TRADE and DEVELOPMENT REPORT, 1991 Note
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Digitized by the Digitization and Microform Unit - UNOG Library UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT Geneva TRADE AND DEVELOPMENT REPORT, 1991 Note Symbols of United Nations documents are composed of capital letters combined with figures. Mention of such a symbol indicates a reference to a United Nations document. The designations employed and the pres entation of the material in this publica tion do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations con cerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. • Material in this publication may be freely quoted or reprinted, but acknowledge ment is requested, together with a refer ence to the document number. A copy of the publication containing the quota tion or reprint should be sent to the UNCTAD secretariat. UNCTAD/TDR/ll UNITED NATIONS PUBLICATION Sales No.: E.91.II.D.15 ISBN 92-1-112309-7 ISSN 0255-4607 Trade and Development Report, 1991 Hi Contents Page Explanatory notes xi Abbreviations xiii OVERVIEW by the Secretary-General of UNCTAD l-Xlll Part One CURRENT DEVELOPMENTS IN THE WORLD ECONOMY Chapter I PROSPECTS FOR THE WORLD ECONOMY 3 Introduction and summary 3 Developing countries 6 1. Latin America 6 2. Africa 9 3. Asia 12 4. Least developed countries 17 China 18 Central and Eastern Europe 20 Developed market-economy countries 23 tv Page Chapter ¡I INTERNATIONAL MARKETS AMD DEVELOPING COUNTRIES 27 Recent developments in international trade 27 1. The impact of the Gulf crisis 28 2. Trade of developed market economies: major trends and imports from developing countries 28 3. German unification and imports from developing countries 31 4. Basic trends in the trade of Central and Eastern European countries 32 5. Developments in commodity markets 32 6. Salient features of the trade performance of developing countries 37 7. China 39 8. Outlook 39 Borrowing by developing countries from the international capital markets and external debt 41 1. Recent trends in international lending 41 2. Debtor countries' external financial positions and recent policy responses 42 3. Renegotiations of external debt owed to commercial banks 43 4. The costs and other terms of private export credits 49 5. Rescheduling of official bilateral debt 51 Chapter ¡II RECENT DEVELOPMENTS IN TRADE POLICIES 57 Protection in developed and developing countries 58 1. Persistence of managed trade in industrialized countries 58 2. Trade liberalization in developing countries 59 The accelerating trend towards economic integration 60 1. Developing countries and greater European integration 60 2. Liberalizing trade in the Americas 65 3. Regional arrangements: building blocks or stumbling blocks? 71 Non-tariff measures applied since 1987 by developed market-economy countries to developing countries not previously affected by such measures 73 Developing countries: Recent tariff reductions, bindings and simplification of tariff structures 75 Annex 3 Developing countries which have eliminated all or most quantitative import restrictions and/or other non-tariff measures having similar effects 79 1' Page Part Two FINANCE, INVESTMENT AND SAVINGS INTRODUCTION 85 Chapter I THE CONCEPT OF SAVINGS SHORTAGE AND THE ROLE OF FINANCE 87 Introduction 87 Private savings 87 Real investment 89 Theory of savings, investment and finance 90 The efficiency of financial markets 93 Alternative ways of organizing the financial system 97 Chapter 11 FINANCIAL FRAGILITY AND GLOBAL EXPANSION 101 Introduction 101 The United States 101 1. The structure of the United States financial system 101 2. Implications of financial innovation and deregulation for the stability of financial flows 103 3. The transmission of monetary policy 103 4. The introduction of equity-based controls 105 5. Variability in capital flows 105 6. Debt deflation or credit crunch? 107 Japan 107 Conclusions 109 VI Page Chapter III FINANCIAL REFORM AND THE DEVELOPMENT PROCESS Ill Introduction HI Financial policies and savings 113 1. Size and allocation of savings 113 2. Interest rates and financial savings 118 Efficiency, instability and regulation of finance 122 Capital markets 123 Internal financial liberalization, trade and industrialization 126 1. Interest rates, trade and macroeconomic stability 126 2. Financial subsidies and industrialization 127 External financial liberalization, trade and competitiveness 129 1. Financial openness in developing countries 129 2. External capital flows 130 3. Cost of finance 135 Conclusions 136 Part Three SELECTED ISSUES IN THE URUGUAY ROUND Chapter ! REVIEW OF DEVELOPMENTS IN THE URUGUAY ROUND 141 Chapter il EFFORTS AT AGRICULTURAL REFORM: ISSUES IN THE NEGOTIATIONS 147 A. Introduction 147 Agricultural production, trade and national policies 147 1. World agricultural production and trade: general pattern and relative importance to national economies 147 2. National policies affecting agricultural production and trade 149 vu Page Negotiating agricultural policy reform in the Uruguay Round 153 Main issues in the negotiations 159 1. Domestic support 160 2. Market access 161 3. Export competition 164 4. Sanitary and phytosanitary measures 166 5. Special and differential treatment for developing countries 168 Development considerations 171 GATT rules and disciplines on agriculture 175 Chapter ill RAD IIGHTS 179 Introduction 179 The drive towards uniform standards on intellectual property 181 1. Bilateral actions 182 2. Multilateral initiatives: the TRIPs negotiations 183 Main areas of tension 185 1. Patentable subject matter 185 2. Scope and duration of patent protection 186 3. Computer software 187 4. Rights related to or neighbouring on copyright law 188 5. Geographical indications of origin 188 6. Undisclosed information 188 7. Transfer of technology and restrictive practices 189 8. Enforcement and dispute settlement 190 Implications for developing countries 190 1. General considerations 190 2. Specific policy considerations 192 Main conclusions 193 Chapter ¡V THE MULTILATERAL NEGOTIATIONS ON BANKING SERVICES: CONTEXT AND SELECTED OUTSTANDING ISSUES 195 Introduction 195 Protectionism and market opportunities in developing countries 196 Salient features of positions expressed at the negotiations 199 Cross-border trade 201 VIH Page Trade involving a commercial presence in the importing country 202 1. Market access 202 2. National treatment 203 3. The most-favoured-nation (MFN) principle 204 4. Cross-sectoral suspension of benefits 205 5. Restrictive business practices and anti-dumping policy 206 The relevance of work in other forums on guidelines for foreign direct investment 208 ix List of text tables Page 1 World output, 1980-1990, and forecasts for 1991 and 1992 5 2 World trade volumes, 1980-1990, and forecasts for 1991 and 1992 5 3 World commodity prices, 1980-1990, and forecasts for 1991 and 1992 6 4 World current account balances, 1981-1990, and forecasts for 1991 and 1992 7 5 Developing countries: sources of financing of the current account, 1981-1990 and forecasts for 1991 and 1992 9 6 Developing countries: debt outstanding, 1988-1990, and forecasts for 1991 and 1992 10 7 Growth of export volumes in selected groups of countries, 1980-1992 29 8 Growth of import volumes in selected groups of countries, 1980-1992 30 9 Merchandise imports into Germany by major region of origin and commodity group, 1988-1990 33 10 Price indices of non-oil primary commodities exported by developing countries, 1989-1991 34 11 World exports and exports from developing countries, by major product group, 1980-1990 38 12 Selected categories of international financing and shares of developing countries therein, 1983-1990 42 13 External assets of banks in the BIS reporting area vis-à-vis developing countries, 1983-1990 43 14 Developing country recipients of negative net flows of total export credits 44 15 Net flow of medium-term and long-term export credits to developing countries, 1983-1989 45 16 Selected indicators of external financial positions of net debtor developing countries, 1981-1990 46 17 Selected international interest rates 47 18 Terms of insurance cover available to selected developing countries from the Export- - Import Bank (EXIM) of the United States and the Export Credits Guarantee Department (ECGD) of the United Kingdom 50 19 Changes in terms on insurance cover available to selected developing countries from the Export-Import Bank (EXIM) of the United States and the Exports Credits Guarantee Department (ECGD) of the United Kingdom 52 20 Proportion of export credit agencies in selected developed market-economy countries that incurred losses on insurance activities, 1981-1989 53 21 Estimated net trade creation effects of the single European market on developing country exports by region and commodity group 64 22 Coverage of non-tariff measures applied by the United States to exports from Latin America, and specifically to Mexico, by sector in 1990 68 23 Intra- and extra-regional exports of major regions, 1973-1988 72 24 Savings ratios as per cent of gross and net national product in major OECD countries 88 25 Net personal savings rates in major OECD countries, 1973-1989 89 26 United States national net saving measured from flows of funds 90 27 Share of agriculture in production and labour force in selected regions, 1965 and 1988 or 1989 149 28 Share of developing countries in world agricultural exports, by product group, 1970-1989 ISO 29 Aggregate food trade of developing countries,