Automotive Industries in Developing Countries by Jack Baranson
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IN THIS ISSUE Cover: Raymond Aubin; back The AWKWI Meetings of the Boards of Governors of the cover: Hordur Karlsson; photo International Monetary Fund and the World Bank Group were credits: pages 2, 3, Central Mort- gage and Housing Corp., Canada; 5, held In September in Copenhagen, Denmark. Articles in the Leroy Woodson, Jr., Corcoran Gal- center section of the issue beginning on p. 29 point out the lery of Art; 8, 14, 21, 39, 44, 53, highlights of these meetings, at which the Governors discussed 59, Edwin G. Huffman for World sortie df the most important problems now facing the world Bank; 27, Ray Witlin for World economy. Bank; 33, 34, 35, 36, 37, 38, 42, Pressehuset, Copenhagen; 37 Ate- lier Bache, Copenhagen; charts: 19, Subjects discussed at the Meetings find echoes in other Linda Reynolds; 49, Hordur Karls- articles. In "Urbanization Problems and Prospects" on p. 2, son; maps: 26, Linda Reynolds; 46, Richard M. Westebbe fees rapid urbanization in the less 47, Richard D. Lawrie; illustra- developed world as an historical phenomenon that calls for tions: 32, 39, 40, 41, 43, 44, 56, Hordur Karlsson. analytical study m well as current action. In "Exchange Rates at the Beginning of 1970" (p. 16), Jozef Swidrowski surveys the world system of exchange rates at this point in time. In "Special Drawing Rights: The Computer Approach to the Wtw -(tern Asset/' Otndeterio Trujilte shows how SDft's were established by etectropie computing and transferring each country's allocation onto computer magnetic tape. JJ. Potak and Fred Hirsch review books dealing with different aspects of the evolving monetary system. See Book Notices, p. 61. ©International Monetary Fund. Not for Redistribution EDITOR J. D. Scott DEPUTY EDITOR Donald Townson Finance and Development CONSULTING EDITORS Volume 7 Number 4 December 1970 L. Ruben Az6car~ Jean van der Mensbrugghe ADVISORS TO THE EDITOR Roger V. Anderson CONTENTS Barend A. de Vries John A. Edelman H. Geoffrey Hilton Michael L. Hoffman Urbanization Problems and Prospects 2 F. A. G. Keesing Richard M. Westebbe Henri H. P. King LarsLind The Case for a Central Projects Bureau 9 Samuel Lipkowitz C. J. Martin A. S.Ray Charles F. Schwartz Exchange Rates at the Beginning of 1970 16 Jozef Swidrowski DESIGN Hordur Karlsson Livestock: The Road to Market 22 Fund Graphics Section Donald J. Pryor 1970 Annual Meetings, Copenhagen 29 The Bank Group Meeting 32 Cyril H. Davies Finance and Development is pub- lished quarterly in English, French, and Spanish by the International The Fund Meeting 38 Monetary Fund and the International Bank for Reconstruction and Develop- Tony Helm and John Kay ment, Washington, D.C. 20431, U.S.A. A German language edition is Indonesia: Economic Stabilization, 1966-69 46 published by the International Mone- Gunnar Tdmasson tary Fund and the International Bank for Reconstruction and Development in collaboration with HWWA-Insti- Special Drawing Rights: The Computer Approach 54 tut fur Wirtschaftsforschung-Ham- burg, sponsored by Kreditanstalt fur to the New Reserve Asset Wiederaufbau and produced by Ver- Candelario Trujillo, Jr. lag Weltarchiv GmbH. A selection of its contents is pub- Book Notices 61 lished annually in Rio de Janeiro, Brazil, in cooperation with the United Nations Information Center. Recent Activity—International Bank for Reconstruction and 64 Opinions expressed in articles and Development, International Development Association, and other material are those of the writer or writers; they are not statements of International Finance Corporation Fund or Bank policy. The contents of Finance and De- Recent Activity—International Monetary Fund 66 velopment^ may be quoted or repro- duced without further permission. Due acknowledgment is requested. Table of Contents for Volume 7, 1970 70 ©International Monetary Fund. Not for Redistribution Urbanization Problems and Prospects The author sees the rapid urbanization in the less developed -world not as a crisis that can be "dealt with" by urgent measures but as a major his- torical phenomenon that calls for analytical study as well as current action in the hope that it can be influenced to play a positive role in economic development. Richard M. Westebbe '-pHROUGHOUT the less developed world rapid The result is that the cities of the underdeveloped JL urbanization is accompanied by bitter social dis- world are increasingly spawning what has been termed tress as well as intractable problems that will pro- by Oscar Lewis a "culture of poverty" that is more foundly influence economic development. The urban akin to rural peasant society than it is to modern urban population grows far more rapidly than the number of society. new jobs available to it, causing severe unemployment Is there, then, an "urban crisis"? It is tempting to and underemployment. The cities are financially unable think in such terms. The word "crisis" suggests that to meet the sharply rising demand for social services urgent measures can be taken that will avert imminent and social overhead investment, thus leading to a dete- disaster. In fact there are no urgent measures that we rioration in the quality of urban life for the bulk of the can take, and there is no prospect that the social struc- inhabitants and to slums and shanty towns for the very tures of the less developed world are about to collapse. poor. The chaotic growth of cities, the ineffective allo- We are witnessing an historical transformation, in cation of resources, and deficiencies in basic infrastruc- which great forces are at work, rending and remaking ture are retarding industrialization, the growth of the whole social pattern; these forces are operating employment, and, in turn, the growth of the national over a long period, and the concept of crisis is inappro- economy. priate. Not only do the cities fail to provide jobs for the It is an unbalanced transformation and—given newcomers—they do not even provide the training and present demographic trends, economic growth rates in the cultural integration that might lead to jobs. Often, the less developed world, and the constraints on the newcomers are absorbed only in the strictest physi- resources—it will probably get worse. Yet urbanization cal sense; in every other way they remain outsiders. is, for better or worse, at the core of the process of 2 ©International Monetary Fund. Not for Redistribution development. The economic growth of urban areas In the most recent years the trends have accelerated. where most industry is centered and the growth of the In the decade of the 1950's the rate of increase of national economy are closely interrelated. The task urban population was almost one and a half times that then is to plan for the most efficient spatial and eco- of the previous three decades in both the developed nomic organization of the system of cities in the less and the less developed countries; in the less developed developed world in order to maximize growth. Further, countries urban populations rose by 64 per cent from we should seek to minimize the cost of urbanization, 1950 to 1960 compared with 31 per cent in the devel- improve the mobilization of urban resources, and oped countries. Projections for the period through greatly improve the management of urban centers. In 2000 indicate that in those less developed countries this way more resources will be available to raise that are densely populated the urban population may output, increase employment, and facilitate the eco- rise fourfold to fivefold and in those of relatively low nomic and cultural integration of the growing marginal density the urban population may rise sixfold to eight- city populations of the less developed regions into fold. modern urban life. Despite these dramatic increases in urban popula- In such ways governments and institutions con- tions, the rural and small-town populations of the less cerned with international development can help to developed countries rose by over 50 per cent from shape these forces, we must first of all study them. As 1920 through 1960 and are projected to rise by a fur- reverse, the historical forces that are currently mani- ther 90 per cent through the end of the century. The festing themselves in the process of urbanization. To growth of big cities is expected to continue to exceed shape these forces, we must first of all study them. As urbanization rates in general. With most major cities the world will not wait and much of our knowledge growing at rates of from 5 per cent to 8 per cent will have to be obtained from experience, programs annually, they can be expected to double their popula- and policies need to be devised on a current basis. The tions in 10 to 15 years' time. management of both national and international While the projections take no account of the effects resources will have to be devoted to urban areas that of potentially successful family planning programs, it can be greatly improved so that the pattern and scale would be unwise to look to such programs for much of urban development can increasingly reflect national, relief in the next two decades. In the first place, family economic, and social objectives. planning programs are only likely to become effective gradually and are therefore unlikely to have great The Demographic Characteristics of Urbani- impact on population growth rates in the near future. zation Second, the numbers entering the labor force will not be affected for at least 15 years; these people are The urbanization process in the developing countries already born. Third, family planning no matter how is characterized by high rates of natural population effective, is unlikely to affect the rate of rural to urban increase coupled with an accelerating movement of migration. More than half of the urban population rural populations to urban centers.1 In the 40 years growth is due to migration from rural areas and small from 1920, the urban population of the more devel- towns.