III. Economic and Social Questions A. WORLD ECONOMIC SITUATION At its fifteenth session, held at United Nations food, especially textiles, from mid-1951 to mid- Headquarters from 31 March to 28 April, the 1952, was less than that required to keep the Economic and Social Council made its annual industries producing them working at capacity. review of the world economic situation, in accord- Despite the substantial increase in resources ance with the recommendation of the General devoted to arms production, there was a general Assembly in resolution 118(II). rise in civilian supplies—and hence real con- sumption and real wages. 1. Reports before the Economic The centrally planned economies continued to and Social Council at its devote a high proportion of national income to Fifteenth Session capital formation, in accordance with their policy of rapid industrial expansion, simultaneously with The Council's discussion was based primarily on their heavy military expenditures. High per- the Secretary-General's report on world economic centage increases in industrial production were conditions, entitled World Economic Report reported; agricultural output, however, developed 1951-52 (E/2353/Rev.1),1 supplemented by a rather slowly. In some countries, increases in the Review of Economic Conditions in the Middle supply of consumer goods were sufficient to per- East 1951-52 (E/2353/Add.1 & Corr.1).2 Also mit a rise in real wages, but in others the food before the Council were: (1) a report entitled supply position deteriorated. Aspects of Economic Development in Africa (E/- Generally speaking, industrial production in 2377 & Corr.1); and (2) the Review of Inter- under-developed countries increased during 1951 national Commodity Problems, 1952 (E/2354).3 and 1952. The high rate of expansion of inven- World production, as calculated from official tories of imported manufactures characteristic of government data, rose to a new high level in 1952, 1950-51 was reduced in 1951-52. The fall in stated the World Economic Report. But the rate external demand for exportable raw materials, of expansion, particularly of industrial production however, was reflected in a piling up of many raw —which had been rapid since 1949—slowed material inventories. In most cases, the major fac- down considerably. tor in determining the trend in consumption was From 1950-51 to 1951-52, production of food the level of food supply. In some countries the rose only 1 per cent, thus barely keeping pace inadequacy of food supplies tended to generate with the population growth. International trade, or sustain upward spirals of wages and prices. In measured at constant prices, was slightly lower in a number of countries in Asia, however, food sup- the first three quarters of 1952 than in the cor- plies were adequate to enable consumption to be responding period of 1951. However, there maintained or increased. appeared to have been an upturn in both trade Towards the end of 1950 and early in 1951, and industrial production in a number of coun- international trade expanded sharply under the tries towards the end of 1952. impact of a general rise in economic activity and, In the economically developed private enter- in particular, of an accumulation of inventories in prise economies, production rose, on the average, both industrialized and under-developed econo- by some 2 per cent from 1951 to 1952. The mies. In 1952, on the other hand, the levelling off in economic activity and the decline in the rate decline in the rate of increase in production was due chiefly to a marked fall in the rate of of accumulation of inventories was associated in accumulation of inventories. While the demand 1 U.N.P., Sales No.: 1953.II.C. for capital goods was sustained at or near the 2 U.N.P., Sales No.: 1953.II.C.1. 3 U.N.P., Sales No.: 1953.II.D.1. For a further dis- level of the growing productive capacity, the cussion of commodity problems see below, under demand for articles of consumption other than International Commodity Arrangements. 286 Yearbook of the United Nations many cases with a fall in the demand for imports. tortion and made it extremely difficult for them Moreover, a number of countries which had to budget for an orderly programme of economic encountered balance-of-payments difficulties in growth. Attempts to diversify the productive 1951 were compelled in 1952 to reduce their capacities of these countries had encountered great imports either through the use of disinflationary obstacles, of which the lack of elasticity in the fiscal and credit policies or import restrictions, or supply of food was among the most important. both. The tempo of economic development could be Those developments were accompanied by sig- substantially accelerated with the aid of resources nificant fluctuations, not only in the quantum but borrowed from industrialized countries. An also in the terms of trade. Both factors were expanded flow of capital to under-developed coun- involved in the fluctuations in the balance of pay- tries could, in fact, advance progress towards the ments between industrialized and primary produc- solution of all three types of basic problems con- ing countries from 1950 to 1952. Changes in fronting the world. balances among the industrialized countries, how- The Review of Economic Conditions in the ever, were associated primarily with differences in Middle East 1951-52 pointed out that develop- the timing of the expansion and subsequent con- ment made only slow progress in the region as traction of their imports. a whole during 1951 and 1952. but with wide differences in this respect among the various coun- The World Economic Report further stated that tries. While the region's terms of trade had pre- while trade between the centrally planned econ- viously improved, following the rise in prices of omies and the rest of the world had declined since raw materials in international markets, the pre-war years, the quantum of trade within both reversal of this trend towards the end of 1951 and groups of countries had expanded substantially the beginning of 1952 tended to remove the owing to an intensification of trade among the stimulus to economic activity provided by higher countries of each group. export prices. In some countries internal factors Significant economic progress had been made tended to intensify the effects of these inter- since the early post-war years, the Report recorded. national trends while in others such factors exerted But there were still three areas of continuing eco- an offsetting influence. The region's production nomic difficulty: the maintenance of economic of crude petroleum rose by 10 per cent in 1951 stability, the persistent disequilibrium in inter- and 8 per cent in 1952, while the production of national payments and the relatively slow develop- refined products dropped by approximately 17.5 ment of the under-developed countries. As to per cent in 1951 because of the cessation of oil stability, the Report stated that by the beginning exports from Iran. The benefits derived by the of 1953 inflationary pressures had subsided in major oil-producing countries in the Middle East most countries. Although the possibility of defla- showed a considerable increase; several new profit- tionary developments could not be excluded from sharing agreements were concluded between oil consideration, there were many elements in the companies and individual governments. current situation in support of demand. Expe- The first part of the report entitled Aspects of rience from 1950 to 1952, however, illustrated Economic Development in Africa dealt with the the sensitivity of balances of international pay- expansion of the exchange economy in tropical ments to even moderate fluctuations in internal Africa and analysed the relationship between sub- demand. The elaboration of measures to mitigate sistence production and cash earning activities. the international impact of domestic instability From the point of view of economic development, continued, therefore, to call for international dis- it noted, the most characteristic feature of vir- cussion. tually the whole of tropical Africa was the fact As to international economic disequilibrium, the that the indigenous inhabitants were in process of Report noted a reduction in dollar deficits in the transition from almost complete dependence on course of 1952, but the improvement was pre- subsistence activities to participation in various carious. Further adjustments in the pattern of forms of cash earning. Although cash income had international trade would be required for dollar become for most indigenous inhabitants of tropical accounts to be balanced without economic aid. Africa a necessary support to established standards Fluctuations in the prices of many primary com- of living, their basic means of livelihood was sup- modities, such as had occurred in recent years, the plied, as a rule, by subsistence agriculture. Report also stated, led to abnormal fluctuations Major developments in African trade and pro- in real income in under-developed countries, duction were summarized in the second part of tended to subject their economies to periodic dis- this report, which also described official economic Economic and Social Questions 287 plans in the Belgian Congo and the British and the boom had not been followed by a depression, French territories. During 1951, it observed, the situation did, however, call for concerted expenditures on development plans in the depend- action for maintaining world demand, the ent territories were generally at a higher level than Swedish representative, for instance, stressed. The in 1950, partly as a result of higher prices and representatives of some countries, including Aus- partly because of the increasing number of pro- tralia and Belgium, stated that consumer goods jects under way. industries had already felt the decline in demand, but that production during 1952 had been high The Review of International Commodity Prob- lems, 1952, prepared by the Interim Co-ordinat- in industries benefiting directly or indirectly from rearmament, and that, in general, unemployment ing Committee for International Commodity had remained low.