The Problems and Policies of Economic Development: an Appraisal of Recent Experience
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THE PROBLEMS AND POLICIES OF ECONOMIC DEVELOPMENT: AN APPRAISAL OF RECENT EXPERIENCE World Economic Survey 1967-Part One UNITED NATIONS T L S P C T COiIOfllJCm UHITED HATIOHS NewYerk, 1968 NOTE Symbols of United Nations documents are composed of capital letters com- bined with figures. Mention of such a symbol indicates a reference to a United Nations document. E!4488/Rev.1 ] ST/E'CA/104 FOREWORD This report, World Economic Survey, 1967, is provide a helpful background to discussions in the twentieth in a series of comprehensive reviews United Nations forums on designing a concerted of world economic conditions published by the programme of action for the 1970%o lJnited Nations. It is issued in response to General Part One of the Survey consists of an introduction Assembly resolution 118 (II), in which the Secre- and five chapters. The first chapter contains an em- tary-General was requested to prepare an annual pirical examination of the dimensions and diversity review and analysis of world economic conditions of recent achievements and problems. The second and trends. The report is intended to meet the re- quirements of the Economic and Social Council chapter examines in some detail progress and prob- and other organs of the United Nations for an lems encountered by developing countries in the principal sectors of economic activity, particularly in appraisal of world economic conditions which may agriculture and industry. The third chapter is de- serve as a basis for recommendations on economic voted to a consideration of problems of mobilizing matters. It is also intended to stimulate interest both human 'and financial resources for accelerating in and discussion of international economic prob- economic development. The fourth chapter considers lems anaong a more general public audience. the recent planning experience of developing coun- Each year .since 1955, the World Economic Sur- tries, with special emphasis on the use of the various vey has contained a study of a particular problem policy instruments available for implementing plans. concerning economic development. Among the sub- The final chapter examines some of the features of jects examined have been economic growth in the the international economic environment in which first post-war decade, balance of payments problems efforts to promote development are taking place. in relation to economic growth, inflation, post-war commodity trade and policies, experience and poli- Par.t Two of the Survey, which is issued as a cies relating to investment and saving, industrializa- separate volume, deals with the main features of the world economic situation, tt consists of three chap- tion and economic development, foreign trade and economic development, the appraisal of development ters. The first covers the growth of output and trade plans, the financing of economic development, and and changes in the allocation of resources in 1967 problems in the implementation of development and early i968. The second chapter examines in some depth several topics of current ,concern in the plans. fields of international monetary and trade policy, Part One of the present Survey examines the commercial policy developments and regional in- principal features of economic progress of developing tegration. The final chapter examines recent progress countries during the period 1955 to 1965. As part in economic reforms in eastern Europe. of the preparatory work for a second United Nations Development Decade, this review seeks to The World Economic Survey is prepared in the draw certain pertinent lessons from the recent ex- Centre for Development Planning, Projections and perience relating to problems and policies of eco- Policies of the Department of Economic and Social nomic development. It is hoped that the Survey will Affairs of the United Nations Secretariat. oo° 111 CONTENTS Page Explanatory notes ...................................................... x INTRODUCTION .......................................................... 1 Chapter I. THE DIMENSIONS OF RECENT ECONOMIC GROWTH ............ f ......... 15 Trends in total production ........................................ 15 The pattern of recent economic growth .............................. 17 The salient problems and their magnitude ............................ 32 II. PRODUCTION AND PRODUCTIVITY: POLICY PROBLEMS .................... 45 Problems and policies of agricultural development .................... 46 Problems and policies of industrial development ...................... 57 III. THE MOBILIZATION OF tKUMAN AND FINANCIAL RESOURCES ............. 69 Human resources ................................................ 69 Domestic savings and the mobilization of capital ...................... 77 Export earnings ................................................. 88 IV. DEVELOPMENT PLANNING: FUNCTIONS AND LIMITATIONS .............. 96 The purpose and problems of planning .............................. 97 Deploying the main instruments of econom{e policy .................... 99 The role of annual programming .................................. 107 Vo THE INTERNATIONAL ENVIRONMENT FOR ECONOMIC DEVELOPMENT ........ II0 Salient features of the market for developing-country exports .......... 112 Economic relations of the centrally planned economies with the developing countries ...................................................... 125 Aid practices and policies .......................................... 129 List of tables Page 1. Average annual increase in population: world and major regions, 1930-1965 16 2. Developed and developing countries: growth of real gross domestic product, 1955-1965 .......................................................... 17 3. Developed and developing countries: real gross .domestic product per capita, 1955-1965 .......................................................... 17 . Developing countries : distribution according to average annual rate of growth in real gross domestic product, 1955-1965 ............................. 18 5. Distribution of developing countries by rate of growth of per capita real gross domestic product, 1955-1965 .......................................... 19 6. Developing countries: growth of major gross .domestic product components, 1955-1960 and 1960-1965 ............................................ 20 7. Developing countries: changes in industrial structure, 1955-1965 .......... 25 8. Developing countries: ratio of exports to gross domestic product, 1955-1957 and 1963-1965 ...................................................... 26 9. Developing countries: rates of growth in gross domestic capital formation and changes in savings and investment ratios, 1955-1965 ...................... 30 10. Distribution of developing countries by per capita output, 1965 ............ 33 11. Distribution of developing countries by rate of growth of real gross domestic product, 1955-1965 .................................................. 33 12. Developing countries: distribution by rate of growth in population, 1955-1965 34 13. Developing countries: rates of increase in per capita production and in school enrolrnent ratio.. .................................................... 34 14. Distribution of world population by size of locality, 1920, 1950 and 1960 .. 35 15. Selected developing countries: growth in agricultural and food production, 1955-1965 .......................................................... 36 16. Cereals: area, yield and production, major country groupings, 1948-1965 .. 37 17. Developing countries : distribution by change in ratio of gross domestic savings to. gross domestic product, 1955-1957 to 1963-1965 ...................... 38 '8. Developing countries : distribution by ratio of real gross domestic savings to gross domestic product, 19'63-1965 .................................. 38 )9. Distribution vf developing countries by change in ratio of real gross invest- merit to gross domestic product, 1955-1957 to. 1963-1965 ................. 39 20. Distribution of .developing countries by ratio of real gross investment to gross domestic product, average 1963-1965 ............................. 39 21. Developing countries:distribution by incremental capital-outgut ratio, average 1955-1965 .......................................................... 40 22. Developing countries: distribution according to ratio of exports of goods and services to gross domestic product, 1955-1957 and 1963-1965 .......... 41 vi Page 23. Distribution of developing countries by rate of growth of export values, 1955-1965 .......................................................... 41 24. Exports of major regions, 1955-1966 .................................. 42 25. Selected export price and quantum indices, 1954-1966 .................... 43 26. Developing countries: growth of exports to principal regions, 1955-1965 .. 44 27. Selected developing countries: distribution by incidence of debt-service pay- ments, 1956, 1960, 1965 .............................................. 44 28. Selected countries: contributions of changes in acreage and .crop yield to growth in output of cereals, 1952-1956 to. 1961-1965 .................... 50 29. Selected developing countries: consumption of chemical fertilizers, 1954/55- 1955/56 to 1964/65-1965/66 ......................................... 52 30. Trade among members of the Central American Common Market, 1955-1965 59 31. Developing countries: distribution according to gross .domestic product, 1965 60 32. Growth of manufacturing production, 'by major groups and by region, 1955-1966 .........................................................