Production Consumption equivalent) equivalent) 1960_74a 1974-76 196074a 1974-76 1960 1976 1960 1976 1960 1976 68 Malaysia 37.4 41.3 11.1 0.4 242 602 0.6 0.7 2 9 69 Algeria 11.7 7.4 12,2 21.4 252 729 0.3 0.8 14 2 70 Turkey 7.6 4.2 9.9 12.8 245 743 0.5 0.8 16 58 71 Mexico 6.0 11.5 7.7 1.5 770 1,227 0.9 1.0 3 10 72 Jamaica -0.7 9.0 11.2 4.2 426 1,937 0.2 1.5 11 34 73 Lebanon 12.7 -1.2 6.3 -26.0 548 533 . .. 68 4 74 Chile 4.0 -2.9 6.1 -4.] 845 987 1.2 1.2 10 25 75 China, Rep. of 2.3 6.0 8.6 12.8 583 1,797 1.4 1.8 76 Panama 14.8 1.9 10.5 7.1 448 885 0.7 0.8 77 Costa Rica 9.5 7.8 10.4 2.1 233 488 0.4 0.5 7 14 78 South Africa 3,8 8.1 .. 8.1 .. 2985 .. .. 9 79 Brazil 8.1 6.4 8.6 7.2 332 731 0.6 0.6 21 43 80 Uruguay 3.7 -5.5 3.1 2.5 825 1,000 0.7 0.8 35 39 81 Iraq 4.9 7.9 5.9 7.5 487 727 0.7 0.5 (.) (.) 82 Argentina 6.5 0.8 5.] 1.5 1,129 1,804 0.9 1.0 14 14 83 Portugal 4.4 -20.3 8.3 4.6 382 1,050 0.5 0.6 17 38 84 Yugoslavia 4.7 3.6 7.1 3.7 872 2,016 1.3 1.3 8 22 85 Iran 14.5 -0.9 15.6 9.8 270 1,490 0.4 0.8 86 Trinidad and Tobago 2.8 6.0 4.8 16.6 1,775 4,272 1.0 1.7 l 51 8] Hong Kong .. .. 6.8 5.6 468 1,313 0.] 0.7 5 1 88 Venezuela 1.2 -10.8 6.6 3.4 1,694 2,838 1.1 1.2 1 89 Greece 14.3 20.3 13.2 6.2 460 2,250 0.5 0.9 26 48 90 Israel 41.9 -86.6 9.6 -1.4 1,270 2,541 0.7 0.7 17 28 91 Singapore .. .. 16.8 3.9 372 2,262 0.4 0.9 17 38 92 Spain 2.5 -4.6 8.5 4.1 756 2,399 0.6 0.8 22 59 Industrialized Countries (g) 3.2 0.7 4.9 1.3 4,462 7,079 1.2 1.1 11 24 93 Ireland 0.1 6.5 4.7 0.6 1,838 3,170 1.2 1.2 17 17 94 Italy 2.2 1.6 8.3 1.3 1,086 3,284 0.6 1.0 18 30 95 New Zealand 5.2 8.2 5,7 2.0 2,277 3617 0.7 0.8 96 United Kingdom -1.2 10.0 1.7 -1.4 4,861 5,268 1.6 1.3 97 Japan -1.7 3.5 10.] -0.] 1,171 3,679 0.8 0.8 18 42 98 Austria 1.5 -4.6 5.1 1.4 2,129 4,013 0.8 0.8 12 1] 99 Finland 3.3 -10.0 9.1 1.6 1,529 5,177 0.5 0.9 11 25 100 Netherlands 16.2 6.2 8.7 2.5 2,504 6,224 0.7 1.0 101 France -1.3 -3.1 5.8 -0.5 2,474 4,380 0.7 0.7 16 26 102 Australia 11.1 7.2 5.6 4.6 3,85] 6,657 0.8 0.9 12 8 103 Belgium -7.2 16.8 4.9 0.2 3,851 6,049 1.1 0.9 11 15 104 Denmark -20.1 45.6 5.5 4.6 2,830 5,320 0.6 0.7 15 23 105 Germany, Fed. Rep. -0.7 -0.] 4,5 2.0 3,695 5,922 0.9 0.8 7 16 106 Canada 8.9 -3.1 6.0 2.1 5,750 9,950 1.3 1.3 9 11 107 United States 3.5 -0.5 4.1 1.7 8,172 11,554 1.6 1.5 8 30 108 Norway 6.8 28.0 5.9 4.4 2,702 5,263 0.7 0.7 109 Sweden 3.6 9.3 4.9 5.4 3,572 6,046 0.7 0.7 16 18 110 Switzerland 4.2 -1.6 5.9 -2.8 1,873 3,342 0.3 0.4 10 11 Capital Surplus Oil Exporters 111 Saudi Arabia 14.1 0.6 14.4 31.4 26] 1,901 0.4 (.) 112 Libya 29.1 13.0 17.9 26.6 251 1,589 0.1 0.3 83 1 113 Kuwait 4.6 -7.9 6.7 6.1 10,396 9,198 0.4 0.6 Centrally Planned Economies (g) 4.8 5.3 4.8 5.2 1,378 2,047 2.2 2.0 114 China, People's Rep. 4.5 5.4 3.6 4.8 683 706 3.5 2.0 115 Albania 10.1 6.9 12.5 17.1 302 867 1.1 1.6 116 Korea, Dem. Rep. 9.1 10.4 9.1 10.6 989 3072 3.8 4.9 117 Mongolia 10.4 10.1 7.3 8.6 540 1,166 0.8 1.5 118 Cuba 20.6 -8.0 4.4 5.7 912 1,225 1.0 1.5 . . 39 119 Romania 5.8 4.5 8.0 7.5 1,342 4,036 3.8 3.0 120 Bulgaria 3.3 7.7 9.8 5.0 1,303 4,710 1.2 2.0 7 121 Hungary 1.8 2.5 3.9 5.3 2,072 3,553 1.5 1.6 13 14 122 USSR 5.6 5.6 5.3 4.4 2,839 5,259 1.9 2.0 4 4 123 Poland 3.9 5.0 4.1 7.7 3,107 5,253 2.1 1.9 . 124 Czechoslovakia 1.3 2.7 3.1 4.2 4,741 7,397 1.9 2.1 15 125 German Dem. Rep. 0.5 0.7 2.1 2.5 4,950 6,789 1.8 1.6 a Figures in italics in these columns refer to 1961-74 rather than 1960-74. 139 Table 8: Growth of Merchandise Trade Merchandise Trade Average Annual Growth Ratesa Terms of Trade (million US dollars) (percent) 1970 = 100 Exports Imports Exports Imports 1977 1977 196070 1970-77 1960-70 1970-77 1960 1977 Low Income Countries (m) 5.0 -1 .7 5.0 2.3 1 Bhutan 2 Cambodia -3.3 .. -3.0 .. 10 3 Bangladesh 451 1,181 6.6 -7.3 7.0 -5.0 155 68 4 Lao PDR 9 64 .. .. .. .. .. 5 Ethiopia 333 352 3.7 -3.8 6.2 -3.0 75 17] 6 Mali 124 159 3.1 7.4 -0.4 7.0 91 101 7 Nepal 81 168 .. .. .. 8 Somalia 100 160 2.3 10.0 2.6 13.0 107 75 9 Burundi 92 91 .. .. . .. 10 Chad 40 150 5.9 -2.0 5.0 2.2 106 133 11 Rwanda 92 114 15.9 4.3 8.0 10.8 89 169 12 Upper Volta 55 209 14.4 9.2 7.8 8.0 75 95 13 Zaire 981 610 -1.8 -3.2 5.5 -8.8 61 67 14 Burma 226 309 -11.6 0.6 -5.7 -6.2 101 83 15 Malawi 195 235 11.6 3.0 7.7 3.0 116 12] 16 India 6,222 6,593 3.1 6.4 -0.9 3.1 104 83 17 Mozambique 220 283 6.0 -13.5 7.8 -13.3 103 102 18 Niger 110 150 6.0 15.0 11.9 2.4 90 78 19 Viet Nam 20 Afghanistan . 306 380 2.4 3.3 0.8 9.8 99 135 21 Pakistan 1,149 2,447 8.2 -3.0 4.2 4.4 93 80 22 Sierra Leone 127 187 0.3 -6.8 1.9 -5.2 89 83 23 Tanzania 543 748 3.5 -7.2 6.0 -1.3 96 127 24 Benin 31 246 5.0 -4.2 7.5 5.0 89 89 25 Sri Lanka 763 695 4.6 -5.3 -0.3 -4.9 175 141 26 Guinea 314 27 Haiti 143 . . . 28 Lesotho . . . . .. . . .. . 29 Madagascar 500 350 5.4 -0.8 4.0 -5.3 118 112 30 Central African Emp. 82 63 8.1 -1.3 4.5 -2.8 93 124 31 Kenya 1,213 1,284 7.2 1.2 6.3 -2.4 112 132 32 Mauritania 157 207 55.2 2.5 4.6 8.4 112 79 33 Uganda 590 241 5.0 -9.6 6.2 -10.4 95 159 34 Sudan 661 1,060 2.1 -4.9 1.1 6.5 100 97 35 Angola 500 340 9.0 -12.4 11.6 -7.4 89 179 36 Indonesia 10,853 6,230 3.5 7.5 1,9 18.4 138 253 3] logo 159 284 10.5 -3.9 8.4 8.4 95 136 Middle Income Countries (m) 5.4 5.1 7.1 5.9 38 Egypt 1,726 4,808 3.2 -3.3 -0.9 15.2 104 93 39 Cameroon 705 764 6.9 0.6 9.3 4.9 90 126 40 Yemen, PDR 17] 335 .. .. .. 41 Ghana 1,300 1,100 0.1 -1.9 -1.6 2.0 92 93 42 Honduras 511 580 11.1 0.6 11.7 1.0 91 91 43 Liberia 447 464 18.3 0.9 2.8 3.1 194 93 44 Nigeria 11,823 11,306 6.1 1.3 1.] 26.3 97 331 45 Thailand 3,484 4,635 5.2 12.1 11.2 4.8 118 75 46 Senegal 520 670 1.2 7.2 2.] 5.1 91 95 4] Yemen Arab Rep. 11 1,040 .. 48 Philippines 3,151 4,270 2.2 5.0 7.2 4.4 73 68 49 Zambia 897 828 2.2 -2.3 9.8 -5.7 50 59 50 Congo, People's Rep. 173 282 5.1 13.] -1.0 6.9 98 121 51 Papua New Guinea 611 492 .. 52 Rhodesia 53 El Salvador 959 950 5.6 2.6 6.4 8.2 94 151 54 Morocco 1,300 3,194 2.5 2.1 3.3 11.9 103 90 55 Bolivia 641 618 9.7 3.5 8.1 11.5 69 127 56 Ivory Coast 2,155 1,752 8.8 7.1 9.7 9.5 89 118 57 Jordan 249 1,381 10.1 20.8 3.6 15.9 99 85 58 Colombia 2,302 1,563 2.2 -1.2 2.4 -0.8 90 154 59 Paraguay 279 302 5.4 9.1 7.5 8.3 92 101 60 Ecuador 1,218 1,508 3.7 9.0 11.6 12.3 110 158 61 Guatemala 1,160 1,079 9.0 3.4 7.1 7.8 9] 142 62 Korea, Rep. of 10,047 10,811 35.2 30.7 20.1 12.4 78 76 63 Nicaragua 608 755 9.] 5.2 10.3 5.7 88 110 64 Dominican Rep. 780 992 -2.3 6.9 10.0 5.8 77 79 65 Peru 1,564 1,911 1.9 -4.4 3.6 4.8 63 84 66 Tunisia 921 1,825 4.1 2.5 2.2 12.9 104 137 6] Syrian Arab Rep. 1,063 2,657 3.2 8.6 4.2 17,4 94 149 140 Merchandise Trade Average Annual Growth Ratesa Terms of Trade (million US dollars) (percent) 1970 = 100 Exports Imports Exports Imports 1971 1971 1960-70 1970-77 1960-70 1970-77 1960 1977 68 Malaysia 6,088 4,633 6.1 5.2 2.7 6.1 139 114 69 Algeria 5,809 7,126 4.1 -0.9 -1.0 18.4 115 315 70 Turkey 1,753 5,694 1.6 0.8 5.5 13.1 .. 80 71 Mexico 4,066 5,489 3.3 1.9 6.4 3.9 87 119 72 Jamaica 856 861 4.7 -1.4 8.2 -5.3 100 87 73 Lebanon 632 1,631 14.1 7.5 5.1 -0.1 78 83 74 Chile 2,190 2,035 0.6 7.7 4.7 -3.8 53 50 75 China, Rep. of 9,349 8,522 23.7 16.7 17.9 13.5 79 80 76 Panama 243 861 10.4 .. 9.9 .. 89 81 77 Costa Rica 798 1,021 9.4 4.2 10.0 3.7 103 114 78 South Africa 6,158 5,893 5.5 6.7 8.2 -0.7 100 80 79 Brazil 12,054 13,229 5.0 6.5 9.7 7.9 88 118 80 Uruguay 608 730 2.1 5.5 -2.8 1.7 99 74 81 Iraq 9,664 3,898 7.3 -0.5 1.3 24.3 112 449 82 Argentina 5,651 4,162 3.3 5.5 0.3 -0.2 101 87 83 Portugal 2,023 4,963 9.6 -2.1 14.1 0.9 83 86 84 Yugoslavia 5,254 9,634 7.8 5.4 9.0 4.9 96 94 85 Iran 24,245 13,750 12.7 -0.2 11.3 25.9 108 414 86 Trinidad and Tobago 2,180 1,809 5.0 -0.8 3.2 -4.9 115 113 87 Hong Kong 9,626 10,457 12.7 6.5 9.2 5.9 104 88 Venezuela 9,548 10,353 2.0 -10.5 4.3 14.0 112 334 89 Greece 2,724 6,778 10.7 13.8 10.9 6.2 92 86 90 Israel 2,959 4,663 10.9 10.2 8.7 4.7 91 79 91 Singapore 8,241 10,471 4.2 9.8 5.9 8.1 92 Spain 10,230 17,846 11.6 10.4 18.4 4.7 93 80 Industrialized Countries (m) 8.7 6.2 9.4 4.7 93 Ireland 4,396 5,378 7.2 7.6 8.2 4.7 94 101 94 Italy 45,063 47,580 13.5 6.8 9.] 2.3 104 78 95 New Zealand 3,142 3,363 4.6 2.4 3.0 3.7 115 94 96 United Kingdom 57,54] 63677 4.8 5.8 5.0 4.7 95 85 97 Japan 80,470 70,660 17.5 10.5 13.7 5.1 102 76 98 Austria 9,808 14,248 9.6 6.7 9.7 7.7 100 97 99 Finland 7,670 7,603 6.7 2.8 7.1 2.8 98 102 100 Netherlands 43,703 45,616 9.9 6.5 9.4 4.3 100 91 101 France 63,560 70,498 8.3 7.4 10.9 7.0 93 93 102 Australia 13,002 12,175 6.5 3.7 7.2 5.3 116 88 103 Belgium 37,457 40,142 10.8 6.2 10.3 6.4 110 93 104 Denmark 10,117 13,239 7.1 4.2 8.1 3.6 108 92 105 Germany, Fed. Rep. 117,895 100,672 10.2 7.0 10.0 6.2 90 101 106 Canada 41,452 39,561 9.9 3,7 9.3 8.0 98 106 107 United States 119,042 156,758 6.0 6.9 9.8 4.6 93 79 108 Norway 8,717 12,877 9.1 6.2 9.5 6.2 91 101 109 Sweden 18,823 19566 7.7 2.5 7.3 3.6 109 97 110 Switzerland 17,682 17,979 9.0 4.9 8.5 1.5 91 104 Capital Surplus Oil Exporters 111 Saudi Arabia 43,465 14651 9.5 8.0 11.1 38.5 107 422 112 Libya 10,113 5,258 61.0 -8.5 15.4 22.3 98 316 113 Kuwait 9,798 4,484 6.9 -10.9 10.4 20.3 105 449 Centrally Planned Economies (m) 114 China, People's Rep. .. 115 Albania .. 116 Korea, Dem. Rep. .. .. 117 Mongolia .. .. .. .. .. 118 Cuba 4,000 4,700 3.9 9.4 5.5 . 5.7 112 71 119 Romania 7,021 7,579 9.9 .. 10.5 120 Bulgaria 6,329 6,329 14.5 10.6 12.8 11.6 121 Hungary 5,832 6,522 9.7 9.3 9.1 6.6 .. 82 122 USSR 45,161 40,817 .. 8.0 .. 10.3 123 Poland 12,336 14,674 10.0 9.9 8.9 13.2 .. 103 124 Czechoslovakia 10,818 11,149 6.6 6.5 6.9 6.2 125 German Dem. Rep. 12,024 14,334 8.3 8.0 8.6 8.1 a See Technical Notes. 141 Table 9: Structure of Merchandise Exports Percentage Shares of Merchandise Exports Machinery Fuels, Other and Minerals, Primary Textiles Transport Other and Metals Commodities and Clothing Equipment Manufactures 1960a 1976 196O 1976 1960a 1976 1960 1976 196O 1976 Low Income Countries 1 Bhutan 2 Cambodia 0 100 0 0 0 3 Bangladesh 0 39 50 0 11 4LaoPDR 5 Ethiopia 0 0 100 98 0 0 0 1 0 1 6 Mali o o 96 99 1 1 1 (.) 2 (.) 7 Nepal 8 Somalia 0 ii 8 4 9 Burundi 10 Chad ii 11 Rwanda 12 Upper Volta 0 100 0 0 (.) 13 Zaire 42 57 0 0 1 14 Burma 4 13 95 86 0 0 0 0 1 15 Malawi 0 96 1 (.) 3 16 India 10 12 45 35 35 20 1 6 9 27 17 Mozambique 0 100 0 0 0 18 Niger 0 100 0 0 0 19 VietNam 20 Afghanistan (.) 82 14 3 1 21 Pakistan 0 3 73 40 23 32 1 1 3 24 22 Sierra Leone 15 20 0 0 65 23 Tanzania (.) 5 87 86 0 3 0 0 13 6 24 Benin 0 100 0 (.) 0 25 Sri Lanka (.) 7 99 79 0 1 0 (.) 1 13 26 Guinea 27 Haiti 0 2 100 47 0 7 0 2 0 42 28 Lesotho 29 Madagascar 4 90 1 1 4 30 Central African Emp. 12 0 86 82 0 1 (.) 1 18 31 Kenya 1 18 87 70 0 (.) 0 (.) 12 12 32 Mauritania 4 69 1 20 6 33 Uganda 8 2 92 98 0 0 0 0 (.) (.) 34 Sudan 0 100 0 0 0 35 Angola 36 Indonesia 33 74 67 24 0 0 (.) 1 (.) 37Togo 0 96 0 0 4 Middle Income Countries 38 Egypt 4 25 84 48 9 17 (.) 1 3 9 39 Cameroon 19 6 77 84 0 3 2 2 2 5 40 Yemen, PDR 41 Ghana 7 11 83 88 0 (.) 0 (.) 10 1 42 Honduras 5 9 93 81 0 2 0 0 2 8 43 Liberia 45 55 0 0 0 44 Nigeria 8 94 89 5 0 0 0 0 3 1 45 Thailand 7 7 91 74 0 8 0 2 2 9 46 Senegal 3 94 1 1 1 47 Yemen Arab Rep. 1 86 3 0 10 48 Philippines 10 18 86 58 1 4 0 1 3 19 49 Zambia 50 Congo, People's Rep. 7 77 84 10 (.) 0 5 2 4 11 51 Papua New Guinea 0 61 92 38 0 (.) 0 (.) 8 1 52 Rhodesia 71 25 1 (.) 3 53 El Salvador 0 94 3 (.) 3 54 Morocco 38 47 54 37 1 10 1 (.) 6 6 55 Bolivia 56 Ivory Coast 1 4 98 88 0 2 (.) 2 1 4 57 Jordan 0 41 96 38 0 4 0 1 4 16 58 Colombia 19 4 79 74 0 8 (.) 2 2 12 59 Paraguay 0 100 0 0 0 60 Ecuador 0 59 99 39 0 2 0 (.) 1 0 61 Guatemala 2 95 1 0 .. 2 62 Korea, Rep. of 30 3 56 9 8 36 (.) 17 6 35 63 Nicaragua 3 1 95 83 0 3 0 1 2 12 64 Dominican Rep. 6 92 0 0 .. 2 65 Peru 49 50 0 0 1 66 Tunisia 24 53 66 21 1 12 1 1 8 13 67 Syrian Arab Rep. 0 66 81 24 2 6 0 2 17 2 142 Percentage Shares of Merchandise Exports Machinery Fuels, Other and Minerals, Primary Textiles Transport Other and Metals Commodities and Clothing Equipment Manufactures 196O 1976 196O 1976 1960a 1976 l96O 1976 196O 1976 68 Malaysia 20 27 74 57 (.) 2 (.) 6 6 8 69 Algeria 12 96 81 3 0 0 1 (.) 6 1 70 Turkey 8 7 89 69 0 17 0 1 3 6 71 Mexico 24 26 64 43 4 5 1 7 7 19 72 Jamaica 50 23 45 21 2 1 0 1 3 54 73 Lebanon .. .. .. .. 74 Chile 92 83 4 12 0 0 0 1 4 4 75 China, Rep. of 2 13 30 .. 21 34 76 Panama .. .. .. . - 77 Costa Rica 0 1 95 70 0 5 0 3 5 21 78 South Africa 29 . 42 2 . . 4 . 23 79 Brazil 8 13 89 62 0 4 (.) 10 3 11 80 Uruguay S S () 66 14 0 . 2 . 0 18 81 Iraq 97 99 3 1 0 0 0 (.) 82 Argentina 1 1 95 74 0 2 (.) 10 4 13 83 Portugal 8 4 37 28 18 26 3 13 4 29 84 Yugoslavia 18 10 45 20 4 9 15 28 18 33 85 Iran 88 97 9 2 0 0 0 0 3 1 86 Trinidad and Tobago 82 91 14 3 0 (.) 0 1 4 5 87 Hong Kong 5 1 15 2 45 44 4 15 31 38 88 Venezuela 74 26 .. 0 .. 0 .. (.) 89 Greece 9 15 81 36 1 17 1 5 8 27 90 Israel 4 2 35 20 8 7 2 11 51 60 91 Singapore 1 31 73 23 5 6 7 25 14 15 92 Spain 21 6 57 25 7 6 2 25 13 38 Industrialized Countries 93 Ireland 5 3 67 44 6 9 4 14 18 30 94 Italy 8 7 19 9 17 11 29 34 27 39 95 New Zealand (.) 5 97 80 0 3 (.) 3 3 9 96 United Kingdom 7 9 9 9 8 5 44 40 32 37 97 Japan 11 1 10 3 28 6 23 53 28 37 98 Austria 26 4 22 12 10 10 16 28 26 46 99 Finland 3 5 50 20 1 7 13 25 33 43 100 Netherlands 15 21 34 25 8 5 18 19 25 30 101 France 9 6 18 18 10 6 25 38 38 32 102 Australia 13 32 79 47 (.) (.) 3 5 5 16 103 Belgium 15 10 9 12 12 9 13 25 51 44 104 Denmark 2 5 63 38 3 5 19 28 13 24 105 Germany, Fed. Rep. 9 6 4 6 4 5 44 48 39 35 106 Canada 33 27 37 24 1 1 8 31 21 17 107 United States 10 7 27 24 3 2 35 44 25 23 108 Norway 22 33 34 14 2 1 10 26 32 26 109 Sweden 10 6 29 16 1 3 31 44 29 31 110 Switzerland 2 3 8 5 12 7 30 34 48 51 Capital Surplus Oil Exporters 111 Saudi Arabia 100 100 0 0 0 0 0 (.) 0 (.) 112 Libya 6 100 84 0 0 0 0 0 10 0 113 Kuwait 97 0 . (.) .. 2 1 Centrally Planned Economies 114 China, People's Rep. 115 Albania 116 Korea, Dem. Rep. 117 Mongolia 118 Cuba 2 119 Romania 120 Bulgaria .. .. 121 Hungary 6 7 28 26 8 Si 122 USSR 24 .. 28 21 26 123 Poland 124 Czechoslovakia 7 6 6 50 31 125 German Dem. Rep. .. Figures in italics in these columns refer to 1961 rather than 1960. 143 Table 10: Structure of Merchandise Imports Percentage Shares of Merchandise Imports Machinery Other and Primary Transport Other Food Fuel Commodities Equipment Manufactures 19600 1976 19600 1976 19600 1976 19600 1976 19600 1976 Low Income Countries 1 Bhutan 2 Cambodia 3 Bangladesh 42 13 .. 6 14 25 4LaoPDR .. .. .. .. -. 5 Ethiopia 6 15 3 34 42 6 Mali 20 19 5 14 4 2 18 30 53 35 7 Nepal .. .. .. 8 Somalia 27 .. 4 .. 0 .. 18 .. 51 9 Burundi .. 19 .. 9 .. 9 .. 28 . 35 10 Chad 19 .. 12 4 19 46 11 Rwanda 12 Upper Volta 24 50 13 Zaire 14 Burma 11 .; .. 9 17 56 15 Malawi 10 14 .. 2 31 .. 43 16 India 21 28 6 26 28 8 30 19 15 19 17 Mozambique 18 Niger 24 th 19 Viet Nam 20 Afghanistan .7 21 Pakistan 22 21 10 18 2 6 27 26 39 29 22 Sierra Leone 23 .. 12 .. 5 .. 15 .. 45 23 Tanzania . . 10 .. 18 . . 5 .. 35 .. 32 24 Benin 17 17 10 8 1 0 18 30 54 45 25 Sri Lanka 39 36 7 25 5 4 15 13 34 22 26 Guinea .. .. .. .. .. . 27 Haiti 31 . . 9 1 17 .. 42 28 Lesotho . . .. .. .. 29 Madagascar 17 .. 6 .. 3 .. 23 .. 51 30 Central African Emp. 15 17 9 1 2 2 26 35 48 45 31 Kenya 12 7 11 2] 8 3 27 29 42 34 32 Mauritania 5 .. 3 .. 3 .. 39 .. 50 33 Uganda .. 11 .. 1 .. 3 .. 44 .. 41 34 Sudan 17 8 .. 3 .. 14 58 35 Angola 36 Indonesia 23 15 5 8 10 5 17 41 45 31 3] logo 16 13 6 6 3 10 32 24 43 47 Middle Income Countries 38 Egypt 23 28 11 6 16 7 25 30 25 29 39 Cameroon 20 10 8 9 3 2 17 37 52 42 40 Yemen, PDR .. .. .. 41 Ghana 19 .. 5 .. 4 .. 26 .. 46 42 Honduras 13 10 9 11 3 3 24 29 51 47 43 Liberia 16 .. 4 .. 7 .. 34 .. 39 44 Nigeria 14 10 5 3 6 2 24 48 51 3] 45 Thailand 10 5 11 23 11 9 25 30 43 33 46 Senegal 30 .. 5 .. 2 .. 19 .. 44 47 Yemen Arab Rep. 28 2 .. 4 31 35 48 Philippines 15 10 10 24 5 5 36 30 34 31 49 Zambia .. . .. .. . .. .. 50 Congo, People's Rep. 18 17 6 9 1 1 31 35 44 38 51 Papua New Guinea 30 23 5 14 4 1 23 32 38 30 52 Rhodesia .. 53 El Salvador 17 .. 6 .. 6 .. 26 .. 45 54 Morocco 27 20 8 11 7 7 19 35 39 27 55 Bolivia .. .. .. .. .. .. . . .. 56 Ivory Coast 18 14 6 13 2 3 27 33 47 37 57 Jordan .. 26 11 3 30 30 58 Colombia 8 12 3 3 15 8 43 42 31 35 59 Paraguay .. .. .. .. .. .. .. .. 60 Ecuador 13 8 3 1 9 2 33 46 42 43 61 Guatemala 12 .. 10 .. 7 .. 26 .. 45 62 Korea, Rep. of 10 9 7 20 25 19 12 27 46 25 63 Nicaragua 9 9 10 13 5 2 22 26 54 50 64 Dominican Rep. .. .. .. .. .. .. .. 65 Peru 16 .. 5 .. 5 .. 37 .. 37 66 Tunisia 20 14 9 12 4 7 23 35 44 32 67 Syrian Arab Rep. 24 17 8 10 5 4 15 34 48 35 144 Percentage Shares of Merchandise Imports Machinery Other and Primary Transport Other Food Fuel Commodities Equipment Manufactures 196O 1976 196O 1976 196O 1976 196O 1976 1960a 1976 68 Malaysia 29 17 16 14 13 7 14 33 28 29 69 Algeria 26 18 4 2 2 3 14 47 54 30 70 Turkey 7 3 11 23 16 6 42 38 24 30 71 Mexico 4 8 2 6 10 7 52 50 32 29 72 Jamaica 22 23 8 23 9 4 24 17 37 33 73 Lebanon 74 Chile . .. 75 China, Rep. of 11 17 14 . - 31 .. 27 76 Panama 15 8 10 35 1 0 22 22 52 35 77 Costa Rica 13 8 6 9 6 4 26 29 49 50 78 South Africa 6 7 9 .. 37 41 79 Brazil 14 8 19 32 13 6 36 29 18 25 80 Uruguay 6 35 8 27 24 81 Iraq 15 .. (.) .. 4 47 34 82 Argentina 3 5 13 18 11 12 44 26 29 39 83 Portugal 15 20 10 16 28 11 26 25 21 28 84 Yugoslavia 11 10 5 15 25 12 37 34 22 29 85 Iran 14 11 1 (.) 1 3 23 45 61 41 86 Trinidad and Tobago 16 8 34 57 7 1 18 17 25 17 87 Hong Kong 27 18 3 6 16 9 10 18 44 49 88 Venezuela 18 .. 1 10 36 35 89 Greece 11 8 8 20 16 8 44 41 21 23 90 Israel 20 14 7 17 18 6 28 22 27 41 91 Singapore 21 10 15 27 38 10 7 26 19 27 92 Spain 16 13 22 30 25 13 22 21 15 23 Industrialized Countries 93 Ireland 18 13 12 13 11 6 21 25 38 43 94 Italy 20 17 14 26 31 15 13 18 22 24 95 New Zealand 8 6 8 15 16 6 29 34 39 39 96 United Kingdom 36 17 11 18 27 12 8 21 18 32 97 Japan 17 17 17 44 49 21 9 6 8 12 98 Austria 16 8 10 12 20 9 29 32 25 39 99 Finland 13 8 10 22 20 7 33 33 24 30 100 Netherlands 18 16 13 20 14 8 22 22 33 34 101 France 25 12 17 22 25 10 14 23 19 33 102 Australia 6 5 10 10 16 5 31 38 37 42 103 Belgium 15 13 10 14 26 11 21 26 28 36 104 Denmark 18 11 12 16 11 6 23 28 36 39 105 Germany, Fed. Rep. 26 16 8 18 28 11 10 18 28 37 106 Canada 12 8 9 11 12 5 36 48 31 28 107 United States 24 10 10 28 25 8 10 25 31 29 108 Norway 12 7 9 11 13 7 36 42 30 33 109 Sweden 13 9 14 18 13 7 26 31 34 35 110 Switzerland 18 12 8 11 13 8 21 23 40 46 Capital Surplus Oil Exporters 111 Saudi Arabia 12 .. 1 .. 3 .. 44 40 112 Libya 13 15 5 3 10 3 40 35 32 44 113 Kuwait Capital Surplus Oil Exporters 114 China, People's Rep. 115 Albania 116 Korea, Dem. Rep. 117 Mongolia 118 Cuba 119 Romania 120 Bulgaria .. .. .. .. 121 Hungary 8 10 12 12 28 13 122 USSR 12 4 18 30 .. 36 123 Poland .- 124 Czechoslovakia 12 14 15 36 .. 23 125 German Dem. Rep. a Figures in italics in these columns refer to 1961 rather than 1960. 145 Table 11: Destination of Merchandise Exports (percentage of total) Developed Developing Centrally Capital Co u ntries Co u ntries Planned Surplus Economies Oil Exporters 1960 1977 1960 1977 1960 1977 1960 1977 Low Income Countries (g) 63 66 30 24 7 8 (.) 2 1 Bhutan 2 Cambodia 3 Bangladesh .. 45 .. 42 .. 13 .. (.) 4 Lao PDR 90 23 (.) 75 10 0 0 2 5 Ethiopia 69 72 30 20 1 4 (.) 4 6 Mali 93 60 3 21 0 19 (.) 0 7 Nepal .. 25 .. 75 .. (.) .. 0 8 Somalia 85 27 15 31 0 9 (.) 33 9 Burundi .. 94 .. 2 .. 4 .. 0 10 Chad 73 57 27 42 0 0 0 1 11 Rwanda .. 94 .. 6 .. (.) .. (.) 12 Upper Volta 4 80 96 19 0 1 0 0 13 Zaire 94 81 6 19 (.) (.) 0 0 14 Burma 23 28 31 69 6 1 0 2 15 Malawi .. 78 .. 22 .. (.) .. 0 16 India 66 55 25 23 8 12 1 10 1] Mozambique 29 70 71 30 (.) (.) (.) (.) 18 Niger 74 83 26 17 0 0 0 (.) 19 Viet Nam 20 Afghanistan 48 34 24 23 28 43 0 (.) 21 Pakistan 56 42 35 37 8 5 1 16 22 Sierra Leone 99 96 1 4 0 0 0 (.) 23 Tanzania 74 64 25 30 1 6 0 (.) 24 Benin .. 56 .. 44 .. 0 .. 0 25 Sri Lanka 71 46 18 37 11 12 0 5 26 Guinea 63 .. 19 .. 18 .. (.) 27 Haiti 98 .. (.) .. 2 .. 0 28 Lesotho 29 Madagascar 39 76 20 24 1 0 C.) C.) 30 Central African Emp. 83 78 17 22 0 0 0 0 31 Kenya 76 65 24 33 0 1 0 1 32 Mauritania 89 80 11 20 0 0 0 C.) 33 Uganda 63 81 33 14 4 4 0 1 34 Sudan 59 44 25 36 14 15 2 5 35 Angola 64 47 34 53 2 0 0 0 36 Indonesia 54 77 38 22 8 1 0 0 37 Togo 74 79 26 12 0 9 0 0 Middle Income COuntries (g) 71 67 24 28 5 4 (.) 1 38 Egypt 26 62 27 11 45 25 2 2 39 Cameroon 93 83 6 14 1 3 0 0 40 Yemen, PDR 46 33 35 43 18 3 1 17 41 Ghana 89 76 4 12 7 12 C.) (.) 42 Honduras 77 83 23 17 0 (.) 0 0 43 Liberia 100 85 (.) 13 0 1 0 0 44 Nigeria 95 71 4 29 1 0 0 C.) 45 Thailand 47 54 48 41 2 3 3 2 46 Senegal 89 85 11 15 0 (.) 0 C.) 47 Yemen Arab Rep. 45 27 23 44 18 24 14 5 48 Philippines 94 81 5 10 1 8 C.) 1 49 Zambia .. 80 .. 16 .. 4 .. 0 50 Congo, People's Rep. 93 79 7 21 0 (.) 0 0 51 Papua New Guinea .. 93 .. 6 1 .. 0 52 Rhodesia 53 El Salvador 88 79 12 21 0 0 0 0 54 Morocco 74 62 22 28 4 9 (.) 1 55 Bolivia 88 60 12 35 0 5 0 0 56 Ivory Coast 84 81 16 17 0 2 0 (.) 57 Jordan 1 7 66 55 11 4 22 34 58 Colombia 94 78 6 17 C.) 5 0 (.) 59 Paraguay 61 64 39 36 0 0 0 0 60 Ecuador 91 54 9 42 0 4 0 C.) 61 Guatemala 94 75 6 25 0 0 0 C.) 62 Korea, Rep. of 89 73 11 17 0 (.) 0 10 63 Nicaragua 91 68 9 30 (.) 2 0 0 64 Dominican Rep. 92 91 8 9 o 0 0 0 65 Peru 84 66 16 23 (.) 11 0 (.) 66 Tunisia 76 69 19 25 3 3 2 3 67 Syrian Arab Rep. 34 55 31 18 24 21 11 6 146 Developed Developing Centrally Capital Countries Countries Planned Surplus Economies Oil Exporters 1960 1977 1960 1977 1960 1977 1960 1977 68 Malaysia 58 62 36 32 6 5 0 1 69 Algeria 92 95 7 4 1 1 0 0 70 Turkey 71 69 17 20 12 9 (.) 2 71 Mexico 93 79 7 20 (.) 1 0 (.) 72 Jamaica 96 84 4 15 0 1 0 0 73 Lebanon 24 13 29 26 6 8 41 53 74 Chile 91 65 9 33 (.) 1 0 1 75 China Rep. of 56 70 43 26 0 0 1 4 76 Panama 99 68 1 32 0 (.) 0 C.) 77 Costa Rica 93 68 7 29 0 3 0 (.) 78 South Africa 71 78 27 22 2 (.) (.) 0 79 Brazil 81 61 13 30 6 8 (.) I 80 Uruguay 82 48 8 46 10 6 0 (.) 81 Iraq 85 56 14 44 1 (.) (.) (.) 82 Argentina 75 46 19 45 6 8 0 1 83 Portugal 56 77 42 20 2 3 (.) (.) 84 Yugoslavia 48 37 19 22 33 38 (.) 3 85 Iran 62 74 35 26 3 0 (.) (.) 86 Trinidad and Tobago 80 83 20 17 0 (.) (.) (.) 87 Hong Kong 54 70 43 26 3 1 (.) 3 88 Venezuela 62 61 38 39 0 (.) 0 C.) 89 Greece 65 57 13 21 22 11 (.) 11 90 Israel 77 75 21 25 2 (.) 0 0 91 Singapore 38 47 55 48 7 2 0 3 92 Spain 80 63 17 30 3 3 (.) 4 Industrialized Countries (g) 67 67 30 26 3 4 (.) 3 93 Ireland 96 88 4 9 (.) 1 (.) 2 94 Italy 65 65 28 24 6 5 1 6 95 New Zealand 92 71 7 22 1 7 (.) (.) 96 United Kingdom 57 65 40 27 3 3 (.) 5 97 Japan 45 45 52 43 2 6 1 6 98 Austria 69 67 16 17 15 14 (.) 2 99 Finland 69 67 12 10 19 22 (.) 1 100 Netherlands 78 83 20 13 2 2 (.) 2 101 France 53 63 43 31 4 4 (.) 2 102 Australia 75 66 20 25 5 7 (.) 2 (.) 2 103 Belgium 104 Denmark 78 83 83 81 18 13 13 14 4.3 4 2 (.) 2 105 Germany, Fed. Rep. 70 70 25 21 5 6 (.) 3 106 Canada 90 89 9 9 1 2 (.) (.) 107 United States 61 57 38 37 1 2 (.) 4 108 Norway 80 78 15 18 5 4 (.) (.) 109 Sweden 79 77 16 17 5 5 (.) 1 110 Switzerland 72 67 24 25 4 5 (.) 3 Capital Surplus Oil Exporters 111 Saudi Arabia 75 75 25 25 0 (.) 0 (.) 112 Libya 67 79 26 21 7 (.) 0 (.) 113 Kuwait 91 62 9 30 0 (.) 0 8 Centrally Planned Economies (g) 114 China, People's Rep. 0 115 Albania 0 116 Korea, Dem. Rep. 117 Mongolia 118 Cuba 72 119 Romania 20 26 9 21 71 50 0 3 120 Bulgaria 13 .. 3 .. 84 .. 0 121 Hungary 23 .. 6 .. 71 .. 0 122 USSR 18 .. 7 .. 75 .. 0 123 Poland 30 .. 7 .. 63 .. 0 124 Czechoslovakia 17 11 .. 72 0 125 German Oem. Rep. 20 4 .. 76 0 147 Table 12: Trade in Manufactured Goods Destination of Manufactured Exports (percentage of total) Total Manufactured \To Centrally Capital Exports N Developed Developing Planned Surplus (million From Countries Countries Economies Oil Exporters US dollars) 1963 1976 1963 1976 1963 1976 1963 1976 1963 1976 Low Income Countries (g) 52 .. 30 11 7 1 Bhufan .. 2 Cambodia 58 42 0 0 1 3 Bangladesh 54 40 6 0 .. 222 4LaoPDR .. (.) 5 Ethiopia 30 55 0 15 (.) 6 6 Mali 14 46 66 54 20 0 0 0 (.) 1 7 Nepal 38 62 (.) 0 .. 16 8 Somalia 13 30 0 57 2 2 9 Burundi 5 95 0 0 .. I 10 Chad 12 32 77 68 11 0 (.) 0 1 3 11 Rwanda 30 70 0 0 (.) 2 12 Upper Volta 12 32 88 68 0 0 0 0 1 3 13 Zaire 98 2 (.) 0 1 290 14 Burma 28 59 11 2 1 6 15 Malawi 7 93 0 0 .. 6 16 India 56 49 35 27 7 13 2 11 677 2801 1] Mozambique .. 6 18 Niger 23 67 77 33 0 0 0 0 1 8 19 Viet Nam 20 Afghanistan 98 88 2 1 0 10 0 1 7 32 21 Pakistan 49 48 1 2 109 629 22 Sierra Leone 100 97 (.) 3 0 0 0 0 23 75 23 Tanzania 80 19 1 0 16 38 24 Benin 18 18 82 82 0 0 0 0 1 7 25 Sri Lanka 70 28 2 (.) 4 76 26 Guinea 16 84 0 0 39 27 Haiti 98 2 0 0 43 28 Lesotho 29 Madagascar 82 82 18 18 0 0 0 0 4 25 30 Central African Emp 50 67 50 33 0 0 0 0 11 11 31 Kenya 13 . 84 1 2 12 76 32 Mauritania 95 85 5 15 0 0 0 0 3 7 33 Uganda 94 (.) 0 6 (.) 8 34 Sudan 35 54 0 11 (.) 4 35 Angola 80 19 0 1 .. 49 36 Indonesia 54 46 (.) (.) 2 130 37 Togo 45 35 55 65 0 0 0 0 1 7 Middle Income Countries (g) .. 64 27 5 4 38 Egypt 13 .. 14 .. 67 .. 6 88 386 39 Cameroon 23 34 77 66 0 (.) 0 0 4 50 40 Yemen, PDR .. 12 41 Ghana 82 64 17 35 0 1 1 0 3 12 42 Honduras 3 25 97 75 0 0 0 0 2 39 43 Liberia 100 78 C.) 22 0 0 0 0 3 9 44 Nigeria 81 98 17 2 1 0 1 0 16 58 45 Thailand 41 67 59 29 0 1 0 3 16 572 46 Senegal 74 43 26 57 (.) 0 0 0 9 14 47 Yemen Arab Rep. .. C.) .. 79 .. 1 20 1 48 Philippines 92 84 8 14 0 (.) (.) 2 34 608 49Zambia .. 2 .. 98 .. 0 0 50 Congo, People's Rep. 93 45 7 55 0 (.) 0 0 23 51 Papua New Guinea 2 52 Rhodesia 53 El Salvador 1 27 99 73 0 0 0 0 18 209 54 Morocco .. 78 . 17 . 1 4 .. 202 55 Bolivia 91 93 9 7 0 0 0 0 6 20 56 Ivory Coast 40 40 60 60 0 (.) 0 0 7 124 57 Jordan 1 72 58 Colombia 45 51 55 48 0 1 0 0 17 384 59 Paraguay 85 59 15 41 0 0 0 0 4 26 60 Ecuador 52 30 48 70 0 0 0 0 3 34 61 Guatemala .. 9 91 0 0 15 218 62 Korea, Rep. of 57 78 43 15 0 (.) 0 7 39 6,770 63 Nicaragua .. 15 85 0 0 3 87 64 Dominican Rep. .. 100 C.) 0 0 1 120 65 Peru 45 36 55 49 (.) 15 (.) 0 6 101 42 53 16 0 5 2 12 203 66 Tunisia 81 1 67 Syrian Arab Rep, .. 6 23 38 33 21 108 148 Destination of Manufactured Exports (percentage of total) Total Manufactured 'NT0 Centrally Capital Exports 'NN Developed Developing Planned Surplus (million From Countries Countries Economies Oil Exporters US dollars) 1963 1976 1963 1976 1963 1976 1963 1976 1963 1976 68 Malaysia 36 . 54 .. 10 0 63 824 69 Algeria .. 57 .. 29 .. 14 .. 0 .. 48 70 Turkey 73 76 14 18 13 3 (.) 3 6 466 71 Mexico 69 75 31 23 (.) 2 (.) 0 147 1,010 72 Jamaica 83 68 17 29 0 3 0 0 13 345 73 Lebanon .. 19 .. 38 .. 4 .. 39 8 196 74 Chile 38 63 62 26 (.) 11 (.) 0 22 142 75 China, Rep. of .. 73 .. 24 .. 0 .. 3 129 6,922 76 Panama 5 81 95 19 0 0 0 0 (.) 18 7] Costa Rica .. 17 . 82 1 0 5 180 78 South Africa 318 1,788 79 Brazil 59 55 40 42 1 2 (.) 1 45 2,500 80 Uruguay .. 60 .. 36 .. 4 .. 0 31 181 81 Iraq (.) 16 21 39 (.) 0 79 45 5 5 82 Argentina 52 32 46 64 2 4 (.) (.) 79 975 83 Portugal 53 81 46 16 (.) 2 1 1 246 1,231 84 Yugoslavia 37 31 29 19 33 47 1 3 468 3,395 85 Iran 64 40 28 23 1 21 7 16 33 160 86 Trinidad and Tobago 40 58 60 42 0 (.) 0 (.) 10 122 87 Hong Kong 71 83 28 13 0 1 1 3 617 7,882 88 Venezuela 79 51 21 49 (.) 0 (.) 0 43 103 89 Greece 60 60 34 19 2 4 4 17 27 1,252 90 Israel 72 68 26 32 2 (.) 0 0 203 1,880 91 Singapore 5 50 95 44 (.) 1 (.) 5 352 3,020 92 Spain 62 58 35 35 2 4 1 3 227 6,025 Industrialized Countries (g) 65 64 31 28 3 5 1 3 93 Ireland 94 92 6 6 (.) 1 (.) 1 133 1,745 94 Italy 64 63 29 25 5 6 2 6 3,842 31,078 95 New Zealand .. 79 .. 20 .. (.) .. 1 40 526 96 United Kingdom 5] 62 39 30 3 3 1 5 9,412 38,051 97 Japan 44 44 50 43 5 7 1 6 4,812 64,600 98 Austria 66 63 1] 19 17 16 (.) 2 985 7,116 99 Finland 59 62 13 9 28 28 (.) 1 634 4,736 100 Netherlands 79 79 18 16 2 3 1 2 2,693 21,737 101 France 58 60 39 32 2 6 1 2 5,744 42,198 102 Australia 59 50 40 45 1 4 (.) 1 332 2,665 103 Belgium 85 83 13 12 1 3 1 2 3,572 25,652 104 Denmark 73 78 19 16 8 4 (.) 2 752 5,068 105 Germany, Fed. Rep. 75 68 22 23 2 7 1 2 12,812 90,400 106 Canada 87 89 13 10 (.) (.) (.) 1 2,165 18,821 107 United States 56 5] 42 3] (.) 1 2 5 12,453 80,008 108 Norway 78 74 19 21 3 4 (.) 1 529 4,185 109 Sweden 78 74 19 19 3 5 (.) 2 2,143 14,514 110 Switzerland 72 66 25 25 2 6 1 3 2,163 13,440 Capital Surplus Oil Exporters 111 Saudi Arabia 11 82 .. (.) 7 0 4 112 Libya 33 22 .. 45 0 (.) 113 Kuwait 819 Centrally Planned Economies (9) 14 18 68 (.) 114 China, People's Rep. 32 53 12 .. 3 .. 3,124 115 Albania 40 .. 10 50 .. 0 .. 32 116 Korea, Dem. Rep. 117 Mongolia 118 Cuba 15 o 119 Romania .. .. .. .. 3,834 120 Bulgaria 6 .. 13 81 0 .. 3,396 121 Hungary 20 .. 21 58 1 .. 3,328 122 USSR 11 .. 22 .. 6] 0 .. 15,773 123 Poland 18 .. 9 72 1 .. 7,119 124 Czechoslovakia 14 . 12 74 0 .. 7,902 125 German Dem. Rep, 11 . 10 .. 79 0 .. 9,452 149 Table 13: Balance of Payments and Debt Service Ratios Current Account Interest Debt Service as Percentage of:a Balance before Payments on Interest Payments External Public on External Public Debt Exports of Debt Goods and (million US dollars) (million US dollars) GNP Services 1970 1977 1970 1977 1970 1977 1970 1977 Low Income Countries (g) 1.3 1.8 12.4 7.6 1 Bhutan 2 Cambodia 3 Bangladesh -265 25 - - 1.2 11.. 4 Lao PDR 75 5 Ethiopia -26 -70 12 ii o'. 11.3 64 6 Mali -2 5 (.) 2 0.2 1.0 1.2 4.0 7 Nepal . -5 (.) 1 0.3 0.2 10.9 1.4 8 Somalia -6 -31 .. 2 0.5 2.6 2.1 10.7 9 Burundi 9 (.) 1 0.3 0.5 2.5 2.8 10 Chad 2 -26 (.) 3 1.0 2.5 3.1 9.3 11 Rwanda 7 21 (.) 1 0.2 0.2 1.3 1.0 12 Upper Volta 9 -71 (.) 2 0.6 0.9 3.9 3.8 13 Zaire -55 -486 9 67 2.0 2.4 4.4 10.0 14 Burma -60 -93 3 11 1.0 0.8 16.1 13.2 15 Malawi -32 -34 3 4 1.8 1.5 7.0 5.0 16 India -203 1,874 189 297 0.9 0.8 22.0 10.5 17 Mozambique 18 Niger ole il 3.8 4.0 19 Viet Nam 20 Afghanistan (.) 2.5 il 25.6 8.2 21 Pakistan -591 -578 76 141 1.9 2.1 21.6 13.6 22 Sierra Leone -14 -33 2 5 2.9 2.8 9.8 9.8 23 Tanzania -30 3 10 22 2.1 1.5 8.2 7.1 24 Benin -1 -94 (.) 2 0.7 1.5 2.2 5.9 25 Sri Lanka -47 158 12 22 2.1 4.4 10.3 14.6 26 Guinea -15 4 24 2.9 14.3 21.3 43.5 27 Haiti 2 -51 (.) 3 1.0 1.1 7.7 7.1 28 Lesotho 11 (-) (.) 0.5 0.2 8.8 3,3 29 Madagascar 2 -16 2 5 0.8 0.7 3,5 3.1 30 Central African Emp. -11 18 (.) 1 0.9 1.3 3.2 4,5 31 Kenya -37 88 17 39 2.6 1.8 7.8 4.6 32 Mauritania -5 -113 (.) 9 2.0 10.0 3.2 22.6 33 Uganda 24 71 5 5 0.8 0.6 3.4 3.9 34 Sudan -30 -443 12 25 1.2 1.5 10.1 8.7 35 Angola 36 Indonesia -289 423 21 473 0.8 2.9 6.4 11.9 37 Togo 4 -73 1 7 0.9 3.3 2.9 11.8 Middle Income Countries (g) 1.7 2.4 9.1 9.2 38 Egypt -116 -529 38 285 4,1 28.7 22.8 39 Cameroon -26 -40 4 30 0.9 2.5 3.1 6.6 40 Yemen, PDR 41 Ghana -9 -56 -92 -26 . 12 () 16 5.0 3,] 42 Honduras -61 -113 3 21 0.8 2.9 2.8 6.9 43 Liberia - - -145 6 8 5.8 3.3 7.2 5.1 44 Nigeria -348 -853 20 44 0.7 0.3 4.1 0.8 45 Thailand -234 -1,039 16 60 0.6 0.7 3.3 3.0 46 Senegal -14 -73 2 21 0.8 2.7 2.7 8.4 47 Yemen Arab Rep. 303 1 0.2 48. Philippines -22 -724 26 105 1.4 1.3 7,5 6.4 49 Zambia 131 -157 23 60 3.1 7.7 5.5 18.6 50 Congo, People's Rep. - - -182 3 11 3.2 4.6 7,4 9.6 51 Papua New Guinea 76 1 19 0.1 1.9 4.3 52 Rhodesia 53 El Salvador 13 20 4 ii 0.9 2.4 3.6 5.9 54 Morocco -101 -1,743 23 129 1.8 2.4 7.7 10.9 55 Bolivia -17 -120 6 56 2.2 4.3 10.9 20.6 56 Ivory Coast -26 -295 12 104 2.7 5.1 6.7 12.2 57 Jordan -15 30 2 16 0.7 1.7 3.6 3.2 58 Colombia -249 562 44 132 1.2 1.6 11.6 8.7 59 Paraguay -13 -52 3 10 1.7 1.3 11.1 6.3 60 Ecuador -106 -322 7 43 1.5 1.9 9.1 7.7 61 Guatemala -2 -50 6 10 1.4 0.3 7.4 1.3 62 Korea, Rep. of -553 447 70 437 3.2 3.7 18.9 8.7 63 Nicaragua -33 -122 7 54 3.0 4.7 10.4 13.8 64 Dominican Rep. -99 -242 4 22 1.1 1.5 6.4 7.0 65 Peru 245 -670 43 248 2.4 5,4 11.6 30.3 66 Tunisia -36 -476 17 59 4.4 3.1 17.1 8.8 67 Syrian Arab Rep. -64 -137 6 27 2.1 1.4 10.8 6.7 150 Current Account Interest Debt Service as Percentage of:a Balance before Payments on Interest Payments External Public on External Public Debt Exports of Debt Goods and (million US dollars) (million US dollars) GNP Services 1970 1917 1970 1977 1970 1977 1970 1977 68 Malaysia 29 675 21 124 1.7 3.6 3.6 6.5 69 Algeria -116 -1935 10 387 0.8 5.3 3.2 15.5 70 Turkey -28 -3,155 42 169 1.3 0.8 16.3 11.0 71 Mexico -851 -547 21] 1,232 2.1 5.2 23.6 48.1 72 Jamaica -145 -9 8 59 1.1 4.7 2.5 14.9 73 Lebanon -23 1 2 0.2 .. 0.5 0.7 74 Chile -13 -290 78 201 2.8 5.9 18.9 32.4 75 China, Rep. of 24 1,162 23 188 1.4 2.4 4.5 4.3 76 Panama 57 -82 7 79 3.0 7.5 7.7 12.2 77 Costa Rica -67 -189 7 36 2.9 3.1 9.7 9.0 78 South Africa -1,215 538 .. -- 79 Brazil -725 -3,787 112 1,063 0.9 1.5 13.3 18.4 80 Uruguay -29 -40 16 58 2.6 5.9 21.5 27.7 81 Iraq 110 1,209 9 13 0.9 0.6 2.2 1.1 82 Argentina -43 1,594 120 308 1.9 2.0 21.4 15.0 83 Portugal -1,402 28 71 1.3 0.9 4.4 5.3 84 Yugoslavia -276 -1,432 72 171 1.7 1.3 8.2 6.7 85 Iran -422 5,371 85 289 3.0 1.1 12.2 3.2 86 Trinidad and Tobago -74 338 6 8 1.9 0.5 2.6 0.5 8] Hong Kong 317 88 Venezuela -64 -1,828 40 222 0.8 2.3 2.8 7.5 89 Greece -364 -1,108 41 169 1.0 2.0 7.2 9.6 90 Israel -572 -250 41 309 3.1 6.5 12.3 16.1 91 Singapore -566 -414 6 45 0.6 1.3 0.6 0.8 92 Spain 151 -2,055 72 403 0.5 0.7 3.6 4.5 Industrialized Countriesa 93 Ireland -189 -261 94 Italy 902 2,285 95 New Zealand -29 -630 96 United Kingdom 1,755 596 97 Japan 1,970 10,911 98 Austria -18 -3,003 99 Finland -240 -151 100 Netherlands -381 363 101 France 67 -3,296 102 Australia -832 -2,512 103 Belgium 715 -373 104 Denmark -544 -1,681 105 Germany, Fed. Rep. 842 3,799 106 Canada 1,078 -3,930 107 United States 2,357 -15,276 108 Norway -242 4,937 109 Sweden -265 -2,815 110 Switzerland 70 3,333 Capital Surplus Oil Exporters 111 Saudi Arabia 71 12,791 112 Libya 645 2,905 113 Kuwait 5,483 Centrally Planned Economiesa 114 China, People's Rep. 115 Albania 116 Korea, Dem. Rep. 11] Mongolia 118 Cuba 119 Romania 106 120 Bulgaria 121 Hungary 122 USSR 123 Poland 124 Czechoslovakia 125 German Dem. Rep. a See Technical Notes. 151 Table 14: Flows of External Capital Public and Publicly Guaranteed Medium- and Long-term Loans Net Direct (million US dollars) Private Investment Repayment of (million Gross Inflow Principal Net Inflow US dollars) 1970 1977 1970 1977 1970 1977 1970 1977 Low Income Countries 1 Bhufan 2 Cambodia 3 Bangladesh 327 41 286 4LaoPDR 5 Ethiopia 27 51 15 17 12 34 4 6 6 Mali 21 55 (.) 4 21 51 7 Nepal 8 Somalia 1 4 29 124 2 1 1 9 1 3 28 115 5 8 9 Burundi 1 15 (.) 2 1 13 10 Chad 6 38 2 11 4 27 1 21 11 Rwanda (.) 28 (.) 1 (.) 27 (.) 6 12 Upper Volta 2 50 2 4 (.) 46 (.) 13 Zaire 14 Burma 15 Malawi 31 16 38 464 159 57 28 18 3 53 22 8 2 3 35 411 137 49 42 -. 9 6 16 India 17 Mozambique 890 1,151 307 523 583 628 6 8 18 Niger 12 37 2 6 10 31 1 19 VietNam 20 Afghanistan 35 151 14 26 21 125 21 Pakistan 22 Sierra Leone 23 Tanzania 482 8 50 755 32 170 114 10 17 175 12 27 2 368 33 580 20 143 23 8 15 5 24 Benin 2 37 7 30 7 1 1 1 25 Sri Lanka 61 150 28 102 33 48 (.) 26 Guinea 97 55 10 130 87 75 10 27 Haiti 4 59 4 10 (.) 49 3 8 28 Lesotho 29 Madagascar 30 Centrat African Emp. (.) 11 2 7 23 23 (.) 5 2 (.) 8 5 (.) 6 (.) 15 18 7 20 1 - 2 3 - - 31 Kenya 30 170 24 34 136 14 54 32 Mauritania 33 Uganda 4 26 86 9 3 6 32 17 20 6 1 8 54 1 4 4 1 34 Sudan 46 132 20 47 26 85 20 35 Angola 36 Indonesia 393 1,989 55 826 338 1,163 83 235 37 Togo 5 115 2 19 3 96 1 Middle Income Countries 38 Egypt 39 Cameroon 40 Yemen, PDR 302 28 1 3,028 234 59 247 4 750 36 0 55 24 1 2,278 198 59 - 16 - - 3 98 - 41 Ghana 40 108 12 21 28 87 68 17 42 Honduras 29 120 3 20 26 100 8 9 43 Liberia 44 Nigeria 7 62 77 89 11 36 15 62 426 62 27 205 245 -. 45 Thailand 55 253 23 67 32 186 43 105 46 Senegal 18 114 5 38 13 76 5 47 Yemen Arab Rep. 2 36 1 2 1 34 2 48 Philippines 132 903 73 163 59 740 29 213 49 Zambia 351 222 32 120 319 102 297 18 50 Congo, People's Rep. 30 86 6 24 24 62 2 51 Papua New Guinea 50 41 0 9 50 32 46 52 Rhodesia 53 El Salvador 8 58 6 52 2 6 4 22 54 Morocco 162 1,273 36 105 126 1,168 20 54 55 Bolivia 54 444 17 92 37 352 76 9 56 Ivory Coast 77 920 27 187 50 733 31 53 57 Jordan 14 211 3 22 11 189 11 58 Colombia 235 367 75 173 160 194 39 42 59 Paraguay 15 107 7 16 8 91 4 17 60 Ecuador 42 596 16 74 26 522 89 34 61 Guatemala 37 49 20 8 17 41 29 95 62 Korea, Rep. of 441 2,218 198 717 243 1,501 66 73 63 Nicaragua 44 267 16 47 28 220 15 10 64 Dominican Rep. 44 143 12 43 32 100 72 46 65 Peru 148 1,283 100 404 48 879 70 55 66 Tunisia 82 729 44 93 38 636 16 93 67 Syrian Arab Rep. 60 551 30 77 30 474 152 Public and Publicly Guaranteed Medium- and Long-term Loans Net Direct (million US dollars) Private Investment Repayment of (million Gross Inflow Principal Net Inflow US dollars) 1970 1977 1970 1977 1970 1977 1970 1977 68 Malaysia 69 Algeria 44 292 645 2,721 45 33 318 640 1 259 327 2081 94 45 481 173 70 Turkey 328 761 128 195 200 566 58 184 71 Mexico 72 Jamaica 782 15 6,146 96 475 6 2,560 88 307 9 3,586 8 323 161 7 555 73 Lebanon 74 Chile 75 China, Rep. of 12 397 154 6 570 612 2 163 54 6 651 282 10 234 100 (.) 81 330 17 79 61 842 76 Panama 67 345 24 88 43 257 33 9 77 Costa Rica 30 236 21 50 9 186 26 63 78 South Africa 318 190 79 Brazil 975 4,623 302 1,442 673 3,181 407 1,719 80 Uruguay 37 199 4] 187 10 12 81 Iraq 63 488 18 103 45 385 24 82 Argentina 489 1,171 341 696 148 475 11 54 83 Portugal 20 485 62 85 42 400 57 84 Yugoslavia 180 403 168 433 12 30 85 Iran 86 Trinidad and Tobago 87 Hong Kong 940 8 2,320 159 206 235 10 .. 601 7 2 705 (.) 1,719 152 206 25 83 802 140 (.) 88 Venezuela 224 2,064 42 60] 182 1,457 23 270 89 Greece 164 543 61 364 103 179 50 24 90 Israel 663 217 131 595 532 378 40 76 91 Singapore 51 257 6 36 45 221 93 343 92 Spain 268 2,391 123 440 145 1,951 179 161 Industrialized Countriesa 93 Ireland 32 173 94 Italy 496 585 95 New Zealand 22 163 96 United Kingdom 463 989 97 Japan 261 1,622 98 Austria 85 41 99 Finland 34 24 100 Netherlands 14 1,292 101 France 248 570 102 Australia 78] 905 103 Belgium 162 72] 104 Denmark 105 Germany, Fed. Rep. 278 1,327 106 Canada 566 222 10] United States 6,125 8,878 108 Norway 32 503 109 Sweden 105 595 110 Switzerland Capital Surplus Oil Exporters ff1 Saudi Arabia 20 822 112 Libya 139 425 113 Kuwait 153 Centrally Planned Economiesa 114 China, People's Rep. 115 Albania 116 Korea, Dem. Rep. 117 Mongolia 118 Cuba 119 Romania 120 Bulgaria 121 Hungary 122 USSR 123 Poland 124 Czechoslovakia 125 German Bern. Rep. a See Technical Notes. 153 Table 15: External Public Debt and International Reserves External Public Debt Gross International Reserves Outstanding and Disbursed in months As Percentage of import (million US dollars) of GNP (million US dollars) coverage 1970 1977 1970 1977 1970 1977 1977 Low Income Countries (g) 20.3 25.0 3.7 1 Bhutan 2 Cambodia .. 3 Bangladesh 2,291 41.8 .. 235 2.2 4 Lao PDR .. 75 .. .. 6 6 1.0 5 Ethiopia 169 471 9.5 14.4 71 225 4.6 6 Mali 238 449 88.1 67.5 1 6 0.3 7 Nepal 3 71 0.3 5.4 94 148 8.1 8 Somalia 77 401 41.1 92.6 21 121 5.9 9 Burundi 7 37 3.0 7.0 15 95 13.1 10 Chad 32 117 11.8 22.0 2 19 0.9 11 Rwanda 2 78 0.9 13.1 8 83 5.4 12 Upper Volta 21 135 6.3 18.6 36 57 2.2 13 Zaire 311 2,666 17.1 52.8 186 145 0.9 14 Burma 102 500 4.7 12.5 94 113 3.8 15 Malawi 121 292 38.7 35.9 29 88 3.4 16 India 7,935 14,531 14.8 14.7 1,006 5,184 9.0 1] Mozambique . 18 Niger 32 122 8.7 15.8 19 101 3.5 19 Viet Nam .. .. .. .. 20 Afghanistan 529 1,059 58.0 34.9 47 316 7.8 21 Pakistan 3,057 6,772 30.5 44.9 190 518 2.0 22 Sierra Leone 59 190 14.3 32.0 39 33 1.7 23 Tanzania 249 1,005 19.4 32.0 65 282 4.2 24 Benin 41 134 16.0 20.5 16 21 0.8 25 Sri Lanka 317 787 17.1 27.8 43 292 4.5 26 Guinea 320 718 65.2 66.5 27 Haiti 40 126 10.3 10.7 4 34 1.4 28 Lesotho 8 23 9.2 7.5 29 Madagascar 94 203 10.9 11.1 37 69 1.7 30 Central African Emp. 19 115 9.1 25.0 1 26 1.7 31 Kenya 313 821 20.3 19.] 220 523 3.9 32 Mauritania 27 45] 16.8 111.7 3 50 1.5 33 Uganda 128 215 9.8 5.9 5] 34 Sudan 302 1,732 11.3 35.4 22 23 0.3 35 Angola .. 36 Indonesia 2,405 11,409 26.7 25.6 160 2,516 2.7 3] Togo 40 285 15.3 38.1 35 46 1.6 Middle Income Countries (g) 14.7 18.6 3.8 38 Egypt 1,639 8,099 23,7 69.2 159 534 1.1 39 Cameroon 131 749 13.0 28.6 81 43 0.5 40 Yemen, PDR 1 291 0.3 50.3 59 101 2.3 41 Ghana 489 785 22.6 5.5 58 162 1.7 42 Honduras 90 436 12.9 30.7 20 180 3.0 43 Liberia 156 266 52.5 37.6 .. 2] 0.5 44 Nigeria 478 891 6.4 2.2 222 4,259 3.7 45 Thailand 322 1,051 4.9 5.8 906 1,915 4.3 46 Senegal 102 441 12.1 20.5 22 34 0.5 47 Yemen Arab Rep. 147 14.6 .. 1,240 16.8 48 Philippines 630 2,985 9.2 14.4 251 1,524 3.5 49 Zambia 596 1,392 34.2 59.5 514 74 0.8 50 Congo, People's Rep. 127 480 48.6 64.4 9 14 0.3 51 Papua New Guinea 61 338 10.4 23.2 431 7.1 52 Rhodesia . . . 53 El Salvador 88 266 8.6 10.2 63 233 2.5 54 Morocco 703 3,469 21.1 36.0 140 532 1.5 55 Bolivia 47] 1,361 46.4 39.2 46 237 3.1 56 Ivory Coast 256 1,973 18.2 34.6 119 186 0.9 57 Jordan 119 645 19.0 29.4 256 678 4,9 58 Colombia 1,249 2,622 18.1 13.5 206 1,821 7.0 59 Paraguay 98 317 16.] 15.4 18 268 6.7 60 Ecuador 213 1,15] 13.3 19.2 83 671 4.0 61 Guatemala 106 253 5.7 4.6 78 690 5.3 62 Korea, Rep. of 1,797 8,472 21.5 26.9 610 4,307 3.9 63 Nicaragua 146 864 19.3 40.3 49 149 1.9 64 Dominican Rep. 215 607 14.7 14.6 32 185 1.8 65 Peru 848 4659 14.0 38.4 336 421 1.6 66 Tunisia 524 1,943 37.3 39.9 60 358 1.9 6] Syrian Arab Rep. 232 1,528 13.7 20.7 55 546 2.3 154 External Public Debt Gross International Reserves Outstanding and Disbursed In months As Percentage of import (million US dollars) of GNP (million US dollars) coverage 1970 1977 1970 1977 1970 1977 1977 68 Malaysia 390 2053 10.0 16.7 664 2,858 5.6 69 Algeria 937 8,165 18.5 42.5 339 1,917 2.6 70 Turkey 1854 4,323 14.4 9.5 431 774 1.3 71 Mexico 3,228 19,208 9.7 26.5 744 1,723 2.1 72 Jamaica 154 896 11.5 28.7 139 48 0.5 73 Lebanon 64 39 4.2 .. 386 1,961 16.5 74 Chile 2,066 3,583 24.0 24.6 389 484 1.8 75 China, Rep. of 601 2,613 10.6 13.4 622 1,44] 1.8 76 Panama 194 1,349 19.0 60.9 16 71 0.6 77 Costa Rica 134 735 13.8 26.5 16 194 1.9 78 South Africa .. .. .. .. 1,012 829 0.8 79 Brazil 3,405 19,221 7.6 11.8 1,187 7,256 4.7 80 Uruguay 267 707 11.0 17.1 175 459 5.6 81 Iraq 274 761 8.8 4.0 462 6,996 8.9 82 Argentina 1,872 4,900 7.5 10.0 673 3,331 7.2 83 Portugal 473 1,455 7,0 8.3 1,504 1,391 3.0 84 Yugoslavia 1,199 2,824 8.5 6.3 140 2,108 2.3 85 Iran 2,193 6,198 20.8 7.5 208 12,266 6.4 86 Trinidad and Tobago 101 252 12.5 8.6 43 1,483 7.0 8] Hong Kong .. .. .. 88 Venezuela 728 4,463 6.7 12.2 1,021 8,214 7.7 89 Greece 905 2,635 8.9 9.9 310 1,020 1.8 90 Israel 2,274 6,568 41.4 46.9 449 1,571 2.3 91 Singapore 145 994 7.6 15.5 1,012 3,858 4.1 92 Spain 1,209 7,003 3.3 6.1 1,817 6,590 3.8 Industrialized Countriesa (g) 2.3 93 Ireland 697 2,372 6.0 94 Italy 5,352 11,629 2.5 95 New Zealand 258 445 1.2 96 United Kingdom 2,827 21,057 3,1 97 Japan 4,840 23,261 3.3 98 Austria 1,758 4,244 2.7 99 Finland 454 570 0.7 100 Netherlands 3,241 8,065 1.9 101 France 4,960 10,194 1.4 102 Australia 1,693 2,384 1.6 103 Belgium 2,847 5,761 1.6 104 Denmark 484 1,671 1.2 105 Germany, Fed. Rep. 13,610 39,737 3.7 106 Canada 4,679 4,608 1.0 107 United States 14,487 19,392 1.2 108 Norway 811 2,200 1.4 109 Sweden 761 3,668 1.8 110 Switzerland 5,132 13,830 7.7 Capital Surplus Oil Exporters 111 Saudi Arabia 662 30,034 12.9 112 Libya 1,590 4,891 7.6 113 Kuwait 203 2,990 6.4 Centrally Planned Economiesa (g) 114 China, People's Rep. 115 Albania 116 Korea, Dem. Rep. 11] Mongolia 118 Cuba 119 Romania 120 Bulgaria 121 Hungary 122 USSR 123 Poland 124 Czechoslovakia 125 German Oem. Rep. a See Technical Notes. 155 Table 16: Net Flows of Official Development Assistance from Members of the OECD and OPEC Estimated 1960 1965 1970 1975 1976 1977 1978 1979 1980 1981 OECD In Millions of US Dollars 94 Italy 77 60 147 182 226 186 175 255 280 285 95 New Zealand 14 66 53 53 55 61 67 76 96 United Kingdom 407 472 447 863 835 914 1226 1,443 1,610 1,814 97 Japan 105 244 458 1,148 1,105 1,424 2,215 2,698 3,159 3,704 98 Austria 10 11 64 48 118 156 180 206 235 99 Finland 2 7 48 51 49 56 70 82 96 100 Netherlands 35 70 196 604 720 900 1,070 1,332 1,557 1,780 101 France 823 752 971 2,093 2,146 2,267 2,689 3,279 3,670 4,143 102 Austra!ia 59 119 202 507 385 427 491 543 614 694 103 Belgium 101 102 120 378 340 371 513 592 675 795 104 Denmark 5 13 59 205 214 258 386 408 470 546 105 Germany, Fed, Rep. 223 456 599 1,689 1,384 1,386 1,977 2,328 2,631 2,928 106 Canada 75 96 346 880 887 992 1,053 1084 1,212 1,369 107 United States 2,702 3,418 3,050 4,007 4,334 4,159 4857 5,162 5,6]] 6,209 108 Norway 5 11 37 184 218 295 355 438 497 567 109 Sweden 7 38 11] 566 608 779 772 947 1,074 1,192 110 Switzerland 4 12 30 104 112 119 176 192 215 248 TOTAL 4,628 5,875 6,811 13,588 13,666 14,697 18,222 21,012 23,696 26,681 OECD In National Currencies 94 Italy (billion lire) 48 38 92 119 188 148 149 215 95 New Zealand (million dollars) 13 55 53 52 53 58 96 United Kingdom (million pounds) 145 168 186 390 462 524 638 728 97 Japan (billion yen) 38 88 165 341 328 383 466 530 98 Austria (million schillings) 260 286 1,115 865 1,947 2,262 2,480 99 Finland (million markkaa) 6 29 177 195 196 232 281 100 Netherlands (million guilders) 133 253 710 1,528 1,904 2,206 2,315 2,719 101 France (million francs) 4,063 3,713 5,393 8,975 10,255 11,762 12,135 14,166 102 Australia (million dollars) 53 106 180 387 314 385 429 476 103 Belgium (million francs) 5,050 5,100 6,000 13,903 13,129 13,234 16,103 17,635 104 Denmark (million kroner) 35 90 443 1,178 1,296 1,529 2,131 2,143 105 Germany, Fed. Rep. (million deutsche mark) 937 1,824 2,192 4,15] 3,484 3,218 3971 4383 106 Canada (million dollars) 73 104 362 895 874 1,057 1,201 1,279 107 United States (million dollars) 2,702 3,418 3,050 4,007 4,334 4,159 4,857 5,162 108 Norway (million kroner) 36 78 264 962 1,190 1,570 1,861 2,232 109 Sweden (million kronor) 36 196 605 2,350 2,64] 3,504 3,487 4,146 110 Switzerland (million francs) 17 52 131 260 281 284 315 322 OECD Summary ODA (billion US dollars, nominal prices) 4.6 5.9 6.8 13.6 13.7 14.7 18.2 21.0 23.7 26.7 ODA as Percentage of GNP .51 .45 .34 .35 .33 .31 .32 .33 .34 .34 ODA (billion US dollars, constant 1977 prices) 12.2 13.1 12.7 15.2 14.8 14.7 15.8 16.6 17.5 18.4 GNP (trillion US dollars, nominal prices) .9 1.3 2.0 3.8 4.2 4.7 5.6 6.4 7.1 7.9 ODA Deflatora .38 .45 .54 .89 .92 1.00 1.16 1.27 1.36 145 See Technical Notes. 156 Estimated 1960 1965 1970 1975 1976 1977 1978 1979 1980 1981 OECD As Percentage of Donor GNP 94 Italy .22 .10 .16 .11 .13 .10 .08 .09 .09 .08 95 New Zealand .23 .52 .41 .39 .34 .35 .34 .35 96 United Kingdom .56 .47 .36 .37 .38 .37 .40 .41 .42 .43 97 Japan .24 .27 .23 .23 .20 .21 .23 .24 .25 .26 98 Austria .11 .07 .17 .12 .24 .28 .28 .29 .29 99 Finland .. .02 .07 .18 .18 .1] .18 .19 .21 .22 100 Netherlands .31 .36 .61 .75 .82 .85 .82 .91 .96 .99 101 France 1.38 .76 .66 .62 .62 .60 .57 .60 .60 .61 102 Australia .38 .53 .59 .60 .42 .45 .45 .45 .47 .47 103 Belgium .88 .60 .46 .59 .51 .46 .52 .54 .56 .59 104 Denmark .09 .13 .38 .58 .56 .60 .75 .70 .73 .76 105 Germany, Fed. Rep. .31 .40 .32 .40 .31 .27 .31 .33 .33 .33 106 Canada .19 .19 .42 .55 .46 .50 .52 .49 .50 .50 107 United States .53 .49 .31 .26 .25 .22 .23 .22 .22 .22 108 Norway .11 .16 .32 .66 .70 .82 .90 .98 .99 1.00 109 Sweden .05 .19 .38 .82 .82 .99 .88 .96 .99 .99 110 Switzerland .04 .09 .15 .19 .19 .19 .20 .21 .21 .22 OPEC In Millions of US Dollars 44 Nigeria 14 83 64 69 Algeria 41 54 47 81 Iraq 218 232 53 85 Iran 593 753 202 88 Venezuela 31 96 72 111 Saudi Arabia 1,997 2,407 2,373 112 Libya 261 94 109 113 Kuwait 975 614 1,442 Qatar 339 195 118 United Arab Emirates 1,046 1,060 1,262 TOTAL 5,515 5,588 5,742 OPEC As Percentage of Donor GNP 44 Nigeria .05 .27 .19 69 Algeria .30 .33 .24 81 Iraq 1.66 1.46 .28 85 Iran 1.10 1.13 .24 88 Venezuela .12 .31 .20 111 Saudi Arabia 6.01 5,84 4.82 112 Libya 2.13 .61 62 113 Kuwait 6.52 4.34 10.18 Qatar 15.62 7.95 4.71 United Arab Emirates 11.79 10.94 10.97 157 Table 17: Historical and Projected Population Growth, and Hypothetical Stationary Populationa Mid-1977 Average Annual Projected Hypothetical Assumed Year Year when Population Growth of Population Size of when Net Stationary Population in Year2000 Stationary Reproduction Population Population Rate of 1 is Reached (millions) (percent) (millions) (millions) is Reached 1960-70 1970-77 Low Income Countries (g) 2.4 2.3 1 Bhutan 2.0 2.2 2 4 2035 2175 2 Cambodia 8 2.8 2.5 16 37 2035 2160 3 Bangladesh 81 2.9 2.5 145 334 2035 2165 4 Lao PDR 3 2.2 1.1 5 11 2035 2175 5 Ethiopia 30 2.4 2.6 52 136 2045 2175 6 Mali 6 2.4 2.5 11 28 2040 2170 7 Nepal 13 2.0 2.2 23 51 2035 2160 8 Somalia 4 2.4 2.3 7 17 2045 2170 9 Burundi 4 2.4 2.0 7 20 2045 2160 10 Chad 4 1.9 2.2 7 17 2045 2170 11 Rwanda 4 2.6 2.9 8 25 2045 2160 12 Upper Volta 5 1.6 1.6 10 24 2040 2170 13 Zaire 26 2.0 2.7 46 122 2045 2160 14 Burma 32 2.2 2.2 51 92 2020 2145 15 Malawi 6 2.8 3.1 11 31 2045 2165 16 India 632 2.3 2.1 973 1,643 2020 2150 17 Mozambique 10 2.2 2.5 17 44 2040 2135 18 Niger 5 3,3 2.8 9 24 2040 2165 19 Viet Nam 51 3,1 3.1 87 149 2015 2105 20 Afghanistan 14 2.2 2.2 25 66 2045 2170 21 Pakistan 75 2.8 3.1 139 335 2035 2155 22 Sierra Leone 3 2.2 2.5 6 14 2035 2160 23 Tanzania 16 2.7 3.0 32 94 2045 2145 24 Benin 3 2.6 2.9 6 15 2035 2160 25 Sri Lanka 14 2.4 1.7 21 30 2010 2070 26 Guinea 5 2.9 3.0 9 23 2045 2170 27 Haiti 5 1.5 1.7 8 16 2030 2130 28 Lesotho 2.2 2.4 2 5 2045 2155 29 Madagascar 8 2.2 2.5 15 39 2045 2160 30 Central African Emp. 2 2.2 2.2 3 8 2045 2165 31 Kenya 15 3.4 3.8 31 94 2045 2135 32 Mauritania 2 2.5 2.7 3 7 2040 2150 33 Uganda 12 3,7 3.0 23 58 2035 2130 34 Sudan 17 2.3 2.6 31 89 2045 2135 35 Angola 7 1.5 2.4 11 29 2040 2155 36 Indonesia 134 2.2 1.8 207 357 2020 2145 37 Togo 2 2.7 2.7 4 12 2040 2135 Middle Income Countries (g) 2.5 2.6 38 Egypt 38 2.3 2.2 58 90 2010 2105 39 Cameroon 8 1.8 2.2 13 32 2040 2135 40 Yemen, PDR 2 1.9 1.9 3 .7 2030 2125 41 Ghana 11 2.4 3.0 21 57 2040 2130 42 Honduras 3 3.1 3.3 7 15 2030 2090 43 Liberia 2 3.2 3.4 3 9 2040 2130 44 Nigeria 79 2.5 2.6 157 435 2040 2135 45 Thailand 44 3.1 2.9 69 105 2005 2095 46 Senegal 5 2.4 2.6 9 24 2040 2155 47 Yemen Arab Rep. 5 1.8 1.9 9 20 2030 2155 48 Philippines 44 3.0 2.7 76 128 2015 2075 49 Zambia 5 2.8 3.1 10 29 2040 2130 50 Congo, People's Rep. 2.1 2.5 3 7 2045 2115 51 Papua New Guinea 3 2.3 2.4 5 9 2025 2120 52 Rhodesia 7 3.9 3.4 13 37 2040 2105 53 El Salvador 4 2.9 2.9 8 14 2015 2075 54 Morocco 18 2.7 2.8 34 71 2025 2090 55 Bolivia 5 2.6 2.9 9 19 2030 2100 56 ivory Coast 7 3.8 5.9 14 36 2040 2130 57 Jordan 3 3.1 3.3 6 12 2025 2090 58 Colombia 25 3.0 2.1 38 55 2005 2065 59 Paraguay 3 2.6 2.9 5 9 2015 2070 60 Ecuador 7 3.0 3.0 14 26 2020 2080 61 Guatemala 6 2.8 2.9 12 23 2025 2085 62 Korea, Rep. of 36 2.4 2.0 49 64 2005 2065 63 Nicaragua 2 3.0 3.3 5 9 2020 2110 64 Dominican Rep. 5 2.9 2.9 9 15 2015 2075 65 Peru 16 2.9 2.8 29 55 2025 2085 66 Tunisia 6 2.0 2.0 9 14 2010 2070 67 Syrian Arab Rep. 8 3.2 3.3 15 33 2025 2085 158 Mid-1977 Average Annual Projected Hypothetical Assumed Year Year when Population Growth of Population Size of when Net Stationary Population inYear2000 Stationary Reproduction Population Population Rate of 1 is Reached (millions) (percent) (millions) (millions) is Reached 1960-70 1970-77 68 Malaysia 13 2.9 2.7 20 29 2005 2065 69 Algeria 17 2.1 3.5 34 94 2040 2100 70 Turkey 42 2.5 2.5 64 98 2010 2070 71 Mexico 63 3.3 3.3 116 204 2015 2075 72 Jamaica 2 1.4 1.7 3 5 2005 2065 73 Lebanon 3 2.9 2,5 5 8 2010 2070 74 Chile 11 2.1 1.7 14 19 2005 2070 75 China, Rep. of 17 2.7 2.0 23 30 2005 2065 76 Panama 2 2.9 2.7 3 4 2005 2065 77 Costa Rica 2 3.4 2.5 3 5 2005 2065 78 South Africa 27 2.6 2.7 49 107 2030 2090 79 Brazil 116 2.9 2.9 200 341 2015 2075 80 Uruguay 3 1.1 0.3 3 4 2005 2065 81 Iraq 12 3.2 3.4 23 49 2025 2085 82 Argentina 26 1.4 1.3 33 41 2005 2065 83 Portugal 10 0.0 0.8 11 14 2005 2095 84 Yugoslavia 22 1.0 0.9 26 29 2005 2100 85 Iran 35 2.8 3.0 58 101 2015 2105 86 Trinidad and Tobago 1 2.0 1.2 1 2 2005 2065 87 Hong Kong 5 2.5 2.0 6 7 2005 2060 88 Venezuela 14 3.4 3.4 24 40 2010 2070 89 Greece 9 0.5 0.7 10 11 2005 2065 90 Israel 4 3.5 2.8 5 8 2020 2080 91 Singapore 2 2.4 1.5 3 4 2005 2035 92 Spain 36 1.1 1.0 43 50 2005 2065 Industrialized Countries (g) 1.0 0.8 93 Ireland 3 0.4 1.2 4 5 2005 2060 94 Italy 56 0.7 0.7 61 63 2005 2035 95 New Zealand 3 1.7 1.6 4 5 2005 2070 96 United Kingdom 56 0.5 0.1 58 60 2005 2030 97 Japan 113 1.0 1.2 130 133 2005 2015 98 Austria 8 0.5 0.2 8 8 2005 2025 99 Finland 5 0,4 0.4 5 5 2005 2020 100 Netherlands 14 1.3 0.9 15 16 2005 2025 101 France 53 1.1 0.6 58 61 2005 2030 102 Australia 14 1.9 1.7 16 19 2005 2055 103 Belgium 10 0.5 0.2 10 10 2005 2025 104 Denmark 5 0.7 0.5 5 5 2005 2020 105 Germany, Fed. Rep. 61 0.9 0.2 61 61 2005 2005 106 Canada 23 1.8 1.2 28 30 2005 2030 107 United States 220 1.3 0.8 250 271 2005 2030 108 Norway 4 0.8 0.6 4 4 2005 2030 109 Sweden 8 0.7 0.4 8 8 2005 2005 110 Switzerland 6 1.6 0.1 7 7 2005 2005 Capital Surplus Oil Exporters 111 Saudi Arabia 8 2.6 3.0 14 31 2030 2120 112 Libya 3 4.0 4.1 5 12 2030 2090 113 Kuwait 1 10,3 6.1 2 5 2030 2085 Centrally Planned Economies (g) 1.7 1.2 114 China, People's Rep, 886 1.9 1.3 1,186 1,530 2005 2075 115 Albania 3 2.9 2.5 4 6 2005 2060 116 Korea, Dem. Rep. 17 2.8 2.6 27 43 2010 2070 117 Mongolia 2 3.0 3.0 2 4 2005 2090 118 Cuba 10 2.0 1.6 13 16 2005 2050 119 Romania 22 1.0 0.9 26 30 2005 2095 120 Bulgaria 9 0.8 0.6 10 10 2005 2080 121 Hungary 11 0.3 0.4 11 12 2005 2060 122 USSR 259 1.3 0.9 310 360 2005 2095 123 Poland 35 0.9 1.0 41 47 2005 2060 124 Czechoslovakia 15 0.5 0.7 17 19 2005 2090 125 German Dem. Rep. 17 -0.1 -0.2 17 18 2005 2025 TOTALb 4,122 5,972 9,777 a For the assumptions used in the projections, see Technical Notes. b Excludes countries with present populations of under one million. 159 Table 18: Demographic and Fertility-Related Indicators Crude Crude Percentage Total Percentage Percentage Birth Death Change in: Fertility of Women in of Married Rate Per Rate Per Rate Reproductive Women Thousand Thousand Crude Crude Age Group Using Population Population Birth Death Contra- Rate Rate (Aged 15-44) ceptivesa 1960 1977 1960 1977 1960-1977 1960-1977 1977 1977 1910 1977 Low Income Countries (w) 46 40 23 15 -11.9 -31.8 1 Bhutan 46 44 28 23 -4.3 -17.9 6.2 42 2 Cambodia 49 46 22 17 -6.1 -22.7 6.6 41 3 Bangladesh 49 46 23 18 -6.1 -21.7 6.5 41 9 4 Lao PDR 44 45 23 22 2.3 -4.4 6.4 41 S Ethiopia 51 49 28 25 -3.9 -10.7 6.7 42 6 Mali 50 49 27 22 -2.0 -18.5 6.7 42 7 Nepal 46 45 29 19 -2.2 -34.5 6.5 42 8 Somalia 48 48 26 20 0.0 -23.1 6.1 44 9 Burundi 48 47 2] 20 -2,1 -25.9 6.3 42 10 Chad 46 45 29 21 -2.2 -27.6 5.9 43 11 Rwanda 51 51 27 19 0.0 -29.6 6.9 41 12 Upper Volta 49 48 27 22 -2.0 -18.5 6.5 42 13 Zaire 48 46 24 19 -4.2 -20.8 6.1 42 (.) 14 Burma 43 39 22 15 -9.3 -31.8 5.5 42 15 Malawi 53 52 27 20 -1.9 -25.9 7.0 42 16 India 43 35 21 14 -18.6 -33.3 5.0 43 12 24 17 Mozambique 46 46 26 19 0.0 -26.9 6.1 42 18 Niger 52 52 27 22 0.0 -18.5 7.1 42 19 Viet Nam 42 3] 23 9 -11.9 -60.9 5.5 41 20 Afghanistan 48 48 30 22 0.0 -26.7 6.9 41 21 Pakistan 49 45 23 15 -8.2 -34.8 6.7 40 4 6 22 Sierra Leone 47 46 27 19 -2.1 -29.6 6.1 42 23 Tanzania 47 48 22 16 2.1 -27.3 6.5 41 24 Benin 51 49 27 19 -3.9 -29.6 6.7 41 25 Sri Lanka 36 26 9 6 -27.8 -33.3 3.6 46 44 26 Guinea 48 46 28 21 -4,2 -25.0 6.2 42 -. - - 2] Haiti 45 43 23 17 -4.4 -26.1 5.9 45 .. 5 28 Lesotho 40 41 23 17 2.5 -26.1 5.4 43 29 Madagascar 47 45 27 19 -4.3 -29.6 6.1 42 30 Central African Emp. 43 44 26 19 2.3 -26.9 5.7 43 31 Kenya 51 51 19 14 0.0 -26.3 7.8 41 2 4 32 Mauritania 51 50 27 22 -2.0 -18.5 6.9 41 - 33 Uganda 45 45 21 14 0.0 -33.3 6.1 42 34 Sudan 45 45 25 19 0.0 -24.0 6.6 41 35 Angola 50 48 31 23 -4.0 -25.8 6.4 42 - - 36 Indonesia 47 37 23 16 -21.3 -30.4 4.9 43 (.) 19 37 Togo 51 50 27 19 -2.0 -29.6 6.7 41 Middle Income Countries (w) ' 42 35 15 11 -15.3 -28.7 38 Egypt 44 36 19 13 -18.2 -31.6 4.8 44 9 21 39 Cameroon 43 43 27 19 0.0 -29.6 5.7 42 - - 40 Yemen, PDR 50 49 29 19 -2.0 -34.5 7.1 41 41 Ghana 49 48 24 17 -2.0 -29.2 6.7 41 1 2 42 Honduras 51 47 19 12 -7,8 -36.8 6.9 40 9 43 Liberia 51 51 25 18 0.0 -28.0 6.9 42 44 Nigeria 52 50 25 18 -3.8 -28.0 6.9 42 45 Thailand 46 32 17 8 -30.4 -52.9 4.5 42 32 46 Senegal 48 49 27 22 2,1 -18.5 6.5 42 47 Yemen Arab Rep. 50 49 29 19 -2.0 -34.5 7.2 41 48 Philippines 45 35 15 9 -22.2 -40.0 5.0 41 8 22 49 Zambia 51 50 24 17 -2.0 -29.2 6.9 41 50 Congo, People's Rep. 46 46 27 19 0.0 -29.6 6.0 42 51 PapuaNewGuinea 44 42 23 17 -4.5 -26.1 6.0 42 52 Rhodesia 47 48 20 14 2.1 -30.0 6.6 42 5 53 El Salvador 48 39 1] 9 -18.8 -47.1 5.5 41 . 10 54 Morocco 50 45 21 13 -10.0 -38.1 6.5 42 1 5 55 Bolivia 48 44 23 15 -8.3 -34.8 6.5 42 56 Ivory Coast 50 50 27 19 0.0 -29.6 6.] 43 57 Jordan 47 47 20 13 0.0 -35.0 7.0 40 58 Colombia 46 30 14 8 -34.8 -42.9 3,] 4] 49 59 Paraguay 43 39 13 9 -9.3 -30.8 5.8 41 .. 16 60 Ecuador 47 41 17 10 -12.8 -41.2 6.3 41 .. 6 61 Guatemala 48 41 18 12 -14.6 -33.3 5.7 42 .. 3 62 Korea, Rep. of 41 21 13 8 -48.8 -38.5 2.8 47 32 44 63 Nicaragua 51 45 19 13 -11.8 -31.6 6.2 41 .. 19 64 Dominican Rep. 50 37 16 9 -26.0 -43.8 5.3 41 .. 30 65 Peru 4] 39 19 12 -17.0 -36.8 5.6 43 .. 66 Tunisia 47 32 19 12 -31,9 -36.8 4.6 42 8 18 67 Syrian Arab Rep. 47 46 18 13 -2.1 -27.8 7.0 40 .. (.) 160 Crude Crude Percentage Total Percentage Percentage Birth Death Change in: Fertility of Women in of Married Rate Per Rate Per Rate Reproductive Women Thousand Thousand Crude Crude Age Group Using Population Population Birth Death Contra- Rate Rate (Aged 15-44) ceptivesa 1960 1917 1960 1977 1960-1977 1960-1977 1977 1977 1970 1977 68 Malaysia 39 29 9 6 -25.6 -33.3 3.8 43 7 34 69 Algeria 51 48 20 13 -5.9 -35.0 7.3 40 70 Turkey 43 30 16 10 -30.2 -37.5 4.3 42 3 71 Mexico 45 38 12 8 -15.6 -33.3 5.7 41 .. 21 72 Jamaica 39 29 9 7 -25.6 -22.2 4.2 38 40 73 Lebanon 43 32 14 8 -25.6 -42.9 4.7 41 74 Chile 37 22 12 7 -40.5 -41.7 2.7 46 75 China, Rep, of 40 21 7 5 -47.5 -28.6 2.5 49 36 61 76 Panama 41 31 10 6 -24.4 -40.0 4.1 42 .. 44 77 Costa Rica 47 28 10 5 -40.4 -50.0 3.6 45 .. 34 78 South Africa 39 39 15 10 0.0 -33.3 5.1 43 79 Brazil 40 36 11 9 -10.0 -18.2 4.9 43 80 Uruguay 22 20 9 9 -9.1 0.0 2.9 41 81 Iraq 49 48 20 13 -2.0 -35,0 7.0 41 82 Argentina 24 21 9 8 -12.5 -11.1 2.9 43 83 Portugal 24 19 11 11 -20.8 0.0 2.5 42 84 Yugoslavia 24 18 10 9 -25.0 -10.0 2.2 45 59 85 Iran 47 40 21 14 -14.9 -33.3 5.9 41 3 23 86 Trinidad and Tobago 37 22 7 6 -40.5 -14.3 2.6 45 44 87 Hong Kong 35 19 7 6 -45.7 -14.3 2.6 46 50 64 88 Venezuela 46 36 10 7 -21.7 -30.0 4.9 43 89 Greece 19 15 8 11 -21.1 37.5 2.3 40 90 Israel 27 26 6 7 -3.7 16.7 3.5 43 91 Singapore 38 19 8 6 -50.0 -25.0 2.2 51 92 Spain 21 18 9 9 -14.3 0.0 2.6 40 Industrialized Countries (w) 20 14 10 9 -31.2 -4.4 93 Ireland 22 22 12 10 0.0 -16.7 3.5 40 94 Italy 18 13 10 10 -27.8 0.0 1.9 41 95 New Zealand 26 17 9 8 -34.6 -11.1 2.2 43 96 United Kingdom 17 12 12 11 -29.4 -8.3 1.7 39 72 97 Japan 18 15 8 6 -16.7 -25.0 1.8 46 .. 61 98 Austria 18 11 13 13 -38.9 0.0 1.6 38 99 Finland 19 14 9 10 -26.3 11.1 1.7 44 77 100 Netherlands 21 12 8 9 -42.9 12.5 1.6 43 59 71 101 France 18 14 12 11 -22.2 -8.3 1.9 41 64 102 Australia 22 16 9 8 -27.3 -11.1 2.1 43 66 103 Belgium 17 12 12 12 -29.4 0.0 1.8 40 67 104 Denmark 17 13 9 11 -23.5 22.2 1.7 41 67 105 Germany, Fed. Rep. 17 10 11 12 -41.2 9.1 1.4 40 106 Canada 28 16 8 8 -42.9 0.0 1.9 46 107 United States 24 15 9 9 -37.5 0.0 1.8 44 65 108 Norway 18 13 9 11 -27.8 22.2 1.8 39 109 Sweden 15 12 10 12 -20.0 20.0 1.7 40 110 Switzerland 18 11 10 10 -38.9 0.0 1.5 43 Capital Surplus Oil Exporters 111 Saudi Arabia 51 49 28 18 -3.9 -35.7 7.2 41 112 Libya 49 48 19 14 -2.0 -26.3 7.4 41 113 Kuwait 44 45 10 5 2.3 -50.0 7.1 40 Centrally Planned Economies (w) 32 21 13 9 -34.3 -28.6 114 China, People's Rep. 36 22 15 9 -38.9 -40.0 2.9 45 115 Albania 40 29 10 6 -27.5 -40.0 4.2 44 116 Korea, Dam. Rep. 41 33 13 8 -19.5 -38.5 4.5 44 117 Mongolia 41 37 15 8 -9.8 -46.7 5.4 42 118 Cuba 32 19 9 6 -40.6 -33.3 2.5 43 119 Romania 20 19 9 9 -5.0 0.0 2.6 43 120 Bulgaria 18 16 9 10 -11.1 11.1 2.2 42 121 Hungary 16 16 10 12 0.0 20.0 2.2 42 122 USSR 24 18 7 9 -25.0 28.6 2.4 43 123 Poland 24 19 8 9 -20.8 12.5 2.3 46 57 124 Czechoslovakia 17 18 10 11 5.9 10.0 2.4 42 66 125 German Dem. Rep. 17 13 13 13 -23.5 0.0 1.8 39 a Figures in italics are for years other than those specified. See Technical Notes. 161 Table 19: Labor Force Percentage of Percentage of Labor Force in Average Annual Growth Population of of Labor Force Working Age (15-64 years) Agriculture Industry Services 1960 1977 1960 1977 1960 1977 1960 1977 1960-10 1970-17 1977-2000 Low Income Countries (9) 55 54 77 73 9 11 14 16 1.8 1.9 2.0 1 Bhutan 56 55 95 93 2 2 3 5 1.7 1.8 1.9 2 Cambodia 53 52 82 75 4 4 14 21 2.1 2.3 2.5 3 Bangladesh 53 51 87 78 3 7 10 15 2.4 2.3 2.7 4 Lao PDR 56 52 83 80 4 6 13 14 1.4 -0.6 2.0 5 Ethiopia 54 53 88 81 5 7 7 12 2.1 1.8 2.1 6 Mali 54 53 94 89 3 5 3 6 2.2 1.9 2.4 7 Nepal 56 55 95 93 2 2 3 5 1.8 2.0 2.3 8 Somalia 54 53 88 83 4 7 8 10 1.7 2.5 2.3 9 Burundi 55 54 90 85 3 5 7 10 2.0 1.2 2.2 10 Chad 53 57 94 87 2 6 4 7 1.7 1.8 2.1 11 Rwanda 52 51 95 92 1 3 4 5 2.3 2.5 2.8 12 Upper Volta 55 53 92 84 5 11 3 5 1.3 1.3 2.2 13 Zaire 53 54 83 76 9 13 8 11 1.4 1.9 2.2 14 Burma 59 55 68 55 11 19 21 26 1.1 1.4 1.9 15 Malawi 56 53 92 87 3 5 5 8 2.5 2.4 2.6 16 India 56 55 73 73 11 11 16 16 1.6 1.7 1,9 17 Mozambique 56 54 81 68 7 20 12 12 2.1 1.6 2.0 18 Niger 52 51 95 92 1 3 4 5 3.2 2.5 2.8 19 Viet Nam ,. 52 81 70 5 9 14 21 1.5 2.3 2.3 20 Afghanistan 55 53 85 80 6 8 9 12 1.9 1.7 2,4 21 Pakistan 52 50 61 58 18 20 21 22 1.8 2.4 2.8 22 Sierra Leone 54 54 78 68 12 18 10 14 1.6 1.7 2.2 23 Tanzania 51 51 89 84 4 6 7 10 2.4 2.3 2.7 24 Benin 53 52 54 47 9 15 37 38 2.1 2.1 2.5 25 Sri Lanka 54 58 56 54 13 15 31 31 2.1 2.1 2.2 26 Guinea 55 54 88 83 6 10 6 7 2.4 2.1 2.1 27 Haiti 58 56 80 70 6 8 14 22 0.6 1.7 2.2 28 Lesotho 5] 57 93 88 2 4 5 8 1.8 1.7 1.9 29 Madagascar 53 52 93 84 3 5 4 11 1.9 1.8 2.4 30 Central African Emp. 54 55 94 89 2 4 4 7 1.9 1.9 1.9 31 Kenya 51 50 86 79 5 9 9 12 3.3 2.8 3.0 32 Mauritania 55 51 91 84 3 5 6 11 2.2 1.8 2.6 33 Uganda 53 52 89 84 4 6 7 10 3.4 2.3 2.6 34 Sudan 53 52 86 79 6 10 8 11 2.0 2.3 2.7 35 Angola 55 53 69 61 12 16 19 23 1.2 1.9 2.4 36 Indonesia 56 56 75 60 8 12 17 28 1.8 2.0 1.9 37 Togo 53 51 79 69 8 14 13 17 2.3 1.9 2.5 Middle Income Countries (9) 55 55 59 46 17 22 24 32 2.0 2.7 2.8 38 Egypt 55 56 58 51 12 26 30 23 2.0 2.2 2.2 39 Cameroon 59 54 79 74 5 6 16 20 1.4 1.2 1.9 40 Yemen, FOR 54 52 70 62 15 20 15 18 1.6 1.5 2.5 41 Ghana 52 50 64 54 14 19 22 27 1.8 2.5 2.9 42 Honduras 52 50 70 63 11 15 19 22 2.8 2.7 3.2 43 Liberia 56 54 81 73 10 14 9 13 2.5 2.2 2.4 44 Nigeria 54 52 71 56 10 18 19 26 1.9 2.0 2.7 45 Thailand 53 52 84 77 4 8 12 15 2.1 2.5 2.3 46 Senegal 56 53 84 77 5 9 11 14 1.9 1.7 2.1 47 Yemen Arab Rep. 54 52 83 76 7 11 10 13 1.5 1.5 2.6 48 Philippines 52 51 61 51 15 15 24 34 2.1 2.1 2.6 49 Zambia 51 51 79 69 7 11 14 20 2.4 2.3 2.7 50 Congo, People's Rep. 55 54 52 36 17 26 31 38 1.7 2.0 2.6 51 Papua New Guinea 57 55 89 84 4 8 7 8 1.8 1.9 2.0 52 Rhodesia 49 51 69 61 11 15 20 24 3.3 2.6 2.9 53 El Salvador 51 51 60 47 13 15 27 38 2.8 3.2 3.1 54 Morocco 53 52 62 53 14 19 24 28 1.7 2.7 3.2 55 Bolivia 54 54 61 51 18 23 21 26 2.3 2.5 2.8 56 Ivory Coast 55 52 89 82 2 4 9 14 3.3 3.9 2.6 5] Jordan 52 50 44 28 26 39 30 33 2.7 2.8 3.1 58 Colombia 51 59 51 31 19 23 30 46 2.7 3.5 2.3 59 Paraguay 51 52 56 51 19 19 25 30 2.3 3.1 3.2 60 Ecuador 52 51 57 47 19 24 24 29 2.7 3.0 3.3 61 Guatemala 52 53 61 57 14 19 19 24 2.5 2.8 2.8 62 Korea, Rep. of 54 60 66 45 9 33 25 22 2.9 2.9 1.9 63 Nicaragua 50 49 62 44 16 14 22 42 2.6 3.2 3.4 64 Dominican Rep. 50 50 66 58 12 16 22 26 2.2 2.9 3.0 65 Peru 52 53 53 40 20 20 2] 40 2.1 2,9 3.1 66 Tunisia 53 53 56 43 18 23 26 34 0.7 2.2 2.5 67 Syrian Arab Rep. 52 50 54 49 19 23 27 28 2.6 2.8 3.1 162 Percentage of Percentage of Labor Force in Average Annual Growth Population of of Labor Force Working Age (15-64 years) Agriculture Industry Services 1960 1977 1960 1977 1960 1977 1960 1977 1960-70 1970-77 1977-2000 68 Malaysia 51 54 63 44 12 20 25 36 2.7 3.6 3.0 69 Algeria 52 49 67 35 12 18 21 47 0.5 3.0 3.4 70 Turkey 55 54 78 62 10 14 12 24 1.3 1.8 2.0 71 Mexico 51 51 55 34 20 25 25 41 2.8 3.3 3.2 72 Jamaica 54 50 39 24 25 27 36 49 0.4 2.0 3.3 73 Lebanon 53 53 38 13 23 27 39 60 2.1 2.6 2.7 74 Chile 57 61 30 21 30 27 40 52 1.4 2.6 2.0 75 China, Rep. of 52 63 56 34 11 27 33 39 2.4 1.9 1.6 76 Panama 52 54 51 30 14 18 35 52 3.2 2.7 2.6 77 Costa Rica 49 56 51 30 18 29 31 41 3.5 3.6 2.7 78 South Africa 56 55 32 30 30 30 38 40 3.0 2.6 2.8 79 Brazil 54 55 52 42 15 20 33 38 2.7 2.8 2.8 80 Uruguay 64 63 21 12 29 32 50 56 0.7 0.4 1.2 81 Iraq 51 51 53 43 18 25 29 32 2.8 2.8 3.1 82 Argentina 64 63 20 14 36 29 44 57 1.2 1.2 1.2 83 Portugal 63 63 44 27 29 36 27 37 0.2 0.6 0.7 84 Yugoslavia 63 66 64 42 23 34 13 24 0.9 1.1 0.8 85 Iran 51 51 54 41 23 32 23 27 2.5 2.4 2.7 86 Trinidad and Tobago 53 58 22 13 34 3] 44 50 1.9 2.8 2.4 87 Hong Kong 56 65 8 2 52 57 40 41 3.1 3.3 1.4 88 Venezuela 51 53 35 21 22 27 43 52 2.5 4.1 3.3 89 Greece 65 64 56 40 20 27 24 33 (.) 0.2 0.4 90 Israel 59 59 14 8 35 3] 51 55 3.5 2.3 2.0 91 Singapore 55 65 8 2 23 32 69 66 2.7 3.1 1.4 92 Spain 64 63 42 19 31 42 27 39 0.2 0.9 0.8 Industrialized Countries (g) 63 65 17 7 38 38 45 55 1.2 0.8 0.8 93 Ireland 58 59 36 21 25 36 39 43 -0.1 1.2 1.4 94 Italy 66 65 31 13 40 47 29 40 -0.1 0.6 0.4 95 New Zealand 59 62 15 10 37 35 48 55 2.2 2.0 1.2 96 United Kingdom 65 63 4 2 48 43 48 55 0.6 0.2 0.4 97 Japan 64 68 33 14 30 3] 37 49 1.8 1.3 0.8 98 Austria 66 62 24 11 46 41 30 48 -0.7 0.7 0.4 99 Finland 62 68 36 14 31 38 33 48 0.5 1.1 0.5 100 Netherlands 61 65 11 6 42 45 47 49 1.6 1.2 0.6 101 France 62 63 22 10 39 41 39 49 0.7 1.0 0.6 102 Australia 61 64 11 6 40 35 49 59 2.5 1.6 1.0 103 Belgium 65 64 8 4 48 43 44 53 0.3 0.5 0.3 104 Denmark 64 65 18 8 3] 3] 45 55 1.1 0.7 0.4 105 Germany, Fed. Rep. 68 65 14 5 48 48 38 4] 0.2 0.8 0.1 106 Canada 59 66 13 6 35 30 52 64 2.5 2.1 1.0 107 United States 60 65 7 3 36 33 57 64 1.7 1.6 0.8 108 Norway 63 63 20 8 37 37 43 55 0.5 0.6 0.5 109 Sweden 66 64 14 5 45 37 41 58 0.9 0.2 0.2 110 Switzerland 66 66 11 6 50 48 39 46 2.0 0.7 0.3 Capital Surplus Oil Exporters 111 Saudi Arabia 54 52 71 63 10 14 19 23 2.2 2.3 2.6 112 Libya 53 52 53 22 16 2] 31 51 3.7 3.0 2.9 113 Kuwait 63 50 1 2 34 34 65 64 7.2 3.0 3.0 Centrally Planned Economies (g) 60 62 44 25 29 43 27 32 0.8 1.4 1.0 114 China, People's Rep. 58 61 75 63 15 24 10 13 1.7 1.5 1.3 115 Albania 54 56 71 63 17 24 12 13 2.3 2.9 2.4 116 Korea, Dem. Rep. 53 55 62 51 23 32 15 17 2.3 2.9 2.7 117 Mongolia 54 53 70 57 13 21 17 22 2.1 2.3 2.5 118 Cuba 61 57 39 26 22 31 39 43 0.9 1.7 1.9 119 Romania 65 65 64 51 20 31 16 18 0.8 0.5 0.7 120 Bulgaria 67 6] 57 41 25 38 18 21 0.7 0.3 0.3 121 Hungary 66 67 38 19 35 58 27 23 0.5 0.4 0.2 122 USSR 63 66 42 19 29 46 29 35 0.7 1.4 0.7 123 Poland 61 67 48 34 29 38 23 28 1.7 1.7 0.9 124 Czechoslovakia 64 65 26 13 46 49 28 38 0.9 0.8 0.6 125 German Dem. Rep. 65 62 18 10 48 51 34 39 -0.2 0.2 0.4 163 Table 20: Urbanization Urban Population Percentage of Urban Population Number of In Cities Cities As Percentage Average In of Over of Over of Total Annual Growth Largest 500,000 500,000 Population (percent) City People People 1960 1975 1960-70 1970-75 1960 1975 1960 1975 1960 1975 Low Income Countries (g) 15 19 3.4 4.2 14 16 24 36 1 Bhutan 3 3 4.2 4.5 .. .. 0 0 0 0 2 Cambodia 11 13 3.7 4.4 73 26 0 0 0 0 3 Bangladesh 5 9 6.7 6.3 20 28 20 43 1 2 4 Lao PDR 8 11 4.1 4.1 69 52 0 0 0 0 5 Ethiopia 6 12 6.1 7.0 30 35 0 35 0 1 6 Mali 11 17 5.4 5.3 32 34 0 0 0 0 7 Nepal 3 4 4.3 4.4 41 30 0 0 0 0 8 Somalia 17 27 5.3 5.0 .. 29 0 0 0 0 9 Burundi 2 2 2.4 1.7 100 100 0 0 0 0 10 Chad 7 14 6.8 6.8 38 0 0 0 0 11 Rwanda 2 4 5.3 5.6 .. 0 0 0 0 12 Upper Volta 5 8 5.3 3.6 .. 36 0 0 0 0 13 Zaire 22 35 5.1 5.4 14 25 14 34 1 2 14 Burma 19 25 3.9 3.8 23 23 23 23 1 1 15 Malawi 4 20 12.7 18.4 .. 23 0 0 0 0 16 India 18 21 3.3 3.1 7 6 26 35 11 28 17 Mozambique 4 7 6.6 6.8 75 83 0 83 0 1 18 Niger 6 10 7.0 6,8 .. 29 0 0 0 0 19 Viet Nam 15 20 5.3 5.2 32 24 32 44 1 3 20 Afghanistan 8 13 5.4 5.5 33 22 0 22 0 1 21 Pakistan 22 26 4.0 4.1 20 21 33 50 2 6 22 Sierra Leone 13 21 5.5 5.6 37 45 0 0 0 0 23 Tanzania 5 9 6.3 8.5 34 47 0 47 0 1 24 Benin 10 23 7.9 10.4 .. 57 0 0 0 0 25 Sri Lanka 18 24 4.3 3.7 28 17 0 17 0 1 26 Guinea 10 16 6.2 6.2 37 77 0 77 0 1 27 Haiti 16 22 3.9 3.9 42 54 0 54 0 1 28 Lesotho 2 4 7.7 8.1 100 100 0 0 0 0 29 Madagascar 11 16 5.1 4.3 44 38 0 0 0 0 30 Central African Emp. 23 36 5.3 5.1 40 37 0 0 0 0 31 Kenya 7 12 6.6 7.0 40 53 0 53 0 1 32 Mauritania 3 23 15.8 14.4 .. .. 0 0 0 0 33 Uganda 5 10 6.3 8.5 38 50 0 50 0 1 34 Sudan 10 20 6.9 6.9 30 30 0 30 0 1 35 Angola 10 18 5.1 5.7 44 62 0 62 0 1 36 Indonesia 15 18 3.7 3.3 20 23 34 45 3 6 37 Toga 10 15 5.6 5.4 .. 60 0 0 0 0 Middle lncome Countries (g) 37 47 3.7 4.2 23 25 35 44 38 Egypt 38 44 3.4 2.7 38 39 53 54 2 2 39 Cameroon 14 27 5.6 8.0 26 21 0 0 0 0 40 Yemen, PDR 28 34 3.2 3.2 61 53 0 0 0 0 41 Ghana 23 32 4.6 5.1 25 33 0 33 0 1 42 Honduras 23 32 5.4 5.3 31 33 0 0 0 0 43 Liberia 21 30 5.6 5.6 .. .. 0 0 0 0 44 Nigeria 13 18 4.7 4.6 13 17 22 33 2 5 45 Thailand 12 14 3.6 3.5 65 69 65 69 1 1 46 Senegal 23 24 2.9 2.9 53 64 0 64 0 1 47 Yemen Arab Rep. 3 8 7.5 7.3 .. 28 0 0 0 0 48 Philippines 30 34 3.8 3.5 27 30 27 33 1 2 49 Zambia 23 34 5,4 5,4 ,. 32 0 32 0 1 50 Congo, Peoples Rep. 33 36 2.6 3.0 77 61 0 0 0 0 51 Papua New Guinea 3 13 14.7 8.0 .. 25 0 0 0 0 52 Rhodesia 13 20 6.8 6.4 40 48 0 48 0 1 53 El Salvador 38 40 3.2 3.1 26 23 0 0 0 0 54 Morocco 29 37 4.3 4.1 32 28 32 38 1 2 55 Bolivia 24 30 4.1 4.2 47 45 0 45 0 1 56 Ivory Coast 19 33 7.3 9.3 27 32 0 32 0 1 57 Jordan 43 53 4.5 4.5 31 36 0 36 0 1 58 Colombia 48 66 5.2 3.9 17 24 28 48 3 4 59 Paraguay 36 38 3.0 3.3 44 45 0 0 0 0 60 Ecuador 34 42 4.4 4.1 31 30 0 52 0 2 61 Guatemala 33 37 3.6 3.6 41 38 41 38 1 1 62 Korea, Rep. of 28 49 6.4 5.4 35 41 61 75 3 6 63 Nicaragua 41 50 4.2 4.5 41 46 0 46 0 1 64 Dominican Rep. 30 46 5.8 5.4 50 58 0 58 0 1 65 Peru 46 63 5.0 4.5 38 39 38 39 1 1 66 Tunisia 36 48 3.8 3.6 40 32 40 32 1 1 67 Syrian Arab Rep. 37 47 4.8 4.7 35 33 35 56 1 2 164 Urban Population Percentage of Urban Population Number of In Cities Cities As Percentage Average In of Over of Over of Total Annual Growth Largest 500,000 500,000 Population (percent) City People People 1960 1975 1960-70 1970-75 1960 1975 1960 1975 1960 1975 68 Malaysia 25 30 3.5 4.8 19 26 0 26 0 1 69 Algeria 30 54 6.1 6.8 27 14 27 14 1 1 70 Turkey 30 43 5.1 4.7 18 23 32 38 3 3 71 Mexico 51 63 4.8 4,6 28 32 36 47 3 6 72 Jamaica 34 46 3.5 3.6 77 67 0 67 0 1 73 Lebanon 44 70 6.2 4.9 64 77 64 77 1 1 74 Chile 68 79 3.1 2.5 38 43 38 43 1 1 75 China, Rep. of 36 51 5.1 4.4 ., .. .. 76 Panama 41 51 4.4 4.1 61 65 0 65 0 1 77 Costa Rica 37 41 4.2 3.3 67 65 0 65 0 1 78 South Africa 47 48 2.8 2.9 16 13 44 51 4 6 79 Brazil 46 61 4.8 4.5 14 16 35 50 6 12 80 Uruguay 80 83 1.3 0.4 56 53 56 53 1 1 81 Iraq 43 66 6.2 5.6 35 53 35 62 1 2 82 Argentina 74 81 2.0 1.9 46 46 54 60 3 5 83 Portugal 23 28 1.5 2.3 47 44 47 44 1 1 84 Yugoslavia 28 38 3.2 3.0 11 11 11 18 1 2 85 Iran 34 45 4.7 5.0 26 29 26 41 1 4 86 Trinidad and Tobago 22 21 1.6 0.7 .. .. 0 0 0 0 87 Hong Kong 89 90 2.5 2.1 100 100 100 100 1 1 88 Venezuela 67 80 4.7 4.4 26 27 26 34 1 2 89 Greece 43 57 2.6 2.4 51 57 51 69 1 2 90 Israel 77 87 4.3 3.3 46 37 46 37 1 1 91 Singapore 100 100 2.4 1.6 100 100 100 100 1 1 92 Spain 57 71 2.6 2.4 13 16 37 43 5 6 Industrialized Countries (g) 67 74 1.8 1.4 18 17 48 54 93 Ireland 46 55 1.6 2.3 51 49 51 49 1 1 94 Italy 59 67 1.5 1.5 7 9 46 52 7 9 95 New Zealand 76 83 2.3 2.2 25 29 0 29 0 1 96 United Kingdom 86 90 0.9 0.5 24 21 61 56 15 16 97 Japan 62 75 2.4 2.4 18 21 35 41 5 9 98 Austria 50 53 0.9 0.6 51 42 51 42 1 1 99 Finland 38 57 3.2 2.8 28 27 0 27 0 1 100 Netherlands 80 76 1.0 0.5 9 10 27 26 3 3 101 France 62 75 2.4 1.7 25 23 34 34 4 6 102 Australia 81 87 2.5 2.0 26 25 62 68 4 5 103 Belgium 66 71 1.2 0.5 17 15 28 25 2 2 104 Denmark 74 82 1.5 1.1 40 33 40 33 1 1 105 Germany, Fed. Rep. 77 83 1.4 0.8 20 18 48 45 11 11 106 Canada 69 78 2.7 1.9 14 1] 31 62 2 9 107 United States 66 70 1.7 1.3 13 13 61 75 40 57 108 Norway 32 47 3.5 3.1 50 34 50 34 1 1 109 Sweden 73 85 1.8 1.2 15 17 15 22 1 3 110 Switzerland 51 56 2.2 1.0 19 22 19 22 1 1 Capital Surplus Oil Exporters 111 Saudi Arabia 30 59 7.5 6.7 15 17 0 22 0 2 112 Libya 23 44 8.0 8.8 57 62 0 62 0 1 113 Kuwait 72 84 10.4 7.8 75 33 0 0 0 0 Centrally Planned Economies (g) 29 34 2.9 2.7 9 8 31 32 114 China, People's Rep. 19 23 3.4 3.1 6 6 42 43 38 56 115 Albania 31 35 3.8 3.4 27 26 0 0 0 0 116 Korea, Dem. Rep. 40 55 5.0 4.5 15 12 15 19 1 2 117 Mongolia 36 48 5.2 4.1 53 53 0 0 0 0 118 Cuba 55 63 2.9 2.5 38 32 38 32 1 1 119 Romania 34 44 2.8 2.5 22 18 22 18 1 1 120 Bulgaria 39 59 3.8 2.8 23 19 23 19 1 1 121 Hungary 40 50 1.7 2.3 45 39 45 39 1 1 122 USSR 49 61 2.7 2,4 6 5 21 22 25 38 123 Poland 48 54 1.8 1.7 17 16 41 45 5 7 124 Czechoslovakia 47 59 2.1 2.1 17 13 17 13 1 1 125 German Dem. Rep. 72 75 0.1 0.1 9 9 14 17 2 3 165 Table 21: Indicators Relating to Life Expectancy Life Infant Child Expectancy Mortality Death at Birth Rate Rate (Aged O1) (Aged 14)a 1960 1977 1960 1977 1960 1977 Low Income Countries (w) 42 50 .. 30 19 1 Bhutan 36 41 41 28 2 Cambodia 42 48 1a 27 19 3 Bangladesh 42 4] 29 23 4 Lao PDR 40 42 29 27 5 Ethiopia 36 39 43 37 6 Mali 37 42 210 41 32 7 Nepal 37 45 35 23 8 Somalia 36 43 43 31 9 Burundi 37 45 41 28 10 Chad 35 43 45 30 11 Rwanda 37 46 41 27 12 Upper Volta 3] 42 263 41 32 13 Zaire 40 46 37 27 14 Burma 44 52 25 15 15 Malawi 37 46 41 27 16 India 43 51 28 18 17 Mozambique 37 46 41 27 18 Niger 37 42 212 41 32 19 Viet Nam 41 62 28 6 20 Afghanistan 34 42 42 27 21 Pakistan 44 51 27 17 22 Sierra Leone 37 46 41 27 23 Tanzania 42 51 32 20 24 Benin 37 46 206 41 27 25 Sri Lanka 62 69 63 7 2 26 Guinea 35 44 45 30 27 Haiti 42 51 39 23 28 Lesotho 42 50 34 21 29 Madagascar 37 46 41 27 30 Central African Emp. 37 46 40 27 31 Kenya 47 53 126 25 14 32 Mauritania 37 42 41 32 33 Uganda 44 53 30 17 34 Sudan 39 46 46 31 35 Angola 33 41 49 34 36 Indonesia 41 48 31 19 37 Togo 37 46 41 27 Middle Income ountries (w) 53 60 19 11 38 Egypt 46 54 31 18 39 Cameroon 37 46 40 27 40 Yemen, PDR 36 47 54 31 41 Ghana 40 48 36 23 42 Honduras 46 57 130 30 14 43 Liberia 40 48 36 23 44 Nigeria 39 48 38 24 45 Thailand 51 61 15 6 46 Senegal 37 42 41 32 47 Yemen Arab Rep. 36 47 55 31 48 Philippines 51 60 98 65 16 7 49 Zambia 40 48 36 23 50 Congo, Peoples Rep. 37 46 180 40 27 51 Papua New Guinea 41 48 32 19 52 Rhodesia 45 52 .. 28 16 53 El Salvador 50 63 24 8 54 Morocco 47 55 30 17 55 Bolivia 43 52 th 36 22 56 Ivory Coast 37 46 41 27 57 Jordan 47 56 30 16 58 Colombia 53 62 98 17 9 59 Paraguay 56 63 16 8 60 Ecuador 51 60 23 10 61 Guatemala 47 57 77 31 15 62 Korea, Rep. of 54 63 62 13 5 63 Nicaragua 47 55 30 17 64 Dominican Rep. 51 60 23 10 65 Peru 48 56 28 16 66 Tunisia 48 57 29 15 67 Syrian Arab Rep. 48 57 29 14 166 Life Infant Child Expectancy Mortality Death at Birth Rate Rate (Aged O1) (Aged 14)a 1960 1977 1960 1977 1960 1977 68 Malaysia 57 67 32 9 3 69 Algeria 47 56 30 16 70 Turkey 51 61 118 24 10 71 Mexico 58 65 78 14 6 72 Jamaica 64 70 63 22 7 3 73 Lebanon 58 65 .. 14 6 74 Chile 5] 67 108 61 14 5 75 China, Rep. of 64 72 25 8 1 76 Panama 62 30 90 47 10 3 77 Costa Rica 62 70 38 10 3 78 South Africa 53 60 17 10 79 Brazil 57 62 .. 13 9 80 Uruguay 68 71 49 4 3 81 Iraq 46 55 31 17 82 Argentina 65 71 .. .. 6 3 83 Portugal 62 69 78 39 7 2 84 Yugoslavia 62 69 88 35 4 2 85 Iran 46 52 24 14 86 Trinidad and Tobago 63 30 45 27 8 3 87 Hong Kong 65 72 42 14 3 1 88 Venezuela 59 66 72 12 5 89 Greece 68 73 40 23 2 1 90 Israel 69 72 31 23 2 1 91 Singapore 64 70 35 12 4 1 92 Spain 68 73 44 11 2 1 Industrialized Countries (w) 69 74 29 14 1 1 93 Ireland 69 73 29 15 1 1 94 Italy 69 73 44 18 2 1 95 New Zealand 71 72 23 16 1 1 96 United Kingdom 70 73 22 14 1 1 97 Japan 68 76 31 9 3 1 98 Austria 68 72 38 17 1 1 99 Finland 68 72 21 12 1 1 100 Netherlands 73 74 18 10 1 1 101 France 70 73 27 11 1 1 102 Australia 70 72 20 14 1 1 103 Belgium 70 72 31 14 1 1 104 Denmark 72 74 22 9 1 1 105 Germany, Fed. Rep. 69 72 34 17 1 1 106 Canada 71 74 2] 14 1 1 107 United States 70 73 26 15 1 1 108 Norway 73 75 19 11 1 1 109 Sweden 72 75 17 8 1 1 110 Switzerland 71 74 21 11 1 1 Capital Surplus Oil Exporters 111 Saudi Arabia 38 48 48 28 112 Libya 47 55 30 17 113 Kuwait 60 69 39 12 2 Centrally Planned Economies (w) 58 66 10 3 114 China, People's Rep. 53 64 14 4 115 Albania 62 70 6 2 116 Korea, Dem. Rep. 54 63 13 5 117 Mongolia 52 63 .. .. 14 5 118 Cuba 64 72 35 23 8 1 119 Romania 64 70 76 31 3 1 120 Bulgaria 67 72 45 24 3 1 121 Hungary 67 70 48 26 2 1 122 USSR 68 70 35 1 1 123 Poland 66 71 57 24 2 1 124 Czechoslovakia 69 71 24 20 1 1 125 German Dem. Rep. 68 73 39 13 2 1 a Figures in italics are for years other than those specified. See Technical Notes. 167 Table 22: Health-Related Indicators Population Per: Percentage of Daily Per Capita Population with Calorie Supply Access to Safe As Percentage Physiciana Nursing Persona Water of Requirement 1960 1976 1960 1976 1975 1974 1974 Low Income Countries (w) 18,700 10,300 9,720 28 2,036 91 1 Bhutan 2,078 94 2 Cambodia 1,894 85 3 Bangladesh 11,350 53,700 53 2,024 92 4 Lao PDR 2,090 93 5 Ethiopia 91,000 84,850 25,670 6 1,914 82 6 Mali 39,000 32,460 4,990 3,040 9 1,774 75 7 Nepal 72,000 38,650 .. 5f',770 9 2,088 95 8 Somalia 30,000 2,010 33 1,822 79 9 Burundi 63,000 45,430 6,240 2,307 99 10 Chad 41,160 4,820 26 1,781 75 11 Rwanda 144,000 39,350 11,680 16,000 35 2,086 90 12 Upper Volta 100,000 61,800 4,890 25 1,859 78 13 Zaire 63,000 .. .. 16 1,885 85 14 Burma 9,900 5,410 6,120 17 2,223 103 15 Malawi .. 48,500 .. 4,370 33 2,397 103 16 India 5,800 3,140 9,610 6,320 33 1,976 89 17 Mozambique 20,000 4,660 .. .. 1,975 84 18 Niger 71,000 42,970 8,800 8,220 27 1,827 78 19 VietNam .. 5,340 880 .. 2,397 111 20 Afghanistan 40,000 28,290 32,030 35,680 6 2,022 83 21 Pakistan 11,000 3,780 10,040 29 2,146 93 22 Sierra Leone 26,000 .. 2,224 97 23 Tanzania 21,000 18,490 8,300 3,300 39 2,003 86 24 Benin 47,000 34,380 3100 20 2,007 87 25 Sri Lanka 4,500 6,230 4,150 2,240 20 2,019 91 26 Guinea 48,000 15,500 3,890 2,330 10 1,943 84 2] Haiti 10,600 11,170 11,880 4,170 14 2,026 90 28 Lesotho .. 17,800 3,780 17 2,287 99 29 Madagascar 8,800 10,780 .. 3,760 26 2,386 105 30 Central African Emp, 37,000 29,410 4,300 5,880 16 2,305 102 31 Kenya 10,000 8,840 2,320 1,070 17 2,11] 91 32 Mauritania 30,000 14,140 7,130 3,200 1,663 72 33 Uganda 13,000 28,330 9,450 4,410 35 2,096 90 34 Sudan 31,000 9,760 1,260 46 2,074 88 35 Angola 14,000 . .. 2,021 86 36 Indonesia 41,000 16,430 4,670 12 2,126 98 37 Togo 34,000 18,360 2,040 16 2,198 96 Middle Income Countries (w) 6,840 4,470 1,930 59 2,557 107 38 Egypt 2,600 1,190 . 1,150 66 2,637 113 39 Cameroon 34,000 13,980 5,210 1,890 26 2,373 102 40 Yemen, PDR 9,210 1,650 24 2,024 84 41 Ghana 21,000 10,200 860 35 2,318 101 42 Honduras 3,300 1,420 46 2,041 90 43 Liberia .. 10,050 2,010 87 44 Nigeria 45 Thailand 32,000 7,800 14,810 8,460 .. 4,900 3,150 3,210 1,970 . 20 22 2,085 2,382 88 10] 46 Senegal 35,000 16,450 1,660 3] 2,309 97 47 Yemen Arab Rep. 18,770 7,220 4 1,976 83 48 Philippines .. 3,150 4,990 38 1,971 87 49 Zambia 12,860 10,370 .. 42 2,052 90 50 Congo, People's Rep. 13,000 7,320 1,460 800 38 2,176 98 51 Papua New Guinea 11,990 2,190 20 2,245 98 52 Rhodesia .. 7,110 1,390 2,593 108 53 El Salvador 5,400 3,460 1,310 53 1,914 84 54 Morocco 9,400 11,100 1,700 55 2,611 108 55 Bolivia 3,900 2,120 3,620 34 1,849 77 56 Ivory Coast 15,220 1,710 19 2,654 115 57 Jordan 5,900 2,250 930 56 2,214 90 58 Colombia 2,400 1,820 3,740 .. 64 2,183 94 59 Paraguay 2,300 1,190 .. 2,250 13 2,723 118 60 Ecuador 2,600 1,570 2,280 40 2,123 93 61 Guatemala 4,200 2,500 .. 40 1,994 91 62 Korea, Rep. of 3,000 1,680 520 62 2,630 112 63 Nicaragua 2,700 1,540 760 70 2,390 105 64 Dominican Rep. 1,870 1,330 55 2,213 98 65 Peru .. 1,580 47 2,360 100 66 Tunisia 10,000 4,800 1,070 70 2,440 102 67 Syrian Arab Rep. 4,600 2,510 3,810 75 2,597 104 168 Population Per: Percentage of Daily Per Capita Population with Calorie Supply Access to Safe As Percentage Physiciana Nursing Persona Water of Requirement 1960 1976 1960 1976 1975 1974 1974 68 Malaysia 7660 4350 1,810 1,210 62 2,574 115 69 Algeria .. 5,590 1,560 77 2,138 88 70 Turkey 3,000 1,720 1,430 75 2,849 113 71 Mexico 1,700 .. .. 62 2,727 117 72 Jamaica 2,600 3,510 .. 540 86 2,664 119 73 Lebanon .. .. ,. 2,517 101 74 Chile 1,810 2,200 650 450 83 2,825 117 75 China, Rep. of 2,330 1,590 7,270 1,830 2,780 119 76 Panama 2,700 1,270 1,440 79 2,421 105 77 Costa Rica 2,600 1,550 1,700 580 77 2,537 113 78 South Africa 1,900 .. 490 .. 2,886 118 79 Brazil 3,600 1,650 77 2,516 105 80 Uruguay 1,100 700 .. 98 3,080 116 81 Iraq 5,600 2,530 6,680 3,010 62 2,433 101 82 Argentina 660 530 .. .. 66 3,408 129 83 Portugal 1,200 800 1,430 520 65 3,446 141 84 Yugoslavia 1,400 790 1,350 390 .. 3,462 136 85 Iran 3,600 2,570 1,910 51 2,368 98 86 Trinidad and Tobago 2,550 1,960 .. 580 2,530 105 87 Hong Kong 3,100 1,350 3,040 1,060 2,533 110 88 Venezuela 1,500 870 .. 420 2,427 98 89 Greece 790 470 2,080 1,170 3,288 132 90 Israel 410 360 .. 3,143 122 91 Singapore 2,400 1,340 650 380 100 2,819 122 92 Spain 820 560 900 3,302 135 Industrialized Countries (w) 820 630 440 210 3,342 130 93 Ireland 950 830 180 200 .. 3,545 141 94 Italy 610 490 920 330 3,524 140 95 New Zealand 700 730 200 3,551 133 96 United Kingdom 960 670 420 180 3,349 133 97 Japan 920 850 460 290 2,835 121 98 Austria 550 440 600 270 3,450 131 99 Finland 1,600 670 220 110 3,204 118 100 Netherlands 900 600 300 3,350 124 101 France 930 680 .. 200 3,411 135 102 Australia 860 .. .. 3,310 124 103 Belgium 780 500 250 3,713 141 104 Denmark 810 510 270 170 3,407 127 105 Germany, Fed. Rep. 690 500 450 270 3,432 129 106 Canada 910 580 300 130 .. 3,377 130 107 United States 780 600 340 150 .. 3,504 133 108 Norway 840 560 330 120 3,213 120 109 Sweden 1,100 580 .. 140 3,064 114 110 Switzerland 740 520 390 230 .. 3,439 128 Capital Surplus Oil Exporters 111 Saudi Arabia 13,000 2,220 .. 64 2,476 102 112 Libya 5,800 1,020 .. 290 100 2,761 117 113 Kuwait 760 850 190 280 89 Centrally Planned Economies (w) 650 400 410 240 2,670 110 114 China, People's Rep. .. .. 2,330 99 115 Albania 2,800 .. 530 2,523 105 116 Korea, Dem. Rep. .. .. 2,641 113 117 Mongolia 1,010 480 290 250 2,475 102 118 Cuba 1,200 1,100 910 2,712 117 119 Romania 780 750 620 590 3,264 123 120 Bulgaria 710 450 550 240 3,457 138 121 Hungary 640 440 440 200 3,560 135 122 USSR 520 300 340 210 3,540 138 123 Poland 1,110 620 660 270 3,514 134 124 Czechoslovakia 570 400 280 160 3,496 142 125 German Dem. Rep. 950 520 3,488 133 a Figures in italics are for years other than those specified. See Technical Notes. 169 Table 23: Educationa Numbers Enrolled in Primary School Numbers Numbers Adult as Percentage of Age Group Enrolled in Enrolled in Literacy Secondary Higher Education Rate School as as Percentage Percentage of of Population Total Male Female Age Group Aged 20-24 (percent) 1960 1976 1960 1976 1960 1976 1960 1976 1960 1975 1960 1975 Low Income Countries (w) 51 73 70 89 36 59 14 24 2 5 29 36 1 Bhutan 3 12 5 16 (.) 7 1 2 Cambodia 64 82 46 3 .. (.) 36 3 Bangladesh 47 83 66 106 26 60 8 23 1 3 22 22 4 Lao PDR 25 85 34 16 1 15 (.) (.) 28 5 Ethiopia 5 23 8 31 3 14 1 6 (.) (.) 10 6 Mali 10 28 14 36 6 20 1 7 .. 1 3 10 7 Nepal 9 60 16 95 1 25 6 12 1 2 9 19 8 Somalia 9 40 13 52 5 28 1 3 (.) 1 2 50 9 Burundi 18 22 27 27 9 17 1 3 (.) (.) 14 10 10 Chad 16 41 29 61 4 21 (.) 3 (.) 15 11 Rwanda 49 61 68 66 30 57 2 2 (.) 16 23 12 Upper Volta 8 16 12 20 5 12 (.) 2 (.) 2 5 13 Zaire 60 86 82 38 3 13 (.) 1 31 14 Burma 56 80 61 83 52 78 10 22 1 2 60 67 15 Malawi 63 63 81 76 45 50 1 4 (.) 25 16 India 61 79 80 94 40 63 20 28 3 7 28 36 17 Mozambique 48 60 36 2 8 18 Niger 5 21 7 28 3 15 (.) 3 (.) 1 8 19 Viet Nam 141 140 142 51 87 20 Afghanistan 9 18 15 30 2 5 1 12 (.) 1 8 12 21 Pakistan 30 50 46 68 13 31 11 17 1 2 15 21 22 Sierra Leone 23 37 30 45 15 29 3 11 (.) 1 15 23 Tanzania 28 70 37 79 20 60 2 3 (.) 10 66 24 Benin 26 53 38 73 15 33 2 10 1 8 11 25 Sri Lanka 95 77 100 80 90 73 27 55 1 1 75 26 Guinea 30 44 16 2 7 27 Haiti 46 50 42 4 8 (.) 15 23 28 Lesotho 83 119 63 98 102 139 3 15 (.) 1 40 29 Madagascar 52 92 58 45 4 14 (.) 1 .. 50 30 Central African Emp. 32 79 53 102 12 56 1 9 (.) 7 31 Kenya 47 105 64 112 30 98 2 15 (.) 1 20 40 32 Mauritania 8 13 3 () 5 17 33 Uganda 49 51 65 61 32 42 3 7 (.) 1 35 34 Sudan 25 39 35 49 14 30 3 13 (.) 1 13 20 35 Angola 21 28 13 2 (.) 5 36 Indonesia 67 82 79 86 55 3] 6 20 1 2 39 62 3] Togo 44 103 63 133 24 73 2 23 1 10 16 Middle Income Countries (w)79 92 85 94 74 86 16 36 4 10 51 69 38 Egypt 66 72 80 88 52 56 16 42 5 14 26 44 39 Cameroon 65 120 87 133 43 106 2 17 1 19 40 Yemen, PDR 13 78 20 107 5 48 5 19 1 .. 27 41 Ghana 59 44 80 50 39 38 3 50 (.) 1 27 30 42 Honduras 67 89 68 89 6] 88 8 13 1 5 45 5] 43 Liberia 31 62 45 79 18 44 2 16 (.) 2 9 44 Nigeria 36 49 46 59 27 39 3 10 (.) 1 15 45 Thailand 83 83 88 86 39 39 12 26 2 4 68 82 46 Senegal 2] 45 36 55 1] 35 3 11 1 2 6 10 47 Yemen Arab Rep. 8 26 14 45 (.) 3 (.) 4 (.) 3 13 48 Philippines 95 105 98 102 93 108 26 56 13 20 72 87 49 Zambia 48 95 58 103 38 86 1 15 .. 2 39 50 Congo, People's Rep. 78 155 103 166 53 143 4 52 1 3 16 50 51 Papua New Guinea 32 58 71 .. 45 1 12 3 29 32 52 Rhodesia 96 98 107 106 86 90 6 9 (.) .. 39 53 El Salvador 80 77 82 79 77 75 11 21 1 8 49 62 54 Morocco 4] 65 67 82 2] 47 5 1] 1 3 14 28 55 Bolivia 64 80 78 88 50 72 12 32 4 10 39 63 56 Ivory Coast 46 87 68 109 24 66 2 17 (.) 2 5 20 57 Jordan 77 84 94 88 59 79 25 42 1 4 32 59 58 Colombia 3] 106 37 103 37 109 12 35 2 8 63 81 59 Paraguay 98 106 105 110 90 102 11 20 2 6 75 80 60 Ecuador 83 102 87 104 79 101 12 49 3 68 74 61 Guatemala 45 50 .. 39 .. 3 .. 2 4 32 46 62 Korea, Rep. of 94 109 99 109 89 109 27 63 5 10 71 91 63 Nicaragua 66 85 65 83 66 86 7 1 9 57 64 Dominican Rep. 98 110 99 109 98 111 7 24 1 9 65 67 65 Peru 83 110 95 115 71 107 15 49 4 14 61 72 66 Tunisia 66 100 88 118 43 81 12 20 1 4 16 55 67 Syrian Arab Rep. 65 103 89 121 39 85 16 50 4 12 30 53 170 Numbers Enrolled in Primary School Numbers Numbers Adult as Percentage of Age Group Enrolled in Enrolled in Literacy Secondary Higher Education Rate School as as Percentage Percentage of of Population Total Male Female Age Group Aged 20-24 (percent) 1960 1976 1960 1976 1960 1976 1960 1976 1960 1975 1960 1975 68 Malaysia 96 94 108 96 83 93 19 45 1 3 53 60 69 Algeria 46 89 55 105 37 72 8 19 (.) 3 10 35 70 Turkey 75 104 90 114 58 94 14 29 3 7 38 60 71 Mexico 80 116 82 117 77 114 11 37 3 10 65 76 72 Jamaica 82 98 82 97 83 98 43 58 2 7 82 86 73 Lebanon 102 105 .. 99 .. 19 . 6 .. 74 Chile 109 117 111 118 107 116 24 48 4 17 84 88 75 China, Rep. of 67 .. 126 47 . 122 37 .. .. 5 17 54 73 82 78 76 Panama 96 124 98 94 29 53 77 Costa Rica 96 111 97 111 95 110 21 43 5 1] .. 88 78 South Africa 89 .. 94 85 .. 15 3 5 57 79 Brazil 95 90 97 89 93 90 11 18 2 10 61 76 80 Uruguay 111 95 111 95 111 94 37 62 8 11 94 81 Iraq 65 99 94 125 36 72 19 38 2 9 18 82 Argentina 98 108 98 108 99 108 32 56 11 28 91 93 83 Portugal 131 97 132 99 129 95 20 85 4 12 62 70 84 Yugoslavia 96 97 100 100 91 94 34 55 9 20 77 85 85 Iran 41 98 56 119 27 77 12 48 1 6 16 50 86 Trinidad and Tobago 78 .. 79 76 22 .. 1 3 93 95 87 Hong Kong 87 121 93 123 79 119 24 50 4 10 70 90 88 Venezuela 100 104 100 105 100 103 21 38 4 19 63 82 89 Greece 105 105 107 107 103 102 41 83 4 16 81 90 Israel 98 128 99 127 97 128 48 39 10 24 84 88 91 Singapore 111 110 121 113 101 107 32 55 6 9 .. 75 92 Spain 110 114 106 114 116 115 23 7.3 4 21 87 Industrialized Countries (w)114 102 110 103 106 104 58 82 16 34 99 93 Ireland 110 109 107 110 112 109 35 90 9 16 .. 98 94 Italy 111 105 112 106 109 105 34 71 7 25 91 98 95 New Zealand 108 111 110 112 106 110 73 85 13 27 99 96 United Kingdom 95 105 95 105 94 105 67 81 9 17 .. 99 97 Japan 103 101 103 101 103 101 74 92 10 25 98 99 98 Austria 105 102 106 103 104 101 50 77 8 19 99 99 Finland 97 103 100 104 95 102 74 97 7 19 99 100 100 Netherlands 105 101 105 101 104 102 58 92 13 26 99 101 France 144 108 144 106 143 110 46 85 8 24 99 102 Australia 103 92 103 92 103 91 51 73 13 23 100 103 Belgium 109 106 111 107 108 105 69 89 9 22 99 104 Denmark 103 103 103 103 103 103 65 77 10 30 99 105 Germany, Fed. Rep. 133 .. .. .. 134 .. 53 .. 6 20 99 106 Canada 104 106 107 108 102 105 52 94 16 39 .. 98 107 United States 118 . . .. . . . . . 64 32 58 98 99 108 Norway 118 102 118 102 118 102 53 89 7 22 99 109 Sweden 98 96 95 96 96 97 55 70 9 28 99 110 Switzerland 118 90 118 90 118 89 26 52 7 14 .. 99 Capital Surplus Oil Exporters 111 Saudi Arabia 12 47 22 58 2 34 2 19 (.) 3 3 112 Libya 59 155 92 163 24 147 9 65 1 .. .. 45 113 Kuwait 117 93 131 98 102 87 37 60 0 9 47 60 Centrally Planned Economies (w) 101 100 101 100 101 99 62 69 11 20 114 China, People's Rep. .. .. .. .. .. 115 Albania 94 .. 102 .. 86 . 20 5 116 Korea, Dem. Rep. . 113 115 .. 112 .. . 117 Mongolia 79 108 79 111 78 105 51 81 8 8 ll8Cuba 109 122 109 125 109 119 14 41 3 11 96 119 Romania 98 109 101 110 95 108 24 62 5 9 98 120 Bulgaria 93 97 94 97 92 96 55 88 11 19 121 Hungary 101 99 103 99 100 99 46 63 7 12 97 98 122 USSR 100 97 100 98 100 97 73 73 11 22 98 99 123 Poland 109 100 110 102 107 99 50 55 9 17 95 98 124 Czechoslovakia 93 97 93 96 93 97 25 37 11 12 95 125 German Dem. Rep. 112 94 111 92 113 95 39 90 16 30 a Figures in italics are for years other than those specified. See Technical Notes. 171 Table 24: Income Distributiona Year Percentage Shares of Household Income, by Percentile Groups of Households Lowest 2nd 3rd 4th Highest Highest 20 Percent Quintile Quintile Quintile 20 Percent 10 Percent Low Income Countries 1 Bhutan 2 Cambodia 3 Bangladesh 4 Lao PDR 5 Ethiopia 6 Mali 7 Nepal 8 Somalia 9 Burundi 10 Chad 11 Rwanda 12 Upper Volta 13 Zaire 14 Burma 15 Malawi 16 India 1964-65 6.7 10.5 14.3 19.6 48.9 35.2 17 Mozambique 18 Niger 19 VietNam 20 Afghanistan 21 Pakistan 22 Sierra Leone 23 Tanzania 24 Benin 25 Sri Lanka 1969-70 7.5 15.7 21.7 43.4 28.2 26 Guinea 27 Haiti 28 Lesotho 29 Madagascar 30 Central African Emp. 31 Kenya 32 Mauritania 33 Uganda 34 Sudan 35 Angola 36 Indonesia 37 Togo Middle Income Countries 38 Egypt 39 Cameroon 40 Yemen, PDR 41 Ghana 42 Honduras 1967 2.3 5.0 8.0 16.9 67.8 50.0 43 Liberia 44 Nigeria 45 Thailand 46 Senegal 47 Yemen Arab Rep. 48 Philippines 1970-71 3.7 8.2 13.2 21.0 53.9 49 Zambia 50 Congo, People's Rep. 51 Papua New Guinea 52 Rhodesia 53 El Salvador 54 Morocco 55 Bolivia 56 Ivory Coast 57 Jordan 58 Colombia 59 Paraguay 60 Ecuador 61 Guatemala 62 Korea, Rep. of 1976 5.7 11.2 15.4 22.4 45.3 27.5 63 Nicaragua 64 Dominican Rep. 65 Peru 1972 1.9 5.1 11.0 21.0 61.0 42.9 66 Tunisia 67 Syrian Arab Rep. 172 Year Percentage Shares of Household Income, by Percentile Groups of Households Lowest 2nd 3rd 4th Highest Highest 20 Percent Quintile Quintile Quintile 20 Percent 10 Percent 68 Malaysia 1970 3.3 7.3 12.2 20.7 56.6 39.6 69 Algeria .. .. .. 70 Turkey 1973 3.4 8.0 12.5 19,5 56.5 40.7 71 Mexico 1977 2.9 7.4 13.2 22.0 54.4 36.7 72 Jamaica 73 Lebanon 74 Chile 1968 4.4 9.0 13.8 21.4 51.4 34.8 75 China, Rep. of 1971 8.7 13.2 16.6 22.3 39.2 24.7 76 Panama 77 Costa Rica 1971 3.3 8.7 13.3 19.9 54.8 39.5 78 South Africa 79 Brazil 1972 2.0 5.0 9.4 17.0 66.6 50.6 80 Uruguay 81 Iraq 82 Argentina 1970 9.7 14.1 21.5 50.3 35.2 83 Portugal 84 Yugoslavia 1973 6.5 11.9 17.6 24.0 40.0 22.5 85 Iran 86 Trinidad and Tobago 87 Hong Kong 88 Venezuela 1970 3.0 7.3 12.9 22.8 54,0 35.7 89 Greece 90 Israel 91 Singapore 92 Spain 1974 6.0 11.8 16.9 23.1 42.2 26.7 Industrialized Countries 93 Ireland 94 Italy 1969 5.1 1 c.s 21.7 46.5 30.9 95 New Zealand 96 United Kingdom 1973 6.3 12.6 18' 23.9 38.8 23.5 97 Japan 1969 7.9 13.1 16.8 21.2 41.0 27.2 98 Austria 99 Finland 100 Netherlands 1967 6.5 11.. 16 22.7 42.9 27.7 101 France 1970 4.3 9.8 16.3 22.7 46.9 30.4 102 Australia 1966-67 6.6 13.5 17.8 23.4 38.8 23.7 103 Belgium 104 Denmark 105 Germany, Fed, Rep, 1973 6.5 150 22.0 46.2 30.3 106 Canada 1969 5.0 11.8 17.9 24.3 41.0 25.1 107 United States 1972 4.5 10.7 17.3 24.7 42.8 26.6 108 Norway 1970 6.3 12.9 18.8 24.7 37.3 22.2 109 Sweden 1972 6.6 13.1 18.5 24.8 37.0 21.3 110 Switzerland Capital Surplus Oil Exporters 111 Saudi Arabia 112 Libya 113 Kuwait Centrally Planned Economies 114 China, People's Rep. 115 Albania 116 Korea, Dem. Rep, 117 Mongolia 118 Cuba 119 Romania 120 Bulgaria 121 Hungary 122 USSR 123 Poland 124 Czechoslovakia 125 German Dem. Rep. a These estimates should be treated with caution. See Technical Notes. 173 Technical Notes These notes outline the scope and sources of position of the Low Income and Middle Income the data presented in the tables and indicate the groups shown in the tables of the present vol- methodology and concepts used in their prepa- ume differs somewhat from that used in World ration. The sources cited in the Bibliography Development Indicators, 1978, since it reflects following the notes carry comprehensive defi- the per capita income levels of 1977, rather than nitions and descriptions of the concepts em- 1976, and takes account of revisions to the un- ployed.1 derlying estimates of GNP and population. While the statistics and measures in this vol- Countries with populations under one million ume have been selected carefully, consistent are not covered in the tables, but basic data for with coverage of a large number of countries small countries that are members of the United over extended time periods, readers are urged Nations and/or the World Bank are given in the to exercise great care in interpreting them, par- Notes to Table 1 below. ticularly in comparing indicators across coun- tries, since statistical practices, definitions, Calculation of Growth Rates methodology, and coverage differ widely among Most growth rates have been calculated for countries. The statistical systems in many devel- two time periods: 1960 to 1970, and 1970 to 1977, oping countries still are weak, and this affects or 1976 when data for 1977 were not available. the reliability of the data. All growth rates shown are in real terms and have been computed using the least-squares Country Groupings and Coverage method unless otherwise noted.3 The 125 countries covered are grouped as By using the least-squares method, all obser- follows: vations within the relevant time period have Developing Countries with populations over been taken into account, and the resulting a million2 are divided on the basis of 1977 per growth rates reflect general trends without being capita gross national product (GNP) into: unduly influenced by cyclical factors or excep- Low Income Countrieswith per capita in- tional variations in a particular year. come of US$300 and below (37 countries) Middle Income Countrieswith per capita Group Summary Statistics income above US$300 (55 countries) Depending on the nature of the particular in- Industrialized Countries [18 countries) dicator and on the available data, the summary Major Capitol Surplus Oil Exporting Coun- statistic given for the groups of countries is tries [3 countries) either a weighted average, an average based on Centrally Planned Economies (12 countries).2 grouped data, or a median value. Since the cov- Within each group, countries are listed in erage of countries is not uniform for all the ascending order of per capita GNP in 1977, ex- cept for Cambodia and Lebanon, for which 1974 indicators, users should exercise due caution in estimates of per capita GNP are the most recent comparing the summary measures, both among available. Countries are listed in this same order indicators and among country groups. Where in all the tables. They are shown alphabetically, there are insufficient data or it is otherwise irn- with their reference numbers, on the page pre- 3The least-squares growth rate, r, is calculated by regressing ceding the Table of Contents. The country corn- all the values of the variable studied within the relevant period over time using the following logarithmic form: 1Since the United Nations no longer reports data on the Log Xt = a + bt + et where: Republic of China, most of the indicators for this country Xt = variable are derived from national publications. t =time 2Albania, People's Republic of China, Cuba, Democratic Re- et = error term public of Korea, Mongolia, and Romania are grouped with b = slope coefficient centrally planned economies. Cambodia, Lao People's Dem- then, r = (antilog b) - I ocratic Republic, Socialist Republic of Viet Nam, and Yugo- Thus, (ant. bJ - 1 provides a least-squares estimate of the slavia are grouped with developing countries. growth rate. 175 possible to derive a meaningful statistic, no in- (such as investment receipts and workers' re- dicator is shown at the group level. mittances) accruing to residents from abroad, The equation for the weighted average, X, is less the income earned in the domestic economy U accruing to persons abroad. Wixi Gross Domestic Product (GDP) measures the xw= i=1 where total final output of goods and services produced II by the country's economythat is, within the Wi country's territory by residents and non-resi- i=1 dents, regardless of its allocation between do- W = indicator used as the weight mestic and foreign claims. The value of both x = indicator to be averaged GDP and GNP is calculated without making de- i = observations. ductions for the value of expenditure on capital goods for replacement purposes. The weights used are given in the Notes on the Population, incomes and area of small UN/ individual indicators in question. World Bank member countries are as follows: The equation for the group average, Xg, is n UN/World Bank Members with Populaton Under 1 Million Xg - n where Population GNP Per Area Capita (thousand k square i=1 (millions) (US dollars) kilometers) and k are the component variables of the indi- Mid-1977 1977 cator to be averaged, and i = observations. For Maldives 0.1 90 (.) example, the group average energy consumption Cape Verde 0.3 130 4 per capita is obtained by summing the energy Coma ros 0.4 190 2 consumption of all the countries in the group (in Gambia, The 0.6 200 11 Solomon Islands 0.2 250 28 kilograms of coal equivalent) and then dividing Guinea-Bissau 0.5 280 36 this total by the sum of the countries' popula- Equatorial tions. Guinea 0.3 330 28 The median value is the central value of a set Western Samoa 0.2 360 3 of values that have been arranged in order of Botswana 0.7 410 600 Sao Tome magnitude. For each of the indicators and groups and Principe 0.1 420 1 of countries in question, the values for individ- Grenada 0.1 520 (.) ual countries are simply arranged from the Guyana 0.8 560 215 largest to the smallest and the median located Djibouti 0.3 580 22 as that below and above which there is an equal Swaziland 0.5 610 17 Seychelles 0.1 710 (.) number of values. Where there is an odd num- Mauritius 0.9 760 2 ber of countries, the median is the middle item; Fiji 0.6 1,210 18 where there is an even number, the median is Surinam 0.4 1,470 163 halfway between (i.e., the mean of) the two mid- Barbados 0.2 1,770 (.) dle items. Cyprus 0.6 1,830 9 Malta 0.3 1,870 (.) Oman 0.8 2,540 212 Table 1: Basic Indicators Bahamas 0.2 3,520 14 The population estimates for mid-1977 are Bahrain 0.3 3,790 1 primarily from the UN Population Division, sup- Gabon 0.5 3,860 268 Iceland 0.2 7,070 103 plemented by data from the World Bank and the Luxembourg 0.4 7,160 3 US Bureau of the Census. Qatar 0.2 11,670 11 The data on area are from the UN Demo- United Arab graphic Yearbook, 1977. Emirates 0.8 14,420 84 Gross National Product (GNP) measures the total domestic and foreign output claimed by The estimates of GNP underlying the 1977 residents of a country. It comprises Gross Do- GNP per capita figures and the real growth rates mestic Product (see below) plus factor incomes of GNP per capita have been prepared by the 176 World Bank on the basis of national accounts capita and its growth differ substantially from series compiled by national statistical offices, those quoted in World Development Indicators, supplemented by data gathered on World Bank 1978. The differences partly reflect revisions to missions, and population data from the UN national accounts data made by the reporting Population Division, the World Bank, and the US countries. (Such revisions are common statis- Bureau of the Census. tical practice, and can be far-reaching: for exam- The 1977 GNP per capita figures are calcu- ple, the US has recently revised its national lated according to the World Bank Atlas meth- accounts for all years since 1938.) However, odology, in the following manner: 1977 GNP in they are mainly due to the use of new UN esti- national currency units is first expressed in mates of population, which take into account weighted average prices for the base period new data from censuses and surveys. 1975-77, converted into US dollars at the GNP- The conversion of the GNP of different coun- weighted average exchange rate for this period, tries to a common denominator is known to and then adjusted for US inflation between the create distortions. The UN's International Com- 1975-77 base period and the current year, 1977. parison Project (ICP), in which the Bank has The resulting estimate of GNP is then divided by been a major participant, is designed to provide Indexes of Per Capita GNP Converted to US Dollars at Official Exchange Rates, and Per Capita GDP in "International" Dollars, 1970 and 1975 (United States = 100) 1970 1975 US International US International Dollars Dollars Dollars Dollars (1) (2) (3) (4) Kenya 3.3 6.3 3.2 6.1 Indiaa 2.0 6.9 1.9 6.9 Philippines 4.8 12.0 5.3 13.9 Korea, Rep. of 6.1 12.1 8.2 16.9 Colombia 7.7 18.1 8.5 19.8 Malaysia 9.1 19.1 10.4 19.9 Iran 18.4 20.3 24.6 40.8 Hungaryb 42.1 42.7 32.5 47.1 Italy 40.7 49.2 40.4 47.1 Japan 56.7 59.2 63.9 65.1 United Kingdom 53.5 63.5 53.6 62.0 Netherlands 81.1 68.7 84.2 70.5 Belgium 83.8 72.0 91.4 78.3 France 77.8 73.2 84.3 79.5 Germany, Fed. Rep. 93.3 78.2 93.3 79.2 United States 100.0 100.0 100.0 100.0 a1975 GOP in international dollars estimated from ICP figure for 1973 using growth rates computed from World Bank Atlas data. b1970 GNP and 1975 GNP in US dollars are special World Bank estimates. The 1975 GDP in international dollars has been esti- mated from the ICP figure for 1974 using growth rates computed from World Bank Atlas data. Sources: Co! (1) and (3)- Atlas method estimates based on 1975-77 average prices and exchange rates. (2) and (4)- International Comparisons of Real Product and Purchasing Power (Baltimore and London: The Johns Hopkins University Press, 1978J, page 14. the mid-1977 population. This method is de- more realistic comparisons of income levels signed to reduce the impact of temporary under- based on comparisons of purchasing power. To or over-valuations of a particular currency and date work has been completed for 16 countries generally assures a greater degree of compara- based on 152 detailed categories of expenditure bility of GNP per capita estimates among coun- in each country. Work is well advanced on the tries. The country-group averages for GNP per third phase of the ICP, which will yield data on capita are weighted by the size of country pop- purchasing power for about 18 more, mostly de- ulations; those for the growth of GNP per capita veloping, countries. are weighted by the size of countries' GNP per The table above provides examples for 1970 capita in 1970. and 1975 of the differences between GNP per For many countries the estimates of GNP per capita as conventionally computed and incomes 177 as calculated using the ICP methodology.' in these tables. The growth rates in Table 2 are The average annual rote of inflation is the calculated using constant-price series, while the "implicit GDP deflator", which is calculated by shares of GDP in Table 3 are calculated from dividing, for each year of the period in question, current-price series. the value of GDP in current market prices by the Gross Domestic Product (GDP) is defined in value of GDP in constant market prices, both the Notes to Table 1 above. For most countries, in national currency. This measure of inflation GDP by industrial origin is measured at factor has limitations, especially for the oil producing cost, but for some countries without complete countries in the light of the drastic increase in national accounts series at factor cost, market- oil prices in late 1973. price data have been used. GDP at factor cost is The adult literacy rate is the percentage of equal to GDP at market prices, less net indirect population aged 15 and over able to read and taxes. write. These rates are based primarily on infor- The agricultural sector covers agriculture, mation from the UN Educational, Scientific and forestry, hunting, and fishing. The industrial sec- Cultural Organization (Unesco), supplemented tor comprises mining, manufacturing, construc- by World Bank data. For some countries the tion, and electricity, water, and gas. All other estimates shown are for years other than, though branches of economic activity are regarded as not more than two years distant from, those services. specified. Hence the series is not strictly com- In Table 2, the average growth rates for the parable between countries. The country-group country groups are weighted, for both periods, averages are weighted by country populations. by the size of countries' GDP at factor cost in Life expectancy at birth indicates the number 1970 US dollars. In Table 3, the average sectoral of years newborn children would live if subject shares are weighted by the size of countries' to the mortality risks prevailing for the cross- GDP in current US dollars. section of population at the time of their birth. Changes in the national accounts series of Data are from the UN Population Division, sup- individual countries are the main source of some plemented from World Bank data files. The substantial differences between the data in these country-group averages are weighted by country two tables and the data quoted in World Devel- populations. opment Indicators, 1978. These changes include The index of per capita food production shows revisions to historical national accounts series, the average annual quantity of food produced and the adoption in some countries of the new per capita in the years 1975-77 as a percentage of UN System of National Accounts (1968). the average annual amount produced in 1969-71. The estimates are derived from those of the UN Tables 4 and 5: Growth of Selected Demand Food and Agriculture Organization, which are Aggregates; Structure of Demand calculated by dividing indexes of the quantity National accounts series in national currency of food production (comprising cereals, starchy units have been used to compute the indicators roots, sugar cane, sugar beet, pulses, edible oil in these tables. The growth rates in Table 4 are crops, nuts, fruits, vegetables, livestock, and calculated in constant prices; the shares of GDP livestock products) by indexes of population. in Table 5 are expressed in current prices. Most Food production is measured net of animal feed, of the definitions employed are those of the UN seeds for use in agriculture, and quantities lost System of National Accounts (SNA). in processing and distribution. The country- Gross Domestic Product (GDP) is defined in group averages are weighted by country popu- the Notes to Table 1 above. lations. Public consumption (General Government Tables 2 and 3: Growth and Structure of consumption in SNA terminology) includes all Production current expenditures for purchases of goods and services by all levels of government. Capital ex- National accounts series in national currency units have been used to calculate the indicators penditure on national defense and security is regarded as a consumption expenditure. 'For a detailed description of the methodology, see I. B. Private consumption consists of the market Kravis, A. Heston, and R. Summers, International Corn pan- sons of Real Product and Purchasing Power (Baltimore and value of all goods and services purchased or London: The Johns Hopkins University Press, 1978). This received as income in kind, by households and book contains the results of Phase 2 of the United Nations International Comparison Project. non-profit institutions. It includes the imputed 178 rent for owner-occupied dwellings. manufacturing, derived from the UN Yearbook Gross domestic investment consists of the of Industrial Statistics, were applied to data on outlays for additions to the fixed assets of both value added in manufacturing from the World the private and public sectors, plus the net value Bank's national accounts series in national cur- of inventory changes. rencies, converted into 1970 US dollars. Per cap- Gross domestic savings shows the amount of ita values were then calculated using mid-year gross domestic investment financed from do- estimates of country populations. mestic output. It is calculated as the difference between gross domestic investment and the defi- Table 7: Energy cit on current account of goods and non-factor All data on energy are from UN sources. They services (excluding net current transfers). It refer to commercial forms of primary energy: comprises both public and private savings. coal and lignite, crude petroleum, natural gas Exports of goods and non-factor services rep- and natural gas liquids, and hydro and nuclear resent the value of all goods and non-factor electricity, converted into coal equivalent. The services sold to the rest of the world; they in- use of firewood and other traditional fuels, clude merchandise, freight insurance, travel, substantial in certain developing countries, is and other non-factor services. The value of fac- not taken into account since data are not tor services (such as investment receipts and available. workers' remittances from abroad) is excluded Energy consumption per dollar of GDP re- from this measure. fers to the ratio of total energy consumption to The resource balance is the difference be- GDP, in constant 1975 US dollars. This indica- tween exports and imports of goods and non- tor shows the intensity of energy use in the factor services. economy. In Table 5, all the country-group averages are weighted by the size of countries' GDP, at mar- Energy imports as a percentage of merchan- ket prices, in current US dollars. dise export earnings refers to the US dollar value Changes in the national accounts series of in- of energy imports - Standard International dividual countries are the main source of some Trade Classification (SITC) (Revised) Section 3 substantial differences between the data in these as a percentage of total merchandise export two tables and the data quoted in World De- earnings. velopment Indicators, 1978. These changes in- The data on energy imports do not permit a clude revisions to historical national accounts distinction to be drawn between petroleum im- series, and the adoption in some countries of the ports for fuel and those for use in the petro- new UN System of National Accounts (1968). chemical industry. Hence these percentages may overestimate the degrees of dependence on for- Table 6: Industrialization eign energy. The percentage distribution of value added among the manufacturing industries is calcu- Table 8: Growth of Merchandise Trade lated from United Nations Industrial Develop- The merchandise trade statistics are from the ment Organization (UNIDO) data, with base UN trade data system, including unpublished values expressed in 1970 US dollars. data and data from the UN Monthly Bulletin of The classification of the manufacturing indus- Statistics and from the UN Yearbook of Inter- tries is in accordance with the UN International national Trade Statistics, supplemented by sta- Standard Industrial Classification (ISIC) of all tistics from the UN Conference on Trade and economic activities. Food and agriculture com- Development (UNCTAD) and from the Interna- prises ISIC Major Groups 311, 313, and 314. tional Monetary Fund's (IMF) Direction of Trade Textiles and clothing comprises ISIC Major and International Financial Statistics. Groups 321-324. Machinery and transport equip- Merchandise exports and imports cover, with ment refers to ISIC Major Groups 382-384. a few exceptions, all international changes in Chemicals comprises ISIC Major Groups 351 ownership of merchandise passing across the and 352. Other Manufacturing comprises ISIC customs borders of the compiling countries. Ex- Major Division 3 less all of the above. ports are valued f.o.b. (free on board), imports To calculate gross manufacturing output per c.i.f. (cost, insurance and freight). These values capita, ratios of gross output to value added in are expressed in current US dollars. 179 The growth rates of merchandise exports and In the categorization of imports in Table 10, imports are in real terms, and calculated from food commodities are those in SITC (Rev.) Sec- quantum indexes of exports and imports. For tions 0, 1, 4, and Division 22 (food and live ani- the majority of developing countries these in- mals, beverages and tobacco, oils, and fats). dexes are taken from the UNCTAD Handbook Fuels refers to commodities in SITC Section 3. of International Trade and Development Sta- Other primary commodities comprises SITC tistics, and computer printouts which show Section 2 (crude materials excluding fuels) less revised data. For industrialized countries, these SITC Division 22 (oilseeds and nuts), plus SITC quantum indexes are obtained from the UN Division 68 (non-ferrous metals). Machinery and Yearbook of International Trade Statistics and transport equipment refers to commodities in UN Monthly Bulletin of Statistics. SITC Section 7. Other manufactures, calculated Revisions to the growth rates shown in World as the residual from the total value of manufac- Development Indicators, 1978 reflect, first, the tured imports, refers to SITC Sections 5 to 9 less use of different sources of underlying data which 7 and Division 68. permit a change in methodology, so that all the growth rates shown this year have been com- Table 11: Destination of Merchandise Exports puted from quantum indexes; and second, major Merchandise exports are,defined in the Notes data revisions by UNCTAD, as of March 1979. to Table 8 above. All trade shares in this table The terms of trade (or the "net barter terms are based on statistics on the value of trade in of trade") are calculated as the ratio of a coun- current US dollars, published by the IMF in its try's export unit value index to the index of Direction of Trade. Unallocated exports are dis- import unit values. The terms of trade index tributed among the country groups in proportion numbers shown here for 1960 and 1977, where to their respective shares of allocable trade. 1970 = 100, thus indicate changes over time in Reflecting the practice used in the data source, the level of export prices expressed as a per- the country groups shown in this table differ centage of import prices. The unit value indexes somewhat from those used elsewhere in the are from the same UNCTAD and UN sources volume. Specifically: cited above, in connection with the growth rates Developed Countries include Gibraltar and of exports and imports. Iceland in addition to those referred to as "in- dustrialized" elsewhere in the volume Tables 9 and 10: Structure of Merchandise Trade Developing Countries include Cuba and Ro- The trade shares in these tables are derived mania, referred to as centrally planned econo- from trade values given in UN trade tapes and mies elsewhere in the volume in the UN Yearbook of International Trade Sta- Capital Surplus Oil Exporting Countries in- tistics, expressed in current US dollars. clude Oman, Qatar and United Arab Emirates, Merchandise exports and imports are defined in addition to Kuwait, Libya and Saudi Arabia in the Notes to Table 8 above. Centrally Planned Economies exclude Cuba In the categorization of exports in Table 9, and Romania. fuels, minerals and metals refers to commodities in SITC (Rev.) Section 3, Divisions 27, 28 and Table 12: Trade in Manufactured Goods the non-ferrous metals of SITC Division 68. The data in this table are from the UN, and Other primary commodities comprises SITC are among those used to compute Special Table Sections 0, 1, 2, 4 (food and live animals, bever- B in the UN Yearbook of International Trade ages and tobacco, inedible crude materials, oils, Statistics. fats and waxes) less SITC Divisions 27 and 28 Manufactured goods refers to commodities in (minerals, crude fertilizers and metalliferous the SITC (Rev.) Sections 5 through 9 (chemicals ores). Textiles and clothing refers to SITC Divi- and related products, manufactured articles, ma- sions 65 and 84 (textiles, yarn, fabrics, and cloth- chinery and transport equipment), excluding ing). Machinery and transport equipment refers Division 68 (non-ferrous metals). to commodities in SITC Section 7. Other manu- The country groups used are the same as those factures, calculated as the residual from the in Table 11, and differ somewhat from those used total value of manufactured exports, refers to elsewhere in the volume. Specifically: SITC Sections 5 to 9 less 7 and Divisions 65, 68, Developed Countries include Gibraltar and and 84. Iceland in addition to those referred to as "in- 180 dustrialized" elsewhere in the volume Table 14: Flows of External Capital Developing Countries include Cuba and Ro- The data on the gross inflow and repayment mania, referred to as centrally planned econo- of principal (amortization) of public and pub- mies elsewhere in the volume licly guaranteed medium- and long-term loans Capital Surplus Oil Exporting Countries in- are from the World Bank's Debt Reporting Sys- clude Oman, Qatar and United Arab Emirates, tem. The net inflow is the gross inflow less the in addition to Kuwait, Libya and Saudi Arabia repayment of principal. Centrally Planned Economies exclude Cuba Since the World Bank's Debt Reporting Sys- and Romania. tem is concerned solely with developing coun- tries, data on external debt are not given here Table 13: Balance of Payments and Debt for other groups of countries. Neither are com- Service Ratios parable data for those countries available from The current account balance is the difference other sources. between (i) exports of goods and services plus Net direct private investment is the net inflows of unrequited official and private trans- amount invested by non-residents of the coun- fers, and (ii) imports of goods and services plus try in enterprises in which they (or other unrequited transfers to the rest of the world. non-residents) exercise a significant degree of Excluded from this figure are all interest pay- managerial control; these net figures also take ments on external public and publicly guaran- account of the value of direct investment abroad teed debt, which are shown separately. The by residents. The IMF's balance of payments latter represent interest payments on the dis- data files have been used in compiling these bursed portion of outstanding public and pub- estimates. licly guaranteed debt plus commitment charges on undisbursed debt. The current account esti- Table 15: External Public Debt and mates have been taken from the IMF's data files; International Reserves estimates of interest payments are from the External public debt outstanding represents World Bank's Debt Reporting System. the amount of public and publicly guaranteed loans that has been disbursed, net of cancelled Debt service is the sum of interest payments loan commitments and repayments of principal. and repayments of principal on external public The data shown refer to the end of the year and publicly guaranteed debt. Debt service data indicated, and are from the World Bank's Debt are taken from the Bank's Debt Reporting Sys- Reporting System. In estimating external public tem. The ratio of debt service to exports of debt as a percentage of GNP, GNP is converted goods and services is a commonly used rule of from national currencies into US dollars at the thumb for assessing debt-servicing capacity. It official exchange rate for the year in question. is important to note, however, that the debt Since the World Bank's Debt Reporting Sys- service ratios shown here do not cover unguar- tem is concerned solely with developing coun- anteed private debt, which for some countries tries, data on external debt are not given here is substantial. Also it should be noted that debt for other groups of countries. Neither are com- contracted for the purchase of military equip- parable data for those countries available from ment is not usually reported. The average ratios other sources. of debt service to GNP for the country groups Gross international reserves comprise the sum are weighted by the size of countries' GNP in of a country's holdings of gold, Special Drawing current US dollars (as quoted in the World Bank Rights (SDR5), the reserve position of IMP Atlas, 1978). The average ratios of debt service members in the Fund, and holdings of foreign to exports of goods and services are weighted exchange under the control of monetary author- by the size of countries' exports of goods and ities. The gold component of these reserves is services. valued throughout at SDR 35 per ounce. This is Since the World Bank's Debt Reporting Sys- equivalent to US$35 per ounce before December tem is concerned solely with developing coun- 1971; US$38 per ounce from December 1971 tries, data on external debt are not given here through January 1973; US$42.22 per ounce from for other groups of countries. Neither are com- February 1973 through June 1974; and to the US parable data for those countries available from dollar price of gold as measured by the market other sources. valuation of the SDR beginning in July 1974. 181 The data for holdings of international reserves Table 17: Historical and Projected Population are from the IMF data files. The reserve levels Growth, and Hypothetical Stationary Population shown for 1970 and 1977 refer to the end of the The estimates of mid-1977 population are year indicated and are expressed in current US those of Table 1. dollars. The reserve holdings at the end of 1977 The growth rates of total population are end- are also expressed in terms of the number of point rates calculated from mid-year country months' imports of goods and services they populations. could pay for, with imports at the average level The projections of population to the year 2000 for 1977. and to the point where it will eventually be- come stationary are made for each country Table 16: Net Flows of Official Development separately, starting with information on its total Assistance from Members of the OECD and population, fertility and mortality rates in 1975, OPEC the base year, and projecting these parameters forward for five year intervals on the basis of Official development assistance (ODA) con- generalized assumptions until the population sists of net disbursements of loans or grants becomes stationary. The base year estimates are made at concessional financial terms by official from the UN ("Demographic Estimates and Pro- agencies of the members of the Development As- jections for the World, Regions, and Countries sistance Committee of the Organisation for Eco- as Assessed in 1978: Provisional Report," 1979), nomic Co-operation and Development (OECD) the World Bank, the US Bureau of the Census, and members of the Organization of Petro- and the Population Council. leum Exporting Countries (OPEC), with the The net reproduction rate (NRRJ indicates the objective of promoting economic development number of daughters that a newborn girl will and welfare. It includes the value of technical bear during her lifetime, assuming fixed age- cooperation. specific fertility rates and a fixed set of mortal- Figures for 1977 and earlier years are actual ity rates. The NRR thus measures the extent to figures published by the OECD; those for 1978 which a cohort of newborn girls will reproduce are preliminary estimates. All others are pro- themselves under given schedules of fertility jections by World Bank staff, based on OECD and mortality rates. and World Bank estimates of GNP growth, on A net reproduction rate of I indicates that information on budget appropriations for aid, fertility is at replacement level: at this rate and on aid policy statements by governments. child-bearing women, on average, bear only They are projections, not predictions, of what enough daughters to replace themselves in the will occur, based on present plans. population. A population will continue to grow after replacement level fertility has been The nominal values of ODA for the OECD reached, because its past higher birth rates will countries as a group have been converted into have produced an age distribution with a rela- constant 1977 prices using the US dollar GNP tively high proportion of people currently in, or deflator. This deflator is based on price increases still to enter, the reproductive ages. This results in the OECD countries (excluding Greece, Por- in more births than deaths until the population tugal, Spain, and Turkey) measured in terms of changes to the older age distribution intrinsic in the US dollar. It takes account of parity changes the low birth rate. The time taken for a country's between the US dollar and national currencies. population to become stationary after reaching (For example, when the US dollar depreciates, replacement level fertility thus depends on its price increases measured in national currencies particular age structure and previous fertility have to be adjusted upward by the amount of patterils. the depreciation to obtain price increases mea- A stationary population is one in which age- sured in US dollar terms.) and sex-specific mortality rates have remained Finland became a member of the Develop- unchanged over a long period, while, simulta- ment Assistance Committee (DAC) in January neously, age-specific fertility rates have re- 1975; New Zealand became a member in 1973. mained at replacement level (NRR = 1). In such The majority of OPEC countries introduced a population, the birth rate will be constant and sizeable aid programs onl3i in late 1973 or early equal to the death rate, the age structure will be 1974. constant, and the growth rate will be zero. 182 To make the projections, assumptions about age annual growth rate between 1977 and 2000 future mortality rates are made in terms of fe. would be about 1.63 percent, decreasing from male life expectancy at birth (that is, the number 1.72 percent in 1977 to 1.36 percent in the year of years a newborn girl would live if subject to 2000. The crude birth rate would decline by the mortality risks prevailing for the cross- 6 points (from 28.8 to 22.8 births per thousand section of population at the time of her birth). population per year) and the death rate by 2 Countries were first divided into income groups, points (from 11.6 to 9.2 per thousand population according to their per capita income in 1975. per year). The present estimate of world popu- Within each income group, a set of annual incre- lation in the year 2000 is slightly lower than that ments in female life expectancy was assumed, used in last year's World Development Report depending on the level of female life expectancy (6.01 billion in place of 6.05 billion); the birth in 1975. For a given life expectancy at birth the rate is also slightly lower (22.8 per thousand in annual increments during the projection period place of 23.6 per thousand), while the death rate are larger in countries where 1975 per capita is roughly the same. income was higher. The estimates of the hypothetical size of the To project fertility rates, the first step was to stationary population, and of the years when estimate the year in which fertility will reach replacement level fertility and stationary popu- replacement level. These estimates are specula- lation size would be reached, are speculative. tive, and are based on information on trends in They should not be regarded as predictions. crude birth rates, total fertility rates (both de- They are included to provide a summary indi- fined in the Notes to Table 18), and the perfor- cation of the long-run implications of recent mance of family planning programs. The years trends, on the basis of highly stylized assump- given in World Development Indicators, 1978 tions. In particular, no account is taken of the were reviewed country by country and altered effects that countries' future income growth and where necessary on the basis of new information family planning might have on their fertility on declines in crude birth rates in 1965-75, the rates. Countries have been ascribed certain fer- recent performance of family planning pro- tility and mortality trends on the basis of their grams, and total fertility rates in 1975. For most present income levels, demographic parameters, countries, it was assumed that the total fertility and family planning performance, but if, for rate would decline between 1975 and the year example, a country with low per capita GNP at in which the NRR=1, after which fertility present achieved rapid income growth over the would remain at replacement level. For coun- projection period, its fertility rate would prob- tries in Sub-Saharan Africa, total fertility rates ably decline more rapidly than projected here. were assumed to remain constant until 1980-85 The estimated hypothetical stationary popula- and then to decline until replacement level was tion of the world according to the present pro- reached. In several industrialized countries, fer- jections is 9.84 billion, or 395 million less than tility is at present below replacement level. Since the corresponding estimate in last year's report. a population will not bedome stationary if its net There are two main reasons for this reduction: reproduction rate is other than one, to make the data now available indicate that fertility has estimates of the hypothetical stationary popu- declined faster than expected in some Latin lation in these countries it was necessary to American and Asian countries, and the assess- assume that their fertility rates would regain ment of the population growth potential of some replacement levels. For the sake of consistency large Sub-Saharan African countries has been with the estimates made for other countries, the revised. total fertility rates in these industrialized coun- tries vere assumed to increase to replacement Table 18: Demographic and Fertility-Related level by the years 2000-2005, and then remain Indicators constant. The crude birth (and death) rates indicate the Throughout the projections, it was assumed number of live births (deaths) per thousand that international migration would have no population in a year. They are derived from the impact. Bank's population projections given in Table 17. According to the projections, the total world The country-group averages for birth and death population would increase from 4.14billion in rates and changes in those rates are weighted by 1977 to 6.01 billion in the year 2000. The aver- the size of country populations. 183 The total fertility rate (TFR) represents the on activity rates, again from the source quoted number of children that would be born per above. woman, if she were to live to the end of her The application of ILO activity rates to the child-bearing years and bear children at each Bank's latest population projections may be in- age in accordance with the prevailing age- appropriate for some countries, where there specific fertility rates. Most of the TFR quoted have been important changes in levels of unem- are from the provisional UN population projec- ployment and underemployment, and/or in in- tions in "Demographic Estimates and Projec- ternational and internal migration. The labor tions for the World, Regions and Countries, as force estimates for 1977-2000 should thus be Assessed in 1978" (1979), supplemented by data treated with caution. from the World Bank, the Population Council, and the US Bureau of the Census. Table 20: Urbanization The percentage of women in the reproductive The data on urban population as a percentage age group refers to women of child-bearing age of total population are taken from unpublished (15-44 years) as a percentage of the total female estimates and projections made by the UN Pop- population. The estimates are derived from the ulation Division. Bank's population projections given in Table 17. The growth rates of urban population are cal- The percentage of married women using con- culated from the Bank's population projections and estimates of urban population shares from traceptives refers only to married women of the UN Population Division. child-bearing age (15-44 years). These data are mainly derived from D. Nortman and E. Hof- Data on urban agglomeration are also from the UN. statler, Population and Family Planning Pro- grams: A Factbook, various issues (New York: Since the estimates in this table reflect the Population Council); D. Nortman, "Changing different definitions of "urban" used in different Contraceptive Patterns: A Global Perspective", countries, cross-country comparisons should be in Population Bulletin, Vol. 32, No. 3 (Washing- interpreted with caution. ton, D.C.: Population Reference Bureau, Inc.); Table 21: Indicators Relating to Life Expectancy and Family Planning Service Statistics Annual Life expectancy at birth indicates the number Report, 1976 (Washington, D.C.: Office of Popu- of years newborn children would live if subject lation, Agency for International Development). to the mortality risks prevailing for the cross- The data refer to a variety of years, not more section of population at the time of their birth. than two years distant from those specified. The data are from the UN Population Division, supplemented from World Bank data files. Table 19: Labor Force The infant mortality rate is the number of in- The working age population refers to the total fants who die before 1 year of age, per thousand population between 15 and 64 years of age. live births in a given year. The data are obtained These estimates are based on the Bank's popu- from a variety of sources including UN Demo- lation projections given in Table 17. graphic Yearbooks and the US Bureau of the The labor force describes economically active Census publication, World Population: 1977; persons, including the armed forces and the un- they refer to a variety of years, not more than employed, but excluding housewives, students, two years distant from those quoted. and economically inactive groups. Agriculture, The child death rate is the number of deaths industry, and services are defined in the Notes to among children 1 to 4 years of age, per thousand Table 2 above. The estimates of the sectoral dis- children in the same age group in a given year. tribution of the labor force in 1960 are from the For countries with reliable death registration, International Labour Office (Labour Force: Esti- these rates are taken from UN Demographic mates 1950-1970 and Projections 1975-2000, Yearboohs; they refer to a variety of years, not second edition, Geneva, 1977); most of those for more than two years distant from those quoted. 1977 are geometric extrapolations of ILO esti- For other countries, the rates have been derived mates for 1960 and 1970 given in the source just from the appropriate Coale-Demeny Model life quoted. tables', to correspond to the expectation of life The labor force growth rates are derived from 1Ansley J. Coale and Paul Demeny, Regional Model Life Tables and Stable Populations (Princeton, N.J.: Princeton the Bank's population projections and ILO data University Press, 1966). 184 at birth for 1960 and 1977. Estimates of total, male, and female enroll- All the country-group averages in this table ment in primary school, of students of all ages, are weighted by the size of country populations. are expressed as percentages of the total (or total male or female) population of primary Table 22: Health-Related Indicators school age, to give "gross primary enrollment The estimates of population per physician and ratios". Although primary school age is gener- per nursing person are derived from World ally considered to be 6 to 11 years, countries' Health Organization (WHO data, some of which educational systems vary. These differences be- have been revised since World Development In- tween countries in the ages and duration of dicators, 1978 was issued, to reflect new infor- schooling are reflected in the ratios given. For mation supplied by reporting countries. Nursing countries with universal primary education, the persons include graduate, practical and assis- gross enrollment ratios may exceed 100 percent tant nurses. Both because country definitions of since some pupils may be below or above the nursing personnel vary, and because the data official primary school age. shown are for years other than, but not more The gross secondary enrollment ratios are cal- than two years distant from, those specified, culated in the same manner. the data for these two indicators are not strictly The data on numbers enrolled in higher edu- comparable between countries. cation as a percentage of the population aged The percentage of total population with ac- 20-24 are from Unesco. The minimum condition cess to safe water, estimated by WHO, is the of entry to higher education is the successful proportion of people with reasonable access to completion of education at the secondary level, safe water supplies, defined to include treated or proof of equivalent knowledge or experience. surface water or untreated but uncontaminated The adult literacy rate is the percentage of water such as that obtained from boreholes, population aged 15 and over able to read and springs and sanitary wells. Some of the WHO write. These rates are based largely on informa- estimates have been revised since last year's tion from Unesco, supplemented by World Bank World Development Indicators was issued. data. The daily per capita calorie supply is calcu- All the country-group averages in this table lated by dividing the calorie equivalent of the are weighted by the size of country populations. available food supplies in a country by its total population. The available food supplies com- Table 24: Income Distribution prise domestic production, imports less exports, The data in this table refer to the distribution and changes in stocks; they exclude animal feed, of total disposable household income accruing seeds for use in agriculture, and the quantities to percentile groups of households ranked by of food lost in processing and distribution. The total household income. The distributions cover daily per capita calorie requirement refers to rural and urban areas and refer to different years the calories needed to sustain the population at between 1965 and 1977. Since the collection of normal levels of activity and health, taking ac- income distribution data has not been systemat- count of its age and sex distributions, average ically organized and integrated into the official body weights, and environmental temperatures. statistical system in many countries, estimates Both sets of estimates are from the UN Food and are typically derived from surveys designed for Agriculture Organization. other purposes (most often consumer expendi- All the country-group averages in this table ture surveys) that also collect some information are weighted by the size of country populations. on income. These surveys use a variety of con- cepts of income, and generally little effort is Table 23: Education made to structure the questionnaires to ensure The data in this table refer to a variety of that income reporting is reasonably precise and years, not more than two years distant from accurate. Furthermore, the coverage of many of those specified, and are mostly taken from the these surveys is seriously deficient for the pur- UN Educational, Scientific and Cultural Orga- pose of obtaining reliable nationwide estimates nization (Unesco). Some of the Unesco data of income distribution. Though the estimates have been revised since World Development given are considered the best available, they do Indicators, 1978 was issued, to reflect new in- not avoid all these problems, and hence should formation supplied by reporting countries. be interpreted with extreme caution. 185 The distributions for developing countries measure the inequality of incomes that is di- outside Latin America are from data gathered rectly attributable to the structure of produc- by the World Bank from national sources. Those tion and ownership of assets, one should look for industrialized countries are taken from at the distribution of income across income- Malcolm Sawyer, Income Distribution in OECD earning individuals. However, for purposes Countries (Organisation for Economic Co-opera- of welfare analysis or poverty measurement, tion and Development Occasional Studies, July household income is more relevant, since the 1976); they refer to post-tax income, and con- household is a redistributing unit that combines ceptually are roughly comparable with the dis- incomes from individuals at different income tributions for developing countries. The esti- levels to provide a relatively uniform level of mates for Latin American countries other than welfare for all its members. Mexico come from the preliminary results of a Households vary in size, and hence a further project on Measurement and Analysis of Income distinction needs to be drawn between distribu- Distribution in Latin American Countries, being tions in which households are ranked according conducted by the UN Economic Commission for to their total incomes, and distributions in which Latin America (ECLA) jointly with the World households are ranked according to per capita Bank. Those for Mexico are the first results from household income. The latter distribution en- the 1977 Household Budget Survey. sures that households are treated as poor (rich) Both the quality and the comparability of according to whether their per capita income is the estimates quoted are limited. The joint low (high) and not according to whether total ECLA-Worid Bank project referred to above has household income is high. The distinction is im- investigated measurement errors in some of the portant because households with low per capita estimates for Latin America. It compared data incomes are frequently large households, whose from household surveys and from national ac- total income may be relatively high. Further- counts and found substantial divergences be- more, since households vary in size, poor house- tween the two sources for incomes other than holds often being larger than rich, the poorest 40 wages. Attempts have been made to adjust the percent of households ranked in terms of per observed distributions to make them consistent capita household income will typically contain with national accounts estimates; these revi- more than 40 percent of the total population. For sions typically increase the apparent degree of this reason, if one wishes to compare two dis- income inequality, as shown in the examples tributions (for example, those of two countries, below: or those of rural and urban areas within a coun- try) for welfare purposes, it is best to use the distribution of individuals ranked by per capita Income Share of Income Share of Poorest 40 Percent Richest 20 Percent household income. Unfortunately, this can so Original Adjusted Original Adjusted far be done only for a few countries; further work on these countries is in progress within Brazil 7.0 5.6 66.6 73.1 the Bank. The following table gives examples of Chile 13.4 12.0 51.4 54.5 the differences among the three distributions: Honduras 7.3 6.6 67.8 69.7 Peru 7.0 5.7 61.0 64.7 Venezuela 10.3 9.8 54.0 54.9 Republic Income Share of Poorest of Sri It should be emphasized that these adjustments 40 Percent of: China Lanka are themselves arbitrary. They are reported Households ranked by simply to indicate the range of variation that can household income 22.0 19.2 be expected for these estimates. Households ranked by per The distribution of total household income capita household income 27.5 24.7 shown in Table 24 is one of several distinct in- Individuals ranked by per capita household income 22.9 20.8 come distributions that are of interest. To 186 Bibliography of Data Sources National Accounts and Economic Indicators World Bank data files. World Rank Atlas, 1978 (Washington, D.C.: World Bank). United Nations Statistical Yearbook, various issues (New York: United Nations, Department of Economic and Social Affairs, UN Statistical Office). A System of Notional Accounts (New York: United Nations, Department of Economic and Social Affairs, UN Statistical Office, 1968). FAQ Production Yearbook, various issues (Rome: Food and Agriculture Organization of the United Nations). National sources. Energy World Energy Supply, 1950-1974 and 1972-1976, UN Statistical Papers Series J, Nos. 19 and 21 (New York: United Nations, Department of Economic and Social Affairs, UN Statistical Office, 1974, 1978). Trade UN trade tapes. United Nations Monthly Bulletin of Statistics, various issues (New York: United Nations, Department of Economic and Social Affairs, UN Statistical Office). United Nations Yearbook of International Trade Statistics, various issues (New York: United Nations, UN Statistical Office). Handbook of International Trade and Development Statistics, various issues (Geneva: United Nations Conference on Trade and Development). International Financial Statistics, various issues (Washington, D.C.: International Monetary Fund, Bureau of Statistics). Direction of Trade, various issues (Washington, D.C.: International Monetary Fund, Bureau of Statistics). Balance of Payments, Capital Flows, and Debt International Monetary Fund balance of payments data files. Balance of Payments Manual, fourth edition (Washington, D.C.: International Monetary Fund, 1977). Development Co-operation: Efforts and Policies of the Members of the Development Assistance Committee, annual issues (Paris: Organisation for Economic Co-operation and Development). World Bank Debt Reporting System. Population World Bank data files. World Bank Atlas, 1978 (Washington, D.C.: World Bank). UN population tapes. UN, "Demographic Estimates and Projections for the World, Regions, and Countries as Assessed in 1978, Provisional Report" (New York: United Nations, Department of Economic and Social Affairs, Population Division, January 1979). World Population: 1977 (Washington, D.C.: US Bureau of the Census, International Statistical Programs Center, 1978). Labor Force World Bank data files. International Labour Office tapes. Labour Force: Estimates 1950-1970 and Projections 1975-2000, second edition (Geneva: International Labour Office, 1977). 187 Social Indicators World Bank data files. Demographic Yearbook, various issues (New York: United Nations, Department of Economic and Social Affairs, UN Statistical Office). United Nations Statistical Yearbook, various issues (New York: United Nations, Department of Economic and Social Affairs, UN Statistical Office). World Health Statistics Annual, various issues (Geneva: World Health Organization). World Health Statistics Report, Vol. 29, No. 10, Special Issue on Water and Sanitation (Geneva: World Health Organization, 1976). Unesco Statistical Yearbook, various issues (Paris: United Nations Educational, Scientific and Cultural Organization). 188 World Development Report, 1979 is published for the World Bank by Oxford University Press. Additional copies may be ordered through book- sellers or from the Press offices in the following countries: AUSTRALIA. Oxford University Press, G.P.O. Box 2784Y, Melbourne 3001, Victoria. CANADA. Oxford University Press, 70 Wynford Drive, Don Mills, On- tario M3C 1J9. HONG KONG. Oxford University Press, 5th Floor, News Building, 633 Kings Road, North Point. JAPAN. Oxford University Press KK, Enshu Building, 3-3-3 Otsuka, Bunkyo-Ku, Tokyo. NEW ZEALAND. Oxford University Press, P.O. Box 11-344, Walton House, 66 Ghuznee Street, Wellington. SOUTH AFRICA. Oxford University Press, P.O. Box 1141, Cape Town 8000; P.O. Box 10413, Johannesburg; 36 Riley Road, Overport 4051. SINGAPORE. Oxford University Press, 41 Jalan Pemimpin, Singapore 20. UNITED KINGDOM. Oxford University Press, Press Road, Neas- den, London NW1O ODD, England. UNITED STATES. Oxford University Press, Inc., 200 Madison Avenue, New York, New York 10016. The full range of World Bank publications, both free and for sale, is described in the World Bank Catalog of Publications, the most recent edition of which is avail- able on request and without charge from: The World Bank Publications Unit 1818 H Street, N.W. Washington, D.C. 20433 U.S.A. The World Bank w World Development Report, 1979 is the second of a series of annual World Bank reports designed to present a continuing assessment of development problems. Its coverage comple- ments that of World Development Report, 1978, which evaluated the development record of the last twenty-five years and examined the development problems and prospects of the Low Income countries. This year's Report pays special attention to issues of structural transforma- tion that are particularly important for the Middle Income developing countries. In dealing with the appropriate policies to be associated with structural changes, it analyzes the processes of industrialization, urbanization, and the sectoral deployment of labor. The Report presents projections of developments in the world economy through 1990 and identifies and analyzes four major challenges for policy: Creation of an international environment that is supportive of trade, capital flows, and energy development for the benefit of developing and industrialized countries alike Creation of job opportunities for the additional half-billion people who will join the labor force in the developing countries by the year 2000 Accommodation of an additional 1 billion people in socially acceptable and economically productive conditions in the urban areas of the developing countries during the same period of time Significant steps toward the elimination of absolute poverty Still available from Oxford University Press World Development Report, 1978 -. "[The reporti shows the progress that has been made in the third quarter of the twentieth century, the fragile basis for this success, and the enormity of the problems that still remain." The Economist "An absolutely riveting se of new-style statistics on world development. . The thinkers of . . the World Bank.. show, once again, an enlightened and practical concern for the poor of this . world, for which they are not always given the credit they deserve."The Guardian 132 pages; ISBN 0-19-502500-8; paperback $4.95 E2.75) $3.50 (E1.95) ISBN 0-19-502638-1