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; :^-No.ija5/^QVEMBER"1983 OECDI OBSERVER

No. 125 November 1983

PUBLISHED bi-monthly in English and French by THE ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT EDITORIAL OFFICES Contents OECD Information Service, Château de la Muette, 2, rue André-Pascal, F 75775 PARIS, CEDEX 16.

RECOVERY ALONE IS NOT ENOUGH Individual articles not copyrighted may be by Emile van Lennep, OECD Secretary General 3 reprinted providing the credit line reads "Reprinted from the OECD Observer" plus date of issue, and two voucher copies TOWARDS MORE EFFECTIVE CAMPAIGNS AGAINST POVERTY are sent to the Editor. Signed articles by Rutherford M. Poats, Chairman of OECD's reprinted must bear author's name. Development Assistance Committee 5 The Organisation cannot be responsible for returning unsolicited manuscripts. Signed articles express the opinions of the AID TO FOOD AND AGRICULTURE: A PERMANENT CHALLENGE 12 authors and do not necessarily represent the opinion of OECD

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The OECD OBSERVER is produced in microform EXPORT CREDITS: REVISED GUIDELINES 19 (microfilm and/or microfiche) by: (1) University Micro¬ films (Xerox), Ann Arbor, Michigan 48100, USA; (2) NCR Microcard Edition, Indian Head, Inc., Ill West 40th Street, New York, USA; (3) Bell and Howell Co., INTERNATIONAL BANKING: CONTROLLING THE RISKS Old Mansfield Road. Wooster, Ohio 44691, USA. by Rinaldo Pecchioli 20 EDITOR: JaneBussière

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THE PROSPECTS FOR SOVIET AGRICULTURE 22 Ulla Ranhall-Jeanneney

Art, Production and Layout: Marc Delemme THE GREEK ENVIRONMENT: THE NEED FOR ACTION 27 ASSISTANTS: Rina Maiden,

NEW OECD PUBLICATIONS 34 Gerald Tingaud Photo Research: Silvia Thompson Lépot

All correspondence should be addressed to the Editor

PHOTOS: Cover: Alain Nogues - Sigma; page 8 ftopj: COI, London; fbottomj: F. Mat- tioli - WFP/FAO; page 9 (topj: UNIDO; (bottom): Paul Rimmerfors; page 15 (topj: ILO; (bottomj: Bundesbildstelle, Bonn; pa¬ ges 18-19: Alain Nogues - Sigma; page 21: COI, London; page 26 (top to bottom, left to rightj: B. Kavachkine - APN; Malkhaz Dati- kashvili - TASS; Adyp Idrisov - TASS; B. Typouh- TASS; page 28: Wilhelm Braga; page 29: Henri Smets - OECD; page 30: Kiriazis; page 32: Jean Mohr; page 33: Wil¬ helm Braga. Recovery Alone is Not Enough

by Emile van Lennep, OECD Secretary General

The conditions for recovery in the Since there is substantial unused capac¬ system, the degree of flexibility has been OECD area are more favourable ity, employment growth can be accelerated roughly similar.

today than for several years. But, for a time by a more intensive utilization of There is clearly a trade-off. The more present economic performance and the existing capacity, rather than new invest¬ labour markets can be made flexible and outlook for the months ahead are still not ment. However, after a decade of lagging responsive, the less daunting the invest¬ entirely reassuring. In particular, the ina¬ investment, prolonged recession and im¬ ment requirements. In realistic terms, both bility to provide employment opportunities portant shifts in relative prices and costs, flexibility and stronger investment are for millions of people who would like to there is considerable uncertainty about necessary in all countries. Investment work is unacceptable on economic, political how much economically viable excess without flexibility would create "jobless and moral grounds. capacity now exists in our economies. growth". Even if flexible labour markets can

High unemployment is partly related to Additional investment is needed not just create jobs, this would entail inadequate the cyclical developments of the last few to create jobs, but also to promote more productivity and stagnating standards of years. To that extent, the problem may rapid structural adjustment to changing living if investment failed to keep pace. ease as recovery strengthens and spreads. patterns of comparative advantage among Moreover, higher investment and But this is not enough. It is clear that, for economic activities in OECD countries, and greater flexibility are complementary objec¬ Europe in particular, unemployment is between the industrial economies and the tives. Flexibility promotes investment by increasingly a structural problem reflecting newly-industrializing ones. Investment is removing the rigidities that impede the flow inadequate rates of job creation, and also required to take advantage of of resources to their most valued uses. recovery alone will not provide the solu¬ emerging technological opportunities. Conversely, new investment can make tion. The need is to focus on restoring Such investment, of course, need not be both markets and production more flexible durable conditions of higher employment inconsistent with creating additional net and adaptive by embodying technologies throughout the OECD area and in the employment. better suited to the rapidly changing eco¬ European economies in particular. nomic environment. Any estimate of investment require¬ ments embodies an implicit judgment Investment and Flexibility: about how flexible labour and output mar¬ Generating the Links kets can be made, and in this respect Higher Investment economies differ widely. The importance of Two key interrelated elements must be this point is perhaps most clearly brought Generating higher rates of investment is addressed if the strong economic perfor¬ out by recalling the striking fact that, with not a simple task. It requires, on the one mance required for job creation over the roughly similar investment trends in North hand, an economic environment in which rest of the decade is to be delivered: higher America and Europe during the past the demand for investment is strengthened rates of investment and greater economic decade, employment growth in North and, on the other, an adequate supply of flexibility. America was more than ten times as great. savings to finance it. Quantification of the capital formation Even when aggregate investment was not All would agree that, to some extent, required to create new jobs is difficult, as particularly high, greater labour mobility, investment decisions by firms are taken on there is no simple relation either between more flexible real and relative wages, and the basis of the confidence which prevails the growth of capital and the growth of perhaps other factors related to the in the business community. The risk-premia output, or between the growth of capital freedom for entrepreneurial initiative in required to support new investment have and job creation. Nonetheless, there can be small or new enterprises led to the rapid risen in the past decade as a result of no doubt that a sustained increase in the creation of new jobs. In Japan, because of greater instability and uncertainties in the rate of growth of employment requires a the capacity of the service sector to absorb overall economic environment. From this substantial shift in the share of GNP allo¬ or shed workers and the wage flexibility perspective, a key role for policy in pro¬ cated to investment. provided to larger enterprises by the bonus moting investment is to create a climate of confidence and reduced uncertainty. This relative both to other production costs and current account deficit in the balance of suggests the need for pursuing stable to output prices to sustain adequate payments. For the OECD as a whole, policies in a medium-term framework and employment and investment. Hence, con¬ however, this is not the case. The longer- making it clear that the structural imbal¬ tinued efforts to bring down labour costs term pattern has been for the OECD region ances in the current situation will be dealt relative to productivity growth, and relative to be a capital exporter to less-developed with. It also argues for stable growth of to the cost of capital, are essential in these regions. This pattern must be re-esta¬ monetary aggregates at rates consistent countries if investment is to strengthen, blished. It follows that the call on private with the gradual elimination from the and if the investment that takes place is to savings by the public sector in the OECD system of inflation and inflationary expec¬ be of the sort that promotes creation of economies must be sufficiently low or tations. new jobs rather than further rationalisation negative to permit not only the higher

Economic theory is clear on the impor¬ of labour use. domestic investment that is sought, but tance of profitability. Businesses undertake Some enouraging developments have also the continuing transfer of resources to investments to the extent that the return to taken place as of late. In a number of OECD the developing countries. this investment exceeds the return that countries, social partners, sometimes in Although there was little evidence of a could be achieved by alternative uses of concert with governments, have suc¬ strong relationship between budget defi¬ funds for example, holding financial ceeded in moderating the growth of real cits and real interest rates during the past assets. From this perspective, the steady wages relative to productivity trends. Var¬ decade, recent high real interest rates decline in profitability over the past 1 5- ious changes in collective bargaining pro¬ suggest that this is no longer the case. 20 years (as measured by realised rates of cesses have also contributed to improved During the 1970s, world savings were returns to fixed capital) is an important cost-price relationship: for example, sharply increased in the wake of the two oil impediment to stronger investment com¬ greater decentralisation of wage negotia¬ shocks, which transferred large amounts of pounded, in current circumstances, by high tions in some countries; a general weak¬ incomes to countries which, at least tem¬ rates of interest on financial assets that ening of wage indexation processes; new porarily, were not able to spend it. At the make investment in physical capital appear approaches to salary determination in the same time, in the OECD area, household less attractive than financial investment. public sector; and increased flexibility in saving rates rose, and investment activity

It is argued by some that, on this basis, relating wage settlements to particular weakened. It is not surprising that, under the key to stronger investment is to cut real economic circumstances in individual en¬ these circumstances, real interest rates wages, thereby increasing profits, and so terprises. were low, or negative, even though budget investment. While there is something to Perhaps the central responsibility for deficits in the OECD area increased sharply over the same period. the argument that high labour costs are a legislators is in the area of the so-called problem, one must guard against too sim¬ non-wage labour costs, particularly the While recovery is still in its early stages, plistic a view for several reasons: contributions paid by enterprises to finance it can also be argued that current deficits

The downward trend in rates of return on social security benefits. Their rapid growth are not a major factor in crowding out capital can only be partially explained by in most countries over the past decade has private investment spending though the rising labour costs. It has been almost as been a major factor in distorting cost-price marked decline in household saving rates marked in countries where labour costs are relationships. They have also tended to suggests that this situation may not per¬ relatively flexible (e.g. the United States) as squeeze profits. Fiscal policies designed to sist. Furthermore, and this is the key point, in those where wages are more rigid and shift the burden away from enterprises may the remainder of this decade is likely to non-wage labour costs have shown a help somewhat. It is unavoidable that be - and we hope will be quite different strong upward trend. the course of social security benefits will from the 1970s. The OPEC surplus has Profitability depends not only on the have to be reined back if the fiscal burden turned into deficit, and this situation seems level of labour costs relative to prices, but on employing labour is to be reduced. likely to continue. To the extent that inflation is controlled, as we expect, and also crucially on the behaviour of produc¬ Higher investment must, by definition, tivity. The evidence of the last few years be matched by a greater supply of savings. consumer confidence remains strong, suggests that a principal reason for con¬ The onset of recovery has been marked by household savings are unlikely to rebound strongly (though some increase from cur¬ tinued weak profitability, despite a sub¬ declines in household saving rates, and this rent very low levels may occur). Thus it is stantial lowering of the trend of real wage is certainly to be welcomed in a conjunc- clear that, if large government deficits growth in a number of countries, has been a tural sense as it contributes to stronger persist over the coming years, they will parallel decline in the growth of productiv¬ demand. But, over the longer term, saving increasingly put pressure on the available ity. Although the linking mechanisms are rates will have to rise if higher investment is savings needed to finance investment and complex and not fully understood, these to be funded. Policies to improve the the export of capital to the developing developments argue against simple conclu¬ attractiveness of private savings may have countries. Indeed, it is to some extent the sions. a role; but the most important contribution perception by markets that such deficits Profitability depends importantly not just that policy must make to assuring an may indeed persist, and thereby cause real on the margin of prices over costs but on adequate supply of savings, beyond that of interest rates to be high in the future, that is the strength of demand for a firm's pro¬ a stable economic climate, is in generating already putting upward pressure on current ducts. If, in attempting to reduce the higher rates of public saving, or less public interest rates. growth of wages relative to productivity, dissaving. insufficient attention is paid to the impact The appropriate level of the government Strengthening of such actions on final demand, results deficit (or surplus) in the medium term is of Market Forces could well be counterproductive. The course a difficult judgment. But clearly, if empirical evidence is very clear that the higher rates of private investment are The OECD has long recognised that the level of demand itself is a powerful deter¬ desired, the funds will have to come from failure of markets to adjust to changes in minant of investment. lower government absorption of domestic the world environment is an important Despite these important qualifications, it savings. An individual OECD country can constraint on economic performance. This appears that, in a number of countries, finance part of its national investment by is most serious when markets fail to prevailing labour costs remain too high - borrowing from abroad, with a counterpart perform adequately and when structural rigidities interact with economic reces¬ sion.

Positive adjustment policies are impor¬ tant not only in labour markets, but also in product markets. The need for industrial restructuring is considerable in all our economies. But when governments inter¬ Towards More vene to shelter declining sectors, the actions taken must be strictly temporary and closely linked to the phasing out of excess capacities. Equally, difficult issues Effective Campaigns are involved in framing the climate condu¬ cive to innovation and the development of new industries, without distorting trade or misallocating resources through inappro¬ Against Poverty priate government intervention. It is neces¬ sary to strive in the direction of reducing the most inimical and ineffective forms of subsidy and regulation, to free up our by Rutherford M. Poats, economies for growth. The protection Chairman of OECD's Development Assistance Committee (DAC) received by one enterprise or individual is too often the rigidity hampering another, frequently a more efficient one. This argu¬ ment applies also to subsidies. There may, for instance, be little if anything to be The global economic illness affected cipants in international trade and finance. It gained from addressing the problem of low developing countries in a variety of is asking much more to expect the political profitability by resorting to public subsidis¬ ways, but almost everywhere it leadership of industrial countries to sustain ation - through the taxation system or evoked a sense of crisis. In many low- and increase support for development of otherwise unless those policies en¬ income countries, where international low-income countries over the many addi¬ courage a fuller and more effective use of development co-operation faces its most tional years that most of them need to resources of labour and capital. demanding tests, the crisis was an extra become self-supporting partners in the

Clearly the aim should not be to rule out measure of woe superimposed on at least a global economy. The most important poli¬ all intervention, but rather to prune it so as decade of disappointed hopes. tical leadership in the development equa¬ to promote healthy growth. This cannot tion, of course, is that of the developing In human lives, crisis can be the parent of countries themselves. realistically be achieved all at once. Where fresh resolve or of enervating despair. At market structures have become impaired, least it compels attention and reflection. The political cost of giving priority to time will be needed to set things right, and The inherent optimism of those who work necessarily long-term development inter¬ in many cases an internationally concerted to accelerate economic and social develop¬ ests over competing near-term benefits or approach is required, difficult as that is to ment inclines them to draw fresh resolve anxieties can be daunting. Moreover, the achieve. But the clear aim has to be to work and practical lessons from a crisis. So it most courageous will and vision cannot progressively and steadily towards re¬ was in 1 983 as the overburden of global overcome severe managerial limitations at storing conditions in which the normal recession began to be lifted from the poor the critical points where development is discipline of the markets can be allowed an countries and this external brake on devel¬ either accelerated or braked. The record of expanding role. opment was eased. shortfalls in pursuit of bold development This holds not only for national markets goals during the past decade has inspired but international ones. As OECD Ministers In most low-income countries, the crisis caution. was a time of long-deferred adjustment to agreed at their last meeting in May, the Certainly the key to changing political favourable conditions provided by the eco¬ their resource limitations. This far-reaching priorities or reality in African villages is not nomic recovery must be used to reverse process opened the way to more funda¬ likely to be found in new global goals or protectionist trends and to reliberalise mental reappraisals of economic policies. slogans. There already are enough unat¬ trade. By the same token reversing protec¬ Thus the climate in many countries became tainable promises outstanding: the 1974 more favourable to objective consideration tionism will promote stronger growth, less World Food Conference's commitment to inflation and higher employment. of lessons of experience. In this light, the overcome the scourge of hunger by 1 984, current transition from global recession to the centrepiece goal of the International renewed growth is offering fresh opportu¬ Development Strategy for the 1 980s to nities for more effective development co¬ eliminate hunger "certainly by the end of operation between low-income countries Our confidence about the future has to the century", or the global targets for and their external partners. be tempered by a realistic assessment of education, health and water. Such interna¬ the present. Despite the more hopeful Whether 1 984 is to be the beginning of a tional declarations have contributed clarity prospects now opening up, no-one should period of strong economic growth, widely of purpose and flesh-and-blood meaning to underestimate the political difficulties of shared and sustained, or a missed historic the multi-dimensional process of develop¬ persevering with the measures of structural opportunity will depend critically on poli¬ ment. It is questionable, however, whether adjustment and financial discipline on tical leadership, in both industrial and more joint declarations would have deci¬ which longer-term success depends. This developing countries. It may be reasonable sive influence on the priorities or perfor¬ objective must not be frustrated by a loss to expect far-sighted political vision in mance of developing countries or aid agen¬ of nerve, either by policy makers or by their applying the lessons of interdependence to cies or trade-policy-makers. constituents at this critical juncture. economic relations among the major parti What is widely agreed to be needed now is country-specific action - including needs of poor countries. DAC Members and some governments to solve development national goals where this can help to international development agencies have problems by controlling and subsidising mobilise and sustain support for national demonstrated their willingness to reinforce production and marketing has spawned political commitments. promising efforts of low-income countries large bureaucracies doomed to ineffective¬ with increasing aid. ness but difficult to abolish; they impose In the disadvantaged low-income coun¬ heavy drains on both the real economy and tries, leadership is called upon to give All of these positive factors are only the budget. In some governments, political development real priority, persistently and potential forces for development, of leaders have not demanded of ministries with the expenditure of political capital. course, unless they are activated in a and agencies compliance with national There can, however, be greater assurance framework of policies and management policies, co-ordination among elements of now that their effort will not be in vain. that only the government of a developing the bureaucracy, or responsible budgeting. There are now in these countries' own country can provide. Of these require¬ These and other management deficiencies professional ranks and among their farmers ments, the more demanding, in terms of now are widely recognised and remedial and businessmen, as well as in the external the time required, is management. In many measures have been well defined by expe¬ development assistance community, more low-income countries, investment in rienced officials of developing countries as capacity, technical resources and exper¬ human capital was inadequate during well as by international development spe¬ ience for activating development than have colonial years and poorly targeted after cialists. ever been properly mobilised. The interna¬ independence. Its limited product has been Policies are more susceptible to early tional systems of economic co-operation, wasted in some instances by political improvement, drawing on the recent, cri¬ including "South-South" co-operation, also upheavals and disaffection or alienated by sis-driven reassessments and the accumu¬ are evolving so as to respond better to the low government salaries. The attempt of lating experience of national development programmes. Always, however, a proviso must be entered: the critical, difficult policy THE LOW-INCOME COUNTRIES choices depend on far-sighted political will. The political priority for development is GNP/ GNP/ likely to be higher and more constant if the capita, capita, GNP/ GNP, GNP/ GNP, development enterprise is demonstrating 1971-81 1971-81 capita, 1981 capita, 1981 Real Real increasing effectiveness in reducing pov¬ 1981 million 1981 million growth growth erty and hunger through economic growth. US$ US$ US$ US$ (%per (%per This has become the declared objective of year) year) development in many low-income coun¬ tries. Now the challenge to all engaged in Least-Developed Yemen 460 4.8 3,180 Countries Yemen, Dem. 510 7.6 970 development co-operation is to enhance the effectiveness of efforts to realise this Afghanistan 180 2.4 3,500 TOTAL 280 -0.5 64,250 objective. Bangladesh 140 1.2 12,340 India 250 1.5 162,000 Benin 330 1.1 1,010 Other Low-Income The key lesson of experience for the Bhutan 80 -0.2 110 Countries predominantly agrarian low-income coun¬ Botswana 900 8.6 820 Angola 790 -7.3 7,180 tries has been that the reduction of poverty Burundi 240 1.1 950 Bolivia 1,140 0.8 7,600 and its shadow, hunger, in such countries Cape Verde 310 3.8 100 Burma 180 2.3 5,740 depend in the long run upon the broad¬ Central African Rep. 330 -0.9 680 5.3 Egypt 710 31,750 ening of popular participation in economic Chad 120 -4.5 530 El Salvador 720 -1.4 3,430 Comoros 310 -2.7 100 growth, especially agriculture-based Ghana 1,370 -4.9 21,190 Djibouti 480 -5.3 180 growth; income distribution and growth Honduras 670 0.0 2,600 Equatorial Guinea 470 3.7 180 policies can be made fully compatible, but Indonesia 520 4.9 81,760 Ethiopia 140 0.8 4,240 they will not automatically be so. These Kampuchea 1 1 0 -2.9 740 Gambia 350 0.5 200 principles have a bearing on both long-term Kenya 430 2.2 6,210 Guinea 300 -0.2 1,560 development designs and the immediate Liberia 540 -1.2 930 Guinea-Bissau 190 1.3 130 decisions of governments and international Madagascar 330 -2.6 2,820 Haiti 300 1.1 1,570 agencies engaged in structural adjustment Mauritania 480 -0.3 710 Laos 100 6.7 360 efforts. It is critically important that effec¬ Mozambique 230 -5.6 2,700 Lesotho 540 8.1 730 Pakistan 350 2.3 29,990 tive measures to help the poor to become Malawi 260 1.4 1,630 St. Helena 440 more fully engaged in productive economic Maldives 270 1.0 70 activities not be sacrificed in current bud¬ St. Vincent 520 -0.68 70 Mali 190 1.2 1,140 Senegal 500 -0.2 2,340 getary retrenchments. As low-income Mayotte 220 0.8 10 Solomon Islands 620 2.0 160 countries re-set their courses for develop¬ Nepal 160 0.2 2,460 Sri Lanka 300 3.4 4,330 ment in the aftermath of the recession, Niger 340 -0.4 1,650 Tokelau Islands 550 development aid can be especially effective Rwanda 250 1.8 1,270 Tonga 500 1.28 60 if it facilitates choices of policies and Sao Tome & Principe 380 -0.3 30 Turks & Caicos operational measures that serve both to Sierra Leone 320 -1.0 1,120 Islands 470 -1.58 enhance economic efficiency and reduce Somalia 280 0.7 1,240 Tuvalu 550 -2.88 poverty. Sudan 380 -0.6 6,720 Vanuatu 550 -0.78 70 Tanzania 300 1.4 5,840 This is not to suggest that a generalised Viet Nam, Soc. Rep. 1 80 -1.28 10,150 Togo 390 -0.3 870 Zaire 220 -2.9 5,870 remedy is packaged and ready for all Uganda 1,500 -4.2 5,360 Zambia 590 -2.6 3,140 low-income countries to adopt. Each case 240 1.8 Upper Volta 1,280 is distinct. There are, however, basic les¬ Western Samoa 860 2.5 140 TOTAL 440 1.4 231,630 sons of both successes and failures that are relevant to the present state of develop- THE MAIN ARENA FOR DEVELOPMENT AID

Sixty-six countries, accounting for nearly halfof the population 20 million tons. Already Africa's food imports have reached of all developing nations, are classified by the OECD as 24 million tons in 1981, at a cost of $8. 6 billion. The region has "low-income countries" (see table). They include India and the become the largest recipient of food aid - about half of the total other large concentrations ofpoor people in southern Asia (China as compared with 5 to 6 per cent in the early 1970s3. is outside this universe), about 250 million people in Africa and Important to national development as is the food import trend small numbers in other regions. "Low-income" here means an in Africa, even more troubling may be the impact of low average GNP per capita of up to $600 per annum in 1 980. The agricultural productivity on the rural-urban terms of trade, on World Bank classes eleven of these countries as "lower rural industrial and commercial growth and on rural employment. middle-income". The Bank's statistics, which are also drawn The consequent migration from villages to urban slums has upon in what follows, have been adjusted for the different explosive political as well as social and economic implica¬° definition of "low-income" used here1. tions. Statistics averaging the economic activities of 1 .4 billion The trend also is drawing sharper class lines in the country people in more than sixty countries over ten or twenty years are side, with modern large-scale farming by-passing the much sure to conceal more than they reveal. But they do provide some larger body of subsistence or small surplus farmers. As the comparative indications of the heavier burdens carried by these income of smallholders and landless workers in the villages falls countries on the road to economic self-reliance. behind the modern farming sector, the proportion and absolutite As a whole, the economic growth rates of low-income numbers of undernourished people may be increasing4.

countries lagged behind those now classified as middle-income ho Low-income countries have registered marked progress in the during the 1 960s and fell to 3. 6 per cent per year in the 1 9 70s. extension of education and health services to rural areas, but a Meanwhile, gains in health, education and food supply caused wide disparity between rural and urban services remains. The their populations to grow faster; the average population growth primary school enrolment ratio, countrywide, doubled for the rate was 2.6 per cent per year in the 1970s excluding India, low-income countries as a whole during the two decades starting which reduced its rate to 2. 1 per cent. The rate of increase in in 1960. About one-fifth of secondary school age children were agricultural production exceeded population growth in the 1 960s enrolled in 1 980, compared with only 6 per cent in 1960. Adult but declined to about 2.5 per cent in the last decade. Manufac¬ literacy nearly doubled over the 20 years, to above 40 per cent turing growth also slowed in the 1970s. Their exports of of the total population of these countries. Life expectancy at birth manufactures made virtually no gain in the 1970s, with the rose from an average of 41 years in 1960 to 51 years in exception of significant gains late in the decade by India. 1980.

Although their shares of world markets are small, the DAC Members' aid to low-income countries was about 57 per proportion of GDP going into exports in many low-income cent of their total concessional flows in 1981 -a total of countries typically is greater than that of most industrial $14.6 billion. Nearly half of this amount went to Sub-Saharan countries. They are generally very dependent on a few non-fuel Africa, whose countries account for only 1 1 per cent of the raw material exports, hence they were more seriously hurt than population of all developing nations. Aid to the Sub-Saharan the more diversified economies by the steep decline (20 per cent region equalled almost 40 per cent of its total imports and over in real terms) in non-fuel commodity prices in 1 981-1 982. half of its total investments in 1981. These proportions were The most alarming deceleration of growth and per capita even higher in the Sahelian countries and in Sri Lanka, while they income losses have been in Sub-Saharan Africa. Twenty-two of were much lower in the large Asian countries. the 37 "least-developed" countries (LLDCs) are there. Food production has been barely growing for two decades while 1. World Development Report 1983, The World Bank, Oxford population growth has risen to about 3 per cent, the highest in University Press, New York, 1 983. the world. There have, however, been notable exceptions to this 2. IFPRI Report 1982, International Food Policy Research Institute, common trend. Washington, D.C. The International Food Policy Research Institute2 projects that 3. Williams, M., Report of Executive Director, World Food Council, on past trends the food deficit of Sub-Saharan countries could Rome, 1982.

reach 35 million tons of basic food staples in the year 2000 while 4. Conclusions and Recommendations of the World Food Council at Asia would shift from a net deficit to a surplus of more than its Ninth Ministerial Session, New York, June 1983.

ment in many low-income countries. And Food price controls agricultural growth and rural non-farm there are the implications for development development the fundamental means of Take the pervasive problem of food price aid and other aspects of international overcoming poverty in agrarian countries. controls. Nowhere is there reasonable economic co-operation in the proposed This now deeply implanted error is easier to doubt today that the protection of con¬ policy orientations. acknowledge than to correct. sumer interests and/or the government budget through food-price controls and The widely recognised better alternative Some Pervasive indiscriminate subsidies has been excessive is some form of food subsidy targeted on Problems and self-defeating. In extreme cases crops the market-dependent poor, along with have been extorted from farmers at below either de-control or gradual adjustment of Each country is a special case. A key production costs. In many cases producer official prices on domestic crop collections step towards economic rationality or more prices imposed by state market monopolies to international levels plus transportation. efficient government operations may be have been a disincentive to smallholder The administrative and political difficulties feasible today in one country and prema¬ production of surpluses for the domestic of this reform were manageable in Sri ture in another. market. Their effect has been to suppress Lanka, using food stamps, but they are daunting in the Sahel where the poor are the majority. There governments have tried to raise official producers' prices to incen¬ tive levels, but they have not budgeted adequately to buy all offered grain. Aid donors can help to facilitate such crucial reforms through well designed food aid and technical and financial support for national food strategies.

The small farmer

Another recurrent problem has been systematic neglect of small and less innov¬ ative farmers by official credit and exten¬ sion services. This discrimination has been justified by a belief that concentrating limited funds and staff on the more innov¬ ative, prominent farmers would create local examples of successful practice which smaller farmers would copy. This theory proved to be contrary to village psychology in some countries. Wider disparities of income resulted. Efforts to correct this bias are under way, but they require not only firm leadership and management down the line but more and better government agency staffs and priority for smallholder production in budget allocations. Even where this is possible, small farmers may shun the risks of change or may lack confidence in government agents. A prom¬ ising means of mitigating both the resource and communication problems was used during Kenya's popularisation of hybrid maize. Extension advice was channelled through village organisations composed of elected representatives of clusters of farm¬ ers.1

Farmers' co-operative organisations have been instrumental in many success stories of development. They nurture pri¬ vate initiative, flexibly respond to the felt needs of farm households, stimulate local development of commercial and light industrial enterprises, and generally pro¬ mote a sense of participation in deciding one's fate a basic human need. Yet, in many African countries, the perhaps unin¬ tended effect of government actions has been to suppress the growth of farmers' associations or the adaptation of tradi¬ tional village systems to commercial agri¬ culture. Instead, governments resorted to state corporations and controls, motivated by impatience and distrust of private initia¬ tive in the absence of a developed legal system to prevent abuse of market power. The result has been a sort of indigenous colonialism, extracting surpluses from the peasants for urban or industrial uses. African commentators are increasingly calling for changes in these attitudes and

1 . House, W.J. and Tony Killick, Social Jus¬ tice and Development Policy in Kenya's Rural Economy, in Agrarian Policies and Rural Poverty in Africa, D. Ghai and S. Radwan, editors, ILO, Geneva, 1983.

8 FOUR ANTI-POVERTY STRATEGIES1

Kenya. A star development performer in the S Kenya saw the economic tide turn in the Seventies. By the end of that decade, alleviati poverty had become the central objective of goven ment planning: 30 per cent of the inhabitants wei below the poverty line, almost all in rural areas. Tl key in this strategy is economic liberalisation le. protection and more reliance on the market. With the i highest fertility rate in the world - 8 children per ^mj£,"

rapidly. Top left: the Embu Agricultural Institute started with aid from the United Kingdom. The Sahel. Of the 30 million people in the eight countries of West Africa that make up the Sahel, perhaps half are perennially undernourished and the problem has been compounded by drought and global recession. The joint goals of the eight governments, grouped into the CILSS, and the aid donor's group, the Club du Sahel, are food self sufficiency and ecological equilibrium. This implies more rapid growth in production of food and livestock than ofpopuli slower migration to the cities, more rice produ for the burgeoning urban population, higher rur incomes, less dependence on imports and an er J the overgrazing and excess fuelwood collection v lead to erosion. On all counts the gap between go, and achievements is widening. The only exception t the bleak story is a five fold increase in cotton yieldi Social indicators have registered gains but from a ver low base. Bottom left: Cotton growing in Uppe Volta. Sri Lanka. A leader according to almost any socia indicator since its independence in 1 948, Sri Lanka (top right) is however dependent on a few raw material exports tea, rubber and coconut oil which have suffered from the world recession. In 1977, a new government initiated a sweeping eco¬ nomic liberalisation to promote export-led industrial growth and agricultural expansion. The results were spectacular: growth doubled, unemployment was cut in half, aid commitments rose, and Sri Lanka began ' exporting textiles and clothing. But a drought in 1 980 % compounded balance-of-payments problems while rising prices, less cushioned than before by subsidies , and controls, reduced real incomes resultin" emergency adjustment measures, taken with the of the IMF. Serious structural problems re - insufficient production of rubber and tea by go ment-owned plantations, a failure to shift resot to private investment or to develop agro indusi... Zambia. Fifteen years ago President Kaunda define Zambia's goals for its rural majority in very specifi terms that foreshadowed the "basic human needs approach. In the days of copper-based econ boom, rural development seemed relatively pain But from 1974 on, investments and services in areas had to be severely restricted. The discrep between goals and achievements was due in part to the diversion of resources from agriculture to large- scale industry and the cities. Subsistence farmers, who account for seven out of eight rural households, have not been given sufficient attention, and their real incomes have deteriorated. In the Eighties, there have been substantial increases in the price of maize and o ther agricultural products, reduction of subsidies and elimination of price controls on consumer goods, expansion of primary health care and an increase in agriculture's share of the government's capital bud¬ get. Bottom right: a Swedish rural development project.

1 . A detailed analysis of these strategies is presented i the DAC Chairman's report. roles of the state. Changes to give greater can be found on some important develop¬ ensured so as to encourage farmer invest¬ scope for smallholder initiative could be ment options. ment in productivity, improved living con¬

undertaken without dismantling parasta- No general principles are applicable ditions and ecological conservation. tals and marketing boards, but funda¬ everywhere or universally agreed, but there The marketing system must ensure that mental changes in attitudes and roles is a high degree of support among strate¬ small farmers receive prices announced by would be required. In this field, particularly, gists for the following lines of approach in a government as guaranteed. The market distinctive land tenure practices and other low-income agrarian country whose gov¬ also must provide efficient supply of both cultural factors as well as national political ernment formulates basic development production inputs and consumer goods. choices will determine how and how fast objectives as "growth with equity", or Government should not monopolise or change occurs. Professional research and "reduction of poverty" or "reduction of otherwise discourage private or co-opera¬ international seminars, mainly among Afri¬ hunger" or "assurance of basic human tive development of marketing systems, cans, could facilitate the process of needs": but government should guard against pri¬ change, and there may be appropriate roles Sustainable gains can be made with the vate abuse of economic power and be for such international groups as the CILSS- prepared to act as a marketer of last resort Club du Sahel and the Southern African greatest efficiency and equity by increasing employment and incomes where most or producer price guarantor. (There is some Development Co-ordination Conference in people live and where poverty is most disagreement on the latter point.) supporting studies of the problem and its common, i.e., the rural areas. Both farm The expansion of rural non-farm eco¬ remedies. and non-farm employment - productive nomic activity marketing, construction, employment must increase faster than administration, transport, processing, Ten Guiding Principles population. All economic policies and pro¬ small-scale manufacturing and crafts, edu¬ gramme priorities should be tested against cation, health and financial services, as These and other politically charged this paramount requirement. well as other rural activities such as mining obstacles to development in low-income In such countries the key to a sustainable and forestry must provide one-quarter to countries are most susceptible to prag¬ one-half of the additional jobs plus reduction of rural poverty is the greater matic remedies where the overall objec¬ increased cash income for subsistence participation of small farmers in producing tives of national development are clearly farmers. Farm income gains are the major for the market - and at rising productivity. articulated. In eastern and southern Africa basis for this growth, but governments can The extension of smallholder farming and and parts of Asia this increasingly is the reduce constraints to the necessarily rapid more intensive cropping (multiple cropping case. To be sure, there are inconsistencies and technology-aided practices) reduce non-farm development by providing sup¬ between objectives and policies and poverty directly and generate demand for porting infrastructure, training, technical between these and budget allocations; services and credit to small entrepreneurs farm labour and for non-farm production of often priorities are not binding. However, it goods and services. In most cases, farm and community organisations, if national now can be said that about half of the household and labour incomes so ex¬ macro-economic policy and government low-income countries have made the construction management are rational, the panded are the only reliable support for reduction of poverty their primary objective expansion of non-farm employment. Small technologies employed in non-farm activity and the acceleration of agricultural growth farmers are more likely to spend their cash are likely to be labour-intensive. the primary means to that end. incomes locally than are large private In both farm and non-farm development There is still lack of precision in the farmers and farming corporations. programmes, including the provision of formulation of objectives, and as in indus¬ social services and infrastructure to vil¬ Small-farmer production of marketable trial countries, some confusion between lages, government agents should en¬ surpluses of traditional food staples can ends and means. But less and less are courage local community organisations (in¬ make a contribution, but the primary guide political shibboleths or such doctrines as to crop-selection should be income and volving women to an increasing extent) to "modernisation through industrialisation" employment creation, i.e. economic effi¬ take leading roles in the design, execution, maintenance and, to the extent reasonable, or "economic independence through import ciency. In some circumstances, the most substitution" diverting attention from the financial support of projects. efficient crop selection will be export crops practical agenda. Within the basic frame¬ because of higher productivity and hence Policies and programmes (including com¬ work of the anti-poverty campaign, there higher income generation plus foreign mercial and aid-financed food imports) are differences among countries and exchange generation. (There is some disa¬ affecting urban food supply and prices debates within them on political choices, greement on this point.) should encourage rather than discourage such as the weight to be given to income domestic food production. (There is disa¬ Simultaneously with shifts toward mar¬ generation versus income distribution; greement as to whether this warrants ket-based or less controlled pricing of domestic food self-sufficiency versus food government intervention through tariffs, agricultural produce, governments must self-reliance through a combination of quantitative restraints or offsetting sub¬ ensure that extension services, credit and export crops, domestic food production sidies in order to promote national food transport effectively reach small farmers, and imports; or the appropriate allocation self-sufficiency.) Food subsidies, whether including women, who seek to create of capital among national infrastructure, applicable to imported or locally produced marketable surpluses, as well as presently large industrial development and rural food, should be targeted on the poor, defined "commercial" farmers. Otherwise industrial and service development. including rural non-farm people. price inducements will often fail2. Re¬ Other nutritional measures should be The most striking and hopeful fact, search, extension and training should focus however, is the pragmatism that develop- on raising the productivity of small farmers integrated into the national food and agri¬ ing-country and outside professionals are and of basic food crop varieties, with cultural development strategy. This im¬ bringing now to the business of develop¬ immediate attention to reducing the gap plies, among other things, encouraging the ment problem-solving. If the professional between potential and actual yields of use of domestic crops in nutritional pro- literature and positions taken by develop- major food crops using existing technolog¬ 2. Streeten, Paul, "Food Prices as a Reflection ing-country specialists at international ies. of Political Power", Ceres, March-April, 1983; seminars are reasonable indicators of In areas of private land ownership, also Development Perspectives, Macmillan trends, a growing measure of consensus security of ownership or tenure should be Publishers Ltd., London, 1981.

10 grammes. Simple and cheaply extended the forms and emphases of aid pro¬ ment Report 1 983 to an assessment of the preventive health and curative practices grammes to the needs of low-income characteristics, causes and corrections of notably the four-point UNICEF/ WHO countries and planning further changes in management weaknesses in developing scheme for home treatment of infant diar¬ response to their concurrent fiscal and countries. This is a field in which DAC rhoea, identification of infant malnutrition, balance-of-payments difficulties. Countries Members' public and private institutions inoculation against childhood diaseases, undertaking rigorous structural adjustment can make valuable contributions through and breast-feeding - effectively improve in association with the IMF and/or World advisory work on management aspects of nutrition of vulnerable people and relieve Bank may be unable in the near term to new investments and through collabora¬ other burdens of poverty. undertake large new capital projects, even tion in the maintenance or strengthening of The foregoing covers probable elements if substantially financed by foreign assis¬ existing institutions or functions. Suc¬ of a national food strategy or anti-poverty tance, but they urgently need technical and cessful modes of aid in this field have strategy, although its specifics would vary. budgetary help in maintaining vital services included "twinning" arrangements be¬ It is not offered as a complete list of and in financing production inputs, which tween counterpart institutions, in-service orientations that would improve the focus have been starved by recession and management training at specialised institu¬ and effectiveness of development efforts in retrenchment, as well as assistance in tions, and short-term reinforcement of most low-income countries. That would be getting small quick-gestating production agencies or enterprises by contract teams, much longer, covering national institutions projects under way. seconded individual experts or retired exe¬ and services, multi-sectoral campaigns cutives from industrial countries. such as manpower development and family Aid for long-term development Long-term investment in development of planning, industrial and export develop¬ Our survey of the longer-term develop¬ human resources. Acute shortages of ment, fiscal, trade and other economic ment record and prospects of low-income skilled manpower often are critical con¬ policies. On these there is much less countries indicated five broad areas straints in low-income countries, especially agreement as to inter-sectoral linkages and requiring more systematic effort for many in rural operations. In order to reduce this trade-offs. years ahead by their governments and their constraint, governments, aid donors and external partners in development: private investors increasingly are building Implications for Comprehensive development strategies training elements into all types of projects. Development Aid focussed on smallholder agriculture and Large benefit "multipliers" also can result from aid to both formal and informal food security for the poor. Unless these The development assistance community fundamentals of development are consis¬ educational systems in the design and has recognised the priority of low-income tently addressed by national policies and testing of low-cost methods of developing countries by its allocation of concessional operating priorities, the contribution of aid skills required by particular development aid to them. Their share of DAC Members' programmes. to the reduction of poverty in most low- total official development assistance (ODA) income countries will be limited. Unless the was 57 per cent in 1981, a total annual Research to give poor people better key institutions that must carry out such a level of $14.6 billion. DAC Members that means of improving their lives. Unless strategy are capable of playing their roles, research in such fields as traditional food allocate significantly lesser portions of their the best conceptions and financial assis¬ aid to low-income countries are being crop production and fuelwood production tance will avail little. Hence, development challenged on this issue in the Committee's and combustion yields practical technolog¬ co-operation must deal in an integrated aid reviews. ical aids adapted to local factors, efforts to way with both the conceptual and institu¬ raise rural incomes and living conditions in At this writing, the critical pending test is tional aspects of national programmes. low-income countries, especially in Africa, the donors' decision on the level of the next External advisers to low-income countries will be severely handicapped. Operationally replenishment of the International Develop¬ engaged in a comprehensive rural develop¬ oriented agricultural economic research ment Association (IDA), the centrepiece of ment effort must be of at least as high also can point the way to greater effective¬ the collective international aid effort in competence and motivation as those ness. Aid donors can provide the critical low-income countries. In the words of the assigned to more advanced countries. stimulus, orientation to operational needs, agreed UNCTAD VI resolution, this reple¬ Co-ordination in each assisted country, and additional funds that research often nishment should be "at a substantial level, focussing domestic and aid resources on needs to give it sufficient scope and prac¬ taking account of the need to accommo¬ the country's development priorities. The ticality. date an expanded recipient community (a many interdependent parts of an effective reference to China's claims on IDA) and the These suggestions for improving the programme to achieve food security and desirability of reversing negative growth effectiveness of development co-operation reduce rural poverty must be orchestrated in low-income countries amount to a for¬ rates in IDA's most distressed borrowing countries". The "soft windows" of the both internally and with external agencies. midable set of demands on aid institutions Coordination can help to make coherent regional development banks and the Inter¬ as well as on the countries concerned. They choices between new investments and national Fund for Agricultural Development are not unrealistic demands, however, support of existing functions. Co-ordina¬ (IFAD) also are essential partners of the Now, far more than at the outset of the low-income countries. tion, while offering high returns, places 1970s, the partners in development can large demands on the more broadly com¬ draw with confidence on a pool of intellec¬ Donors whose multilateral programmes petent manpower of both the assisted tual capital derived from experience. In this are relatively low as a proportion of their government and development aid institu¬ respect, at least, the prospect for securing total aid effort or their contributions to tions. the continuing support of people in both these multilateral lending programmes Improvement of management of eco¬ developing and industrial countries for have a special responsibility to support nomic and technical organisations in both development is more promising than in the their adequate replenishment. the public and private sectors. Many failed past. With demonstrated effectiveness in

Aid for short-term adjustment and plans can be traced to inadequate manage¬ reducing poverty through sustained eco¬ maintenance ment, especially of public services to small nomic growth in poor countries, develop¬ farmers and rural communities. The World ment assistance should gain increased The aid community has been adapting Bank devoted much of its World Develop support in DAC countries.

11 grammes increased in terms of national currency, but the conversion of that cur¬ rency into dollars made them appear to have fallen (e.g. Belgium, Italy, Norway Aid to Food and and Sweden) or to have increased only a little (Denmark and France). While the overall tendency is towards a levelling off, there is great disparity among Agriculture: the various bilateral ODA programmes of the DAC Members (table 2). Some pro¬ grammes have been and still are expanding very rapidly (Canada, the EEC, Denmark, A Permanent Japan and Switzerland) while others are declining (the United Kingdom, Germany and the Netherlands), although the Challenge increase in the last two countries had previously been very strong. There was also a halt in the expansion of multilateral ODA, but not as strong as for bilateral ODA. Following a sharp decline between 1 978 and 1 979, commitments of The development of agriculture and the improvement of nutrition are, the World Bank's soft window, IDA, pro¬ more than ever, priority issues for Third- World countries, especially the gressed from 1 979 onwards to reach poorest ones. In Africa, the annual rate of growth of agricultural and $1.7 billion in 1981. At the same time, livestock production per person was low in the 1960s and became loan commitments on concessional terms to agriculture by the special funds of the negative (-1.1 per cent) in the 1970s. In southern Asia, despite marked regional development banks and the Inter¬ progress due to the "Green Revolution", the increase of agricultural national Fund for Agricultural Development output has only kept up with population growth over the last two (IFAD), which had been growing strongly decades. since 1976, stopped rising in 1981, though there was no change in the policy of Matters have not improved in the 1980s: in 1982 the increase in food those organisation which continue to give production in the developing world was well below that of 1981, largely high priority to food and agriculture in their because of drought that afflicted Africa, particularly Zimbabwe, Swazi¬ programmes. Finally, the commitments of land, Botswana, Zambia and other parts of Southern Africa. In India, the the United Nations bodies (in particular the FAO and UNDP) for food and agriculture food situation has deteriorated again, after some years of improvement. have been increasing steadily since In addition, and particularly in Africa, the real prices of most commodity 1978. exports have slumped badly. Lastly, imports of food products by the Despite the crucial importance of human poorest developing countries have declined, despite malnutrition and resources in developing agriculture and hunger, because these countries lack the necessary foreign exchange. improving food and nutrition, traditional bilateral technical cooperation (scholar¬ After a brief review of current and future trends in aid for food production ships, technical advisers, teachers, etc.) and agriculture, the 1983 Annual Report1 of the Chairman of OECD's has been stagnating. Development Assistance Committee (DAC) examines some of the As to geographical distribution, there is a gradual but evident redirection of aid to difficulties encountered by donors in this sector and how food strategies food and agriculture towards the low- can help as well as the implications of such strategies for aid. income countries (table 3) and towards

Africa.

1 . Development Cooperation: Efforts and Pol¬ icies of the Members of the Development Assistance Committee, 1983 Review, to be There was a quite remarkable Several comments can be made about this increase in aid for agriculture2 trend: published shortly. 2. Contrary to the definition of aid for the between 1973 and 1978 (more After the very rapid growth of bilateral other sectors where aid includes only Official than 1 8 per cent a year at constant prices, and multilateral ODA between 1973 and Development Assistance (ODA), "aid" for agri¬ see table 1), but that rate of increase 1979 (more than 14 per cent a year in culture includes all public sector commit¬ subsequently slowed down, reaching only constant prices), a slowdown could be ments- i.e. Official Development Assistance 2.5 per cent a year between 1979 and expected. But it was both very sharp and (ODA) and other official flows (OOF) from the 1981. In the latter year, bilateral and very sudden: the increase between 1980 DAC on a bilateral basis, from multilateral multilateral official commitments and 1981 was only 4 per cent (a higher organisations and from OPEC, to eighteen subsectors. These include all activities contri¬ amounted at current prices, to $12.2 bil¬ rate of growth however, than that of buting to agricultural development directly (irri¬ lion, or 23.5 per cent of total aid commit¬ bilateral ODA to all sectors). gation, supply of farm inputs agricultural ser¬ ments. Of this amount, official develop¬ Analysing changes in aid volume from vices, etc.) or indirectly (integrated rural devel¬ ment assistance (ODA) accounted for a one year to the next is not always very opment projects, rural infrastructures, manu¬ little less than two thirds. significant. Between 1980 and 1981, the facture of agricultural inputs, agro-food indus¬ The slowdown in the increase of aid to appreciation of the dollar introduced tries, regional and river-basin development this sector after 1979 reflected decreases further distortions into the figures recorded programmes, etc.). This definition excludes in both bilateral and multilateral ODA. for bilateral ODA programmes. Some pro food aid.

12 1. AID FOR AGRICULTURE... BY SOURCE AND TYPE OF AID

Official commitments at constant and current prices, 1973-1981 ($ million)

1973 1978 7 979 1980 1981 Commitments by Source and Type A B A B A-B A B A e

ODA DAC bilateral + EEC1 1,594 810 3,633 3,270 4,304 3,809 4,228 3,839 4,261 Multilateral 1,533 725 2,761 2,402 2,503 2,969 3,266 3,083 3,299 OPEC 69 34 307 276 243 179 199 346 374 1. Sub-total 3,196 1,569 6,701 5,948 7,050 6,957 7,693 7,268 7,934

OTHER OFFICIAL FLOWS

DAC bilateral + EEC1 351 172 403 353 329 237 265 527 569 Multilateral 902 442 3,275 2,872 2,319 2,621 2,935 3,376 3,646 OPEC 63 31 49 42 99 79 88 96 103 2. Sub-total 1,316 645 3,727 3,267 2,747 2,937 3,288 3,999 4,318

TOTAL OFFICIAL ASSISTANCE DAC bilateral + EEC1 1,945 982 4,036 3,617 4,633 4,046 4,493 4,366 4,830 Multilateral |2,435 1,167 6,036 5,274 4,822 5,590 6,201 6,459 6,945 OPEC 132 65 346 320 342 258 287 442 477

Total (1+2) 4,512 2,214 10,428 9,211 9,797 9,894 10,981 11,267 12,252

A = at constant prices, 1979 = 100 B = at current prices 1 . EEC aid managed by the Commission and by the European Bank of Investment.

2. ...BY DONOR BY RECIPIENT1

$ million at current prices (%)

7976 7980 79S7 ODA ODA + OOF

Recipients by Income Level average average average average Australia 7 43 82 1977-1978 1980-1981 1977-1978 1980-1981 Austria 22 66 27 Belgium 9 21 18 Low-Income Countries 71 79 47 57 Canada 170 167 395 of which : Denmark 17 98 99 Least Developed Countries2 22 27 74 77 EEC1 156 386 (423) Other 49 52 33 40 Finland 5 17 21 Middle-Income Countries 21 17 32 26 France 308 478 534 Newly Industrialising Countries (NICs) 6 3 21 15 Germany 186 729 489 OPEC 2 2 .1 2 Italy 32 33 128 Japan 90 524 932 7. Commitments only. Official development assistance (ODA) and other flows (OOF) of DAC Members, the Netherlands 304 379 289 EEC and international financial institutions. New Zealand 14 13 17 2. 31 countries. Norway 43 70 69 Sweden 88 209 204

Switzerland 9 46 115 1980 and 1981) especially those coming main sources of finance for agriculture) are United from the multilateral financial institutions. likely to drag on. IFAD is having difficulty in

Kingdom 70 135 117 mobilising the amounts already agreed United States 363 1,079 981 upon for its first replenishment; and the Total DAC Future Prospects prospects for the second one, due to take Members 1,893 4,493 4,830 place in 1984, are not encouraging. The Total Despite general acceptance of the need to regional development banks have plans to Multilateral attach greater importance to food and increase their lending from their ordinary Agencies 2,715 6,201 6,945 agriculture if malnutrition and under-nutri- capital resources. Total OPEC 424 287 477 tion are to be overcome, the prospects for As to their concessional funds, however, GRAND increasing aid for agriculture are not only the African Development Fund is in a TOTAL 5,032 10,981 12,252 bright. position to increase significantly its lending So far as multilateral aid is concerned, a in real terms in the immediate future. There 1 . EEC aid managed by the Commission and by the period of consolidation rather than con¬ is also a possibility of expansion in the fifth European Bank of Investment. tinued expansion of resources is to be European Development Fund (EDF), which expected, and this cannot fail to have an is planning to allot 40 per cent of its Analysis of non-concessional flows for impact on aid to the agricultural sector, resources to agriculture (compared with food and agriculture reveals a steady rise which already accounts for a large share of 35 per cent in the previous EDF). The between 1979 and 1981 (a rise of more commitments. The negotiations for the period of rapid growth of United Nations' than $1 billion in constant prices between seventh replenishment of IDA (one of the resources also appears to be at an end.

13 UNDP contributions are likely to stagnate, The quality of expertise in certain aid consistent way closely linked to the devel¬ and the growth in the FAO's extra-budge¬ agencies is not up to the mark. opment actions undertaken or planned. tary resources is beginning to decline. There may be insufficient financial Encourage local producers and their

The trend of bilateral aid is still more resources, especially for maintenance. organisations as well as national develop¬ difficult to forecast. What is expected at Western technologies may be ill- ment agencies to take much of the respon¬ present is a slight rise in overall ODA. Some adapted to local conditions, particularly in sibility. The aid agencies should limit them¬ Africa. countries might significantly increase their selves to ensuring that the project is logical commitments for food and agriculture, i.e. Aid is budgeted for too short periods. and coherent but not make the detailed Canada, with 45 per cent of its total Progress however, has been made towards decisions. commitments to be devoted to this activity solving this problem, especially in the Make aid more flexible by facilitating the compared with 39 per cent in 1981, Bel¬ United States. Aid should not be brought to carry-over of funds from one year to the gium, with its recent voting of a new Third a halt abruptly but by degrees. next, for example, and by integrating eval¬ World Survival Fund of $200 million, Italy uation and follow-up measures into the with its $500 million programme for the ... And How project from the start. Aid must be allo¬ Sahel, and France, in the context of its to Overcome Them cated to cover recurrent as well as capital overall efforts to raise ODA to 0.7 per cent costs. of GNP- Although some countries, such as Analysis of these obstacles highlight Deal with problems of aid to agriculture Germany and the Netherlands, might possible lines of approach: in more comprehensive fashion, as part of return to a moderate rate of increase in Expand technical assistance, with an development plans or food strategies, an their agricultural commitments, others emphasis on training more qualified, moti¬ approach espoused by the World Food Japan and the United Kingdom have vated and responsible staff. Council and being adopted by a growing announced that it will probably be difficult Support institutions in a responsible and number of countries. to maintain the present volume of aid to this sector.

Obstacles to Efficency ... FOOD AID

Action aimed at making more effective Some Members of the DAC have aid as such. The share of food aid in use of the resources placed at the disposal large-scale food aid programmes. Such total bilateral and multilateral aid pro¬ of the developing countries is therefore assistance is not included in the usual vided by DAC countries has varied becoming urgent. However, the agricul¬ definition of aid to agriculture1 , yet to somewhat over the period, falling from tural sector remains one of the most these countries it is an essential part of 1 3. 5 per cent in 1974 to 11.6 per cent difficult for the aid agencies to tackle. It is their programme of aid to agriculture in 1981. However that average was much easier to build a road than to contri¬ and food production. considerably exceeded by the United bute to the development of millions of Between 1974 and 1981, the value States and above all by the EEC, where peasant holdings, since decisions affecting of the food aid provided by DAC Mem¬ food aid represented 40 per cent of the these plots are not made by those respon¬ total disbursements of ODA in 1981. bers increased regularly by an average sible for promoting development. After of 10 per cent per year in current prices, The worsening food situation in several decades of aid and despite some which is less than the ODA for agricul¬ Africa is one reason why this region has progress (the Green Revolution in Asia and ture (14 percent). In tonnes, the annual become the main recipient of world certain cash crops in Africa) there have growth rate was still lower, i.e. 7.9 per food aid. Between about 1955 and been many setbacks, particularly in subsis¬ cent a year. Since 1977, however, the 1975, Africa received only 5 or 6 per tence farming and rural infrastructures. The quantities provided have progressed cent of total food aid against nearly two reasons for these setbacks include: considerably, and 1981 was a record thirds for Asia. In 1976, Africa's share The complexity of agricultural develop¬ year with 9. 5 million tonnes of food aid, reached 27 per cent, and it has grown ment. Although isolated aid projects may a figure close to the minimum objective continuously since then, amounting to be successful in the long run, aid to of 1 0 million tonnes fixed by the World 51 per cent in 1981, i.e. 4.3 million agriculture can be effective only if national Food Conference, particularly if one tonnes. This amount was distributed policies focus on development and the takes into account the fact that total equally among the countries to the effective use of aid. All economic para¬ food aid provided included not only aid north and the south of the Sahara. meters (prices, taxation, exchange rates, from DAC countries but also that sup¬ marketing and outlets, transport, commu¬ In recent years food aid has focussed plied by non-member countries (about nication systems, etc.) need to be taken more on development. The recipients 400,000 tonnes a year). into account but rarely are. are increasingly aware of the risks inherent in food aid in the absence of Recipients' absorptive capacity leaves During the same period, several much to be desired, due to the lack of important trends have been evident: any guaranteed continuity of delivery

institutions able to serve as a link between The United States continues to provide and the need to achieve greater self-

the central government and the farming the largest share about 60 per cent sufficiency while the donors insist on population or to supply the essential ser¬ of the food aid granted by DAC and EEC integrating food aid into the pro¬ vices and inputs. There is also a scarcity of members. Since 1 980, Japan has pro¬ grammes of agricultural and rural devel¬ competent technical staff at local and vided the second largest amount of aid opment and particularly into food stra¬ after the United States. The role of the national level: it is difficult to attract such tegies. Food aid should thus be geared

staff to the rural areas with their harsh World Food Programme (WFP) has both to avoiding disincentive effects on

conditions of life and even more difficult to increased considerably. On the other food production and to promoting more hand, Canada's share has declined keep the trained people on the spot once broadly based development. since 1978, as Canada chose to give aid is withdrawn. The problem of human 1 . See note 2 page 1 2. resources is a crucial one for rural develop¬ priority to aid for agriculture over food I ment.

14 V % m

m\

' .9r* --k,v

/n an agricultural country, a food strategy may be identical to the national economic development plan. Above: Harvesting millet in Mali. .. and (below) a vegetable-drying factory in Kenya. These are the two African countries whose food strategies are considered most fully developed.

Food Strategies: While integrating many facets of other marketing and the possibility of raising types of aid, a food strategy provides a incomes. Jobs must be created in the A Conditional Hope national framework for taking into account secondary and tertiary sectors as well as all the major inter-linkages: food security, the primary. The increase in income can To what extent can food strategies stem from both cash and subsistence crops provide a response to the difficulties men¬ nutrition, and farm and non-farm employ¬ ment. This framework has two other as the sharp distinction between the two tioned above? What advantages do they essential advantages: types of farming is out of date. have over other promising approaches. A food strategy is an integrated and multi- Town and country. The link between the How to succeed? sectoral approach covering the whole food food problems of towns and the provision system from the producer to the consumer. of edible commodities by the farms is at the There are certain pre-conditions for a The main objective is to give priority to heart of food strategies. successful food strategy. satisfying the food requirements of a given Nutrition and food security. A food stra¬ It must embody the political will of the country by mobilising all its available tegy must be concerned with establishing a government at the highest level (at least resources. This summary definition ex¬ balance between the surplus and deficit ministerial) to give priority to feeding the plains both the advantages and the difficul¬ geographical areas and to that end should country's population. The key factors in a ties of the undertaking. develop not only food production but also food strategy are the mobilisation of poli-

15 tical leaders to participate in drawing up a These few examples, which do not has already been given by aid agencies for project which they will then fully support, exhaust the list, show that, although the the preparation of food strategies, but the the setting of unambiguous priorities and seeds have been sown, the harvest has not agencies have to make sure that these reconciliation of contradictions (political, yet been reaped, partly because of the strategies are drawn up by the recipient. administrative, etc.). Until a food plan usual difficulties entailed in aid to agricul¬ The ideal technical assistant should be a receives governmental support it is only an ture, but also because of the obstacles catalyst capable of giving ideas to the academic document. specific to food strategies: strategists. The aid agencies should also It must be closely integrated into the Giving priority to food and agriculture try to reinforce national bodies that can national economic plan. In countries that may cause difficulties for a government help to work out and implement food are mainly agricultural, a food strategy may whose existence often depends on the strategies - a problem to which too little be considered as the focal point of the plan support of the cities. attention has been paid but not bolster or even constitute the entire plan. It is difficult to co-ordinate various min¬ up unwieldy and inefficient administrations It must contain consistent and realistic istries (planning, rural development, fi¬ or bloat the bureaucracy so that it acts as a criteria for choosing investment projects nance, etc.) and obtain recognition of the screen from the farmer. To sum up, food and programmes and present a coherent need for reforms in areas, such as farm strategies will call for more technical assis¬ framework of action for the relevant price policies and land reform, which tance and a different kind of aid over a long national and international bodies. Aid involve many key and often divergent period but not necessarily more people. requirements including food aid - should interests. The main need is for motivation, responsi¬ be clearly indicated. Food strategies require sophisticated bility and skills. analysis, but the developing countries Obviously the approach outlined is an often lack the expertise and even the basic Coordination and discussion ambitious one, and a food strategy is in the statistics. Inadequacy of institutional and last analysis a long-term, slow and difficult If the developing countries must commit human resources is a major obstacle to the process, that can only be realised in themselves to back food strategies to the preparation and execution of strategies. stages. hilt, policies of the donors must be consis¬ Further down the road there is a problem of tent with the options laid down in these financial resources. A tentative balance sheet strategies. Frequent meetings between Governments need short-term results to donors and recipients, especially at local According to the World Food Council, justify their actions, and it is difficult to level, to prepare these strategies, should about 40 some would even say 50 transform political, strategic and economic facilitate mutual understanding of the developing countries, of which some options into practical results in the short needs, the constraints and the resources 30 are in Africa, have prepared or are term. available to each. preparing food strategies. In fact, few A gap too often exists between the strategies are actually operational, even administrations at national level and the Lastly, food strategies should facilitate though a growing number of countries farmer- whose action is decisive at the co-ordination between donors; for example evince a desire to have one. wider circulation could be given to the implementation stage. How can he be studies carried out by the various aid The most fully developed examples of helped to participate in working out the agencies so that analyses need not be food strategies are probably to be found in strategies? repeated. This in turn should reduce the Asia (e.g. in the Philippines). In Africa, The international monetary and financial number of on-the-spot studies by experts Kenya and Mali are the countries most crisis and the foreign trade problems that who have no clearcut responsibility and often cited in this context. Mali has just set directly affect the economies of the indus¬ whose conclusions commit no-one to any¬ up five sub-committees (on prices, market¬ trialised countries are considered by some thing. ing, food aid, livestock and agricultural as a major obstacle to carrying out food inputs) to study the measures needed to strategies. How the effects of these inter¬ What machinery should be used to transform options into action. A food plan national problems can be mitigated must provide the basis for such improved co¬ for Zambia is also being worked out with be kept in mind when working out the ordination? A number of solutions can be the help of the Netherlands, and despite strategies. envisaged. Existing machinery may be some difficulties should soon be incorpo¬ strengthened: on the national level, the rated into the operational production plan committee bringing together representa¬ Implications for Aid for the country's food crops. The strategies tives of the main ministries concerned, and of Gambia and Mauritania exist on paper on the international level the groups of the Financial resources but have not yet been approved by their World Bank, representatives of the UNDP, governments. Nigeria, on the other hand, Will the use of food strategies call for Club of the Sahel, or more recent organis¬ has already completed a first stage of its further aid, or a different kind of aid? It is ations such as the Sudan Group and the strategy, with the help of the World Bank, difficult to answer this question in the new FAO food security machinery. Ad hoc and Morocco should have its first strategy abstract, as it is the socio-economic con¬ machinery can also be set up, such as the by the end of the year. text of the country and the ambitiousness EEC "special working parties" already func¬ tioning in Mali, Kenya, Rwanda and Zambia In Latin America, the Mexican Food of its strategy that largely determine the reply. It is generally thought that a food and which most countries consider a test system which showed so much promise, for the implementation of food strate¬ has been at a standstill since 1 982 (a new strategy does not ipso facto call for new resources. It does indicate the most blatant gies. government came to power in the interim and there have been balance of payments gaps. Thus, even if a food strategy does problems, etc.), but a "food production not necessarily imply additional aid but plan" will be included in the framework of merely a different and better integrated aid, this in turn may give rise to a need for the national economic development plan. Thus food strategies appear to offer a further resources. Strategies are being prepared for Nicaragua real alternative to more sectoral ap¬ and Honduras. The IFAD completed the Technical assistance proaches, but much will depend on the first version of a food strategy for Guyana willingness of donors and recipients to at the end of 1 982. A large amount of technical assistance move from intentions to action.

16 tered in replenishing its resources. Prelimi¬ nary indications suggest that, in 1 982, IDA support rose substantially again.

The extent to which DAC Members are focussing on energy development is shown Support for by the rise in energy aid as a share of their total aid commitments from 4.9 per cent in 1 978 to 8.7 per cent in 1 981 , a remark¬ able increase, given the strong competing claims on scarce aid funds from other high Third-World Energy priority sectors. But the proportion ranges from over 30 per cent for Austria and 20 per cent for Japan and Canada, to under 5 per cent for Australia, Belgium, Finland, France, Italy, the Netherlands, Sweden, Switzerland and the Uni¬ ted States. The need to step up energy produc¬ resources for their energy development. Multilateral financing institutions have tion in the developing countries has Stepped-up domestic energy investment consistantly focused much more on energy become critical since 1973 and the must be combined with strengthened poli¬ than bilateral programmes. The share of subsequent oil price shocks. Under the cies to ensure a rational use of scarce energy aid in their overall aid programmes impact of the second oil price rise, the net energy resources. reached a peak of 23.5 per cent in 1 980, cost of oil imports of the developing coun¬ followed by a drop to 9.2 per cent in 1 981 , tries shot up to some $60 billion (in 1 981 ), when IDA assistance collapsed. about 5 per cent of their GNP and 27 per The Aid Component cent of their imports. Subsequently, these Official development assistance from all costs declined (to about $50 billion in Non-Concessional Flows sources2 for energy development in devel¬ 1 983, 4 per cent of GNP and 20 per cent of oping countries has already risen rapidly in Virtually all types of non-concessional imports) as a result of lower recent years. Between 1976 and 1980, funds finance energy development in the oil prices, slower growth, stepped-up total ODA commitments increased from Third World: export credits, direct invest¬ energy investment, increases in the effi¬ $1.1 to $3.8 billion (see table), an average ment, bank and bond lending, multilateral ciency of energy use, and more rational annual growth rate of 28 per cent. Aid "hard window" loans, and commercial energy management. The adjustment pro¬ from DAC bilateral donors grew from OPEC credits. However, the available sta¬ cess, however, is far from over. The devel¬ $0.5 billion to $2.2 billion (34 per cent a tistical data permit an analysis of only three opment of indigenous energy resources year), while aid from multilateral sources kinds of these flows (see table). remains a policy goal of high priority for the rose from $0.3 billion to $1.3 billion economic growth of the Third World and DAC countries' official export credits (31 per cent a year), and OPEC assistance for balanced world energy markets. (with a maturity of one year or more), and fell back to $0.3 billion after its peak of The World Bank has estimated1 that official guaranteed private export credits over $1 billion in 1978. In 1981 - the developing countries need to invest about (with a maturity of five years and more). latest year for which detailed data are Since no sectoral breakdown exists for $130 billion annually (in 1982 dollars) in available - aid for energy from DAC donors energy development over the next decade. officially guaranteed private export credits fell slightly, from the World Bank's soft with a maturity of under five years the This would mean increasing the share of window, the International Development energy investments in GNP from 2- figures shown cover only about two-thirds Association (IDA)) dramatically, while aid 3 per cent during the late 1970s to an of total officially supported export credits from OPEC donors rose again somewhat. average of 4 per cent over the next decade. for energy development. On a 3-year (1979-1981) average, the main source of Roughly a half of these energy investment Notwithstanding the general upward export credits were the United States requirements are in foreign exchange - trend in energy assistance, year-to-year about $65 billion per year. Since, ac¬ changes have been rather erratic, due in (30 per cent of the DAC total), Japan cording to World Bank estimates, the large measure to the "lumpiness" of energy (18 per cent), Germany (15 per cent) and France (12 per cent). actual flow of external resources for energy aid which goes mainly to large projects. Multilateral non-concessional flows. development in developing countries was The main DAC donors of bilateral energy about $25 billion in 1982, these funds assistance in recent years (1979/1981) Lending by the World Bank, the regional development banks and the Common Mar¬ would have to increase annually by about were Japan (32 per cent of the DAC total), ket's European Investment Bank. Such 1 5 per cent in real terms to meet the Germany (20 per cent of the DAC total), as lending is dominated by the World Bank projected foreign exchange requirements. well as the United Kingdom, the United These projections, of course, are very States and Canada (which together whose energy support programme more than doubled, from $0.9 billion in 1 978 to uncertain. However, even if the interna¬ accounted for 24 per cent of the DAC tional oil price declined by about 20 per¬ total). Energy assistance from France $2.2 billion in 1980, but dropped to $1.6 billion in 1981. cent (to around $25 per barrel), the bulk of (9 per cent of the DAC total) has risen on OPEC Non-Concessional Flows. Known the projected energy investments would average by 55 per cent a year since remain economic. 1976. OPEC non-concessional support for energy

While creditworthy developing countries Multilateral energy assistance was, until 7. The Energy Transition in Developing Coun¬ will continue to be able to attract signifi¬ 1980, dominated by IDA contributions tries, World Bank, August 1 983. cant amounts of market resources, the (almost 90 per cent of multilateral energy 2. Aid from CMEA countries is not included in aid in 1980 - over $1 billion) and fell poorer nations must rely mainly on aid this analysis since no detailed information is funds. Most importantly, developing coun¬ sharply in 1981 to $403 million, reflecting available on its country or sectoral distribu¬ tries need to mobilise adequate local the serious difficulties which IDA encoun tion.

17 1. ENERGY RESOURCES FOR THE DEVELOPING WORLD, 1979-81 $ million

NON-CONCESSIONAL AID1 FLOWS2

7 979 1980 1981 1979 1980 1981

DAC MEMBERS 7,854 2,239 2,109 6,718 7,651 5,109

Australia 15 7 6 4 1

Austria 4 22 131 6 33 309 Belgium 3 8 6 2 132 Canada 194 93 160 658 79 290

Denmark 20 37

-- EEC 66 (216) 89 - Finland 1 5 3 51 3

France 74 157 188 730 788 765 Germany 397 277 589 961 1,455 503

Italy - 2 23 251 250 42 Japan 460 902 613 1,120 1 ,21 73 1,215 Netherlands 70 74 32 219 7714 13 .

New Zealand 4 5 5 _ Norway 24 26 15 49 2 Sweden 15 44 26 5 397 48

Switzerland 3 2 8 312 211 115 United Kingdom 296 217 59 88 303 215 *?'(. United States (FY) 211 150 154 2,358 2,045 1,456 MULTILATERAL

INSTITUTIONS 661 1,259 403 2,137 2,811 2,609 World Bank 506 1,101 123 1,148 2,159 1,576 Inter-American Development Bank 86 42 127 553 229 571 African Development Bank 15 9 9 45 28 23 Foum Gleita Dam at Kaedi in Mauritania is being finar Asian Development Bank 54 107 144 265 275 336

European Investment Bank - 126 120 103 Notwithstanding the important competi¬ OPEC 383 325 577 7 27 13 tive advantage of coal over oil for electricity Bilateral 299 208 410 production and many industrial uses, most Multilateral 84 117 107 7 21 13 coal-producing countries have not yet taken full advantage of this energy source. OVERALL TOTAL 2,898 3,823 3,029 8,862 10,483 7,731 By the same token only a little bilateral aid 7. ODA commitments for energy, development by individual DAC Members, multilateral development supports coal development, whereas financing institutions and OPEC donors. 1 3 per cent of multilateral energy funds 2. New exports credits (guaranteed private credits, maturity over 5 years, and official credits, maturity over one year) extended by individual DAC countries and non-concessional commitments by multilateral (notably those of the World Bank) go to this development financing institutions and OPEC sources for energy development. sector. 3. Includes $292 million by the Japan National Oil Corporation. 4. Gas pipeline in Argentina. Nuclear energy (uranium mining and power plants) has figured significantly in DAC export credits accounting for 1 1 per development is all in multilateral form. countries. It has not increased much in cent of such credits to energy projects. Commitments decreased from $50 million recent years (the number of wells hardly Most aid for energy focuses on hydro- in 1 978 to $1 3 million in 1 981 . exceeds 3 per cent of the world total) and power production and electricity distribu¬ has remained highly concentrated on a few In addition there is foreign direct invest¬ tion which, together, absorb around a half developing countries, mainly because of ment in energy, which is estimated at about of the energy support provided by DAC competition from some developed coun¬ $2.8 billion a year or 20 per cent of total Members, multilateral organisations and tries and an unfavourable legal and con¬ investment flows from DAC to developing OPEC donors. tractual framework in Third-World coun¬ countries. Hydro-electricity production in devel¬ tries. oping countries has grown by over 9 per What Kind of Energy? Although about 50 developing coun¬ cent a year over the past decade, but still tries, including 30 oil-importing countries, only a small part of the hydro-power Only 7 per cent of DAC bilateral energy have natural gas resources, there has been potential has been tapped. Thus, though aid goes to o/7, but oil accounts for 1 5 per little exploration or development as yet and investments are large and site-specific, cent of multilateral energy aid and 29 per virtually no DAC bilateral aid. Despite some they involve well-tried technologies and cent of DAC export credits to the energy constraints - a lack of comprehensive offer scope for external funds. sector. Thus oil depends mainly on energy planning and supporting infrastruc¬ The importance of fuelwood for many ture, market considerations, and the site- financing by non-concessional flows, both developing countries can hardly be overem¬ private and official. However, for poorer specificity of gas development - gas pro¬ phasized. The number of people living in developing countries with small oil duction has a large potential domestic areas with acute scarcity is steadily reserves, aid can help to support oil explo¬ demand, and its development is relatively growing while the forest base is dimin¬ ration activities which do not attract for¬ inexpensive. ishing with grave consequences for eign oil companies. Coal is produced in over 30 developing economic, social, human and environ¬ There is obviously scope for expanded oil countries (China is the world's third largest mental development. While efforts are exploration in oil-importing developing producer), virtually all for domestic use. underway to attack this problem on a broad

18 Low-income countries have been the Among other low-income countries, the main beneficiaries of DAC bilateral ODA main recipients of DAC bilateral energy programmes, (54 per cent in 1981) total assistance were Indonesia, Sri Lanka, OPEC flows (71 per cent) and multilateral Egypt, Burma and Pakistan, while multila¬ energy aid (68 per cent) and non-conces¬ teral energy support benefited mainly sional flows (23 per cent). In contrast, Indonesia, Egypt, Pakistan and Honduras. 58 per cent of DAC export credits went to OPEC energy aid to the other low-income upper-middle-income countries. countries was highly concentrated on Pakistan. DAC export credits went mainly The main recipients of DAC aid among to Indonesia, Egypt and Liberia. the least developed countries were Sudan and Bangladesh and of OPEC aid Bangla¬ Among the upper-middle-income coun¬ desh, Yemen and Niger. tries, Turkey was a large beneficiary of DAC India has been a major, though declining, aid and Argentina and Brazil of multilateral recipient of external energy support. flows.

Export Credits: Revised Guidelines

ced in large part by the European Development Fund.

front, so far only a small amount of aid has been used for this purpose, given the fact that technologies for saving fuelwood Anew agreement on export credits An automatic adjustment mechanism for (such as use of stoves) are only reluctantly has been reached by the 22 OECD these minimum rates of interest. The min¬ accepted by the inhabitants of developing countries which apply the "Ar¬ imum rates will be adjusted automatically countries. rangement on Guidelines for Officially Sup¬ every six months (January/July) in accord¬ ported Export Credits". ance with changes in a representative Among the new and renewable sources international weighted average interest of energy, mini-hydro, biogas, alcohol, The new agreement has three main rate, provided that such movements are at solar (especially photovoltaic pumping), features: A revised matrix of minimum rates of least equal to 50 basis points (100 basis geo-thermal, and wind are being aided by points = 1 per cent) since the preceding limited amounts of external support. interest for export credits extended with official financing support. The new matrix, change. A complementary adjustment, applicable from 1 5th October 1 983 until involving upward adjustments amounting Where Are the the time it is further adjusted under a new to 65 or 50 basis points, will be imple¬ mechanism, is as follows: mented between July 1 985 and July 1 986 Funds Going? to bring minimum interest rates for Cate¬ Maximum Repayment Period gory II and Category III countries closer to Low-income countries which are depen¬ (number of years) market levels. In the case of downward dent on oil imports, and have been hard hit Over Over adjustments to the general level of min¬ by higher oil prices, have only limited ^cope Classification 2-5 5-8.5 8.5-10 imum rates of interest, the complementary for short-term resource reallocation to of country adjustment procedure will be acceler¬ favour investment in energy or commercial % % % ated. borrowing. Such countries as Benin, Bhu¬ new old new old new old Generally applicable rules for the exten¬ tan, Ethiopia, Guinea, Guinea Bissau, Haiti, sion of export credits with official financing Kenya, Liberia, Madagascar, Mali, Mauri¬ 12.15 12.15 12.40 12.40 n.a. n.a. I. Relatively rich support in "low rate" currencies, i.e. cur¬ tania, Niger, Senegal, Sierra Leone, II. Intermediate 10.35 10.85 10.70 11.35 n.a1 n.a.1 rencies where the commercial lending rates Somalia, Sri Lanka, Sudan, Tanzania, III. Relatively 9.50 10.00 9.50 10.00 9.50 10.00 of interest are below the relevant minimum Togo, Upper Volta and the two Yemens poor matrix interest rates. According to agreed import three quarters or more of their guidelines, commercial interest reference commercial energy. For most there is no n.a. not applicable 1. For countries reclassified in July 1982 rates (CIRRs) have been established for quick way to increase domestic production. from Category III to Category II, the maximum "low rate" currencies. These rates are At the other end of the scale, India, also a repayment term will continue to be 10 years circulated to all Participants in the Arrange¬ low-income country, is successfully at¬ with minimum interest rates for repayment ment. Export Credits in such currencies can tacking the energy problems on a broad terms of over 5 to 8.5 years. be extended with official financing support front: domestic oil production is being provided that the interest rate charged is raised, large-scale hydro-electricity pro¬ Thus there is a reduction of 0.5 to not less than the relevant commercial duction accelerated, and oil-fired electric¬ 0.65 percentage points in rates for the interest reference rate plus 0.2 percentage ity-generating plants are being replaced by intermediate and relatively poor coun¬ points per annum. coal-fired ones. tries.

19 International Banking: Controlling the Risks

by Rinaldo Pecchioli1

A major consequence of the rapid authorities' main task is to ensure that growth of banks' international In the current public discus¬ bank managements exercise effective con¬ business over the past two trol over their foreign exchange depart¬ sion of international debt, one decades has been to underline the risks ments. associated with such forms of banking of the issues is whether activity and the need for an appropriate tighter supervision of the in¬ Country Risk adaptation of the regulatory framework. ternational banking system Supervisory authorities in OECD countries This is a relatively recent concern and have followed the development of interna¬ might have avoided some of comprises two risks in one: the much tional financial markets closely to ensure the current crisis situations or discussed "transfer risk" involved in a that the international diversification of could prevent future prob¬ debtor country's willingness or ability to banking does not result in a dilution of lems. The question is among repay and service its external debt and the control and supervision2. "local currency risk" arising in the case of those raised in the following A review of supervisory practices in local currency indebtedness to a foreign article. banking shows that, by and large, there bank. Supervisory authorities have two have been few new statutory exposure choices: limits or formalised measures of control. Taking the responsibility out of the Supervisory procedures are more flexible hands of the banks by laying down regula¬ for international than domestic business in country exposure and maturity transforma¬ tions based on a country-by-country credit- the majority of Member countries, and tion. rating system and limits on lending to there is more leeway for the exercise of specific countries; this approach entails individual judgment. Bank management is Currency Risk innumerable problems as to the criteria, still considered to have primary responsi¬ If there are unanticipated movements in political, economic and social, to be bility for the appraisal and control of the exchange rates, banks expose themselves applied. risks associated with international opera¬ to losses because claims and liabilities Leaving it to the commercial judgment of tions, while supervisors' initiatives have denominated in foreign currencies do not individual banks. focused on ensuring that bank manage¬ match. The methods used to control banks' The latter option requires banks to devote ments enforce their internal controls, irres¬ currency exposure vary greatly from adequate resources to country-risk analy¬ pective of marketing considerations or country to country, but everywhere super¬ sis, including periodic reviews of the credit¬ competitive pressures. However, the closer vision has been tightened since the shift worthiness of debtor countries. It calls on analysis of banks' internal control practices towards flexible exchange rates. It would the authorities to assist banks by dissemi¬ that has been made possible as a result of be impractical to try to eliminate currency nating information that banks can use as new statistical material has given supervi¬ risk entirely by prohibiting banks from well as to verify that banks' exposure is not sors greater insight into the international carrying open positions in any foreign excessive in relation to their capacity to risks of bank exposure and has led to the currency. First, such a prohibition could not meet losses. strengthening of such controls. The need to be enforced and, second, it would impose a ensure a proper balance between adequate significant opportunity cost on banks. Thus supervision and undue interference with Maturity Transformation most countries permit banks to take open banks' operational decisions is a delicate positions but within fixed quantitative ceil¬ Though a traditional concern of supervi¬ matter in international banking where the ings or, more frequently, within prudential sory authorities, the riskiness of mis¬ environment is highly competitive and ratios that allow for the size of the bank. matching asset and liability maturity has there is a risk that too rigid application of Other countries either have no formal been enhanced by the high level and controls will stifle financial innovation. regulation at all over currency dealings or volatility of interest rates. Interest rate impose limits on banks' aggregate foreign- risks have been reduced by the use of the Three Types of Risk currency positions rather than currency- rollover technique, entailing a periodic by-currency limits, relying on periodic review of the rates on outstanding loans Since the mid-Seventies, banking autho¬ reporting to monitor banks' exposure. Final with reference to an agreed indicator. But rities have concentrated on three types of responsibility for the prudent management not all lending takes the form of rollover risks specifically associated with interna¬ of currency dealings nevertheless resides credits, and banks' exposure to possible tional business: foreign currency exposure, with the bank's own managers, and the interest-rate losses has increased in recent

20 ground of existing legal and practical con¬ years as a result of aggressive asset and Transparency liability management policies. Significant straints and the complexity of the problems progress has been made recently in moni¬ There is ample evidence of an effort, to be addressed. The availability of a more toring such mismatching in international both national and international, over the comprehensive and detailed flow of statis¬ business, but this is an area in which further last decade to improve the transparency of tical information has provided the basis for work by supervisory authorities would international business. Official action may a more objective evaluation of risks by both seem warranted at both national and inter¬ at times have appeared somewhat slow supervisors and the banks themselves. national level. but should be evaluated against the back- Internal control systems have also improved significantly. Nevertheless there The hub of international banking - the City of London remains considerable scope for further improvement both as to the quantity and quality of statistical coverage. Supervisory authorities in Member countries are aware of the obstacles and problems, and there is ample evidence that they will continue in the direction of improving the statistical basis of risk monitoring, stimulated by recent experience.

International Co-operation

The important question of the demarca¬ tion of supervision between home and host authorities has been at the centre of

international discussions for almost a decade. Given the philosophical, legal and practical difficulties, it is not surprising that differences of opinion still exist amongst countries. In this context, endorsement of a set of broad guidelines, including the sharing of responsibility under the BIS Con¬ cordat, is to be viewed as a major achieve¬ ment. However, problems of conflicting jurisdiction remain, and further interna¬ tional co-operation is essential if adequate supervisory coverage is to be ensured.

The increasing emphasis on consolida¬ tion of balance sheets, being imposed on banks by the authorities as a supervisory technique, is a step towards limiting the number of international banking operations escaping supervision. If consolidation is to be implemented comprehensively, legal and technical problems have still to be overcome. Nor will the extension of consol¬ idation be a panacea for all supervisory problems. To be effective, consolidated supervision requires support and co-opera¬ tion from the banking community, and while banks have generally become less averse to the principle, some banking circles are concerned that its imposition will harm competitive positions and be used to impose additional constraints on banks' range of activities. Conversely, as long as supervisory standards and prac¬ tices differ significantly from country to country, supervisors will be confronted with a conflict between the desirability of enforcing national supervisory measures worldwide and the advantages of main¬ taining domestic banks on an internation¬ ally competitive footing.

7. OECD Capital Markets Division, Directo¬ rate for Financial, Fiscal and Enterprise Affairs.

2. The Internationalisation of Banking: The Policy Issues, OECD, 1 983.

21 57 kilos per head since 1 978-79. This situation could be altered by a change of policy on meat imports; up to now, meat has only been imported to make up for shortfalls in domestic production, and for¬ eign-produced meat has not been used to The Prospects for raise per capita meat consumption in the Soviet Union. Such a change of tack cannot be ruled out entirely, however.

Soviet Agriculture Grain: Low Yields and High Volatility

The need to increase animal production, and in particular the supply of meat, is the Output of Soviet agriculture has been growing at an ever decreasing rate central issue of Soviet agricultural policy over the past 15 or 20 years and persistently failing to meet the targets and will remain so for the foreseeable laid down in successive five-year plans. After several years of poor future. This problem hinges on the shortage of feed grain, imports of which have been harvests, necessitating large imports of grain, the Soviet government running at high levels recently. The persis¬ announced a new, longer-term Food Programme in May 1982 with a tent feed grain problem is the paramount horizon of 1990, which sets out the government's commitment to concern of the Soviet authorities who are overcoming chronic shortages of agricultural products, ensuring more trying to increase production, to cut losses regular food supplies and improving the popular diet, while at the same by improving storage and transport facili¬ ties and to avoid bottle-necks caused by time reducing imports of feed grain. Although substantial investments are production shortfalls in individual years. At to be made in the sector in the years to 1990, the Food Programme does present these can only be met by large- not involve a profound reorganisation of the agricultural sector. Hence the scale imports of grain from the West. In prospect during the 1980s is for Soviet agriculture to continue to fall 1980-81, for instance, grain imports short of the targets laid down for it. Grain is likely to come closer to target amounted to 34 million tonnes, and they increased to an estimated 45 million than meat, and as a result, grain imports, both for feed and direct tonnes in 1 981-82 equivalent to about a consumption, will probably be lower than in recent years, according to a quarter of the Soviet Union's average grain new OECD report1 . output in the four years 1979-1982. And imports are expected to continue at a high level for the next two or three years.

Fluctuations in grain production (table 2) The gross output of Soviet agriculture 70 per cent of North America's protein reflect to a large extent the great differ¬ increased in real terms at an average intake comes from animal products, in the ences in climate between the various annual rate of 3.9 per cent from Soviet Union the figure is only 50 per cent. regions of the country. In trying to assess 1 966 to 1 970, 2.5 per cent from 1971 to Even so, Soviet citizens' consumption of the future prospects of Soviet grain output, 1975 and 1.7 per cent from 1 976 to animal products and fruit and vegetables the possibilities of eliminating these cli¬ 1 980. During this period, the Soviet popu¬ has increased while per capita intake of mate-induced instabilities must be taken lation grew at an average rate of about potatoes and grain products has dimin¬ into account. The Soviet Union is making 1 per cent a year, so the expansion of ished since the 1 960s. However, this trend great efforts to apply biological, chemical agricultural production has only gone a has not been sustained in recent years as a and mechanical technologies to this prob¬ small way to eliminating shortages of some result of four bad harvests in a row lem, as well as taking appropriate adminis¬ basic foods, especially higher value items (table 1 ). So although the Soviet people's trative measures to minimise the effects of such as meat. Output growth has been nutritional needs are met in a quantitative adverse climatic conditions. achieved with a steadily shrinking labour sense, their demand for greater variety and The emphasis on increasing animal pro¬ force but a spectacular increase in invest¬ more meat, fruit and vegetables a pro¬ duction has led to larger and larger shares ment (see Chart). While the new Food duct of the rising expectations that accom¬ of grain production being used for animal Programme provides for the farm sector to pany higher real incomes is far from feed. Between 1966-70 and 1980, the receive 27 to 28 per cent of total capital satisfied at present. In recognition of this, absolute quantities of grain used for feed investment in the 1986-1990 period, this the underlying objectives of Soviet agricul¬ doubled, while total grain output grew by will not be enough to achieve the ambitious tural policy comprise both qualitative and barely 40 per cent. Despite substantial production goals for either grain or meat. quantitative improvements and reflect the increases in coarse grain production during view that the limiting factors to the devel¬ The implications for the Soviet consumer 1976-80, the supply of feed grain opment of food consumption are exclu¬ are not catastrophic, though, any more remained insufficient. than in the past. The difficulties of Soviet sively on the supply side. The 1981-85 plan provides for annual agriculture have not caused the population In general, though, it is not expected that grain output to average 239 million tonnes to starve, but they forced the people to the consumption of animal products will over the period, reaching 245 million accept a less rich and varied diet than their markedly increase by 1 985 except perhaps tonnes in the fifth year. This means average Western counterparts. Their calorie intake for eggs. While the 1981-1985 plan annual output in these years is 34 million is comparable to that of the United States includes a target for meat consumption of tonnes higher than during the last plan population, but a far smaller proportion 65 kilos per head by 1 985, the outcome is comes from animal products than is the likely to be no more than 59-60 kilos, only 7. Prospects for Soviet Agricultural Produc¬ case in North America. Whereas almost a slight increase on the average of about tion, OECD, 1983.

22 period, a target which seems difficult if not impossible to reach. It would be equivalent THE BASICS OF SOVIET AGRICULTURE to an output of 885 kilos per head in 1 985, which would be nearly midway between LABOUR (million workers)1 AREA SOWN TO GRAIN (million hectares) the average output in the 1976-80 period and the long-term target of 1 ,000 kilos per 26.2 head a year.

v_^~ 128 The production of feed grains in partic¬ 123.2 /~N ular is given a high priority in the current (126) plan, with the emphasis on expanding production of maize, barley and leguminous grain. Increased grain output is expected to 23.1 come from larger acreages sown to maize and barley but essentially from higher 60 65 70 75 80 85 90 57 60 65 70 75 80 85 90 yields per hectare. Since record harvests in

1976 and 1978 were followed in the LAND ("land units")2 GRAIN YIELDS (quintals per hectare) 1 979-82 period by a return to a more 295.5 sluggish trend, it seems unlikely that tar¬ gets set out in the present 5-year plan will be met; and a total production of 230 mil¬ 282.9 lion tonnes by 1985 seems the maximum that could be expected (table 3). This figure 57 60 65 70 75 80 85 90 assumes an average yield of 1 8 quintals per hectare (against an average of less INVESTMENT (gross, billion roubles)3 than 15 in 1980). An increase in grain planned average acreage appears out of the question insofar /"" 1981-85; 37.8-38 as the country's arable area is practically exhausted. The area sown to grain, there¬ 57 60 65 70 75 80 fore, is not likely to exceed 127-128 mil¬ lion hectares. FERTILISER USED FOR GRAIN5

With the shift in the cropping pattern

towards feed grains and away from bread 51 grains, the authorities are endeavouring to raise the overall crop yield as well as meet the rising demand for animal feed. The / general trend towards giving more acreage / to feed grain can be deduced from the fact / / that in 1965, 67 per cent of the grain acreage was sown to bread grain and only 23 per cent to feed grain (the rest is sown / to rice and groats); by 1976, the relative

shares were 55 per cent and 37 per cent 3

respectively. 57 60 65 70 75 80 85 90

Baybakov's figure. Animal Production: Three-year averages. / A land unit as used in the OECD report is equal to Stagnant / one hectare for arable land and land planted with perennial crops and equal to a fifth of a average Animal production increased substan¬ 1966-70: hectare for pasture and other agricultural 16.3 tially during the 1960s, but since the late lands. Per year. 1970s meat and milk production have In 1 973 prices, three-year averages. stagnated (table 4). Targets in the 1976- 57 60 65 70 75 80 85 90 Kg of effective nutrient per hectare. 80 plan were not attained, but Soviet planners have still set their sights on an OUTPUT (billion roubles)4 even bigger increase in meat output during 1985 / Plan: the 1980s than was hoped for in the / 147.1 Sources : Nar. khoz. SSSR za 60 let, Mos¬ 1 970s. The prospects however are for cow, 1978, p. 273 and Nar. khoz. SSSR v 1980 g., output to increase very slowly, although it Moscow 1981, p. 202 (for gross output in 1973 prices) and 437, 440 resp. 340, 341 (for invest¬ is likely that poultry meat production will ment, which for 1961-69 and 1966-69 is on the move as rapidly as planned through the price basis of Nar. khoz. SSSR v 1975 g., and ... creation of more big broiler farms. In / 1872 g., resulting in a slight understatement); labour general, though, the plan does not provide from Soviet statistical abstracts for various years; land units derived from data in Statisticheskiy for a sufficient increase in productive 77.4 ezhegodnik stran-Chlenov SEV, various years.

investment for its objectives to be 57 60 65 70 75 80 85 90 Grain figures from statistical abstracts, plan data. achieved.

While animal production has accounted 1 980, its expansion has been restricted by priority given to grain production reflected for an increasing share of total agricultural the Soviet authorities' failure to push up the planners' desire to increase animal output, reaching 55 per cent in 1979 and grain production as fast as hoped. The production more rapidly than has been the

23 raise animal productivity through up¬ 1. PER CAPITA CONSUMPTION OF SELECTED FOODS grading breeds, even if large imports of (kg per year) high-breed animals could be envisaged. One of the most important objectives of 1980 1980 7982 OECD Group of products 1970 7975 the 1 976-80 plan was to increase the actual plan estimates average production of protein concentrates and to Meat(a) 48 57(c) 57 (60-63) 57 83 improve the nutritive content of concen¬ Milk and milk products trate feed by shifting to the industrial (b) 307 315 314 (330-335) 310 290 processing of mixed feed with a physiolog¬ Fish and fish products 15.4 16.8 17.0 (20.9) 17.4 19 ically balanced composition including Vegetables and melons 82 87 93 (113) n.a. 109 added protein, vitamins, minerals and Eggs 159 215 238 (225) 244 236 micro-elements. Sugar 39 41 42.2 (43-44) 40 41 Grain and grain products In the 1981-85 plan, a major expansion (including leguminous in productive capacity for protein feed and compounds is planned, but no specific grain) 149 141 139 (144) 140 104 Potatoes 130 120 112(d) (115) 110 56 targets have been laid down. As it is, the Soviet Union's failure to improve the nutri¬ a) Including meat products, animal fat and meat subproducts in kind. To compare the Soviet data with tive value of feed mixes is evident in the OECD consumption statistics, a deduction of at least 10 per cent has to be made for fats and low quality fact that the annual milk yield per cow has subproducts. remained stationary for almost a decade, b) Liquid milk, cream, butter and cheese only, in whole milk equivalents. c) Per capita meat consumption in 1975 was abnormally high because of numerous distress while the output of laying hens has tended slaughterings as a consequence of that year's harvest failure. It was 55 kg in 1974. to level off at 202 eggs per year, a figure d) The sizeable decline by 7 kgs (or 6 per cent) compared with 1 9 79 was mainly caused by the extremely which remains unsatisfactory. bad potato harvest and the resulting shortfall in market supplies. Sources: Statistical Yearbooks of the USSR. Plan data for 1970 according to F. Kotov Y Ivanov I Any substantial increase in Soviet animal Prostyakov, The USSR Economy in 1 976-1980, Moscow 1977, p. 81 and Ekonomika sel' skogo khozyaistva production would require additional capital No 8, 1976, p. 17. investment in land improvement, in the construction of modern livestock housing and in technological advances in the feed- 2. FLUCTUATION OF GRAIN YIELDS processing industry. The necessary capital IN THE USSR, 1956-80 for a general modernisation of animal Quintals per hectare production through a shift towards indus¬ trially organised and properly equipped Difference livestock complexes will only be available Five year Maximum and minimum yield between in the longer term. No imminent break¬ average in individual years maximum and minimum yield through in the Soviet livestock industry is conceivable, therefore, and the protein 1956-1960 10.1 11.1 8.4 2.7 deficit will persist for some time to 1961-1965 10.2 11.4 8.3 3.1 come. 1966-1970 13.7 15.6 12.1 3.5 1971-1975 14.7 17.6 10.9 6.7 1976-1980 16.0 18.5 14.2 4.3 Mechanisation and Land Improvement: Source : Zernovoe Khozyaystvo, n° 9, 1976, and figures derived from this source; Nar. khoz. SSSR, 1980 Limited Benefits

case and, in the event, the shortage of feed production will decline further and its share The growth in Soviet agricultural produc¬ grain resulted in meat production reaching of milk and egg output (now 30 and 34 per tion in the past two decades or more has only 1 5. 1 million tonnes in 1 980 instead of cent respectively) will fall even more come about largely as a result of capital the 17.3 million tonnes projected. Simi¬ sharply. investment. Capital resources remain rela¬ larly, the target for 1985 of 18.2 million High feed consumption for a given tively scarce, however, and additional tonnes looks impossible to attain (ta¬ weight increase is a mark of the inefficiency inputs meet with diminishing returns in ble 4). of Soviet livestock farming, a qualitative terms of the increased output per unit of Private plot farming, which accounts for problem which exacerbates the quantita¬ incremental investment. Hence, there is an around a quarter of total Soviet production tive one of feed shortage. Feed conversion emerging tendency for the authorities to on less than 10 per cent of the cultivated ratios are generally unsatisfactory, the give priority to capital investment pro¬ area, is particularly important in the live¬ main reason for excesive feed consumption grammes which yield quick returns. stock sector where such farms account for being a physiologically unbalanced compo¬ Investment growth in agriculture has about 30 per cent of production, and it is sition of rations - particularly a lack of been on the decline since 1975, and the declared policy to help private livestock digestible protein. According to a Soviet planned increase in the 1981-85 plan fol¬ farmers by supplying feed from the social¬ estimate, some 25 million tonnes of feed lows the downward trend. In view of this, ised sector and by improving the marketing grain could be saved if feed contained the planned growth in total agricultural facilities for their produce. However, the adequate quantities of protein. The low output looks impossible to achieve. incentives offered to private farmers have technical level of harvesting, storage and While Soviet farms remain technically done no more than prevent the long-term feeding in the Soviet Union, on top of the far behind their Western counterparts, decline in private animal production, and feed shortages leads to considerable losses considerable improvements have been private holdings are not expected to contri¬ in nutrients and vitamins and generally made in mechanising farm operations. bute significantly to future output growth. depresses feed conversion. With present During the 1 976-80 plan alone, the moto- Hence, the private sector's share of meat feed deficiencies, moreover, it is difficult to rised power capacity per farm worker

24 doubled, while the farm sector's electricity consumption trebled. However, the 1981- 85 plan provides for only a modest number of machines delivered to agriculture com¬ Soviet grain output is given in The total deductions that have to be pared to the previous plan. Despite the "bunker" terms, meaning the weight made from Soviet figures for gross grain urgent need to replace machinery, the ascertained by farms immediately after output therefore are of the order of 14 number of new machines supplied to Soviet harvesting, whereas Western figures to 1 7 per cent. The actual loss will vary farms in 1981-85 may be only half the show the yield of grain after cleaning according to factors such as the number acquired in 1976-80. A net addi¬ and drying. Apart from the moisture weather, of course, which may reduce tion of 100,000 tractors is expected, for content, losses occur at all stages of the moisture content by half, if it is instance, compared to 228,000 in 1976- the handling and distribution process. particularly favourable at harvest time. 80 and 357,000 in 1971-75. Yet the On the other hand, a wet, short har¬ tractor park remains only half the required Losses arise during transport of the vesting season may increase losses to minimum, according to Soviet observers. grain from farms to elevators and from 25 per cent, as seems to have hap¬ the drying out of moisture contained in A particular deficiency is the lack of pened in 1977, when predictions of a the grain delivered to the elevator, not combine harvesters, which exposes crops record harvest gave way to a disap¬ to mention impurities. Some 12 per to weather damage at harvest time and pointing result. cent of total bunker weight is probably results in greater harvest losses than would "lost" on average in this way and must Better harvesting organisation, more otherwise be the case. One Soviet projec¬ be deducted to arrive at a figure com¬ modern methods and improved trans¬ tion set a goal of one combine harvester for parable to Western measures of grain port and elevator facilities may reduce every 1 00 to 110 hectares of cropland (or output. To this must be added losses losses by one quarter over the current one per 70 to 80 hectares in regions of during storage and during the transport decade, thus adding an extra 7 to intensive land use), but this target will and distribution of the grain to the final 9 million tonnes of usable grain in an

probably not be met even in 1 990. consumer. average year by 1990. The Soviet authorities are attaching

increasing importance to land improvement draining and liming, although some irriga¬ ESTIMATES OF GRAIN OUTPUT as a means of increasing agricultural pro¬ tion is also involved. Despite a heavy (in million tonnes ductivity. Land improvement measures investment not only in land improvement on 128 million hectares) involve mainly irrigation in dry regions and itself but also in fertiliser supplies and drainage in over-watered areas, as well as mechanisation, production has not in¬ Maximum Optimistic Realistic the liming of acid soils. Expenditure on land creased as rapidly as hoped in this area. Its

1980* 1 89.1 ! 189. 11 189.1 1 improvement is due to increase by 1 9 per rate of output growth was only half the

1985" 250 237-243 230 cent in 1981-85, compared to 1976-80. national average in 1976-80, and the targets were consequently lowered for 236-2442 A major project in the country's land 1 985. It is still being allocated a dispropor¬ 1990" 282 256 243-256 improvement programme has been the tionate volume of capital equipment and development of the so-called Non-Black- Actual. fertiliser supplies - 20 and 30 per cent Earth zone, a vast region stretching from Projection. the Urals westwards to the Baltic and respectively, although it comprises only 1. On 126.6 million hectares. 9 per cent of total agricultural land and Byelorussian republics and from the White 2. Baybakov's yield figure for 1 985 on 1 4 per cent of overall crop acreage. This is 126.5-128.5 million hectares. Sea southwards to a line between Bryansk much the same as in 1976-80, although and Sverdlovsk. The emphasis is on during that period fertiliser supplies were 21 per cent under target and total invest¬ 4. ANNUAL OUTPUT OF LIVESTOCK PRODUCTS TO 1985 ment was 1 1 per cent short. Although this million tonnes region could contribute a significant output of high-yielding winter wheat, if properly 1975-77 1978-80 1976-80 1981-85 1985 utilised, its gross agricultural output is

Planned unlikely to expand by the 30 per cent

average projected in the 1981-85 plan, and it will (soviet OECD es¬ Planned Estimated be even further off the ambitious targets Ac:tual avera je timate global laid down for its level of production by meat fi¬ 1990. gure)

Beef and Veal 6.6 6.9 6.8 7.4 6.9 7.6 7.0 Fertilisers: Rapid but Still

Pigmeat 5.0 5.2 5.0 5.7 5.3 6.2 5.6 Inadequate Development

Poultrymeat 1.5 2.0 1.8 2.9 2.9 3.3 3.0 Up to the early 1 960s, fertiliser use in Other meat1 1.3 1.1 1.2 1.2 1.0 1.1 1.0 the Soviet Union had been limited almost

exclusively to industrial crops - cotton, Total meat 14.5 15.3 14.8 17.0 16.0 18.2 16.6 sugar beet, flax and sunflower seed. In

Milk 91.8 92.9 92.7 97.0 95.0 102.0 97.0 1 960, only one fifth of total fertiliser supplies were used for grain, although it Eggs (billion) 58.2 66.0 63.0 72.0 74.0 76.0 80.0 was the largest single crop, while 1 3 per 1. Chiefly sheepmeat and goat meat. cent was applied to potatoes, vegetables Sources : 7 977 data from SSSR v tsifrakh, Moscow, 1978, p. 123. All other figures calculated and and melons. Fertiliser application soared adapted by OECD. during the 1 960s and 1 970s, though, with

25 an increasing proportion used for grain being devoted to grain crops and meadows step up fertiliser application on grain to crops - almost two fifths by 1976. The and pastures is too low and will remain so 1 50 kilos per hectare by 1 990, the actual situation has stabilised since then, with up to 1985. figure will probably fall well short of that, grain receiving 32 million of the 82 million Grain has benefited more than any other since the expected outcome for 1 985 is at tonnes of fertiliser supplied in 1 980. While crop from fertiliser use, since most of the best 1 1 7 kilos per hectare, which implies the quantity of fertiliser being used for increases in grain yields have been due to an annual increase of 5.7 per cent industrial crops is quite satisfactory under the more intensive use of fertilisers. While throughout the course of the 1981- existing climatic conditions, the amount it would be ideal for Soviet agriculture to 85 plan.

The Soviet Union is trying to upgrade the population's diet.. ...and especially to increase the supply of meat...

...Hence, if meat production targets are to be met, Ï..5* It imports of feed grains will have to continue. But ...This requires more feed grain than the country can raise, despite considerable these targets are not realistic, so i grain imports may fall in mechanisation and increased use of fertilizer... the second half of the Eighties.

26 The targets for fertiliser supply in 1 985 have been revised down from the initial level of 135-140 million tonnes, and the new objective for 1 985 is 115 million tonnes, the same as the unattained target The Greek originally set for 1 980. Even so, to meet this target, deliveries will have to rise by 7 per cent annually, compared to an average of 5.4 per cent per year in 1 976- Environment: 80. This appears optimistic and depends both on the fertiliser industry being able to operate recently built plants at full capacity and on the addition of new capacity during The Need for Action the period.

Until the early 1 970s the Soviets used to Should Greece, as a less industrialised country within the OECD, be slaughter a certain portion of their animal concerned about environmental problems? The answer given by a new herd in years of bad harvest to offset feed OECD report1 is an unqualified yes. The pressures on the Greek shortages, but since a more consumer- oriented policy was adopted (to improve or environment have made themselves felt in a particularly brutal way. at least sustain the level of meat produc¬ Urbanisation has been rapid while economic activity and population have tion), such shortages have been made up been concentrated in a few areas (85 per cent of the population increase by ever-growing grain imports, ranging of the last 20 years has taken place in Athens and its suburbs), and from 30-40 million tonnes in recent years. economic growth, which was well above the OECD average during the If present meat-production targets were to be achieved, grain imports would continue Seventies focussed on industries which can give rise to much pollution at about present levels. On the assump¬ chemicals, textiles, and non-metallic minerals. Quadrupling of energy tion, however, that meat production will requirements over the last twenty years added to the picture, as did the fall well short of planned levels (i.e. twelvefold increase in the number of autos on the road (table 1). 1 6.6 million tonnes in 1 985, against a goal of 1 8.2 million tonnes, for instance), require¬ As Greece is the cultural cradle of Europe, with outstanding monuments ments for feed grain will also be reduced. and privileged geographical and climatic conditions, the contrast between By 1 985 grain production could at best past glories and present pollution is particularly unsettling. Yet until reach 230 million tonnes rather than the recently the country had not yet formulated a comprehensive environ¬ 245 million tonnes targeted, implying grain imports of some 1 5 million tonnes. By mental policy. This is now being remedied as Greece moves into the 1 990, the gap between domestic produc¬ Common Market and must harmonize its environmental policies, along tion of 250 million tonnes at best and with other economic measures, with those of the Nine. At the same time requirements should narrow. If, as sug¬ slower growth is likely to limit available resources, including public gested by OECD's report, meat production were to reach only 18.2 million tonnes in finance, and to cause difficulties in mustering the very considerable 1990 instead of the planned 21.5 million investment required to cope with the environmental backlog. Given these tonnes, the Soviet Union could come close pressures, a further deterioration of the environment in Greece is a real to self sufficiency in grain by the end of this risk. To avoid it, government action is mandatory. decade. This does not take account of possible reexports to other Communist The Greek government is acutely conscious of the problem and has given countries, for whose benefit it may still environmental protection high priority. Greece has also asked OECD to need to import sizeable quantities of grain carry out an examination of the situation and the actions undertaken. The in normal years. Meanwhile, though, much following article outlines some of the difficulties and the conclusions of its foreseeable import requirements are reached by OECD on the Greek environment and environmental covered by medium-term agreements with the United States, Canada and Argen¬ policy. tina.

However, the prospect remains bleak for the Soviet consumer. If the authorities The priority given by the Greek Since financial and administrative re¬ were determined to raise meat consump¬ government to environmental sources are limited, measures must be tion levels to somewhere near official protection can be seen from the simple and practical so that they can come targets, they would have to import sub¬ fact that existing laws and regulations are into effect quickly. But environmental poli¬ stantial additional quantities of feed grain being enforced and reinforced, that more cies are complex by their very nature. and/or step up meat imports (assuming resources are being devoted to the environ¬ Despite growing awareness of environ¬ prices were favourable). But even with the ment and that the public is being encour¬ mental problems in recent years and most strongly consumer-oriented policy aged to participate in urban planning. But national pride in historical monuments and imaginable, there is little chance that meat despite the government's determination, it the wine-dark sea, the public is not as consumption will attain the so-called is difficult to carry out an effective environ¬ Soviet scientific norm of 78-82 kilos per mental policy in Greece for several rea¬ 7. Environmental Policies in Greece, OECD, 1983. capita by 1 990. sons:

27 If Greece were to let the environment deteriorate, it would be a loss to the entire world community. attuned to many environmental issues as in Greece's favourable experience with gov¬ policy. Such measures would ensure that most other countries. Nor is there much ernment-launched industrial zones and decentralisation does not merely become public participation in environmental deci¬ could entail the use of environmentally city sprawl. sion-making. sensitive policy instruments investment Keeping the lid on pressures for urban The government's commitment to the grants that are conditional on sound siting, growth could also help the authorities cope environment has revealed a lack of per¬ for example. OECD's report commends the with serious traffic congestion, air pollution sonnel qualified in the techniques of envi¬ government for having envisaged the use and noise within the city limits. There is an ronmental management, a gap which can of such instruments in its plans for regional obvious need to implement existing urban only be filled by more training.

Urban and Regional Policies 1. INDICATORS OF ENVIRONMENTAL PRESSURE IN GREECE, 1962-1982

Regional and urban policies are the key 7 962 = 7 00 7 962 to any environmental policy since they 7 972 7977 7 9S2 create the framework for specific measures against pollution and for the preservation 8,389,000 (1961) Population1 105 n.a. 1 16 (1981) of historic and cultural treasures and nature 3,628,000 (1961) Urban Population1 129 n.a. 162 (1981) sites.

The lack of success of the measures $8.81 billion ($ 1975) GDP2 215 260 295 taken in this domain by the various govern¬ ments of the last 30 years can mainly be 3.45 Mtoe Energy Requirements3 319 413 468 (1981) attributed to the fact that they were largely 2,735 million kWh Electricity3 440 636 n.a. of the "thou shalt not" variety. The aim was primarily a negative one to restrain the n.a. Industrial Production4 272 362 410 growth of greater Athens; positive meas¬ 1 90 thousand tons per ures that should have been taken simulta¬ month Cement4 278 463 539 neously were conspicuously absent. The 1.64 million m3/month Construction Permits4 391 393 272 present government is taking a more posi¬ tive approach, its objective being to achieve 50,000 Vehicles5 488 910 1,260 balanced development of the entire coun¬ try. 572,000 Foreign Tourist Arrivals6 390 645 880

It is true that, if people and economic Sources: activity were less concentrated on Athens 1. Greece, Economic Studies, OECD, 1982 and Thessaloniki, balanced development 2. National Accounts, 1951-1980, OECD, 1982. would be easier to achieve, and in the last 3. Energy Balances of OECD Countries, OECD Energy Statistics, 1971-81, OECD, 1983. two or three years there has been a trend in 4. Main Economic Indicators, 1960-79, OECD, 1982. this direction. Appropriate regional policies 5. Review of Environment Policy in Greece 6. National Tourist Organisation of Greece and OECD. are also necessary. They could draw upon

28 GREEN SPACE IN CITIES

m2 /per capita

Athens 2.7

Paris 8.4

Rome 9 London 9

Vienna 15

Source: T. Papayannis, Greece, Urban Growth in the '80s, Athens, 1981

Numerous studies have been undertaken to measure the effects of air pollution on the health of Athenians- with striking results. To take only one example, a tripling of sulphur dioxide entails a doubling of hospitalisation for respiratory and cardio¬ vascular illnesses2.

Air pollutants also contribute to the deterioration of building materials and his¬ toric monuments and to the corrosion of

many metallic structures. The damage to the marble sculptures on the Acropolis is the flagrant example and has given rise to world-wide concern.

Since there are no studies on the overall

plans: in the course of urbanisation, become a very serious problem indeed and economic consequences of air pollution in housing needs have largely been met by will worsen unless drastic measures are Athens, the cost of reducing the damage unauthorised construction, which now taken. and the cost of the damage itself - can only accounts for up to 35 per cent of the be inferred from studies made elsewhere. housing stock. The implementation of Estimates in France and the United States SUSPENDED PARTICULATES urban plans has been systematically frus¬ (in 1 978) of the cost of damage from air IN OECD CITIES trated by the failure to control such illegal pollution that could have been avoided if (CENTRE-CITY, COMMERCIAL) building and by periodic legalisation of pollutants had been reduced by 20 per (Method: annual average mg/m3 housing constructed without authorisa¬ cent, range from $45 to $90 per person. high volume gravimetric 24 hr) tion. The total cost of damage stemming from air pollution in the U.K. and France ranges Urban services have been neglected for 300 from $61 to $76 per person, according to too long, and the first step in remedying / .T other studies. National averages cannot be this situation is to identify priorities. At transposed to a city, where pollution is least some of the appreciation in land more concentrated, except to give a lower values caused by urban growth should be limit, which in the case of Greater Athens channelled into the financing of infrastruc¬

29 resources for the fight against air pollution. Consolidating presently fragmented legis¬ lation would also be advisable, OECD's report concludes.

Water: Shortages, Sewage and Oil Spills

Parts of Greece suffer from an actual or potential scarcity of water, given com¬ peting demands for irrigation, industrial and domestic uses. The Government has responded to the problem by investing heavily in measures to increase the water supply over the last three decades. Exper¬ ience suggests that conflicts over water use can best be resolved within a consoli¬ dated management system, based on clear principles for the allocation of rights to water use and discharge of waste, and incorporating appropriate pricing schemes.

Greece faces an enormous backlog of construction for sewage systems and waste-water plants. This problem should be attacked through a priority programme based on the results of the ongoing water- quality survey and on cost-effectiveness and efficiency criteria. Such a programme will require an extraordinary investment effort. Fees could cover at least part of the costs of waste disposal, both for domestic sewerage and industrial waste.

The quality of Greece's inland and Air pollution even if it is sometimes invisible is damaging not only to the health of the inhabitants but also to the city's monuments. coastal waters is generally good, but pol¬ lutants have been found in certain rivers increase by 34 per cent over the period. In The new and vigorous measures recently and lakes. The gulfs of Saronikos, Thermai- Greater Athens, however, increases may adopted in Athens (see inset) which the kos, Pagassitikos and Patraikos are heavily be smaller because of the implementation Government plans to strengthen, reflect an polluted by industrial discharges and by of air-quality regulations, closure of pol¬ appreciation of how serious the situation in untreated municipal wastes. Official dis¬ luting plants and the banning of potential the capital is. While the effects on sulphur charge standards could certainly be better new sources of pollution. dioxide and lead are encouraging so far, enforced. They could also be improved and Pollutants from autos, trucks and other they are less so for nitrogen and hydrocar¬ systematised, taking EEC directives into bons. Enforcement of EEC's new vehicle mobile sources on the other hand are likely account. emission standards would be especially to increase sharply because car ownership The quality of coastal and sea waters is effective (and Greece may even wish to see is growing faster than per capita income also threatened in certain places by oil these tightened further). and is likely to more than double before the development and accidental oil spills, a end of the century. According to a recent The mechanism of Athens' cloud forma¬ problem which calls for greater efforts to OECD study4, the vehicle fleet in Greece in tion needs probing, and the effect of meet international standards and to accel¬

the year 2000 could be two and a half countermeasures systematically moni¬ erate the ratification of international con¬

times larger than it is today. If such tored. Inventories of pollution sources and ventions. projections are realised, traffic-related transmission models should be improved. emissions can be expected to increase by Cost-effectiveness and efficiency are key Noise: Even on Sunday some 60 per cent over ten years unless issues in pollution control in Greece, and stricter control measures are taken. these criteria should be used in selecting Examination of available data suggests Emissions from space heating are the appropriate strategy. A typical choice that 50 per cent of Athenians and 1 5 per expected to increase more or less in line for example is whether or not to site a cent of Greeks outside Athens are exposed with the growth of income, unless modified polluting industry in or near an urban to noise that disturbs daily activities such area. by control measures. In cities, the effect as conversation and sleep. Hence, some 20 would, of course, be greater. Circumstances may require a shutdown to 25 per cent of the Greek population

Taking all sources into account, there¬ or relocation of some highly polluting suffers from unacceptable levels of noise. fore, it seems reasonable to conclude that plants. Elsewhere emission abatement and These figures are close to those for Spain emissions of air pollutants will increase and monitoring of new plants at the planning and Denmark but below those for Japan. that air quality, especially in cities, will and development stage may be more effec¬ Noise in Athens is a particularly difficult tive. continue to deteriorate unless firm and 4. Long-term Outlook for the World Automo¬ effective air-pollution abatement policies The Government has recently taken bile Industry, OECD, to be published late in are adopted. steps to coordinate responsibilities and 1983.

30 NEW GREEK ENVIRONMENT POLICY

by Antonis Tritsis, Minister of Physical Planning, Housing and the Environment

The main measures taken by the Greek government to lay the year. It will be the first official master plan for the Attica region in foundations for a comprehensive environmental policy in Greece 1 50 years and will include all levels of planning.

are: To remedy the more general urban problem, a new law of urban planning is presently under preparation. It will cover the entire Environmental issues have been entrusted to the Ministry of range of planning from an overall master plan to neighbourhood Physical Planning, Housing and the Environment. planning and local building and will make specific reference to

The decision was taken to introduce into Parliament a new environmental improvement. A special 2-year crash programme basic law on the environment. It is now being prepared and is of urban planning and improvement will cover 432 large, medium intended to replace or supplement the various existing laws with a and small towns and will mobilise an estimated 7,000 planners, comprehensive and updated legal framework for an effective architects, engineers and multidisciplinary scientists. This opera¬ environmental policy. tion includes the localisation of industry and other sources of pollution, transportation and traffic planning, water sewerage and It is proposed to set up an autonomous agency within the waste disposal. Ministry of Physical Planning closely linked to local govern¬ Provision will be made for a coastal zone extending to a water ment. depth of 500 metres as well as the sensitive zones on the The Ministry of Physical Planning, Housing and the Environ¬ periphery of cities to protect those areas from illegal subdivision, ment has undertaken a systematic survey of land use and the squatting or over building problems which are at the heart of the state of the environment, country-wide, in cooperation with the environment crisis. universities and other technical and scientific organisations. New legislation will provide for direct citizen participation in the To resolve the problem ofAthens, the government approved in neighbourhood planning process. January 1 982 the first comprehensive antipollution programme There will be a new approach to tourism featuring coordinated which, in December 1 982, was further refined and a timetable action between the Ministry of Physical Planning, Housing and the established. This programme commits the Government to take Environment and the National Tourist Organisation of Greece so specific action on all sources of pollution industry, automobile that new tourist facilities can be located in such a way as to fuels and central heating. Within this framework, a master plan protect sensitive landscapes, in particular the coastline. for the Greater Athens Area is in preparation which will give due Lastly, as an indicator of Greece 's new environmental concern, concern to environmental improvement. The Government is the country is taking a more active part in international environ¬

comremitted to putting the plan into effect before the end of the ment fora.

problem because of the large number of medium-sized Greek towns, the popula¬ OECD average but is smaller than average vehicles in use (60 per cent of the national tions of which are now increasing more as a per cent of GDP (1 .9 per cent in 1 980 fleet), the density of population, the prox¬ quickly than before, and tourist areas, as against an OECD average of 3 per cent). imity of industry to housing, and the which are also growing rapidly. The Greek chemical industry grew in the operation of an airport within a peri urban decade 1 969-79 at a faster rate than the Traffic-management measures and ve¬ residential area. It is compounded by traffic hicle inspections should be continued, average for OECD (7.75 per cent as against an OECD average of 6.1 per cent). In congestion which occurs four times a further developed and accompanied by the day. enforcement of noise emissions standards agricultural chemicals the country is a small net importer of fertilizers, but had a trade Measurements of noise in Athens indi¬ for imported vehicles. While these may be cate that levels over 70 decibels (dBA Leq based initially on EEC standards, Greece surplus in pesticides. Index5) are frequent in the city centre and may wish to see them strengthened in due Chemicals-control legislation and prac¬ that levels above 65 dBA, which are con¬ course. tice in Greece reflect the concern of a sidered "unacceptable" by most OECD Similar conclusions apply to the regula¬ country in which agricultural fertilizers, countries, are regularly found in residential tion, both international and domestic, of insecticides and pesticides account for a areas of the suburbs. During the night, industrial and construction equipment and significant proportion of the chemicals noise falls by only 5 to 7 dBA between released into the environment. home appliances. 2 a.m. and 5 a.m. in the centre, and Aircraft disturbs the sleep of more than The draft institutional law for the envi¬ between 1 1 p.m. and 5 a.m. in the half the people living around Athens' air¬ ronment will contain a section dealing with suburbs. port. A stricter control of flight paths would transport and use of hazardous chemicals, As in many OECD countries, noise prob¬ be helpful. Control of urban development is which is aimed at harmonizing Greek legis¬ lems in Greece are likely to grow in the also needed, especially in view of the lation with international regulations. future. An OECD Conference on Noise project for a new airport but also more As in most other OECD countries, laws Abatement Policies forecast that, for the generally to reduce both noise generation have been enacted to control a broader OECD as a whole, the number of people and nuisance. range of chemicals - pharmaceuticals and exposed to unacceptable levels of noise cosmetics, for example. More recently, the would increase by 30 per cent between authority to control industrial chemicals now and the turn of the century. The Control of Chemicals has also been established. increase could be greater in Greece In keeping with international trends, the because of the projected higher rates of In 1980, chemicals accounted for growth in the vehicle fleet. Furthermore, 1 1 .3 per cent of the total value added to since noise is spreading over time and production by the Greek manufacturing 5. Leq = Equivalent continuous noise level, space, it may begin to affect small and sector which corresponds closely to the i.e. total sound energy over day or night.

31 Greek legislative approach has increasingly been an anticipatory one, and information on chemicals must be generated and assessed prior to marketing. Moreover, the range of potential health and environ¬ mental hazards reviewed prior to marketing has broadened. A number of pesticides can be used only if the Ministry of Agriculture issues a licence, based on precise informa¬ tion about the substance and its toxicity. Knowledge of whether and how a pesticide is used in other countries is a guide but not decisive in determining whether or how that pesticide may be used in Greece. Having joined the EEC, Greece will be consolidating notification procedures ac¬ cording to Common Market directives, taking into account the socio-economic and environmental conditions prevailing in the country and undertaking regulation of existing chemicals on a case-by-case basis.

Soil and Forests:

Deforestation and Erosion

Erosion is one of Greece's major prob¬ lems, affecting about a third of the land mass. In areas where the pattern of rainfall is unfavourable, the productivity of over 2 million hectares of land has already disappeared in places and only patches of tillable soil remain, most of the surface consisting of bare limestone and igneous bedrock. An additional 3 million hectares, in more favourably endowed zones, are severely if not completely eroded. Some of About a third of the Greek territory suffers from soil erosion. this land can be cultivated only every three years and some is simply being aban¬ helpful, not only from an environmental extended. Finally surface mining is an doned. point of view but also economically and increasingly serious problem and, given the socially. Some 2.5 million hectares or 19 per employment implications of mining, one in which it is difficult to enforce controls. cent of Greek land is forest, with 3V4 million While overgrazing as a factor in soil hectares partially forest and 2V2 million damage is likely to decline with economic OECD's report suggest a policy in which wooded grazing land. advancement of rural areas, the OECD's rehabilitation of damaged lands is made a condition for the authorisation of new As in other Mediterranean countries, report suggests that the Greek Govern¬ mining acreage. most of the remnants of what used to be a ment may wish to consider stricter enforce¬ rich cover of vegetation are to be found ment of existing regulations, accompanied today only in the mountains. Another by compensation as appropriate. Unless Nature Conservation 1 Vi million hectares of forest are in such adequately integrated fiscal, agricultural It is essential for Greece to raise public poor condition as to be virtually unproduc¬ and soil conservation policies are adopted, tive. cultivation of marginal and sub-marginal understanding and support for the "capital" land in Greece will increase. represented by its splendid scenery and The ruggedness of the land, the aridity of rare species. Existing nature conservation the climate, floods, fires, overgrazing, min¬ The Ministry of Agriculture is involved in policies concerning the designation of ing, and inadequate forest management the management of virtually all aspects of national parks and other protected areas have all taken their toll on the forest and on agriculture and forestry, beginning with a could be improved by giving special atten¬ the soil. Deforestation itself is a major much needed mapping exercise over the tion to "aesthetic" - the Greeks have a cause of soil degradation, while conserva¬ whole country; this would provide opportu¬ word for it forests and monuments of tion is hindered by the fragmentation of nities to ensure that environmental con¬ nature, to coastal wetlands and estuaries. land ownership, a tradition of rural individ¬ cerns are taken into account at an early Greece is a party to a number of interna¬ ualism and residual pockets of subsistence stage of policy development. tional conventions on conservation, but farming. Greece has at least two other severe several of them are yet to be ratified, and Reforestation is used to combat soil environmental problems. The extensive implementing legislation is not yet erosion but, at a current rate of 4,000 hec¬ enacted. programme of irrigation (irrigated land now tares a year, it is not even keeping pace covers about a quarter of arable land) has Consideration should also be given to with losses from fire. Fire prevention and left in its wake a residue of salt in the soil setting up a National Conservation Stra¬ control could be improved but a more which indicates a greater need for environ¬ tegy as a step towards harmonising pro¬ vigorous reforestation programme could be mental care when irrigation is further grammes of several agencies. Such a stra-

32 tegy could also help in identifying ecosys¬ sites and museums. Ways must be found tems and in reviewing policies and legisla¬ to diminish congestion as well as to raise 3. INTERNATIONAL tion, and could provide the basis for revenues for site development, restoration TOURIST RECEIPTS AS A SHARE strengthening the Government's adminis¬ and conservation. Several suggestions trative capacity to implement conservation have been advanced, such as longer ...of ex¬ ports of programmes. opening hours, higher admission fees ... of GDP goods and Experience in other OECD Member coun¬ within schedules that accommodate the % services 1981 tries suggests the value of setting up a needs of special groups, incentives to % special nature conservation agency, admin¬ encourage visits at off-peak hours, days or 1981 istratively distinct from bodies responsible seasons and perhaps even the establish¬ for the promotion of agriculture, forestry or ment of a heritage-conservation club, Greece 20.5 5.1 other types of land development. It would offering members privileges in exchange for Italy 7.5 2.2 need to have close links to economic and a substantial fee. Portugal 16.1 4.3 physical planning. Greece is also rich in post-classical Spain 18.9 3.6 buildings and traditional villages for which Turkey 6.9 0.7 Monuments and Villages there needs to be greater appreciation on the part of the inhabitants themselves as OECD 4.1 0.9 The monuments that constitute well as measures of protection. Govern¬ Greece's great legacy to world culture are ment efforts to assist owners in restoration Source: OECD protected by strong laws; less so their work, to foster appropriate new uses for surroundings. Apart from theft and vandal¬ old buildings and to involve residents in Greece grew from about 1.2 million to ism, air pollution is the major culprit in the planning the future of their settlements more than 5 million; and an additional half process of decay: sulphur and nitrogen hold promise and could be further devel¬ million tourists touch down at Greek ports compounds in the atmosphere transform oped. every year on cruises. Foreign tourists the sparkling Pentelic marble of the Acro¬ spent about 58 million nights in all regis¬ polis into gypsum. The Government has Tourism tered accommodations in 1 981 . A further adopted a number of measures to halt the 20 million nights should be added for degradation, including air pollution abate¬ Tourism, with 5 per cent of GDP is a domestic tourists, although this is probably ment and support for research to develop a mainstay of the Greek economy. As else¬ an underestimate because it does not cover protective chemical treatment for the where, it depends critically on the preser¬ visits to secondary residences or tourists stone. All statuary and friezes in the vation and enhancement of the environ¬ staying with families. Acropolis are gradually being removed and ment. Comparison of the touristic pattern As in other countries, tourism is sensitive shortly will be visible only in museums. in Greece with that of other Mediterranean to environmental protection or degradation Efforts are also being made to reduce the countries (Table 3) brings out substantial and could become increasingly so. As crowds of visitors who tend to cluster differences. Between 1970 and 1982 the tourists are becoming more demanding and around a few well-known archeological number of foreign tourists arriving in want reliable information on local condi¬ tions, this information could be provided Could tourist fees cover part of the cost of environmental measures? through simple environmental indicators.

Greek coastal waters generally meet EEC quality standards for bathing, but sewage collection and installation of waste-water treatment should be pro¬ grammed with a view to the likely number of visitors. Similar anticipatory concepts apply to drinking water. Litter control is inadequate in a number of spots and could be improved with relatively simple meas¬

ures.

Only limited damage seems to have been done by inappropriate forms of tourist development but with notable exceptions. Policies to encourage the use of traditional buildings (including the restoration of old structures) have worked successfully. There is a need, however, to reinforce the control of unauthorised development and it would be useful to see whether tourist fees could cover any of the costs of environ¬ mental measures.

The need, OECD's report concludes, is to act now before the country becomes more industrialised since there is still time to control the situation and the opportunity to do so.

33 TOURISM POLICY AND INTERNATIONAL TOURISM IN OECD MEMBER COUNTRIES. New OECD Publications Evolution of Tourism in 1 982 and the Early Months 1983 (October 1983) In spite of the economic recession, international SOCIAL AFFAIRS, MANPOWER, policies which encourage more efficient use of tourism within OECD countries proved resilient, EDUCATION energy. with no decline in visitors or receipts. But 1 97 83 03 11 ISBN 92-64-12470-5 competition became more fierce and the pres¬ 138 pages ...... F60.00 £6.00 US$12.00 DM27.00 OECD: EMPLOYMENT OUTLOOK sures on governments to introduce protec¬ COSTS OF COAL POLLUTION ABATEMENT. -SEPTEMBER 1983 (September 1983) tionist measures increased. Results of an International Symposium (August (78 83 01 II ISBN 92-64-12511-6 In most OECD countries, unemployment is 1983) 156 pages F96.00 £9.60 US$19.00 DM43.00 alarmingly high. Even if a recovery gets under¬ The prospect of a large increase in the use of way, it will remain a serious problem in the ECMT (European Conference of Ministers coal in coming years has aroused public concern 1 980s. Which groups are most affected? What of Transport) lest the environment suffer. This book examines RESEARCH ON TRANSPORT ECONOMICS - are the short-run prospects? How is the labour the latest technological advances and assesses Annual Information Bulletin. Volume XVI - market adapting to high and growing unem¬ the costs of producing and handling coal with a ployment? This report surveys current labour November 1983 (October 1983) reasonable degree of environmental protec¬ (74 83 01 31 ISSN 0304-3320 market trends and examines several key labour tion. 556 pages bilingual market developments from a medium-term Subscription: .... F180.00 £20.00 US$45.00 DM90.00 197 83 05 11 ISBN 92-64-12482-9 perspective. (See also OECD Observer No. 1 24, 300 pages F120.00 £12.00 US$24.00 DM54.00 STATISTICS September 1983, page 15.) 181 83 03 11 ISBN 92.64-1 248 7-X INDUSTRY 104 pages F4S.00 C4.S0 US$9.00 DM22.00 QUARTERLY NATIONAL ACCOUNTS BUL¬ THE STEEL MARKET IN 1982 AND THE OUT¬ REVIEWS OF NATIONAL POLICIES FOR EDU¬ LETIN No. 2-1983 (August 1983) LOOK FOR 1 983. "Document" Series (August (36 83 02 31. 130 pages bilingual CATION: NEW ZEALAND (August 1983) (36 00 00 31 ISSN 0304-3738 1983) Examines the aims, content and quality of Subscription for 1983: F60.00 £6.00 US$13.00 DM30.00 World steel demand, after a major contraction teaching and learning in New Zealand in light of NATIONAL ACCOUNTS: Detailed Tables. in 1982, is unlikely to show any general the current response of the schools and post- Volme II 1964-1981 (September 1983) recovery in 1983, though there may be some school institutions to emerging social and (30 83 03 31 ISBN 92-64-02459-X economic pressures. improvement before years end. Demand in 31 8 pages bilingual . . . F120 £12.00 US$24.00 DM54.00 (91 83 04 11 ISBN 92-64-12477-2 1983 is likely to be lower for the EEC, Japan LABOUR FORCE STATISTICS 1970-1981 140 pages F66.00 £6.60 US$13.00 DM30.00 and Australia. In North America it will be only (September 1 983) slightly higher. (30 83 04 31 ISBN 92-64-02458-1 ENERGY 158 83 02 11 ISBN 92-64-12481-0 478 pages bilingual F120.00 £12.00 US$24.00 DM54.00 38 pages F45.00 £4.50 US$9.00 DM22.00 QUARTERLY LABOUR FORCE STATISTICS: IEA (International Energy Agency) SCIENCE AND TECHNOLOGY No. 3-1983 (October 1983) (35 83 03 31 82 pages, bilingual COAL INFORMATION REPORT (September not sold separately 1983) EAST-WEST TECHNOLOGY TRANSFER: Study ISSN 0304-3312 1983 Subscription: F60.00 £6.00 US$17.00 DM35.00 The first result of the IEA Information System of Poland 1971-1 980, byZbigniew Fallenbuchl designed to provide both OECD governments (September 1 983) INDICATORS OF INDUSTRIAL ACTIVITY: and the coal industry with a comprehensive Measures the massive flow of technology from 1983-111 (October 1983) the West to Poland and assesses its impact on (37 83 03 31 124 pages, bilingual picture of future prospects for coal. Per issue: F34.00 £3.40 US$7.50 DM17.00 161 83 07 11 ISBN 92-64-12489-6 the Polish economy. The various factors which (37 00 00 31 ISSN 0250-4278 Annual subscription 376 pages F400.00 £40.00 US$80.00 DM145.00 led to the failure of the import-led growth (Quarterly) F120.00 £12.00 US$26.50 DM60.00 INTERNATIONAL COOPERATION FOR RA¬ strategy are examined. (See also OECD THE ENGINEERING INDUSTRIES IN OECD TIONAL USE OF ENERGY IN INDUSTRY: Observer No. 122 May 1983 page 29). MEMBER COUNTRIES: Basic Statistics 1977- (92 83 01 11 ISBN 92-64-12484-5 Proceedings of an international seminar organ¬ 1980. Deliveries of "100" Selected Products. 200 pages F1 10.00 £11.00 US$22.00 DM49.00 ized by the Latin American Energy Organization, "Document" Series (October 1 983) the International Energy Agency, the Ministry of AGRICULTURE, FOOD AND FISHERIES (71 83 40 31 ISBN 92-64-02490-5 1 1 0 pages bilingual . . F50.00 £5.00 US$10.00 DM25.00 Energy and Mines of the Republic of Peru, and THE FOOTWEAR, RAW HIDES AND SKINS the Commission of the European Communities, PROSPECTS FOR SOVIET AGRICULTURAL AND LEATHER INDUSTRY IN OECD COUN¬ Lima 4-6 July 1983 (September 1983) PRODUCTION AND TRADE (August 1983) 161 83 08 II ISBN 92-64-12502-7 TRIES: STATISTICS 1981-1982 (August In recent years the Soviet Union has become 654 pages F100.00 £10.00 US$20.00 DM45.00 1983) one of the most important purchasers of (71 83 81 31 ISBN 92-64-02456-5 agricultural commodities from OECD countries. ENVIRONMENT 60 pages bilingual .... F45.00 £4.50 US$9.00 DM23.00 This report examines the extent to which this is PULP AND PAPER QUARTERLY STATISTICS: due to natural conditions or to organisational CONTROL TECHNOLOGY FOR NITROGEN 1983/1 (October 1983) problems and provides an outlook on agricul¬ OXIDE EMISSIONS FROM STATIONARY (73 83 01 3) 68 pages, bilingual tural developments to 1990. Per issue: F22.00 £2.20 US$5.00 DM11.00 (73 00 00 31 ISSN 0335-37 7X SOURCES. "Document" Series (September 151 83 06 11 ISBN 92-64-12471-3 Subscription 1983: . . F66.00 £6.60 US$14.50 DM33.00 1983) 118 pages F60.00 £6.00 US$12.00 DM27.00

Nitrogen oxides emitted by combustion pro¬ REVIEW OF FISHERIES IN OECD MEMBER THE PULP AND PAPER INDUSTRY 1 981 (Sep¬ tember 1983) cesses contribute significantly to the formation COUNTRIES-1982 (September 1983) of "photochemical smog" and "acid rain", a (71 83 60 31 ISBN 92-64-02457-5 (53 83 01 11 ISBN 92-64-12476-4 84 pages bilingual . . . F62.00 £6.20 US$12.50 DM28.00 problem of international concern. The report 268 pages F79.00 £7.90 US$1 6.00 DM36.00 QUARTERLY OIL STATISTICS. First Quarter assesses control techniques and their impact on TRANSPORT AND TOURISM 1983 -No. 2/1983 (August 1983) energy production costs for stationary combus¬ (60 83 02 31 318 pages bilingual tions sources. Per issue: F120.00 £12.00 US$26.00 DM60.00 197 83 06 11 ISBN 92-64-12485-3 MARITIME TRANSPORT-1982 (August (60 00 00 31 ISSN 0378-6536 168 pages F69.00 £6.90 US$14.00 DM31.00 1983) Annual subscription: F400.00 £40.00 US$88.00 DM200.00

ENVIRONMENTAL EFFECTS OF ENERGY SYS¬ During 1 982 worldwide demand for shipping FOREIGN TRADE BY COMMODITIES - SERIES TEMS: the OECD Compass Project (August services suffered a dramatic setback, resulting C I- Exports 1981 (September 1983) in the largest surplus of tonnage recorded since 1983) (34 81 02 31 ISBN 92-64-02455-7 The OECD Compass Project a comparative the second World War, with gross overcapacity 292 pages bilingual assessment of the environmental implications in almost all sectors of the fleet. The prospect of Volume II Imports 1981 of various energy systems seeks to show how austere trading conditions and too many orders (September 19831 ... (34 81 01 3) ISBN 92-64-02459-9 for all kinds of ships suggest continued difficul¬ environmental considerations can be better 258 pages bilingual. Each Volume, integrated into energy policy-making. Environ¬ ties for shipowners. Exports or Imports: . . F80.00 £8.00 US$16.00 DM40.00 1 76 83 01 II ISBN 92-64-12479-9 1983-1984 Subscription. Volumes I & II mental impacts can be reduced significantly by 162 pages F60.00 £6.00 US$1 2.00 DM27.00 Exports & Imports: . F1 50.00 £1 5.00 US$30.00 DM74.00

34 Where to obtain OECD Publications

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