THE POOR COUNTRIES: SHIFTING STRATEGY AND PROSPECTS FOR THE SEVENTIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R002000120033-7
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 53
• Document Creation Date: December 20, 2016
• Document Release Date: August 21, 2006
• Sequence Number: 33
• Publication Date: January 19, 1973
• Content Type: MEMO

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OFFICE OF
NATIONAL ESTIMATES
0. N. E.
MEMORANDUM
The Poor Countries: Shifting Strategy
and Prospects for the Seventies
For Official Use Only
19 January 1973
Copy No.
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF NATIONAL ESTIMATES
19 January 1973
THE POOR COUNTRIES: SHIFTING STRATEGY
AND PROSPECTS FOR THE SEVENTIES
The poor countries' attitude toward the rich has been
noticeably hardening. Far from seeing themselves and the
rich as "partners in deveZopment", many poor nations have
come to view the rich --- including the Communist rich -- as
adversaries.. This attitude is evident both in global and
regional forums, like the Stockholm environmental meetings
and UNCTAD sessions, and in bilateral relationships.
How far will these countries go in alienating themselves
from their rich patrons? What will the impact be on longstand-
ing global institutions which the poor see as instrumento de-
signed to serve the interests of the rich? The broad issues
touched on in this paper are subject to diverse interpretation;
indeed, many of them have yet to be analyzed systematically.
Hence this memorandum is presented as an essay in the classi-
cal sense of the word -- an attempt to stimulate thinking, on
relations between developed and Zess-developed countries in
the seventies, particularly as they affect US interests.
This memorandum was prepared by the Office of National Estimates
and dis'ussed with appropriate offices in CIA, which are in
general agreement with its judgments.
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TABLE OF CONTENTS
Page
I. WHEN THE POOR CONFRONT TIE RICH . . . . . . . . . . . 2
II. THE DEVELOPMENT DECADE IN RETROSPECT. . . . . . . . . 6
A. The Record . . . . . . . . . . . . . . . . . . . 6
B. What Went Wrong? . . . . . . . . . . . . . . . . 10
III. UNCTAD III AND BEYOND: PROBLEMS AND PROSPECTS FOR
THE SEVENTIES . . . . . . . . . . . . . . . . . . . 16
A. Third World Strategy Shifts at UNCTAD III. . . 16
B. Major LDC Problems and Prospects in the Decade . 21
IV. IMPLICATIONS . . . . . . . . . . . . . . . . . . . . . 31
A. Prospects for LDC Relations with Advanced
Countries . . . . . . . . . . . . . . . . . . . 31
1. Implications for the US . . . . . . . . . . 33
Denial of Access to Raw VateriaZs. . . . . . . . 34
Other Forms of Economic Warfare. . . . . . . . . 36
Other Adversary Reactions. . . . . . . . . . . . 37
Other Considerations . . . . . . . . . . . . . . 38
2. Implications for Other Advanced Countries . 41
B. Implications for the LDCs. . . . . . . . . . . . 42
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I. WHEN THE POOR', CONFRONT THE RICH
1. As the world's poor countries play a more active and inde-
pendent role in g'obal commerce and finance, they find themselves deal-
ing with an established international economic order which they had no
part in making. The existing system was developed by nations that
were rich, mode,,,n, and industrialized;'it was not designed to meet the
needs of countries that were underdeveloped, agricultural, and poor.
In the years vf-jen the system was developed these areas -- including most
of those that were nominally independent, like the Latin American states had been wards or clients of the industrial nations: any economic gains
to the former were incidental and subordinate to those of the latter.
2. By 1360 th,n notion that every state should try to achieve
rapid economic development was an idea whose time had come. A new
academic Field, the economics of development, gained public attention
through 'such popularized publications as Walt W. Rostow's Stages of
Economi.' Growth (1960), and seemed to point the way to growth and
In this paper "poor", "less-developed", and "Third World" are
used interchangeably to refer to the 90 nations included in the
UN's list of developing countries, except that Israel has been
dropped and Bangladesh added. All of them had a per capita GDP
in 1965 of less than $1,000 (see Annex A for details). Bebause
of the many differences among these countries, only a limited
number of propositions apply to them as a group. Accordingly
in Part II, the treatment is dis-aggregated.
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development for all. The UN declared the sixties the Development
Decade, and existing international organizations created a number
of special organs concerned with promoting development.jj The poor
countries had reason to hope that the road to development was well-
known and open to all; that the industrialized countries were
committed to seeing that they acquired the means (read capital and
technology) to develop; and that "the system" was accommodating
itself to the needs and interests of the have-not nations.
3. In fact, the sixties did see substantial economic progress
in the Third World. For the LDCs as a whole, GOP expanded by about
5 percent a year -- on target for the goals set for the Development
Decade, during which it was hoped the well-publicized gap in incomes
between rich and poor countries would be narrowed. Third World ex-
ports grew at an annual rate of over 6 percent during this period,
while its exports of manufactures grew by 14 percent a year -- faster
than those of the developed world. Gross official capital flows to
2/
Among the more important: International Development Associa-
tion (of the World Bank) 1960; Development Advisory Committee
(of the OECD) 1961; Development Program (of the UN) 1966;
UNCTAD -- the UN Conference on Trade and Development (1964)
discussed below.
The International Development Strategy in Action: The Role of
UNCTAD (TD/99-2972 UN- 15 February 1972).
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the poor countries averaged less than $3 billion annually In the
1954-1959 period, but rose to over $7 billion a year in the second
half of the sixties.
4. Meanwhile, back at the UN, the poor countries succeeded
in establishing an organ to represent their development interests:
UNCTAD -- the UN Conference on Trade and Development -- a permanent
body with all UN member states as members. UNCTAD has had relatively
little impact on the course of economic development, but a review of
its activities offers useful insights into shifting LDC views and
priorities in their relations with the developed world. UNCTAD has
*.
met only three times -- in 1964, 1968, and 1972. Size alone has
made it something less than a model of parliamentary effectiveness.
Its membership has grown from 119 to 140 countries, and participating
delegates from fewer than 2,000 to more than 3,000. In trying to
accommodate the many different local and regional interests represented,
the agenda at each plenary has been far too heavy to be usefully
dealt with. But a number of major proposals have nevertheless emerged
from each session.
* UNCTAD's only permanent bodies are a secretariat and a Trade
and Development Board which carry on planning and staff work
between plenary sessions.
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5. These proposals reveal something of the poor countries' view
of the international economy, and how they feel it should accommodate
to their needs. Among the chief proposals of UNCTAD I, not surprisingly,
were several urging the industrialized nations to expand their purchases
of Third World primary products. It was suggested that ways-be found to
achieve a steady growth in these imports -- a proposal which seemed to
ignore long-run trends in world demand for such products. The LDCs also
sought preferred treatment, especially duty-free entry to developed
countries' markets, for LDC exports of manufactures -- including
textiles, which account for a large part of Third World exports of
manufactures, as well as being a major industry in the industrialized
countries. The advanced nations were further asked to increase
foreign aid -- 1 percent of a donor's national income was set as
the target -- and to ease the poor nations' debt burden.
6. The optimism of the poor countries at UNCTAD I was notably
absent at the second plenary (1968). In large part this reflected the
LDCs' frustration at the lack of any action on major UNCTAD I recommenda-
tions. The second plenary saw three separate blocs -- Western, Communist,
and LDC -- with positions hardened in advance on all major issues -- a
weakness of UNCTAD that has persisted ever since. In addition,-many
of the Third World representatives failed to perceive that UNCTAD
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was at best a forum for publicizing the poor countries' economic
problems and for exchanging views among all those concerned with
particular problems of development. Some delegates expected
UNCTAD resolutions to have a direct impact on developed countries'
policies. Probably the most significant achievements at UNCTAD II
were the identification of problems peculiar to the land-locked and
least developed LDCs, and the outlining of special measures needed
to improve their trading position with Communist countries. But
its failure to elicit favorable responses from the developed
countries on major issues led UNCTAD II to be judged a failure
by almost all its participants.
n. The Record
7. UNCTAD's lack of measurable progress during its first five
years is only one aspect of the failures of the development experiment.
as a whole. By the end of Development Decade, rapid population
increases had nullified much of the economic growth achieved in Third
World countries, and the rich-poor gap was seen to have widened.* Even
The hope held out of "narrowing the income gap" was illusory.
Because the industrialized nations have a vastly greater
economic base than the LDCs, the gap was almost certain to
widen, and will continue to do so.
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the favorable aggregative attainments in growth of income, trade,
etc. reflected an extremely uneven record: some stunning success
stories concealed a generally dismal record in most of the Third
World.
8. The Poor and the Poorest: This disparity reflects the
wide differences among the 90 states included in the UN's ranked list
of "developing" countries (Annex A). In the top 30 are countries
like Argentina and Mexico, with diversified economies, a large modern
sector, developed infrastructure, high literacy rates -- in short,
countries which already have reached a fairly advanced state of
development and which possess the prerequisites for further rapid
growth -- as well as such countries as Korea and Taiwan, which have
recently registered extremely high growth rates based on specialized
manufacturing for export. Among the upper and middle groups are
countries which depend on exports of one or two major commodities
to spur their economic growth: Ghana (cocoa), Zambia (copper),
Liberia and Malaysia (rubber), etc.
9. With few exceptions, all the upper- and middle-group states
have far more favorable development prospects than the 30 nations
at the bottom-of the list. These "least-developed" are the hard-
core poor. Typically they are small, land-locked, and African,
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and subsistence farming is the dominant economic activity. For
most, per capita GNP is less than $90 a year.
10. In the Development'Decade these 30 countries made no
discernible economic progress. Indeed, a third of them have
lower per capita GNP than they did at the start of the decade,
and the majority grew by less than 1 percent a year. These
countries, which would appear on the face of it to be the most
desperately in need of outside help, also are the least able to
make effective use of foreign aid (no infrastructure, no resources,
etc.); accordingly, the Zeast-developed received only something
like 6 percent of total foreign aid disbursements during the decade.
11. Economic Growth: Thus, although the Third World as a whole
achieved an average growth rate of 5 percent a year during the decade,
this progress was extremely unevenly distributed. No more than 25 LDCs
achieved this rate. At the lower end, the world's 50 poorest countries,
with two-thirds of the Third World's population, grew by 3 1/2 percent
or less. In per capita terms, the difference is even more critical: the
40 fastest-growing LDCs attained a per capita growth of about 3 percent.
But the bottom 50 LDCs' per capita income grew by some 1.2 percent a year
and some registered negative growth. Perhaps of greater concern, in terms
of the human costs of underdevelopment, is the failure of economic growth
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to touch the lives of many people in the LDCs, where most remain tied to
subsistence agriculture, and the ever-growing ranks of unemployed during
the past decade have been able to share only very marginally and in-
frequently, if at all, in the benefits of modernization.
12. Exports, Debt, and Foreign Aid: For almost every LDC, develop-
ment plans in the sixties were predicated on a rapid and sustained ex-
pansion of exports. Yet, while world exports grew by 8 1/2 percent a
year during the decade, LDC exports increased by only 6 1/2 percent.
Even this is a respectable rate, but only some 40 LDCs -- i.e., well
below half of them -- achieved it. Many failed to come anywhere near
it.* At the same time, cumulative LDC foreign indebtedness rose 14
percent annually, and by 1969 amounted to almost $60 billion. Payments
on this debt were rising by 9 percent a year, and debt service ratios the percentage of annual export earnings going to repay foreign debt --
reached 20 percent for several LDCs and was rising steadily toward
this level in a dozen more. In addition, the growth of foreign aid was
slowing during the latter half of the decade; hence a growing part
* Similarly, exports of manufactures from the developing to the
developed nations rose fourfold in the 1960-1969 period, but
almost 60 percent of these exports came from a half dozen
countries.
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of the LDCs' debt was commercial, thus effectively raising the
average cost of their imports.
B. What Went Wrong?
13. Had the results of the sixties been achieved without all
the advance hoopla -- no din of slogans about development decade,
narrowing the gap, five-percent-growth-for-all, one-percent-of-GNP-
for-aid, etc. -- the period probably would have been seen for what
it was: one of substantial economic progress for a limited number of
the poorer states; and not as a development disaster. But this misses
the main point. Expectations, in both the developed and undeveloped
parts of the world, were initially high. The results, and their
implications for future global "north-south" relations, must be assessed
in the light of these expectations, rather than of actual achievements.
14. Basically too much was expected to happen too soon, and
there was far too little general appreciation of the tremendous diffi-
culties involved in trying to modernize traditional societies. Third
We ;aders, particularly those in the newly independent countries,
i.., prey to their own illusions about colonialism: independence would
spontaneously unleash their countries' natural economic potential
from the strictures imposed by colonialism, and the ex-colonial powers
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would be persuaded of their moral obligation to help the areas which
they had previously exploited; hence, as they saw it, economic pi,ngress
was virt".+ally assured.
15. In the developed world those concerned with the poor
countries' development promoted policies and programs based on
the only development experience they knew. Previous Western de-
velopment programs had taken place in modern, integrated industrial
economies, where the impact of a given input of capital or technology
could be predicted within reasonable limits of probability. For the
Communist states, too, the development prototype was a modern European
society, but one in which an educated ruling elite, with coercive
power over the population, directed the allocation of resources from
the center. In both cases, development was achieved primarily through
heavy investments in industry. Where additional skilled labor,
administrators, raw materials, and intermediate products were readily
available, such investments had a fairly prompt impact on employment
and incomes.
16. In most LDCs, however, none of these conditions existed.
Hence there was much uncertainty and disagreement over the likely
impact of traditional stimuli to development. In the event, such
misgivings were well-founded. Social and institutional factors, in
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particular, put a brake on Third Wor;i development. For example,
the trickle-down benefits from a given capital investment were
severely reduced by such factors as the separation of the economy
into discrete modern and traditional sectors and the absence of
large capital markets.
17. The Cold War also affected the course of Third World de-
velopment, although its impact is more difficult to weigh. Global
aid disbursements would have been substantially lower in the absence
of East-West competition to woo the emerging nations. But cold war
considerations also led to an eagerness on the part of donors to meet
LDC requests for arms, which in some cases caused serious payments
problems for the recipients and in others diverted foreign currency
resources into uneconomic expenditures.* Similarly, economic aid projects
were sometimes agreed to with more thought to pleasing particular LDC
leaders, or pre-empting other prospective donors, than to likely economic
benefits.
18. Often domestic LOC policies placed serious constraints on
economic development. Every Third World leader is ideologically
Not all military cj-?cnditu.rea ocre without economic boric-fit,
however. In come countrica military aid programa have been a
major contributor to local t,'chnical training (drivera, r~vcluinicn,
etc.) and to raining lit,,7r1.my and nanit:ation otan:arda.
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"committed" to development; but in the harsh light of local politics
other, often conflicting claims come first -- particularly those of
family, fellow tribesmen or fellow provincials, and the politically
aware urban masses. Sometimes, to remain in power, an LDC leader
has felt it necessary to placate a restless army by providing it
with expensive new toys, or to buy the support of a particular
region with low priority projects. Domestic political imperatives
and the need for prompt and visible symbols of economic "independence"
also have led to a preference for heavy industrial projects -- e.g.,
a dam or a steel mill, which typically require much capital and offer
little employment -- rather than less spectacular investments in
infrastructure or other areas offering potentially greater benefits
per dollar spent. In a number of cases overriding LDC foreign
policy objectives have channeled development funds into costly
investments of questionable economic effectiveness. For example,
Zambia launched the costly (over $70 million to date) Kafue hydro-
electric project in an unsuccessful effort to free its copper
industry from dependence on Rhodesian electric power.
19. In a larger sense, people in a traditional society attach
relatively less importance to economic growth than those in a modern
industrial society. The conflict between this and the evident "rising
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expectations" in the 'rhird World may not be apparent to the societies
involved. A good part of the rising expectations in the sixties may
have reflected a vague notion that "development" is something which
can be conferred, like a degree or title, on deserving poor countries
by the rich. A Western observer at early UNCTAD conferences might
well have felt he was seeing a sophisticated revival of the cargo
cult.*
20. Some of the chief Third World development goals of the
sixties, particularly those concerned with enlarging export markets,
called for major changes in developed countries' donestic and regional
economic policies ??- changes which were either polit k ally or economi-
cally unacceptable. Protectionist policies in the developed countries
have been extremely resistant to LDC pleas for preferential treatment.
This especially applies to agricultural products and textiles: two
of the Third World's leading exports. Even where preferences have
been granted, they are frequently token gestures; for example, general
preferences extended by the EEC leave room for the LDCs to expand
" A couple of years after the withdrawal of US forces from the
no4thweot Pacific at the end of World War .II, witch doctors in
t/f-a Guinea predictt'd that great ships would soon arrive filled
with Floods for the local people. Thin led to a widespread work
n t oppagr, and near famine, as large r.umhcro of Papuans chose to
cr ~a i. t the arrival of the cargo ships rarhrr than go about their
usual. planting.
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exports of such items as Jet aircraft and computers -- hardly a
meaningful concession.*
21. There were other problems as well. The collapse of the boom
in the industrial countries in the mid-1960s led them to reduce their
purchases of LDC raw materials (or depressed the prices paid for them,
or both), and eroded support for foreign aid and tariff concessions --
neither of which has ever had terribly strong constituencies among the
developed countries, Communist and non-Communist alike. In addition,
the gradual winding down of East-West tensions weakaned one of the
leading inducements for both sides to provide foreign aid. There has
also been a widespread feeling, among both the developed and undeveloped,
that they were in some way euchered on the whole subject of development
and foreign aid. Among major Western aid donors, particularly the US,
this reaction is attributable in part to the earlier over-selling of
foreign aid as something that would have an immediate impact on re-
cipient countries. It was apparently often assumed that development
would bring contentment and hence political stability, and ultimately
reduce the attractions of communism.
Although the US -- unlike the EEC countries -- has not as yet
extended generalized preferences to LDC exports of manufactures,
it nevertheless accounted for more than half of the total in-
crease in Third World exports of manufactures in the sixt-es.
OFF
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22. By the end of the sixties, all groups of participants
in the Development Decade had begun to reflect on its failures,
and on the lessons to be drawn. The Pearson Report (undertaken
for the World Bank in 1969), the Jackson Report (on the UN's
Development Program), and the Peterson Report (on future US aid
policy) addressed major aspects of the question. In the last
analysis, no one has yet formulated a law of economic development,
or even an adequate list of the essential criteria for economic
growth. But there have been important shifts in thinking in the
Third World, too, which have found their clearest expression in
the meetings of UNCTAD III in April/May of 1972.
III. UNCTAD III AND BEYOND: PROBLEMS AND PROSPECTS FOR THE SEVENTIES
A. Third World Strategy Shifts at UNCTAD III
23. In many respects UNCTAD III was much like its predecessors.
The meetings were big (3,000 delegates), disorganized, and confused:
final wording on several resolutions was delayed until several days
after the Conference had officially ended. Deadlocks in committee
were "referred to the summit" -- appropriately enough located on the
22nd floor of the convention site -- where they were filed away to be
forgotten. Regional differences among the LDCs continued to thwart
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consensus on trade policy and other issues. For example, those
enjoying preferred markets (in particular those associated with
the EEC or Commonwealth) were unwilling to give them up in ex-
change for generalized preferences for all LDCs. In debating
the proposal on "special measures to help the least-developed",
each regional group -- the Asians, the Africans, and the Latin
Americans -- wanted the criteria of "least-developed" altered in
such a way as to favor admission of states from their particular
region. A disgusted delegate summed up the meetings as being a
place where "all were animals in a zoo, assigned to their own
cages".
24. Yet, for all that, there were marked changes in the LDCs'
priorities, and in their general posture toward the developed. Their
main thrust was to insist on their right, as sovereign states, to
participate in future decision-making on world monetary reform and
in the multilateral trade negotiations scheduled for 1973. This
demand is essentially conservative: it indicates that the LDCs, despite
all the years of anti-colonialist rhetoric and their repeated failures
to change the patterns of world economic activity to favor their
interests, are not yet trying to sabotage existing global institutions,
but rather are seeking a larger role for themselves within the
established system.
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25. But new, radical trends in Third World attitudes also
have emerged. Indeed, UNCTAD III witnessed a new militancy --
an increasingly adversary posture on the part of many LDCs toward
the developed world. There was less effort by the poor countries
to reach consensus with the non-LDCs, or to seek compromise language
In order to gain broad support for LDC proposals. This disdain for
the developed countries' views resulted in a series of final resolu-
tions, all but a few of which were unacceptable to the industrialized
nations,and to a parochial, Third World focus in others.* Few
of the LDCs seemed willing to go as far as Chile in declaring that
the question of compensating foreign firms for nationalized properties
was purely an internal matter for the nationalizing state. But there
was for the first time general acknowledgement that countries have
a right and duty to control their own natural resources, and that
compensation for nationalized properties should not include any
payment for the resources themselves.
26. There was a broad consensus among the Third World states
that far more emphasis should be given to self-reliance, and to seeking
The resolution on environment, to cite but one, recommended only
that special attention be given to the porrnible effects of de-
veloped countries' environmental policies on LDCa' trade and
development.
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ways to reduce dependea ce on foreign aid and capital, and on markets
in developed countries. While it is doubtful that many LDCs will
set OUI to make this a prime economic policy goal, they were en-
couraged in this direction by the Chinese Communist delegates,
who quietly pushed the Chinese model as the most appropriate for
poor countries valuing their independence.
27. In other recent Third World gatherings, both before and
after UNCTAD III, radical minorities have advocate-' a policy of
confrontation with the developed countries. At a meeting of
distinguished development specialists,* a minority suggested that
the poor should adopt a variety of punitive and disruptive measures
against the rich to force concessions from them: debt repudiation,
selective disruption of raw materials supply, coordinated expropria-
tions, and switching ..DC reserves from one currency to another were
among the tactics proposed. The most recent Non-Aligned Foreign
Ministers' Conference in Guyana was dominated by a handful of radical
states, particularly Cuba, Chile, and Guinea. They were able to
Columbia Conference on International Economic Development,
February 1970.
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win support from a sizable minority of nations -- roughly a third
of the 68 member countries -- for resolutions condemning the activi-
ties of multinational corporations and endorsing nationalization of
foreign-owned properties, as well as anti-US resolutions on Vietnam
and Puerto Rico.
28. One point to be drawn from this trend is the evident erosion
of LDC expectations and fears of the great powers. Perhaps these are
mutually reinforcing: if a country expects no US foreign aid, then its
leaders feel freer to attack US policies. But there is more to it than
this. In the past few years assertive small states have taken a number
of tough measures against big powers -- e.g., nationalizing properties,
throwing foreign patrons and advisors out -- and no terrible retribution
has followed. This is not lost on other Third World leaders, who in many
cases must demonstrate to their domestic supporters that they are both
independent of foreign powers and politically progressive. Even where
there are no foreign properties worth nationalizing, or where the un-
developed condition of the country's resources dictates a more prudent
policy for the time being, a defiant pose at UNCTAD or an anti-
imperialist speech at the UN will have some appeal for the home audience.
29. In addition there is China. Its influence is difficult to
weigh; but the Chinese have been active recently in major world and
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regional conferences -- even the Non-Aligned meetings, where they
were much in evidence although not a member country. In spite of
a growing foreign aid program (extensions of almost $500 million
in 1972), the Chinese have declared that they have a very limited
capability to provide material assistance, and should not be
lGoked to as a source of large-scale capital aid. But they offer
an alternative development model with some appeal: self-help,
modest economic targets chosen for their broad social impact, and
non-interference by other countries. They also encourage an anti-
great power alignment among the poor countries. While few LDCs --
Tanzania being the outstanding exception -- have so far chosen to
follow Chinese development methods, and though most LDCs (including
Tanzania) seem to be leery of Chinese influence, Peking's recent
outward policy no doubt has encouraged tendencies among the LDCs
toward defiance of the industrial countries.
B. Major LDC Problems and Prospects in the Decade
30. Regardless of what policies are followed by the developed
or undeveloped states, most of the chronic attributes of poor and
traditional societies -- disease, ignorance, tribalism, and parochialism,
and the vulnerability of large masses of people to economic disaster --
will yield slowly, at best, to the forces of modernization. These
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problems will not be eliminated, or even seriously diminished, in
this decade. Of course technological events, such as the develop-
ment of "miracle" 'strains of rice, wheat, and most !recently corn,
can bring rapid change to large numbers of people; but such de-
velopments are not always predictable. Moreover technological
advances commonly take a long time to be introduced and applied
where traditional ways still predominate. Therefore, this paper
has been limited to those problem areas where significant change
is likely to occur in the present decade.
31. Economic Growth: Studies by the UN and other agencies
suggest that national product for the Third World as a whole is
likely to grow during the seventies at least as fast as in the 1960s
(5 percent) and perhaps as high as 6 percent annually. East Asian
LDCs (Korea, Taiwan, Hong Kong, Malaysia, and Singapore) are likely
to continue to lead the rest. A couple of other countries may, like
Libya in the sixties, move away from the ranks of the very poor through
the discovery and exploitation of valuable mineral deposits. Some
states will remain basket cases.
32. There are also a number of shifts in world production and
distribution patterns, such as the growing practice by firms in the
US and other high-labor-cost industrial nations to farm our the
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manufacture of component parts and assembly operations in developing
countries. Such shifts could significantly accelerate economic growth.
But more important than the various efforts of Third World countries
to raise their growth rates is a rather recent and dramatic shift in
attitude away from the concept of growth as an end in itself. Many
prominent LDC figures, economists 1/ as well as national leaders, now
seriously question the value of a policy objective which, so far, has had
such little impact on jobs and living standards for the masses of LDC
citizens. Indeed, it now appears that more stress in the remainder of
this decade will be not on growth of output for its own sake, but on
the problems of how to provide more jobs.
2/
33. Unemployment and Urbanization: Third World job prospects
for the seventies are extremely bleak. The number of job-seekers in the
LDCs is expected to increase by something like 3 percent a year, but
there is nothing to indicate that employment will grow at anything near
this rate: in the sixties, LDC employment grew at 1 percent or less.
Proposed solutions suggest the need for a radical reordering of social
and economic objectives to assure higher levels of domestic investment,
1 Among others Raul Prebisch, well-known Argentine economist, and
"father" of UNCTAD.
2/ See ONE Memorandum, "Urbanization, Unemployment, and Unrest in
the Poor Countries", dated 14 November 1972, OFFICIAL USE ONLY.
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broader participation in production (through promoting labor-inten-
sive enterprise, massive public works, etc.), and a re-distribution
of income in favor of the poorest 40-50 percent of the society.
There is much doubt, of course, whether such things can be done under
any conditions. But there is little doubt that they could not
be carried out without a high degree of coercion by the state. The
alternative for many LDCs is a steep rise in unemployment during
this decade.
34. The question is, what will high and growing levels of
unemployment mean to the LDCs where they occur, and to other countries?
In particular, what does it imply for political and social cohesion?
If it meant only a few million unemployed city-dwellers returning to
the villaqes, the problem would not necessarily be serious. But the
projected growth of Third World unemployment In this decade coincides
with the most rapid urbanization the world has ever seen. Throughout
the Third World masses of people, most of them without any of the skills
needed by the modern sector, are moving into the cities, where they are
swelling the ranks of the jobless in slum and squatter settlements.
35. So far there is no demonstrated and consistent correlation
between urban unemployment and violent political upheaval. But this is
no cause for complacency. Most Third World cities already have large
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numbers of uneducated and semi-educated youths who can find no
jobs, and degree-holders who can find no work they consider suitable.
There is no way to predict whether such groups will remain politically
quiescent in the face of growing unemployment. As time goes on and
jobs are not forthcoming, such people will have an ever-declining
stake in the otatuo quo, and a growing receptivity to advocates of
radical change. It seems likely that, under these conditions, at
least some LDCs will experience in the current decade increasing
lawlessness and a bleak succession of government upheavals in which
the disaffected urban unemployed play an active role; and as successor
regimes fail to cope with unemployment and other urgent economic and
socia'. N-oblems, the end result may be a much tougher kind of
authoritarian rule.
36. Trade and Aid: It is beyond the scope of this paper to
get into detailed projections of LDC exports. But some of th.. major
factors likely to affect these exports during the rest of the decade
can be identified and discussed.
37. There will probably be no dramatic departures from past
patterns: the LDC5 will continue to find their major export markets
in the industrial West and Japan, and neither intra-Third World trade
nor exports to Communist states are likely to take more than, say,
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7f) percent, and 1!, per(.ont. rr~:prct iveiy, of t.otai i_Ui expn'~ t.:,, In
general , growth of trade among i.flt c:onI. nue: to he h0d1 hack by the
...imi1arity of their import. reguirrtmentc and export offering , III i
is true to lesser degreo of Third World trade with the Corrmuni t
states, but the chief brakes herr' have to do with 11 marked preference,
both in the [:[ICs and Contnuni st countries,, to use their hard currency
earnings for the purchase of Wes I/
t i:uroipean. US, or Japrrnesr goods.
38. Even the non-Communist industrial countries will not offer
rapidly growing markets for most Third Worlu exports. According to a
V
UN study, global demand for agricultural products, which ;till
make up about 70 percent of LOC exports. and a somewhat larger share
of their exports to industrial countries, will rise as follows during
this decade:
Temperate Foods . . . . . . . . . . . . 4.3% per annum
Tropical Foods. . . . . . . . . . . . . . . 2.4%
Agricultural Raw Materials. . . . . 0.8%
Among the LOCs only Argentina, which normally exports substantial quanti-
ties of wheat, is likely to benefit much from the projected growth in
Among the LDCo tinted in Annex A, only Nigeria, rndoneoia, and
Portugal (i.e., its Angolan territory) haver good proope1tta for
continuing to expand petroleum exports. Some major Middle East
producers have grown so wealthy that, even though none of them
would be ? min t -,, en for a madern industrial state, they have none-
thelcoo moied ahead of most other Third World states in income.
See footnote "a" to Annex A.
/ UNCTAD/TD-113, Supp. 2, 7 March 1972.
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demand for f, r.n.prratr fr~nri~. Ire t,hr rainy LUC_; which count on gr(rwing
export ?arninrt; frrzn rubtber, wool * co tt()ti, hrnp, and other
agricultural raw matrrial , the outlook for inrre:ased g1nhal domand
is dim.
39. The rtrowth of LUC export; of manufactures is threatened by
the incrcasinq protectionist sentiment In industrial countries
for example, in the US, organized labor's recent abandonment of its
longstanding commitment to free -,rade. Offshore assenthly of components,
which hat been an important factor in the booming export Industries of
Mexico, Korea. and Taiwan will came under increasing prcSstyre for
import restrictions in the industrial states.
4(7. On the import side, the rapidly rising prices of petroleum,
stimulated by accelerating demand in the industrial countries, will
worsen the balance of payments of petroleum-importing LDCs. Indeed,
in some cases where industrial growth plans are based on a steep rise
in energy imports, the plans may have to be scaled down or seriously
altered. Similarly the costs of other imports needed for development
capital equipment in particular -- have been rising rapidly. Prices
for most LDC export products have not kept pace. If, as expected,
this trend continues, the terms of trade for many LDCs will further
deteriorate.
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41. flfit. some favorahlr' Inilut;~r,n?, art! ,it. work, The nrxt.
allocation of iMI '.pecIaI Drawitr(i Pight., for 1977-1915,
probably will provide the LUCs with more than their 27 percent
share of the first (1969-1911) allocation. New arrangement.;
have still to be worked out, hut, regirrdles, of the particular, the result wi 11 he to increa sc+ the international liquidity,
and thus help them to finance their- growing deficit with the
developed countries.
4?. Private direct investment by develol,.J countries in LDCs
has been growing rapidly and seems likely to continue doing so during
the rest of the decade, in spite of the threat of nationalization.
The annual (net) flow of such investments rose from $1,8 billion
in 1960 to $3.4 billion in 1970. Moreover the share of investment
in LDC manufacturing is large and growing. In 1968, to take only
the US case, US subsidiaries accounted for 40 percent of all Latin
American exports of manufactures. As in the past, private investments
will tend toward concentration in countries with both a favorable
investment climate and commercially exploitable resources, including
skilled but cheap labor; hence private investment will not be of help
to the very poorest LDCs, which are resource-deficient.*
NOTE: Data on private Invocotmr-nt from (INC, TAD/TD/122/Supp. 1, Jan. 72.
Except, that is, for the cccaer:onal Cinderella case: Botswana, one
of the poorest of the lot, wan recently found to have disable re-
ocrveo of copper, ciiamcndn, and chemical fertilisers which should
Disc it the means for its first nignificant economic progress.
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43. The future of foreign aid is uncertain, at best. Some
new and imaginative plans havo hen suggested to render aid more
useful to the recipient and less influenced by bilateral pal i t-
icel considerations. But a general aid fatigue has set in among
major donors, particularly the US. An II31tt) study estimates that
official development aid through 1975 will fall far short of the
.7 percent of GNP which the developed countries themselves set as
a target. And even this target Is far below the volume of aid
that could make a real difference to L)C growth. Development aid
is currently running on the order of $7 billion, and is likely to
grow at most by 5-6 percent a year; but a continuing flow four times
that large would be needed (per a World Bank study) to have any
discernible effect on LDC development within this decade. Even a
flow this large would not, of course, assure rapid development for
every recipient.
44. Food. Food production i s getting mere attention from
Third World leaders in this decade than in the last. This reflects
the growing desire for economic self-reliance, the recognized need
to raise food output to take care of expanding urban populations,
and the need to provide rural employment. It also reflects the high
degree of success attained with new high yield and high-nutrient
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grains. Even if, as some point out-, the dramatic gains made to date
reflect a sort of Stakhanovite ait? in the first experiments -- i.e.,
agricultural conditions generally are favorable In the area, where
miracle seeds already have been introduced -- food output in the
Third World might be increased by 3 percent, and perhaps as much as
4 percent, a year during the seventies.
4r,. Even if these rates are achieved, It would mean only that
food production was keeping somewhat ahead of anticipated population
increases, and -- for the Third World as a whole -- food would no
longer be quite so critical a factor in economic life. But in any
event there will still be chronic food deficit areas, and other regions
where output depends heavily on the such fickle natural factors as the
character and timinj of monsoon rains. And for the long run, there
are additional causes for concern: inadequate storage and distribution
facilities and primitive farming t''hniques are likely to place
serious constraints or, the future expansion of agricultural output
in much of the Third World.*
In black Africa, for e=mple, gains in food output have been achieved
by expanding areas under cultivation, rather than improving yields.
Future expansion of tilled areas in limited by the growing scarcity
of any but marginal land; indeed in some African countries per capita
food production has been declining in the past few yearn.
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46. Mi,l.i:;..,ry t::r~~u-~li.r.ur~~>: The priority of survival of the
state -- or the regime -- over economic development already has been
mentioned. Already a number of LDCs are spending large sums of
money on arms. So far such expenditures cannot be shown to have
inhibited economic development, except in Nigeria. But arms expendi-
tures by Third World countries are likely to grow during the seventies.
Some countries, particularly Francophone states. may elect within the
next couple of years to end their military dependence on foreign troops:
and a modern army -- even a small one -- is costly. Some countries
may decide suddenly, in the face of a crisis with a neighboring state,
to buy modern arms; for example, should the guerrilla operations against
white minority governments in southern Africa start to heat up tensions
in that area, black African states bordering Rhodesia, South Africa,
and the Portuguese territories could be expected to raise dramatically
their drms purchases. In these, as in other cases of profligate arms
spending by poor countries, 'there is usually a strong subjective
element, involving national pride, the rn-rohiomo of a national leader,
or a drive to satisfy some exaggerated notion of "national security".
Such concerns are unlikely to abate during the rest of this decade.
IV. IMPLICATIONS
A. Prospects for LDC Relations with Advanced Countries
47. For the poor countries generally, relations with the developed
world in the past few years have not been moving favorably. The LDCs
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have failed so far to win any but token concc'+sions in global monetary
and financial matters. There also has been a marked decline in forclic/n
aid outlays by najor donors, reflecting a diminished commitment; to cte-
velopnent assistance in principle. Moreover, because of the thaw in
great power relations. Cast rind West no longer can be played off
against each other to raise foreign aid receipts. Nor is close identifi-
cation with a powerful patron as attractive as it once was: it neither
guarantees continuing economic support, nor is it likely to be popular
at home.
48. These developments have prompted a number of Third World
spokesmen to urge the pour countries to adopt new, tougher tactics vis-
a-vis the rich. With little to gain from seeking the developed coun-
tries' approval for their actions -- and little to lose by opposing
them -- the LDCs as a group have become more responsive to such sugges-
tions. As many of the poor states fail to cope with their growing economic
and social problems in the years ahead, it will be tempting for their
leaders to blame their failures on the neglect and disinterest of the
advanced countries, both non-Communist and Communist. There will, of
course, be wide variations in the responses of particular LDCs. But as
a general proposition the developed countries are likely to find the
LDCs -- particularly in global and regional organs -- more independent,
less cooperative, less tractable, and more inclined to
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view their reliti(n:, with th(? rich nations in an a(lvf!r7~Iry
1. Impllcat.lons for the (IS
49. A number of I.DCs with which the US has had close
economic and political ties -- South Korea and Taiwan, among others --
have been making substantial economic progress. As such countries
move further away from a dependent relationship with the US, mutual
ties are likely to be increasingly influenced by commercial and other
pragmatic factors, and to be somewhat less subject to political
frictions. This should make official relations less visible and,
possibly, easier.
50. But only a small number of the 90-odd poor countries are
likely to move in this direction. To many others the US, as the
richest and most powerful nation, will be viewed as a political
and economic adversary. This will be particularly true in areas
where the US is seen as opposing regional political interests --
e.g., the Middle East and Southern Africa questions. In some cases
an LDC will adopt a hard-line adversary posture to facilitate bargaining
with the US. This has been a tactic of Latin American states in
their efforts to win trade and other concessions. In other cases--
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particularly those marked by despair, extreme frustration or
quixotic leadership -- the adversary posture will be genuine,
and may lead to acts which ire consciously directed toward
damaging US interests.
l)c'rtict l of Aocona to Hai.)
51. The most plausible US vulnerability is its increasing
dependence on foreign sources of minerals, particularly energy
supplies. By the early 1980s, the US will be spending many
billions of dollars on oil imports alone. Meanwhile, oil import
requirements of Western Europe and Japan also will grow rapidly.
Already the existence of a seller's market has erabled producing
countries to exact major concessions, in terms of prices and
producer equity, from the international oil companies. The
rich Third World countries will strive to make oil an ever-
dearer commodity to the industrial countries. Nor will they
shy away from using economic pressures to gain concessions.
52. Althoujh oil offers the best prospects for an embargo,
this is not likely to occur. For one thing, to be effective an embargo
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would have to involvV., at least one of the two top producers, Saudi
Arabia or Iran. Short of some drastic heightening of Arab-Israeli
tensions and the resulting emotional response by Arab states, the
prospects for producer cooperation in an embargo are slight.
Producer states are highly dependent on the flow of oil revenues,
and sink above all to maximize in some sense their own national
gains. It seems likely that they will continue to act as individual
states, rather than a bloc; and hence they will be seeking to make
their own best arrangements with individual oil companies and consumer
states. The recent Iranian defection from OPEC ranks, as well as the
Saudis' proposal to invest in oil refining and distributing
facilities in the US, suggest that new consumer-producer arrange-
ments will continue to develop.
53. There is even less likelihood of an effective embargo by
LOC suppliers of other important raw materials, such as copper or
bauxite. A major objective of the LDCs over the years has been to
sell more, not less, of their few exportable products. Even in the
case of copper, where production is centered in only 3-4 countries,
the producers have so far been unable to agree on a policy of denial:
Zambia, which gets some 90 percent of its export earnings from copper,
seems in any event an unlikely prospect for joining an embargo. And
the same is true of most other producers. Also, there are few if any
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prc,.iucts of critical importance to US economic activity which are the
monopoly o-r' one or two countries and which have no reasonably good
substitutes.
Other Form of k~oonomic Warfare
54. Nationalization or expropriation of US properties is
another tactic open to LDCs. These are recognized, however, as
drastic measures, which can be employed only once. In view of
the LDCs' strong desire for foreign capital, most will carefully
weigh the potential gains -- psychological as much as economic --
of nationalization against the almost certain risk that capital
flows from abroad would drop sharply, at least for awhile. Nevertheless,
the political urge to eliminate the more visible forms of foreign
influence from LDC economies is unlikely to diminish; hence the
trend toward nationalization seems certain to continue. But
multinational business has shown the way to new solutions -- the
post-nationalization relations between Algeria and industrial
Western firms is a classic example -- and new forms of associa-
tion between LDC enterprises and Western capital, technology, and
management are likely to evolve.
55. The possibility of financial mischief-making, such as
switching reserves from one currency to another, sounds far more
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threatening than it probably is. Few Third World states other
than the large oil producers will have large enough reserves to
make a difference, and the chance of effective collaboration
among several countries in such activities, while it cannot be ruled
out, seems remote. Moreover, sudden withdrawals on a scale large
enough to disrupt the global monetary system could be effectively
countered by central bankers and international monetary authorities
acting in concert. Indeed, the only situation in which such
monetary warfare might have an impact would be against an already
weak national currency. Even in a highly selective situation,
however, the threat of such action would not be an effective bargain-
ing weapon.
Other Adversary Reactions
56. In an adversary atmosphere, any US policy initiative
where international cooperation is sought -- such as nuclear
non-proliferation, environmental cooperation, Law of the Sea,
and similar global issues -- will be suspected of being a self-
serving developed country initiative with little or no potential
benefit for the poor countries. Indeed, Western initiatives on
programs for population control and for environmental Protection
have already been characterized by a number of influential LDC
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leaders as phony issues dreamed up by the rich countries as a
pretext for keeping the poor countries in economic thralldom.
Such attitudes reflect an erosion of faith in established global
institutions -- maritime rules, trade and banking practices,
the World Court, diplomatic protocol, et at -- and may lead to
refusal to play by the old rules.
57. There is also the usual range of directly punitive
acts open to any state, including LDCs: denial of overflight or
landing rights, withdrawal of access to ports, renunciation of
space-track or other special bilateral agreements, etc. But it
is generally recognized that such measures can do little more
than salve a government's hurt feelings, and are likely to re-
sult in costly counteractions. Hence it is unlikely that many
countries would resort to them. And, short of some regional
rash of punitive measures, the US would probably be able to
make alternative arrangements without serious difficulty or
exorbitant cost.
Other Cons?ilerations
58. Beyond the possibilities of getting hur,~--,, there is
the larger issue of precisely what the US would like to achieve
in its relations with Third World countries. There is the obvious
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leaders as phony issues dreamed up by the rich countries as a
pretext for keeping the poor countries in economic thralldom.
Such attitudes reflect an erosion of faith in established global
institutions -- maritime rules, trade and banking practices,
the World Court, diplomatic protocol, et a2 -- and may 'lead to
refusal to play by the old rules.
57. There is also the usual range of directly punitive
acts open to any state, including LDCs: denial of overflight or
landing rights, withdrawal of access to ports, renunciation of
space-track or other special bilateral agreements, etc. But it
is generally recognized that such measures can do little more
than salve a government's hurt feelings, and are likely to re-
sult in costly counteractions. Hence it is unlikely that many
countries wuuld resort to them. And, short of some regional
rash of ?unitive measures, t": US would probably be able to
make alternative arrangements without serious difficulty or
exorbitant cost.
Other Considerations
58. Beyond the possibilities of getting hurt, there is
the larger issue of precisely what the US would like to achieve
in its relations with Third World countries. There is the obvious
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goal of access -- access to the people, the raw materials, the
markets, the culture, the government, etc. The US continues to
enjoy a great deal of status in most countries of the Third World.
Its culture, political institutions, technology, business manage-
ment -- to mention a few areas -- have exerted much influence.
Presumably it remains in the US interest to make its point of
view known to Third World governments and peoples, particularly
on such issues as the importance of the rule of law or of a
government's obligation to safeguard its peoples' welfare and
basic human freedoms. The large body of institutionalized ex-
perience and assumptions on which peaceful and orderly intercourse
is conducted between nations is endangered to the extent that
Third World states, most of which only recently have joined the
community of ;:.d pendent nations, fail to understand or to feel
a stake in those experiences and assumptions. If all this is true,
then it would clearly be in the US interest not to become isolated
from -Third World developments or to be barred from a voice in
major Third World deliberations.
59. Even a policy of maintaining peaceful engagement with
the LDCs, however, will not result in a smooth path for US-LDC
relations. In part this reflects the frequent and unavoidable
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conflicts of US interests in a given area or country. We would
lake to see greater economic integration among Latin American
states, but not at the expense of US exports. Nor does our
interest in seeing Southeast Asian industry prosper mean that
we would permit it to do so at serious cost to domestic US
production. D1 addition, the extreme sensitivity of the poor
states on matters of personal status and national pride often
results in a different perception of events and priorities. A
casual act by a powerful country, or its inattention to some
small event of importance to a poor state, can have serious re-
percussions.* Particularly in a time of growing independence
and self-assertiveness by Third World states, there is no pollry
that any developed nation coull pursue that would be guaranteed
failsafe or wrinkle-free. And there will probably be few
instances where a Third World state could be induced to shift
position on a gut issue because of anything the US might or would
do. We could not offer a financial or economic inducement large
enough to soften the Arab stand on Israel, or to cause the black
African states to ease up on the southern Africa question.
For example, when a Zairian emissary, who was sent to the UK to
help negotiate the safe passage of Asians out of Uganda, found
his London hotel suite too small for his liking, he took th1.e
as an official British slight, and abruptly caZZed off his
mission and returned to Zaire.
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60. In some areas US Government activity will form a considerably
smaller share of the total US-LDC relationship than in the past. The
decline in official aid funds and the expansion of trade with the Third
World means that an ever larger part of LDCs' foreign economic and
financial ties will be conducted with representatives of independent,
often multinational firms, without the US as intermediary. The LDCs,
themselves, are promoting new forms of relationships, such as technical
aid contracts negotiated with US firms and personnel training programs
contracted directly with US educational institutions. To the extent
that the US channels economic development funds and technical assistance
through multilateral agencies, this, too, will expand US-LDC links
while reducing the area of friction between the US and Third World
governments. All these developments should contribute to a broader
base than the past one for US-LDC relations.
2. Implications for Other Advanced Countries
61. The factors affecting the LDCs' attitudes toward the
US also affect their relations with other industrialized states.
For example a number of ex-French colonies have demonstrated an in-
creasing willingness to oppose the former Metropole in both their
foreign and domestic policies, and many are pressing France to revise the
independence accords under which it retained a large degree of influence
- 41 -
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in their political, economic, and cultural activities. Similarly
the USSR, despite almost two decades of effort to be identified
as the leading champion of the less-developed countries, finds
that these states generally regard It as just .noth^r big power looking
after Its own national interests: particularly since they have been
disabused of earlier illusions that the USSR offered an alternative
to the West as a market for LDC exports.
62. Finally, the obvious fact that none of the Third
World nations has fallen under Soviet or Chinese hegemony means
that we can look at the Third World for what it is -- a diverse
group of states in various stages of movement toward moderniza-
tion -- rather than seeing it as a board full of pieces to be
won or lost in the Cold War. This more relaxed perspective
should be an advantage in US approaches to Third World states
as,the decade goes on.
Implications for the LDCs
63. For the LDCs as a group, the winding down of the Cold
War and the decline in big power patronage has brought opportuni-
ties as well as problems. Because of declining foreign aid prospects,
a number of Third World countries have taken a harder, more realistic
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look at their development prospects. They realize that they can
no longer look to official aid flows to fill the gap between
foreign currency outlays and receipts. This should lead, at
least in sonic cases, to priority development of export industries
and scaling down of development plans to more realistic goals.
64. Moreover the change in big power involvement in the LOCs
has led them to turn more toward each other. In UNCTAD and the
Stockholm Environment6'J Conference, as well as in such regional
groupings as the Inter-American Economic and Social Conference
and the Organization for African Unity, a number of issues have
been found on which most members could take a common position.
But personal and national rivalries, as well as conflict over
substantive issues, have Crevented such organs from being effective
in bringing the LDCs lasting and meaningful unity. Moreover,
there are limits on the extent to which mutual support could, in
the best of conditions, help the LDCs meet their individual problems.
Ultimately most poor states must accept the fact they are part
of a global economic and financial system; that they must look
to the advanced countries for the technology and capital -- and
most of the financial aid -- that they need for economic develop-
ment.
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65. Most of the time most states will stop short of adopting
measures which would threaten their own economic interests. There
is always the possibility of a Soekarno or an Idi Amin twisting
state policy to carry out his own fantasies of power. But many
LDCs -- particularly those in East Asia and Latin America -- have
a growing and politically powerful business elite whose economic
interests depend on a stable government acting in conventional
and predictable ways. The stronger this group. the less likely
the state will adopt measures that would disrupt economic life
and threaten access to export markets and sources of foreign
capital. Indeed several such countries seem likely candidates
to graduate from the ranks of the poor by the end of the decade.
66. Conversely, among the poorest LOCs are a large number*
where tribal or regional interests dominate the society. These
states seem unlikely -- short of a major mineral discovery --
to advance very far or very fast economically, and are likely
to allow other priorities to take precedence over the economic.
Most of the small, land-locked LDCs (indicated in Annex A) also
are not expected to make significant economic gains in this decade.
For example, Madagascar, Uganda, Sierra Leone, Dahomey, Burundi,
Laos, Yemen, and Somalia.
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But a few of the latter at least have a growing national unity
which should promote stable political conditions despite slow
economic progress.
In sum, while the present decade will see LDCs as a group
make about the same sort of uneven economic progress as in the
sixties, there will be differences. There will be few illusions
about the likely volume or impact of foreign assistance, and
Third World governments will assume more of the responsibility
for their countries' economic progress or non-progress. Grow-
ing frustration over lack of:forward movement will make poor
states generally more truculent and less disposed to cooperate
with the rich, except for their own obvious and direct benefit.
And for the large number of LDCs which face serious and growing
unemployment, social unrest in the seventies may make the
sixties seem in retrospect a period of tranquility and ease.
For most of the Third World's people, life in 1980 will be very
much as it was in 1970 and 1960.
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ANNEX A
COMPARATWOTIVEINDICESCLASOFSIFDEVELOPMENTICATION OF
(1)NCOMPOSITEWRandG TO
(2) PER CAPITA INCOME
(1965 or nearest year)
RANK OF COUNTRY
COUNTRY
COMPOSITE
INDEX
GROSS
per ca ita
-
Argentina
Yugoslavia
2
10
Spain
3
2
Malta
4
12
Portugal
5
14
Greece
6
4
Uruguay
7
5
Chile
8
7
Mexico
9
11
Cyprus
10
3
Cuba
11
18
Panama
12
8
Singapore
13
6
Jamaica
14
9
China, Rep. of
15
38
Lebanon
16
17
Korea, Rep. of
17
58
Peru
18
26
/ Source: UN, Trade and Development, TD/B/269, 11 July 1969. This Zist,
and the ranking of individual states, is no more than a rough indicator
of poverty. States like Argentina and Uruguay, which are not norr;ially
thought of as poor and underdeveloped, fell within the UN's definition.
On the other hand such underdeveloped countries as Iraq, Iran, Saudi
Arabia, and Algeria -- all with per c ita GDPs ranging between $200
and $300 -- were excluded, because their skewed social and economic
structures made a composite index of their development impossible.
Moreover, the ranking is already somewhat out of date: Argentina is
now well above the $1,000 per capita GDP cutoff, and Nigeria's
rapidly rising oil revenues have probably raised its position con-
siderabZy above 73rd place among the LDCs. The list nevertheless re-
mains the most systematic identification of the world's poor countries.
A weighted index, in which account was taken of degree of industrializa-
tion, school enrollment, energy consumption, export composition,
availability of medical services, as well as per capita CDP at factor
cost.
-Al-
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ANNEX A
COUNTRY
costa ca
Guyana
Philippines
Colombia
Barbados
Brazil
United Arib Republic
Paraguay J
Ecuador
Turkey
El Salvador
Dominican Republic
India
Mauritius
Tunisia
Nicaragua
Jordan
Malaysia
Guatemala
Syria
Gabon
Western Samoa
Congo (Brazzaville)
Honduras
Bolivia A/
Ghana
Liberia
Pakistan
Ceylon
Zambia' /
Morocco
Zaire
Cameroon
Kenya
Swazilanda]
Viet-Nam, Rep. of
Thailand
Ivory Coast
a/ Land-locked countries-.
RANK OF COUNTRY
COMPOSITE wSs Dom
INDEX pgr capita
20 21
21 28
22 20
23 15
24 30
25 47
26 37
27 39
28 25
29 27
30 29
31 64
32 31
33 42
34 19
35 34
36 22
37 23
38 46
39 16
40 40
41 45
42 35
43 49
44 33
45 24
46 59
47 51
48 36
49 44
50 72
51 53
52 60
53 44
54 55
55 56
56 32
_A2_
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ANNEX A
RANK OF COUNTRY
COMPOSITE . T
COUNTRY
INDEX
per capita
n onesia
57
69
Equatorial Guinea
58
48
CambnP;;
59
54
Senegal
60
41
Gatswanal
61
6G
Haiti
62
68
Lesotho/
63
79
Madagascar
64
62
Togo
65
63
Nepal/
66
76
Central African Republic/
67
57
Uganda)
68
71
Ma111
69
74
Afghani?tan/
70
83
Mal awi J
71
86
Sierra Leone
72
50
Ethiopi
73
82
RwandaA/
74
89
Guinea
75
67
Nigeria
76
73
Laos/
77
78
Tanzania
78
81
Burma
79
80
Gambia
80
65
Dahomey
81
75
Sudan
82
61
Burun ia/
83
87
Chad
84
77
Maurit nia
85
52
Ni
er
86
70
g
Upper Volta
87
88
Somalia
88
84
Yemen
Bangladesh
89
n.a.
85 n?a.b/
a/ Land-locked countries.
Y Well below $100.
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