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CIA-RDP79T01316A000900010001-0
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Publication Date:
January 5, 1978
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SECRET
NOFORN-ORCON
ECONOMIC INTELLIGENCE WEEKLY REVIEW
Mexico: Tough Controls on Foreign Investment Continue ............................ 1
The government believes that direct foreign investment is no
longer necessary for economic development in most fields and
that any investment allowed should be carefully circumscribed.
European Community: Grappling With Short-Run and Long-Run Steel Issues.
Members of the Community have a powerful economic incentive
to agree on the retirement of high-cost facilities and the modern-
ization of remaining plants, although this will require the subordi-
nation of national political interests.
Industrial Countries: Youth Unemployment Still Rising ............................... 11
A complex of demographic, educational, cultural, and economic
forces has further worsened employment prospects for youths in
OECD nations.
China: Disappointing Grain Harvest, Above-Average Imports .....................
Peking has admitted to a second consecutive year of little or no
growth in grain prodution, with adverse weather the fundamental
cause.
Aeroflot: Soviets Partially Succeed in Upgrading Operations ....................... 20
Moscow has focused on modernizing the aircraft fleet, upgrading
passenger service, and improving the poor safety record.
Note
USSR May Be Seeking Additional Grain ....................................... 28
i
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SECRET
NOFORN-ORCON
Articles
MEXICO: TOUGH CONTROLS ON FOREIGN INVESTMENT" CONTINUE
Mexico continues to toughen its controls on foreign investment, despite the
advent of a new "pro-business, pro-US" administration. This reflects both Mexico's
improving economic position-the result of its oil bonanza-and the continued slow
implementation of a basic investment philosophy evolved many years before. Mexico
City believes that direct foreign investment is no longer necessary for economic
development in most fields and that any investment allowed should be carefully
circumscribed to ensure the greatest possible political and economic benefits. Al-
though investment restrictions will continue to be applied with typical Mexican
flexibility, the basic regulations are unlikely to be eased even if it means seriously
delaying the resumption of large-scale foreign investment. In the longer run, many
foreign companies probably will find that the advantages of investing in Mexico's
dynamic economy outweigh the disadvantages of the restrictive investment
regulations.
Trends Under the Echeverria Administration
Mexican restrictions on direct foreign investment, long ranked among the most
stringent in Latin America, were greatly tightened by the "antibus:iness" administra-
tion of Luis Echeverria (1970-76). Supplementing the 1938 "Mexicanization" legisla-
tion that excluded foreign investors from petroleum, banking, and certain other
services, Echeverria adopted new controls on foreign investment. These include:
The Law on the Transfer of Technology (1973) establishing a Registry of
all technology transfer contracts, with the government required to refuse
registration of contracts containing clauses potentially damaging to Mexico. F
Law To Promote Mexican Investment and To Regulate Foreign Invest-
ment (1973) requiring (with certain exceptions) at least 51 percent Mexican
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equity, management control in new firms, further limitations on the
economic sectors open to foreign investment, and sharper restrictions on
foreign takeovers of domestically owned firms.
Law on Patents and Trademarks (1976) requiring the use of Mexican
trademarks along with foreign trademarks for goods produced in Mexico and
shortening the life of exclusive trademark and patent rights.
Partly because of these laws, real direct foreign investment inflows have slowed
markedly since 1973. Other factors have been the world recession and, in 1976, the
collapse of business confidence and the subsequent floating of the peso. As foreign
firms sold off assets, the book value of US investment in Mexico-about 75 percent of
total foreign investment-dropped by 7 percent last year, to $3.0 billion. This fall
mainly reflected a decline in manufacturing investment from $2.4 billion to $2.2
billion, putting Mexico back in seventh place worldwide for US manufacturing
investment only one year after it had grabbed sixth place from Australia.
The importance of direct foreign investment to the Mexican economy declined in
the 1970s, Mexican balance-of-payments data on net direct foreign investment inflows
(excluding reinvested earnings) show the share of foreign investment in total private
fixed investment slipping from 5 percent during the 1960s to 4 percent in the early
1970s and to 3 percent in 1976. Since public investment accounts for 30 percent of
total fixed investment, the foreign share of total investment is now 2 percent.
The importance of foreign direct investment as a source of foreign exchange has
also slipped markedly. These inflows covered one-third of the current account deficit
during the 1960s, but only 14 percent in the early 1970s, as Mexico turned to
international money markets to finance the rapidly rising deficit. Foreign direct
investment equalled 9 percent of the current account deficit in 1976.
Foreign Investment Policy Under Lopez Portillo
After coming to power in December 1976, Lopez Portillo intensified the
Echeverria policy of accepting only selected foreign investment. The new President
has stressed that foreign investment must contribute directly to Mexican development
by creating jobs, bringing advanced technology, and earning foreign exchange. He has
backed up his statements by continuing previous controls and adopting new ones.
Officials of multinational corporations, although encouraged by the generally favor-
able attitude of the new government toward the private sector, are disturbed by Lopez
Portillo's harsh enforcement of the 1976 Lavv on Patents and Trademarks and by the
enactment of a new law regulating foreign-owned automobile companies.
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The Law on Patents and Trademarks
Foreign companies face a February 1978 deadline for linking foreign trademarks
with Mexican-owned and originated trademarks. Although the administration con-
cedes major problems with the regulations implementing the law, it has stated that
neither the law nor the regulations will be altered. Instead, the government has opted
for settling problems on an individual case basis. In a typically Mexican compromise,
the government has offered not to apply the law in cases where companies agree to
increase their exports. While compromise agreements have satisfied some soft drink
and tire firms, most foreign companies find this approach unsatisfactory. They fear
that, because such agreements do not carry the weight of law, they could be rescinded
without warning.
The patent section of the law also hurts foreign investors by reducing the owner's
control and shortening the life of patent rights. Although this section probably is in
violation of Mexico's obligations under the Paris Convention on patents, the govern-
ment refuses to amend it. The law will undoubtedly deter some direct investment and
technology transfers, especially in the chemical and pharmaceutical fields. Full
assessment of its impact, which will depend on how it is administered, will require
several years.
The Law on the Automotive Industry
The new law regulating the automotive industry, which has the full support of
Lopez Portillo, is intended to expand employment and to narrow the present large
trade deficit in automotive parts. The decree requires foreign firms (the few small
domestic firms are excluded) to increase the domestic content of their output and to
boost exports to partly offset imports of components. The latter provision will be
enforced through a complex formula determining
company.
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To meet the requirements of the decree, the companies must make large
investments to expand parts production in Mexico. The companies are not prepared to
make such investments at this time because of (a) damage to their liquidity positions
by higher import costs resulting from the 45-percent depreciation of the peso and (b)
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currently weak Mexican demand for automobiles. Despite the concerns expressed by
the companies and by foreign governments, Mexico City is unlikely to change the law.
The Lopez Portillo government will likely continue to toughen its policies toward
foreign investors over the next several years. The brunt of the restrictions will fall on
foreign companies in consumer industries, such as food processing, where the
government feels domestic companies have the capability to meet Mexican require-
ments. On the other hand, foreign firms that bring in advanced technology, create
jobs, or expand exports can expect the rules to be bent in their favor.
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The presidential advisers believe that foreign investors can make a major
contribution to Mexico's ambitious program to develop the capital goods industry.
Mexican industry now provides only about one-half of capital goods requirements.
The program is expected to place less emphasis on Mexican content than is generally
the case in other industries; it will, however, insist that the goods produced be priced
at levels competitive with those in the foreign investors' home markets.
Despite rumors of large, new US industrial investments, we believe that most
foreign investors will remain cautious for the next year or so while assessing Mexican
financial stability and growth potential. In the near term, investors will probably react
favorably to government encouragement of investment in in-bond plants and in the
apital goods industry. In the longer run, Mexico's attractiveness to foreign investors
should grow as other LDCs multiply controls on foreign investment. In particular, US
multinationals are likely to resume large-scale investment in Mexico, given its rapidly
rowin domestic market strong energy position, and political stability.)
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EUROPEAN COMMUNITY: GRAPPLING WITH SHORT-RUN AND LONG-RUN
STEEL ISSUES
The European Community, moving toward comprehensive structural reorganiza-
tion of its steel market, is considering programs to retire high-cost production facilities
and modernize remaining plants. To date, policy efforts have stressed the cyclical
problems of control over prices, production, and imports. The new policy direction, to
be successful, must supplant national programs with Community-wide policy. Al-
though this will require the subordination of national political interests, members of
the Community have a powerful economic incentive to rationalize their combined
steel industry.
The slump in the world steel industry since 1974 has hit the European
Community particularly hard. EC steel production in 1977 fell an estimated 19
European Community: Steel Trends
Million Tons'-
0
1974
Consumption
Imports
I
1976
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percent below the 1974 level and 6
percent below the depressed level of European Community: Crude Steel Production
1976. Steelmakers are operating al-
most 40 percent below capacity;
new units started before the slump
have continued to come on line.
Prospects remain dismal, with new
orders from EC purchasers 15 per-
cent lower in third quarter 1977
than in the same period of 1976.
The decline in world demand
has brought EC producers increased
competition. With Japan, Spain, and
Communist countries offering steel
1974 '
Total .......................................... 143,366
West Germany ......................
France ....................................
Italy ........................................
United Kingdom ....................
Belgium ..................................
Luxembourg ..........................
Netherlands ............................
Denmark ................................
Ireland ....................................
49,227
24,749
21,768
20,649
15,093
5,966
5,313
493
108
Data are for the first 11 months.
Estimate.
Percent
Change
19771
116,722 -18.6
36,002 -26.9
20,623 -16.7
21,373 -1.8
19,198 -7.0
10,319 -31.6
3,969 -33.5
4,569 -14.0
628 27.4
41 2 -62.0
at bargain prices, Community imports jumped two-thirds between 1974 and 1976 to
12.4 million tons. Meanwhile, EC exports dipped by 37 percent. EC producers
belatedly slashed prices to defend their market shares, helping raise Community
exports 16 percent in 1977, to about 25 million tons, while keeping imports at the 1976
level.
EC steelmakers also face a grave structural problem signified by high production
costs and excess capacity for several years to come. Wage rates are high, many plants
are obsolete, and governments discourage layoffs. Producers have put 166,000
employees, or 22 percent of their labor force, on short time and, despite government
pressure, have released 51,000 workers. Not surprisingly, most EC producers are in
financial difficulty.
? Italy's largest steel company, state-owned Italsider, is expected to report
an operating loss exceeding $570 million for 1977, its third straight year of
record losses.
? In the first six months of its 1977/78 8 financial year, the British Steel
Corporation lost a record $348 million.
? The French steel industry lost $550 million in 1976, and its 1977 losses are
estimated to be 10 percent greater.
? The West German industry lost about a million dollars per day in 1977.
? The Belgian industry claims its 1976 losses were equal to about one-fourth
of total equity, and 1977 losses were also heavy.
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? The Dutch - West German steel combine, Estel, expects to post a $200
million loss for 1977.
? The Luxembourg-based steel firm, Arbed, recorded a $60 million loss in
first half 1977, about double the previous year's loss for the same period.
Policy Response
Most member governments have moved to help the faltering steel industry but
for the most part have limited their aid to subsidies to cover operating losses. While
these subsidies ease the current financial stress, they do not help solve the more basic
structural problem. Political constraints have kept governments from facing up to the
need to cut costs by closing plants and reducing employment. So far, the EC
Commission also has directed most of its effort toward alleviating the immediate
situation. The Commission has concentrated on shoring up prices and limiting
production and imports.
In West Germany, where the free market orientation is strongest, the govern-
ment has done little for the steel industry. Steel management is optimistic, hoping to
solve its problems mainly through rationalization measures. West German producers
have been hurt by import restrictions that force them to buy expensive domestic coal.
Hence, Bonn is considering selling to the steel
companies 3 million tons of coking coal from the
national emergency reserve at one-third off the
current market price. In addition, the government
may help hard-hit Saarland producers to restruc-
ture their operations.
Last February, France issued a "Plan Acier"
for revitalizing and restructuring the steel indus-
try. The plan calls for reducing capacity from 33.7
million tons to 31.5 million by 1981 and cutting
the work force by about 10 percent through
attrition and early retirements, The plan hits po-
litically sensitive Lorraine particularly hard be-
cause many facilities there are old and inefficient.
European Community:
Tons of Crude Steel Per Production
Worker/Man-Year, 1976
European Community' ..........
Italy ........................................
Luxembourg ..........................
West Germany ......................
Belgium ..................................
France ....................................
Netherlands ............................
United Kingdom ....................
225
297
267
262
256
225
207
173
' Data that are not strictly comparable put
productivity at 459 tons/man-year in Ja-
pan and 343 tons/man-year in the United
States.
Paris will make available about $260 million in credits for modernization to be
matched by equivalent industry financing. Steel companies will try especially hard to
avoid any major job reductions before the March 1978 parliamentary elections.
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Government pressure to maintain employment probably is greatest in Italy. The
government holding company Finsider has stated it will not close any plants, but a
subsidiary has announced it will lay off 6,500 employees for three months. Indirect aid
has kept the state companies going in the face of heavy losses. Istituto Per La
Ricostruzione Industriale (IRI), the umbrella government holding company, has
guaranteed bond issues and purchased newly issued capital stock. Despite the slump,
state companies are continuing with a sizable investment program aimed at expansion
as well as modernization. In particular, plans are going ahead for the 1.3-million-ton-
capacity Gioia Tauro complex in economically depressed Calabria, notwithstanding
an IRI finding that the project is not economically justifiable.
In Great Britain, the government is funding operating losses and investment for
the nationalized British Steel Corporation. A parliamentary committee is looking into
the company's problems and is likely to recommend some layoffs, plant closings, and
scaling down of investment plans. As many as 60,000 workers, or 29 percent of the
work force, should be weeded out on economic grounds-a number far beyond what
the unions would accept. British workers are nearly 25 percent less productive than
their French counterparts and only 60 percent as productive as Italian steel workers.
The Treasury has begun pressing for a 24,000-man cut over two years even though the
government is committed to keeping plants open in certain depressed regions.
In Belgium, the government has helped the steel industry by guaranteeing lines
of credit amounting to $85 million and covering about 85 percent of the interest cost
of a $280 million loan. In return, the major firms allow Brussels to oversee their
operation. Last March a conference of government-company-union representatives
agreed to a "steel moratorium" that suspends capacity expansion projects, worker
layoffs, and reductions in credit lines. The moratorium was to last through 1977 and
probably will be extended until June 1978.
The government of Luxembourg has done little for the steel industry. One firm,
Acieries Reunies de Burbach-Eich Dudelange (Arbed) dominates the economy,
accounting for 90 percent of Luxembourg's steel output and 10 percent of its total
employment. Arbed has initiated a crisis plan that includes a 19-percent reduction in
employment over two years, a cut of about 4,000 workers. The plan also calls for
modernization at the maximum affordable rate. In 1977, the modernization effort
raised investment to $100 million, up by 54 ;percent from the 1970-76 average.
The Netherlands is relying on- careful management and the development of a
Community-wide program to surmount the crisis. Hoogevens, the Dutch arm of Estel,
is planning to reduce its 23,000-man work force by 2,500 over the next two years.
About 1,500 workers are expected to leave because of retirement and natural turnover;
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the other 1,000 will be dismissed outright. Hoogevens, which accounts for 90 percent
of Dutch steel output, hopes to return to the black by 1980.
The EC Commission expanded its control over the combined steel market in
several stages during 1977. Addressing the cyclical problem first, the Commission in
January instituted the Simonet Plan. In its original form, the plan merely asked EC
steel companies to limit sales within the Community in an attempt to raise prices.
Eurofer, the association of EC steel producers, urged its members to comply but
lacked the strength to dictate company sales policies. Last May the EC Council
lowered sales quotas under the Simonet Plan and approved minimum price guidelines.
Later the Commission made the minimum prices for reinforcing bars mandatory
because private Italian companies were undercutting the guidelines. Last month, the
Commission obtained Community agreement to raise guideline prices by 15 percent
during 1978 and impose mandatory minimum prices on merchant bars and coils.
While price guidelines have helped hold prices up, lack of direct control over
import prices left a gaping hole in the program. The early 1977 Community
agreements with Japan and South Africa to limit exports to the EC had no obvious
effect on the downward price pressure from imports. The EC Council plugged the
hole at its December meeting by adopting an amended Commission proposal to
impose a minimum import price system for first quarter 1978. In this period, the
Commission will try to negotiate bilateral minimum price agreements with principal
suppliers-that is, Japan, South Africa, South Korea, Spain, and East European
countries.
While the Commission preferred only a two-month program, the French,
threatening independent protectionist measures, demanded it be extended beyond the
date of their parliamentary elections. The Commission will apply countervailing
duties to steel products entering the Community below minimum base prices. The
prices will be established by estimating the lowest cost of production in a country
experiencing "normal competitive conditions," probably Japan or South Korea.
With the anticyclical program taking effect, Commission efforts will now be
directed toward developing a coordinated EC approach to structual deficiencies.
Market pressures seem likely to bring about cooperation among the Nine despite
substantial obstacles. Depressed steel demand has persisted for three years, and
member governments are beginning to realize that consumption will not regain the 5-
percent expansion rate of the 1960s. A large amount of idle plant seems sure to exist
well into the 1980s unless total capacity is cut. Even if production were to grow an
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optimistic 3 percent per year through 1985, the EC steel industry would be left with
more than 20 percent unused capacity, assuming total capacity remains at the present
level. This scenario implies continued heavy financial losses. For the industry to return
to profitability, new more efficient facilities must replace less productive plants.
Uncoordinated measures by member countries almost certainly would upset
relative competitive positions among the Nine and would lead to intra-EC trade
restrictions, These restrictions would have serious economic and political conse-
quences, since one-fifth of Community steel output moves in intra-EC trade.
The Commission will try to get member countries to reduce their steelmaking
capacity in a coordinated fashion, through the orderly shutdown of old high-cost
plants. At the same time, it will encourage modernization to reduce unit costs, thereby
enhancing EC competitiveness in the world market. During the transition period,
which would last well into the 1980s, the Commission no doubt would continue efforts
to fix prices and assign market shares to both EC and non-EC producers.
Early last year the Commission proposed a plan that called on EC producers to
more than match any capacity additions with capacity retirements. While some
member governments, particularly the West German, were reluctant to yield more
authority to the Commission, continued slack demand is underscoring the need for
industry restructuring. Implementation of the proposal would trim the 740,000-man
work force in EC steel by an estimated 100,000. Specific actions have yet to be worked
out. EC members will have great difficulty agreeing on a formula for allocating cuts
because of their diverse political and economic situations.
The Commission also has proposed increased financial assistance to help steel
firms modernize their operations and to provide new job opportunities for displaced
steel workers. The Commission has obtained member agreement to a boost in interest
subsidies, from $17 million in 1977 to $48 million in 1978, enough to cover about $600
million in loans. The additional funds will come from duties on non-EC steel. The
Commission believes demand for such subsidies will exceed $100 million and is
seeking additional financing from member governments.
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More than 7 million persons under 25 years of age are out of work in the 24
member countries of the Organization of Economic Cooperation and Development,*
and the situation is worsening. The jobless rate of youths is, on a weighted average
basis, double the rate for older workers. Youths account for more than 40 percent of
the unemployed although they constitute less than a quarter of the labor force. For the
OECD countries as a group, the youth unemployment rate was almost 12 percent by
mid-1977, the highest in more than 20 years. This high level of youth unemployment
is attributable to a complex of demographic, educational, cultural, and economic
forces.
In the next several years, the number of people reaching the age of 18 will
continue to rise sharply in most OECD countries. West Germany, the United
Kingdom, and Italy in particular will see their labor forces inundated with new
entrants. If economic growth in the developed countries remains below historical
trends through the mid-1980s as most economic forecasters expect, fewer new jobs will
be created than in the 1950s and 1960s. Hence, the policymaker's job of reducing
youth unemployment will be extremely difficult.
While OECD youth unemployment recently has averaged almost 12 percent, it
varies considerably from country to country. Worst off in 1977 were Canada, France,
Italy, the United Kingdom, and the United States, with rates of 14 to 16 percent.
Moreover, joblessness among the young was still rising in 1977 in all these countries
except the United States. At the other end of the spectrum, Japan, West Germany, and
several small countries have been experiencing rates of 5 percent or less. The youth
share of total unemployment also varies widely across countries, ranging from less
than 30 percent in Denmark and West Germany to more than 60 percent in Italy. In
addition, evidence suggests that some young people, discouraged by the job outlook,
have dropped out of the labor market.
Cyclical Influences
In the recent international recession, as in other cyclical downturns, the demand
for young workers fell much more rapidly than demand for older people. The
* By descending order of GNP, the OECD countries are the United States, Japan, West Germany, France, the United
Kingdom, Italy, Canada, Spain, the Netherlands, Australia, Sweden, Belgium, Switzerland, Austria, Turkey, Denmark,
Norway, Finland, Greece, Portugal, New Zealand, Ireland, Luxembourg, and Iceland.
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Selected OECD Countries: Youth and Total Unemployment Rates'
United States
Youth ..................................
8.7
8.7
8.4
11.0
12.7
12.1
10.5
11.8
16.1
14.7
13.82
Total ..................................
3.8
3.6
3.5
4.9
5.9
5.6
4.9
5.6
8.5
7.7
7.12
Japan
Youth ..................................
1.8
1.8
1.8
1.9
2.1
2.4
2.4
2.5
3.0
3.1
3.72
Total ..................................
r.3
1.2
1.1
1.1
1.2
1.4
1.3
1.4
1.9
2.0
2.01
West Germany
Youth ..................................
0.9
0.4
0.3
0.4
0.6
0.7
1.0
3.0
5.6
5.1
5.0
Total ..................................
1.3
0.7
0.4
0.4
0.6
0.7
0.8
2.1
3.9
3.5
3.7
France
Youth ..................................
4.9
6.4
6.1
6.3
6.8
7.0
6.8
8.0
12.9
14.5
15.7
Total ..................................
2.1
3.1
3.2
3.2
3.6
3.7
3.4
3.6
5.2
5.9
6.4
United Kingdom
Youth ..................................
2.0
2.0
2.2
2.6
4.2
4.9
3.2
3.7
9.4
13.4
15.2
Total ..................................
1.8
2.0
1.9
2.1
2.8
3.1
2.2
2.1
3.3
5.0
6.1
Italy
Youth ..................................
9.9
10.7
10.8
10.3
10.1
13.1
12.6
11.1
12.8
14.6
15.5 2
Total ..................................
3.5
3.5
3.4
3.2
3.2
3.7
3.5
2.9
3.4
3.7
4.22
Canada
Youth ..................................
6.5
7.7
7.5
10.1
11.1
10.9
9.7
9.4
12.1
12.7
14.4 2
Total ..................................
3.8
4.5
4.4
5.7
6.2
6.2
5.6
5.4
6.9
7.1
8.12
Australia
Youth ..................................
NA
NA
NA
2.6
3.1
4.4
4.0
4.9
9.0
7.7
11.21
Total ..................................
1.6
1.5
1.5
1.4
1.6
2.2
1.9
2.3
4.4
4.4
5.21
Sweden
Youth ..................................
3.8
3.9
3.4
2.9
5.1
5.7
5.3
4.4
3.8
3.7
4.42
Total ..................................
2.1
2.2
1.9
1.5
2.5
2.7
2.5
2.0
1.6
1.6
1.82
Austria
Youth ..................................
1.6
1.7
1.5
1.5
1.4
1.4
1.3
0.9
1.3
1.2
1.2
Total ..................................
1.1
1.2
1.1
1.1
1.1
1.1
0.8
0.7
1.2
1.0
0.9
Norway
Youth ..................................
NA
NA
NA
NA
NA
5.5
5.6
5.5
8.2
5.9
5.42
Total ..................................
0.7
1.1
1.1
0.8
NA
1.7
1.5
1.5
2.3
1.8
1.61
Finland
Youth ..................................
5.2
6.9
4.8
3.1
4.1
4.9
4.8
3.5
4.6
8.6
12.72
Total ..................................
2.9
4.0
2.8
1.9
2.3
2.5
2.3
1.7
2.2
4.0
5.92
' Youth is defined as persons under 25 years old, except for Austria (under 30) and Italy (under 21, plus those
seeking their first job). Rates are midyear for Austria, West Germany, and Great Britain; March or April for
France; and annual averages for all others.
2 Estimated.
inexperience of youthful workers, the high cost of training them, their low job
attachment, and their high turnover rate together yield a high cost-to-productivity
ratio. Furthermore, youths and other new entrants to the labor force are hard hit when
firms react to depressed demand by reducing their work forces through attrition.
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Between yearend 1973 and yearend 1976, the number of unemployed OECD
youths increased by about two-thirds. An analysis of data for the United States by the
Congressional Budget Office concluded that just over one-third of teenage unemploy-
ment in 1975 was attributable to the cyclical downturn. In countries such as France,
the United Kingdom, and West Germany-which experienced much sharper in-
reases in youth unemployment in this period-the recession no doubt played a much
igger role than demographic factors.
In most OECD countries, gains in money wages accelerated beginning about
1973, while productivity growth slowed or turned negative. The resulting surge in unit
~abor costs held down employment, including youth employment.
Most labor economists agree that minimum wage legislation, through its pressure
n the lower end of the wage scale, has increased unemployment disproportionately
mong youth. * For example, one analysis found that the US youth unemployment rate
ould have been 3.8 percentage points lower in 1972 if the minimum wage
mendments of 1966 had not been implemented. After reviewing this and other
ecent studies, the OECD Secretariat concluded that a statutory minimum wage has
`serious negative effects" on teenage employment by (a) reducing job openings (b)
channeling teenagers toward uncovered industries and part-time work, and (c) cutting
the labor force participation rate of young people.
Social security taxes have increased substantially in all major industrialized
countries in the past decade, further worsening employment prospects for youths. The
payroll taxes-levied to cover unemployment insurance, health insurance, disability
benefits, and pensions-constitute a large and growing share of employer labor costs.
Since payroll taxes have the same impact as cash wages, increases in these taxes
encourage the employer to economize on labor, Payroll taxes represent a higher
proportion of the total cost of labor at the lower earnings levels, because these taxes
usually are linked to earnings only up to a specified maximum--Italy providing a
prominent exception. With youths typically in the lower wage brackets, payroll taxes
raise the relative cost of hiring the young.
* Statutory minimum wages exist in Canada, France, Japan, Luxembourg, the Netherlands, Portugal, Spain, and the
United States. In Italy, rates set by collective agreements are extended to uncovered workers by legislative decree. In
West Germany, the rate established for unskilled workers by collective bargaining serves as a general minimum. The
United Kingdom has a type of quasi-collective bargaining in Wage Councils for unorganized workers, which set
minimum rates for youths.
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Legal Restrictions
Youth work opportunities have been constrained by curbs on employers' rights to
hire youths for hazardous occupations or night work and to determine the content and
duration of on-the-job training programs. Furthermore, the right to fire has been
directly or indirectly limited, increasing employer reluctance to hire untried young
people. Among the EC countries, Denmark, which has done the least to restrict
dismissals, enjoys the lowest percentage of youths among the unemployed.
Education and Training
Many observers believe that the match between the educational training youths
receive and the requirements of most entry-level positions is worsening, contributing
to youth unemployment. Furthermore, higher levels of educational attainment have
raised expectations, reducing the willingness of youths to accept some available jobs.
The recession has exacerbated the educational mismatch by reducing employer
incentives to train poorly prepared applicants.
Educational inadequacies pose less of a problem in countries with sizable
apprenticeship programs. These programs incorporate a system of lower wage rates
for youths, provide job security to young people, and offer a realistic, phased
introduction to the world of work. Large apprenticeship programs may also act as a
depressant on wage rates for youth generally, thus making young workers more
employable.
Demographic Influences
The OECD population aged 15-19 rose by 14 million and that aged 20-24 by 15
million between 1960 and 1975. Youth population changes varied dramatically across
Selected OECD Countries: Change in
Population Aged 15-24
Percent Change
1975 over 1960
1990 over 1975
United States ........................
63.5
-16.0
Japan ....................................
-2.0
12.5
West Germany ....................
1.0
-14.0
France ..................................
42.0
6.0
United Kingdom ..................
15.5
6.0
Italy ......................................
3.0
11.0
Canada ..................................
74.0
-19.0
Australia ................................
64.0
1.0
Sweden ..................................
8.5
2.5
Austria ....................................
0
5.5
Finland ................................
20.0
-21.5
14 SECRET 5 January 1978
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countries, ranging from a 74-percent increase in Canada and a 64-percent increase in
Australia and the United States down to a 2-percent drop in Japan. In general, the
countries with the greatest increase in the youth population are also the ones suffering
from high rates of youth unemployment.
The extraordinary increase in recent years in the entry of older women into the
labor force is another demographic factor. Having limited job experience, these
women often compete with youths for less-skilled jobs. Employers prefer them
because of their greater maturity.
In most OECD countries, female labor force participation rates seem likely to
continue their recent trends, at least until 1985. On the other hand, population
movements will show some dramatic shifts.
Selected OECD Countries: Youth Share in Labor Force
Percent
United States ....................................
20.3
22.7
23.4
23.0
20.8
Japan ................................................
23.3
23.8
18.8
16.2
16.1
West Germany ................................
21.9
20.1
21.4
23.3
23.6
France ..............................................
21.2
22.8
21.0
19.7
18.7
United Kingdom ..............................
23.2
22.3
19.7
20.7
20.9
Italy ...............................................:..
22.6
20.5
18.9
19.0
19.2
Netherlands ......................................
29.7
28.9
24.4
21.3
19.0
Sweden ..............................................
19.2
17.8
14.5
13.5
13.4
Belgium ............................................
20.1
22.2
21.5
20.7
19.1
Switzerland ......................................
24.9
25.0
23.6
23.2
21.8
Finland ............................................
21.8
21.9
17.4
14.3
11.3
From 1975 to 1990, the OECD youth population will rise by only about 6 million,
one-fifth the increase recorded during 1960-75. During the next few years, however,
demographic factors in most OECD countries will tend to increase youth unemploy-
ment. In particular the number of people reaching age 18 each year is still rising
sharply in most countries, particularly in Western Europe where the peak will not
come until 1982 or 1983. West Germany-followed by the United Kingdom and
Italy-will face the greatest pressure over the next five years, with Japan faring quite
well in this regard and the United States in an intermediate position.
Remedies
A sharp pickup in economic growth, which would increase the demand for labor,
does not seem likely in the next several years. Indeed, most economic forecasters
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Selected OECD Countries:
Number of Persons Turning 18 Each Year
I 70 If I
120 120
110 110
100 100
4
90 90
80 80
70
130
701 1 1 1 1 1 1 1 11 1 1 1 1 1 1 1 1 1 1 1 1 1 1 I 7011111111 1111 1111 11111 111 I
1961 1965 1970 1975 1980 1985 1961 1965 1970 1975 1980 1985
SECRET 5 January 1978
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expect GNP in the major foreign developed countries to grow well below historical
trend rates through the mid-1980s, partly because of structural adjustments due to the
large increases in oil prices that occurred in 1973/74. In addition, private invest-
ment-the key to a robust, self-sustaining recovery-continues to be dampened by
low profitability and general expectations of weak future demand at home and
abroad. Public spending programs in many developed countries are, moreover, being
moderated by governments' desires to reduce payments deficits and return inflation to
pre-1970 rates.
Obstacles to economic growth probably will lead. to greater reliance on micro-
policy measures to relieve youth unemployment. For the most part, these efforts
would aim at (a) providing public sector jobs for young people, (b) reducing the cost of
employing youths in the private sector, and (c) improving the preparation of young
people for the jobs available.
A variety of micropolicy measures have been enacted already, usually on a
temporary basis:
? Public sector job creation schemes have been implemented in Canada,
Denmark, Ireland, Italy, the Netherlands, the United Kingdom, and the
United States.
? Employers who hire unemployed youths have been exempted from
customary social security taxes in Belgium and France.
? Direct subsidies have been paid to employers hiring unemployed youths in
Italy and the Netherlands.
? Young people have been paid by the government to participate in on-the-
job training programs in France and the United Kingdom.
? Compulsory education has been extended or young people encouraged to
continue their education in Canada, France, and West Germany to reduce
the number of job-seekers and better prepare youths for future employment.
? Programs for early retirement of older workers have been implemented in
Belgium, France, and the United Kingdom to open up more jobs for younger
people.
Similar measures are likely to be enacted in the future, often on a more
permanent basis. Various OECD countries have proposed additional steps. These
5 January 1978 SECRET
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include lowering the minimum wage for young workers, easing restrictions on
dismissals, enhancing the vocational orientation of schools, expanding apprenticeship
systems, and eliminatin re ulations that bar young people from certain activities.
CHINA: DISAPPOINTING GRAIN HARVIEST, ABOVE-AVERAGE IMPORTS
The Chinese Government has admitted to a second consecutive year of little or no
growth in grain production, claiming that "despite natural adversities, grain produc-
tion reached last year's level." Grain output (including soybeans) in 1976 was
unofficially claimed to be 285 million tons; in 1975 the total was 284 million tons.
Bad weather is the fundamental cause for the leveling off of grain production in
the last two years. In 1977 the major problem was drought, which ran from October
1976 to April 1977. The drought mostly affected north China, with an estimated 10
percent (4 million to 5 million tons) of the winter wheat crop being lost. An
abnormally high amount of waterlogging and cool temperatures after the drought had
broken caused additional crop losses in the summer and fall. The 1977 fall harvest
nevertheless was much improved over 1976. The pattern in 1976 differed: after a good
winter wheat crop, early crops were retarded by cool, damp weather, which in turn
delayed planting of the fall-harvested crops; an early winter and excess precipitation
then caused harvest losses, late rice being especially hard hit.
Until late 1976, the PRC had drawn down grain reserves to avoid spending scarce
foreign exchange on new grain purchases. Purchases of wheat subsequently acceler-
ated as Peking began to realize the extent of damage to the fall harvest from cold and
damage to the spring harvest from drought. Between November 1976 and June 1977,
11.7 million tons of wheat were purchased for delivery through July 1978.
The total amount of grain imported in 1977 was about 7 million tons, which is
above the yearly average since 1970 of 5 million tons. During first half 1978, 4.5
million tons of grain are scheduled to be delivered. Total 1978 grain imports will again
be about 7 million tons if the half-year average of 2.5 million tons is purchased for
delivery during second half 1978. We doubt that more grain will be purchased for
delivery during first half 1978. The Chinese need time to evaluate prospects for the
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China: Imports of Grain, by Source
Million Tons
7.0
0.9
Argentina
2.0
U n i ed States
2.8
4.8=
{0.8
EC :and Other
3.3
2.5
Au
K"O
tralta
ada
196 x- 1X71 1972 1973 19 74 1975 1976 1977
Annual Average (Prelim.)
spring harvest, and the amount of grain already coming in is well above the average.
Wheat imports mostly supplement the grain supply of China's northern cities.
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SECRET
AEROFLOT: SOVIETS PARTIALLY SUCCEED IN UPGRADING OPERATIONS*
The USSR has had only limited success in its efforts to enhance the image of
Aeroflot, the wide-ranging Soviet domestic and international airline. Moscow has
focused on modernizing the aircraft fleet, upgrading passenger services, and improv-
ing the poor safety record.
The Soviets have made some progress in their modernization program. Although
a large gap remains compared with equipment and passenger amenities on most
Western airlines, a continuing flow of new jet aircraft has allowed increases in flight
frequency, greater passenger comfort, and an expansion of international routes,
especially to Sub-Saharan Africa. The USSR has been less successful in promoting
aviation safety; the severity of the problem remains obscured by the continued failure
to report many fatal accidents on domestic routes.
About 95 percent of Aeroflot activity probably will continue to be confined to the
USSR and Eastern Europe. The Soviet carrier does not offer the flight frequencies,
route alternatives, passenger amenities, and safety image needed to garner a sizable
share of the highly competitive international air travel market.
The Airline
Aeroflot-the world's largest single airline in terms of aircraft fleet and
passengers carried-currently links 4,000 locations in the USSR and serves 73 foreign
countries over a 845,000 kilometer network. In 1976 the airline carried 104 million
passengers, about 18 percent of the world total. Operations are geared primarily to
domestic routes, which account for more than 90 percent of the passengers carried.
The international routes, operated over an expansive but for the most part thinly
ved network, reaches from the Western Hemisphere to the Far East.
* This article is a joint effort of the Office of Economic Research and the Office of Strategic Research and
includes a contribution from the Office of Central Reference.
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Aeroflot: International Route Network to Non-Communist Countries, Winter 1977/78
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Airline operations began over 50 years ago on a small scale in European Russia.
VVVV
l
Aeroflot itself was launched in 1932 as an amalgamation of many small regiona
carriers, which connected the USSR's main urban centers. At the outbreak of World
War II, Aeroflot's network had expanded to 160,000 kilometers, almost all domestic.
In the post - World War II period, the restoration of domestic routes was followed
by the extension of Aeroflot service to the new satellite countries of Eastern Europe.
The next stage was expansion of service to Western Europe. Throughout the 1960s,
Aeroflot continued its outward thrust to new areas-to the Middle East, South and
Southeast Asia, and across the Atlantic to Canada and the United States. By the early
1970s the network covered much of the globe except for Oceania, most of Latin
America, and portions of Sub-Saharan Africa. With the expansion of Aeroflot service
to more and more Western capflalls observers began to criticiz~~t e'4 e irr
airline's
.,, q P
an afe e ui ment' lack of passenger amenities, and poor sa eft recoorr Since 1970
under fhe leadershi 6T-Boris gayev, Minister of Civil Avi tt
a Soviet
top
[,. government-I as moved on several fronts to respond to these criticisms.
As Minister of Civil Aviation, a post he has
held since May 1970, Boris Bugayev is the chief
administrator of Aeroflot. In this post, much of
his time is spent promoting Aeroflot at home
and abroad while seeking bilateral civil air
agreements with foreign countries. Highly re-
spected professionally, the 54-year-old Bugayev
is a somber man, direct and to the point in
conversation. His working style is deliberate.
k Bugayev holds the military rank of chief mar-
of aviation and is a voting member of the
Central Committee of the Communist Party of
the Soviet Union (CPSU).
Fleet Modernization and Service Improvements
The pace of fleet modernization since 1970 has been impressive; deliveries of new
jets have averaged 135 aircraft annually. At yearend 1977, the Aeroflot jet inventory
reached an estimated 1,369 aircraft-more than three times the 1970 inventory.
Although the small 28-passenger YAK-40 accounts for half the jet inventory, Aeroflot
22 SECRET 5 January 1978
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continues to acquire substantial numbers of larger aircraft, including the medium- M
range TU-134, the medium- to long-range TU-154, and the long-range IL-62,
flagship of the Soviet fleet.
Aeroflot Inventory of High-Performance Aircraft
Yearend
Type and Model
NATO
Designation
1960
1965
1970
1973
1975
1976
19771
Total ................................................
365
782
1,668
2,147
2,558
2,706
2,936
Jet ..................................................
191
227
430
784
1,079
1,194
1,369
TU-104 (A and B) ..................
Camel
190
150
155
141
138
138
136
TU-124 .....................................
Cookpot
1
77
77
72
68
67
66
TU-134 (Standard and A) ......
Crusty
50
125
173
194
232
TU-154 .....................................
Careless
37
64
87
128
IL-62/M ...................................
Classic
28
47
67
78
89
YAK-40 (Standard and B) ......
Codling
120
360
565
624
710
IL-76 ........................................
Candid
2
4
6
8
Turboprop .......:............................
174
555
1,238
1,363
1,477
1,512
1,567
AN-10 ......................................
Cat
68
84
86
81
76
75
74
AN-12 .....................................
Cub
3
52
150
161
163
163
163
AN-24 ......................................
Coke
91
591
690
771
796
820
IL-18 .......................................
Coot
93
300
380
357
352
346
343
TU-114 ......................................
Cleat
10
28
31
24
24
24
24
AN-26 ......................................
Clank
50
91
108
143
In addition to the high-performance aircraft in Aeroflot's current inventory, the fleet includes from 850 to 950
multiengine piston aircraft. For the most part, propeller-driven aircraft are used in training operations and during
peak traffic periods during summer schedules.
I Estimated.
New Designs
Along with the delivery of transports already in production, the Soviets are in the
process of introducing new designs to the Aeroflot fleet. The most important are:
The YAK-42. Basically an enlarged version of the YAK-40, the 110-passenger
YAK-42 is slated to replace the smaller aircraft on routes where passenger growth
has been rapid. The new aircraft first flew in March 1975 and continues an
extensive flight-testing program. We expect it to enter limited passenger service
by late 1978.
The IL-86 Airbus. This belated Soviet answer to wide-bodied aircraft, first
flew in December 1976. The aircraft, which carries 350 passengers, is currently in
flight testing. The Soviets are pushing hard to have several IL-86s in scheduled
passenger service for the 1980 Olympics. /
5 January 1978 SECRET
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The IL-76. The Soviets first claimed that this longer range cargo transport was
built primarily for civil application. Of perhaps 60 IL-76s in service, ho ver,
about 50 have been assigned to military unit As eroflot operates at least six, lout
not` more`fhan
10 in civil cargo operations, mostly in the Siberian Arctic.
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The Supersonic TU-144
The clouded history of
the TU-144 has not enhanced
Soviet prestige in civil avi-
ation. The program has been
plagued by delays stemming
from operational problems
and the need for engines with
greater thrust. The widely
publicized inauguration of
scheduled passenger service in
early November 1977-be-
tween Moscow and Alma-
Ata-was followed by cancel-
lations of several flights. Judging by the current test program, we believe that the
aircraft needs another year of trial flights before it is ready for daily scheduled
passenger operations.
Impact of Modernization on Operations
Fleet modernization has allowed Aeroflot to increase the frequency of flights,
improve adherence to schedules, and increase comfort on some routes. All interna-
tional routes and one-third of domestic routes now are served by jet aircraft.
Domestic routes normally are the last to receive new equipment. Because of the
growing fleet of modern jets, however, Aeroflot has been able to place new aircraft in
domestic operations, increase flight frequencies on high-density routes in European
Russia, and add new domestic routes. An average of 75 city-pair links are being added
annually. On medium- and long-range flights, TU-134s, TU-154s, and IL-62s are
replacing the older turboprop IL-18s, while the YAK-40 is being used for shorter
routes and services in rural areas.
Improvements on International Routes
The newer jets have allowed Aeroflot to upgrade its international routes and
operate more frequent flights. All but a few of the 280 weekly international flights are
now serviced by TU-134s, TU-154s, and IL-62s. Most increases in frequency have
been on routes to Western Europe. Most of these routes are operated on a multiweekly
basis, with daily flights to London.
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Along with the new aircraft, the Soviets have tried to improve other aspects of
travel. For example, an "Air Service Agency,"' established under the Ministry of Civil
Aviation in 1973, was made responsible for improving (a) passenger facilities at
airports, (b) ticketing, (c) procedures in transferring flights, and (d) baggage handling.
Efforts have focused on international services and key domestic routes; little
improvement has filtered down to the vast majority of routes within the USSR.
While fostering modernization, the Soviets have continued to add international
routes, with emphasis on new routes to Sub-Saharan Africa. The USSR has also been
setting the stage for future expansion of services to Latin America.
As for Latin America, only three countries are currently served in this region:
Cuba, with longstanding service; Peru, with a weekly flight; and Mexico City, with
service starting in July 1977. Latin American governments have been slow to respond
to Aeroflot overtures. The Soviets, however., continue to press them. Intermittent
discussions have been held with Argentina, Brazil, Colombia, Panama, Venezuela, and
others.
Aeroflot has selectively filled gaps in service to Western Europe and other
locations during the last three years, complementing the rapid growth in service to
Sub-Saharan Africa. In Western Europe, Aeroflot added Luxembourg, Ireland, Spain,
and Portugal in 1977. Other new services include weekly flights to Kuwait.
Aviation Safety
Aeroflot has traditionally had a poor safety record. Until the late 1960s, almost all
accidents within the USSR were concealed and went officially unreported. In recent
years, the increased number of foreign travelers and the presence of Western press
representatives have led to better coverage of crashes on major domestic routes. The
Soviets,. still - fail to _.report accidents in rural areas.
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at least five accidents in rural areas in the vast_thnee._vears)
a me
ata hies none o these was reporfe b the Soviet We estimate t
deaths er 100
million passen r-kilometers Qn Aeroflot are substantially b gher than
~
in the Wet,-.perhaps by 25 percent on the average.
Moscow has taken belated steps to improve safety on Aeroflot. In 1973, for the
first time, an Aviation Safety Committee was established within the Ministry of Civil
Aviation. This action followed a disastrous series of aircraft accidents within a 12-
month period, when at least 10 crashes killed about 550 persons. The role of the
committee is to investigate safety procedures and probable causes of accidents. Its
enforcement powers have been expanded, but investigative procedures lag far behind
Western standards.
At the time the safety committee was formed, the Soviets upgraded operational
testing of new civil aircraft and began assessing Western air traffic control equipment
and procedures. The latter action led to the purchase of air traffic control equipment
from Stansaab in Sweden. The equipment, scheduled to be operational in 1979, will
handle high-density traffic operating into and out of Moscow.
On the Horizon
Aeroflot's current fleet modernization program will continue over the next three
to five years, highlighted by the introduction of new jet aircraft. On the international
front, the focus of expansion will be on routes to Latin America. The modern fleet will
provide for improvements in service, and the application of Western air traffic control
equipment should allow for growth and improved safety on high-density routes.
Despite these advances, Aeroflot will lag behind Western standards for the
foreseeable future and thus should not pose a serious commercial threat to major
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SECRET
Note
25X1 C
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USSR May Be Seeking Additional Grain
The USSR may soon be in the market for additional grain for delivery in the
current marketing year,F- -1
We believe that the Soviets contracted for 23.5 million tons of grain in 1977; an
estimated 22.5 million of this will be delivered in the October 1977-September 1978
marketing year. The bulk of the deliveries will be evenly divided between wheat and
corn; also involved are small amounts of barley, rye, and oats.
We estimate that the Soviets are already committed to buying 10 million tons of
corn and 5 million tons of wheat from the United States. Supplies of non-US grain are
short. If the Soviets are to make substantial additional purchases, they will probably
have to make a formal request to Washington to raise the 15-million-ton purchase
imit established b the long-term US-USSR grain agreement
25X1 C
25X1
25X1
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Center
Economic Indicators
Weekly Review
5 January 1978
ER EI 78-001
5 January 1978
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1. The Economic Indicators Weekly Review provides up-to-date information
on changes in the domestic and external economic activities of the major non-
Communist developed countries. To the extent possible, the Economic Indicators
Weekly Review is updated from press ticker and Embassy reporting, so that the
results are made available to the reader weeks-or sometimes months--before receipt
of official statistical publications. US data are provided by US government agencies.
2. Source notes for the Economic Indicators Weekly Review are revised every
few months. The most recent date of publication of source notes is 20 October 1977.
Comments and queries regarding the Economic Indicators Weekly Review are
welcomed.
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
05/1IND DEX: CIA-1970RDP79 A ly adjusted -0
INDUSTRI~--~pr.'~ff6V J~+ t 6 lq~~2@~A ~Q R6: 3100010001
t=1000, , sea seasorn al ?y d
West Germany
130
120
Semilogarithmic Scale
'
/N/ v it
_ \
1972 Approjy@*?or Release l2QE 05/16 : CIA- 9T01316A0Q@, X10001-0 1977
A-2
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
United Kingdom
-110
111
V
102
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR, JUL OCT
1972 1973 1974 1975 1976 1977
Percent
Change
AVERAGE ANNUAL
GROWTH RATE SINCE
Percent
Change
from
AVERAGE ANNUAL
GROWTH RATE SINCE
LATEST
from
Previous
1 Year
3 Months
LATEST
Previous
1 Year
3 Months
MONTH
Month
1970
Earlier
Earlierl
MONTH
Month
1970
Earlier
Earlierl
United States
PI 0V , 7
0.5
3.6
6.1
2.6
United Kingdom
s 'L1 77
1.2
).3
2.3
0.1
Japan
LCT II
0.4
3.1
3.3
1.9
Italy
t7i_J 77
1.3
1.2
-5.7
-20.0
West Germany
=CT 77
0
2.2
1.7
4.7
Canada
SE.P 77
-0.2
3.9
3.2
-1.3
France
. "I
l.ri
va
~.,
4.7
.114920 12-1/
q~}~,3 tp~,
'Average for latest 3 mfr ~ a '8?" dfeas~e"'LUU6J~~/16 :,14-RDP79T01316A000900010001-0
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
UNEMPLOYMENT PERCENT OF LABOR FORCE
United States
West Germany
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1972 1973 1974 1975 1976 1977
Approved For Release 2005/05/26: CIA-RDP79TO1316A000900010001-0
4
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
United Kingdom
6
3-
A labor force survey based on new definitions of economic activity sharply raised the official estimate of Italian unemployment in first quarter 1977. Data for earlier periods thus are not comparable.
Italian data are not seasonally adjusted.
Canada
7.2
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1972 1973 1974 1975 1976 1977
1 Year
Earlier
3 Months
Earlier
1 Year
Earlier
3 Months
Earlier
United States
70V 77
6,818
1,651
6,926
United Kingdom
1 C 17
1,428
1,326
1,446
Japan
0 P 77
1.130
1080
1,190
Italy
; 7 IV
1.598
777
1,692
West Germany
60V 77
1,041
1,016
1,047
Canada
601 77
900
754
838
France
NOV 77
1,055
931
1,216
NOTE: Data are seasonally adjusted. Unemployment rates for France are estimated. The rates shown for Japan and Canada are
roughly comparable to US rates. For 1975.77, the rates for France and the United Kingdom should be increased by 5 percent and
15 percent respectively, and those for West Germany decreased by 20 percent to be roughly comparable with US rates.
Approved For Release 2005/05/16A:-CIA-RDP79T01316A000900010001-0
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
DOMESTIC PRICES1 INDEX: 1970=100
Japan
West Germany
150
125
France
225
200
175
1Wholesale price indexes cover industrial goods.
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
A-6
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
United Kingdom
Canada
175
150
Percent
Change
from
AVERAGE ANNUAL
GROWTH RATE SINCE
Percent
Change
f
AVERAGE ANNUAL
GROWTH RATE SINCE
LATEST
Previous
1970
1 Year
3 Months
LATEST
rom
Previous
1970
1 Year
3 Months
MONTH
Month
Earlier
Earlier
MONTH
Month
Earlier
Earlier
United States
NOV 77
0.1
8.4
6.5
4.8
United Kingdom
NOV 77
0.3
14.5
15.9
5.9
OCT 77
0.3
6.5
6.5
4.2
NOV 77
0.5
136
13.0
6.0
Japan
OCT 77
-0.3
7.4
0.1
0
Italy
SEP 77
1.0
15.5
14.0
7.4
NOV 77
-1.2
10.2
6.2
4.5
NOV 77
1.5
132
15.8
15.5
West Germany
OCT 77
-0.1
5.1
1.6
-0.8
Canada
SEP 77
0.1
10.0
9.5
9.3
NOV 77
0.1
5.4
3.7
0.5
NOV 77
0.7
7.5
9.1
9.2
France
SEP 77
0.6
8.2
6.1
5.4
OCT 77
0.8
9.1
9.5
9.2
199
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A-7
GNP'
RETAIL SALES
Constant Market Prices
Constant Prices
Average
Average
Annual Growth Rate S
ince
Annual Growth Rate Since
Percent Change
Percent Change
Latest
from Previous 1 Year
Previous
Latest
from Previous
1 Year
3 Months
Quarter
Quarter 1970 Earlier
Quarter
Month
Month
1970
Earlier
Earlier'
United States 77 111
0.9 3.2 4.6
3.8
United States
Oct 77
1.7
3.2
5.3
2.0
Japan 77 III
0.5 5.4 5.1
1.8
Japan
Jun 77
-0.1
9.8
2.6
1.4
West Germany 77 II
-0.2 6.3 2.4
-0.8
West Germany
Sep 77
-0.8
2.3
1.7
9.5
France 77 II
-0.6 3.8 2.5
-2.2
France
Jun 77
7.7
-0.3
1.0
-8.1
United Kingdom 77 II
0.7 1.6 1.9
2.9
United Kingdom
Nov 77
-0.4
0.8
-3.8
-1.7
Italy 77 II
-1.9 2.8 2.8
-7.3
Italy
Jul 77
-5.8
2.9
8.4
17.8
Canada 77 III
1.3 4.9 2.5
5.3
Canada
Sep 77
0.1
4.4
1.5
5.6
Seasonally adjusted.
Seasonally adjusted.
:Average for latest 3
months compared with avera
ge for previous 3 mon
ths.
WAGES IN MANUFACTURING'
FIXED INVESTMENT'
Average
Non-residential; constan
t prices
Annual Growth Rate Since
Percent Change
Average
Latest
from Previous
1 Year
3 Months
Annual Growth Rate
Since
Period
Period
1970
Earlier
Earlier'
Percent Change
Latest
from Previous 1 Year
Previous
United States
Sep 77
0.4
7.5
6.6
6.5
Quarter
Quarter 1970 Earlier
Quarter
United States 77 III
1.0 2.1 7.8
4.2
Japan
Aug 77
2.2
17.0
9.8
8.7
Japan 77 II
0.5 1.1 4.5
2.0
West Germany
77 III
1.2
9.3
7.4
5.0
West Germany 77 II
-1.6 0.4 3.4
-6.4
France
77 1
2.3
14.1
0
9.5
France 75 IV
8.8 4.2 2.9
40.1
United Kingdom
Aug 77
0
15.3
3.0
3.5
United Kingdom 77 II
11.2 1.7 8.0
53.2
Italy
Sep 77
0
20.8
23.8
22.3
Italy 77 11
-7.8 2.5 10.3
-27.6
Canada
Sep 77
1.6
11.4
11.2
9.6
' Hourly earnings (seasonally adjusted
) for the United States, Japan, and Canada;
hourly wage
Canada 77 III
- 1.1 5.8 3.2
-4.2
rates for others. West German and
French data refer to the beg
inning of
the quarter.
' Seasonally adjusted.
' Average for latest 3
months compared with that
for previous
3 months.
MONEY MARKET RATES
Percent Rate of Interest
1 Year
3 Months
1 Month
Representative rates
latest Date
Earlier
Earlier
Earlier
United States
Commerical paper
Dec 14 6.60
4.65
6.00
6.56
Japan
Call money
Dec 16 5.00
7.00
4.88
4.50
West Germany
Interbank loans (3 months)
Dec 14 4.15
4.84
3.95
4.06
France
Call money
Dec 16 9.38
10.31
8.50
9.13
United Kingdom
Sterling interbank loans (3
months)
Dec 16 6.71
14.24
5.88
4.76
Canada
Finance paper
Dec 16 7.31
8.55
7.25
7.39
Eurodollars
Three-month deposits
Dec 16 7.11
4.95
6.59
7.09
EXPORT Pi 1cq -oved For Release 2005/05/16 : CI
-FMMJffft 000900010001-0
US $
National Currency
Average
Average
Annual
Growth Rate Since
Annual Growth Rote Since
P
ercent Change
Percent Change
Latest from Previous
1 Year
3 Months
Latest from Previous
1 Year 3 Months
Month
Month
1970
Earlier
Earlier
Month
Month
1970
Earlier Earlier
United States
Oct 77
-0.8
9.2
1.9
-1.3
United States
Oct 77
-0.8
9.2
1.9 -1.3
Japan
Jul 77
-1.8
10.4
10.4
-4.4
Japan
Jul 77
-1.0
6.3
3.1 -5.3
West Germany
Sep 77
- 1.5
11.0
6.2
3.6
West Germany
Sep 77
- 1.2
4.2
- 1.2 -2.3
France
Sep 77
-1.4
11.2
8.3
12.1
France
Sep 77
-0.9
9.4
8.5 10.1
United Kingdom
Nov 77
3.2
11.5
24.8
27.3
United Kingdom
Nov 77
0.4
15.8
12.4 6.8
Italy
Aug 77
1.4
11.4
13.2
21.1
Italy
Aug 77
1.4
16.9
19.2 19.2
Canada
Sep 77
-5.0
8.9
-2.4
- 1.3
Canada
Sep 77
-3.2
9.5
9.1 11.4
IMPORT PRICES
OFFICIAL RESERVES
National Curren
cy
Average
Billion us $
Annual
Growth Rate Since
Latest Month
Percent Change
1 Year 3 Months
Latest from Previous
1 Year
3 Months
End of
Billion US $
Jun 1970
Earlier Earlier
Month
Month
1970
Earlier
Earlier
United States
Oct 77
19.0
14.5
19.0 18.9
United States
Oct 77
-0.3
13.0
7.6
3.3
Japan
Nov 77
22.1
4.1
16.7 17.8
Japan
Jul 77
-1.5
10.5
-2.3
7.0
West Germany
Oct 77
35.7
8.8
35.8 35.1
West Germany
Sep 77
-2.3
4.0
-1.3
-5.5
France
Oct 77
10.1
4.4
9.6 9.9
France
Sep 77
- 1.0
10.1
7.4
0.6
United Kingdom
Oct 77
20.4
2.8
4.8 13.6
United Kingdom
Nov 77
-1.3
18.3
3.7
-8.7
Italy
Oct 77
11.1
4.7
5.4 10.5
Italy
Aug 77
2.7
20.9
12.4
19.0
Canada
Nov 77
4.2
4.3
5.1 4.8
Canada
Sep 77
-3.6
8.7
15.9
9.7
CURRENT ACCOUNT BALANCE
'
BASIC BALANCE'
Current and Long-Term-Capital Transactions
Cumulative (Million
US $)
Cumulat
ive (Million US $)
latest
Latest
Period Million US $
1977
1976
Change
Period
Million US $
1977
1976 Change
United States I
77 II
-4,605 -
8,763
1,070
-9,833
United States
No longer published Y
Japan
Oct 77
1,356
7,834
2,452
5,382
Japan
Oct 77
739
5,161
1,895 3,266
West Germany
Nov 77
625
2,236
2,250
- 14
West Germany
Sep 77
-1,341
-4,642
1,655 -6,297
France
77 III
-786 -2,809 -
4,483
1,674
France
77 111
-1,123
-2,908
-6,121 3,214
United Kingdom
77 II
-474 -1,490 -1,277
-213
United Kingdom
77 II
.1,409
2,075
-1,119 3,195
Italy
77 II
161
-768 -
2,859
2,091
Italy
77 II
97
-395
-2,963 2,568
Canada
77 II
- 1,407 - 2,956 -
3,088
132
Canada
77 II
-217
-791
1,701 -2,493
' Converted to US dollars at the current market rates of exchange.
'Converted to US doll
ars at the current market rates of exch
ange.
'As recommended by
the Advisory Committee on the Presentation
of Balance of Payments
2 Seasonally adjusted.
Statistics, the Department of Commerce
no longer publishes a ba
sic balance.
EXCHANGE RATES
TRADE-WEIGH
TED EXCHANGE
RATES'
Spot Rate
As of 30 Dec 77
Percent Change from
As of 30 Dec 77
Perce
nt Change from
Us $
1 Year
3 Months
1 Year
3 Months
Per Unit
19 Mar 73
Earlier
Earlier
23 Dec 77
19 Mar 73
Earlier
Earlier
23 Dec 77
Japan (yen)
0.0042
9.65
22.18
7.78
0.72
United States
1.65
-3.67
-3.89
-0.97
West Germany
0.4750
34.14
12.08
8.76
2.08
Japan
13.92
20.25
5.80
0.20
(Deutsche mark)
West Germany
31.32
6.38
3.23
0.55
France (franc)
0.2124
-3.62
5.42
3.41
1.59
France
- 10.20
-1.57
-2.98
-0.06
United Kingdom
1.9160
-22.15
12.64
8.94
2.98
United Kingdom
-25.97
8.64
4.07
1.65
(pound sterling)
Italy
-41.72
-6.30
-4.60
-0.93
Italy (lira)
0.0011
-35.14
0.44
1.15
0.70
Canada
--7.91
-9.86
- 1.97
-0.21
Canada (dollar)
0.9142
-8.37
- 7.81
-0.54
0.15
' Weighting is based o
n each listed coun
try's trade wi
th 16 other i
ndustrialized countries to
Ann
roved
For Rel
ease 2
00510
5116 -
reflect the competitive i
_RIlP79Tn131
mpact of exchange rate variations among
6nnn
the major currencies.
A-9
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
FOREIGN TRADE BILLION US $, f.o.b., seasonally adjusted
United States
14.0
12.0
10.0
Japan
West Germany
10.0
8.0
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
A-10
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
United Kingdom
Canada
CUMULATIVE (MILLION US $)
LATEST
MONTH
MILLION
WS $ 1977
1976
CHANGE
LATEST
MONTH
MILLION
US $ 1977
1976
CHANGE
United States
OCT 77
9,304
109,078
104,463
4.4%
United Kingdom
OCT 77
4,830
50,923
40,228
26.6%
11,386
133,556
109,475
22.0%
4,697
53.687
46,355
15.8%
Balance
-3,098
-22,396
-3,982
18,414
Balance
55
-2,907
-5,383
2,475
580
6
65
066
54
025
20.4"0
3,509
36,344
29,949
21.4?-o
Japan
OCT 77
,
5,168
,
51,065
,
45.731
11.7
Italy
OCT 77
3,887
36,315
32.598
11.4%
Balance
1,412
14,001
8,294
5,707
Balance
-378
30
-2,649
2,679
West Germany
OCT 77
10,046
106,794
92,096
16.0%
Canada
OCT 77
3,539
34,719
32,095
8.20
8,357
87,339
75,375
15.9%
3,272
33.195
31.532
5.3%
Balance
2,359
17,766
14,982
2,784
Balance
267
1,524
564
961
France
OCT 77
5,710
59,184
51,885
14.1%
6,259
61,832
55.826
10.8%
Balance
26
-2,098
-3,176
1,078
Approved For Release 2005/05/1~-19IA-RDP79T01316A000900010001-0
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
FOREIGN TRADE PRICES IN US $1
United States INDEX: JAN 1975 =100
105
M4
West Germany
106
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
A rived For Retp1M5t005/05/16 iQlAdDP79T013116?y00900010001-0
-Export and import plots are based on five month weighted moving averages.
A-12
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
France
United Kingdom
Italy
Canada
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
Approved WR lease 2005 R:CIA-RDPT9TU "?316A00090 W
5(~ ~1 42->
Approved For Release 2005/05/16 : CIA-RDP79T01316A000900010001-0
SELECTED DEVELOPING COUNTRIES
INDUSTRIAL PRODUCTION'
MONEY SUPPLY'
Average
Annual Growth Rate Since
Avera
ge
Percent Change
A
nnual Growth
Rate Since
latest
from Previous
1 Year
3 Months
Percent Change
Period
Period
1970 Earlier
Earlier'
latest
from Previous
1 Year
Month
Month
1970
Earlier
Brazil
76 II
0.1
11.0 10.7
0.4
Brazil
Aug 77
0
36.7
46
2
India
Jul 77
4.7
4.3 2.0
-7.2
.
India
Jun 77
0.3
12.0
16
9
South Korea
Aug 77
4.7
22.7 13.6
49.3
.
Iran
Aug 77
1.6
28.3
15.6
Mexico
Jul 77
1.0
6.0 4.7
21.6
South Korea
Sep 77
9.5
32.6
56.3
Nigeria
76 IV
0.2
11.3 9.0
0.7
Mexico
Aug 77
0.7
18.7
30.1
Taiwan
Sep 77
7.2
15.0 12.3
-2.0
Nigeria
Apr 77
-2.3
36.9
47.5
1 Seasonally adjusted.
Taiwan
Jul 77
1.4
24.4
27.1
'Average for latest 3 months compared with average for previous 3 months.
Thailand
Jun 77
-1.8
13.1
12.0
'Seasonally adjusted
.
CONSUMER
PRICES
WHOLESALE PRICES
Average
Average
Annual Growth Rate Since
An
nual Growth
Rate Since
Percent Cha
nge
Percent Change
Latest
from Previous
1 Year
Latest
from Previous
1 Year
Month
Month
1970
Earlier
Month
Month
1970
Earlier
Brazil
Oct 77
2.7
27.2
42.1
Brazil
Sep 77
1.6
27.1
34.4
India
Sep 77
1.2
8.5
9.6
India
Sep 77
0
9.2
4.8
Iran
Sep 77
0.7
12.3
30.2
Iran
Oct 77
0.5
10.1
13.1
South Korea
Sep 77
0.3
14.5
9.2
South Korea
Sep 77
0.7
16.3
9.4
Mexico
Sep 77
1.8
15.0
32.2
Mexico
Sep 77
0.5
16.5
44.6
Nigera
Jun 77
4.0
16.2
23.7
Taiwan
Sep 77
-0.5
8.9
3.8
Taiwan
Sep 77
- 1.9
10.9
10.4
Thailand
Jul 77
1.0
10.1
7.1
Thailand
Aug 77
1.1
8.7
9.9
EXPORT PRI
CES
OFFICIAL RESERVES
us $
Million US $
Avera
ge
Latest
Month
Annual Growth
Rote Since
1 Year
3 Months
Percent Change
End of
Million US $ Jun 1970
Earlier
Earlier
Latest
from Previous
1 Year
Period
Period
1970
Earlier
Brazil
Jun 77
5,707 1,013
3,716
5,863
India
Oct 77
4,886 1,006
2,778
4,395
Brazil
Jul 77
-12.4
16.3
28.4
Iran
Oct 77
11,547 208
8,542
11,592
India
Feb 77
8.0
10.4
8.9
South Korea
Sep 77
4,040 602
2,374
3,502
Iran
Aug 77
0
35.0
18.7
Mexico
Mar 76
1,501 695
1,479
1,533
South Korea
77 II
1.4
8.7
8.5
Nigeria
Oct 77
4,551 148
5,635
4,495
Nigeria
May 76
-0.1
27.3
12.3
Taiwan
Aug 77
1,416 531
1,586
1,331
Taiwan
Aug 77
-0.3
11.8
5.3
Thailand
Oct 77
1,906 978
1,937
2,017
Thailand
Dec 76
2.0
13.3
13.1
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Latest 3 Months
Percent Change from
3 Months 1 Year
Latest Period
Earlier'
E
arlier 1977
1976
Change
Oct 77 Exports
-47.7
5.0
10,171
8,119
25.3%
Oct 77 Imports
11.4
-4.4
9,989
10,250
- 2.5%
Oct 77 Balance
182
-2,131
2,313
Jul 77 Exports
-42.6
1.8
3,165
2,923
8.3%
Jul 77 Imports
10.6
2.7
2,529
2,480
2.0%
Jul 77 Balance
636
443
193
Iran
Sep 77 Exports
0.2
-0.3
17,793
16,865
5.5%
Sep 77 Imports
2.8
3.5
9,479
9,301
1.90/0
Sep 77 Balance
8,313
7,564
749
South Korea
Aug 77 Exports
43.9
20.3
6,217
4,838
28.5%
Aug 77 Imports
16.4
18.8
6,265
5,121
22.3%
Aug 77 Balance
-47
-283
235
Mexico
Aug 77 Exports
-46.9
30.5
2,743
2,125
29.1%
Aug 77 Imports
101.8
-16.5
3,260
4,070
- 19.9%
Aug 77 Balance
-517
-1,945
1,428
Nigeria
Sep 77 Exports
-18.9
14.6
3,638
2,940
23.7%
Dec 76 Imports
86.7
8.4
2,531
1,990
27.2%
Dec 76 Balance
1,502
1,102
399
Taiwan
Sep 77 Exports
28.7
9.0
6,637
5,902
12.5%
Sep 77 Imports
-13.9
6.1
5,722
5,111
11.9%
Sep 77 Balance
915
790
125
Thailand
Aug 77 Exports
-18.7
26.3
2,392
1,911
25.2%
Aug 77 Imports
28.4
40.2
2,716
2,101
29.3%
Aug 77 Balance
-324
-190
-134
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AGRICULTURAL PRICES MONTHILY AVERAGE CASH PRICE
7.5 $ PER BUSHEL
Kansas'City No. 2 Hard Winter
1-27 DEC
1973 1974 1975 1976 1977
1-27 DEC
COTTON
1.0 $ PER POUND
Memphis Middling 1 1/16"
27 DEC 0.5066
14 DEC 0.4849
NOV 77 0.4904
DEC 76 0.7416
$ PER BUSHEL
Chicago No. 2 Yellow
1-27 DEC I
0
1973 1974 1975 1976 1977
SUGAR
75 O PER POUND
World Raw London, bulk
$ PER METRIC TON
27 DEC 7.95
14 DEC 8.22
NOV 77 6.66
DEC 76 7.64
COFFEE/TEA
400 4 PER POUND
TEA COFFEE
Other Milds Arabicas,
2,000 London Auction ex-dock New York
10 OCT 96.9
300 `;- NOV 77 NA
1,500 DEC 76 77.0
150
500
1-27 DEC
1973 1974 1975 1976 1977 10
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A-16
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RICE
$ PER HUNDRED WEIGHT
30.0-,
No. 2 Medium Grain, 4% Brokens,
f.o.b. mills, Houston, Tex.
COCOA1
225
500'_
22 NOV NA
16 NOV NA
OCT 77 NA
NOV 76 150.51
SOYBEAN MEAL
$ -PER METRIC TON $ PER TON
800
41 Percent Bulk, f.o.b. Decatur
400
N
80 ` _
1973
27 DEC 168.00
14 DEC 155.50
NOV 77 '.. 163.40
DEC 76 196.22
SOYBEAN OIL/PALM OIL
$ PER METRIC TON $ PER POUND $ PER METRIC TON
0.5 T._u, __ s x
.7,000 SOYBEAN OIL
NOV 77 0.1948
DEC 76 0.1960
27 DEC 0.2288
NOV 77 0.2099
DEC 76 0.2100
NOTE: The food index is compiled by the Economist for 16 food commodities
which enter international trade. Commodities are weighted by
3-year moving averages of imports into industrialized countries.
574924 12-77
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INDUSTRIAL MATERIALS PRICES MONTHLY AVERAGE CASH PRICE
140 C PER POUND
ZINC
100 C PER POUND
1-23 DEC
1974 1975 1976 1977 200
621.1
417.0
MP USD
23 DEC 168.5 175.8
14 DEC 168.5 176.5
NOV 77 167.2 169.4
DEC 76 167.0 153.5
1-22 DEC
0 100
1973 1974 1975 1976 1977 1973 1974 1975 1976
LEAD
$ PER METRIC TON 45 C PER POUND
LME US 3,000
23 DEC
58.1
63.6
40
23 DEC
30.8
33.0
14 DEC
57.6
60.6
14 DEC
31.7
33.0
NOV 77
53.6
60.6
2
500
NOV 77
28.6
32.0
DEC 76
58.6
65.6
,
35
DEC 76
21.6
26.0
$ PER METRIC TON
14,000
1-23 DEC
1977
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ALUMINUM
Major US Producer
t per pound
53.00
44.00
48.00
41.00
US STEEL
Composite
$ per long ton
359.36
316.36
333.78
306.72
IRON ORE
Non-Bessemer Old Range
$ per long ton
21.43
19.50
20.51
18.75
CHROME ORE
Russian, Metallurgical Grade
$ per metric ton
150.00
150.00
150.00
150.00
CHROME ORE
S. Africa, Chemical Grade
$ per long ton
58.50
39.00
42.00
44.50
FERROCHROME
US Producer, 66-70 Percent
it per pound
41.00
45.OCI
43.00
52.00
NICKEL
Composite US Producer
$ per pound
2.07
2.20
2.41
2.20
MANGANESE ORE
48 Percent Mn
$ per long ton
72.24
72.0CI
72.00
67.20
TUNGSTEN ORE
Contained Metal
$ per metric ton
21,564.00
13, 954.00
18, 352.00
10, 960.00
MERCURY
NY
$ per 76 pound flask
123.00
110.00
134.50
120.00
SILVER
LME Cash
t per troy ounce
467.96
478.82
434.62
408.93
GOLD
159.82
125.71
133.79
139.30
INDUSTRIAL MATERIALS INDEX
LUMBER INDEX 6
1-16 DEC
1977
1Approximates world market price frequently used by major
world producers and traders, although only small quantities of
these metals are actually traded on the LME.
2Producers' price, covers most primary metals sold in the U S.
3As of 1 Dec 75, US tin price quoted is "Tin NY lb composite."
4Quoted on New York market.
5S-type styrene, US export price.
6This index is compiled by using the average of 13 types of lumber whose
prices are regarded as bellwethers of US lumber construction costs.
7Composite price for Chicago, Philadelphia, and Pittsburgh.
NOTE: The industrial materials index is compiled by the Economist for 19 raw
materials which enter international trade. Commodities are weighted by
3-year moving averages of imports into industrialized countries.
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