1 THE ECONOMIC OUTLOOK - DECEMBER 1967 MANPOWER POLICIES AND UNEMPLOYMENT JN EUROPE TOWARDS A SOCIALIST MARKET ECONOMY IN YUGOSLAVIA REDUCED POWER PRODUCTION COSTS THROUGH COOPERATION THE FOOD PROBLEM OF THE POOR NATIONS OECD OBSERVER N°31 DECEMBER 1967 CONTENTS Published bi-monthly in English and French by THE ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT 3 STATEMENT BY THE OECD EDITORIAL OFFICES MINISTERIAL COUNCIL OECD Information Service, Château de la Muette, 2 rue André Pascal, F 75 Paris 16e. 5 THE FOOD PROBLEM OF DEVELOPING COUNTRIES Individual articles not copyrighted may be reprinted provi¬ ding the credit line reads "Reprinted from the OECD 11 LOWERING ELECTRIC POWER Observer", plus date of issue'Aand two voucher copies are PRODUCTION COSTS THROUGH sent to the Editor. Signed articles reprinted must bear INTERNATIONAL MUTUAL AID author's name. AGREEMENTS The Organisation cannot be responsible for returning unsolicited manuscripts. Signed articles express the opinions of the authors and do 15 MANPOWER POLICY AND not necessarily represent the opinion of OECD. EUROPEAN UNEMPLOYMENT by Gôsta Rehn, OECD Director for Annual Subscription Rates : F 10.00, FS 10.00, DM 8.30. Manpower and Social Affairs 15 s., $ 2.50. Single copies : F 2.00, FS 2.00, DM 1.70, 3 s., $ 0.50. 19 MAIN POINTS FROM THE OECD ECONOMIC OUTLOOK, DECEMBER Editor : Anker Randsholt 1967 Assistant Editors : Peter Tewson and Jane Bussière Production and Layout : Marc Delemme 35 TECHNICAL ASSISTANCE AND PRIVATE ENTERPRISE All correspondence should be addressed to the Editor. 38 YUGOSLAVIA : TOWARDS A SOCIALIST MARKET ECONOMY COVER : Almasy ; pages 3-4 : Jouan-OECD ; page 11 : Brigaud-EDF Photo Library ; page 14 : EDF Photo Library ; pages 16-17 : Studio Cole. UK; page 31 : Central Office of Information, UK; page 34 : Almasy; page 36 : Jack Ling-Unesco ; pages 44-45 : Jouan-OECD. 46 NEW OECD PUBLICATIONS fi .--., vyy. */,. V warn 4 sIKflMfMBl THE OECD MINISTERIAL COUNCIL he Council of the OECD met at Ministerial level The slowdown of economic growth in large parts of the -*- in Paris on 30th November and 1st December, OECD area that began in 1966, now seems to have come 1967, under the Chairmanship of the Honourable J.C. de to an end and for the next year the average growth rate of Oliveira, Minister of Economic Affairs of Portugal, and gross national product may again reach about 4 i per cent. reviewed the economic situation of its Member countries, their economic relations with the rest of the world, and The expansionary forces vary in strength, however. the work of the Organisation itself. They are strong in the United States, where in fact fiscal restraint is required, and in Japan and Italy. They are Ministers welcomed the statement by the Delegate for weaker in most of Europe where manpower and other the United Kingdom on the strong measures announced economic resources may remain less fully employed than by the United Kingdom following devaluation, to streng¬ in recent years. Flexible economic policies are therefore then the balance of payments and lay sound foundations called for, with a readiness to apply more expansionary for economic growth. measures in some countries as and when required. In many countries a more active manpower policy ar structural adjustments will be helpful. The economic expansion in most developing Member countries continues at a somewhat faster rate than in the other Member countries taken as a whole. The develop¬ ment aims of these countries are, however, far from being realised. Their problems of economic development, espec- ally their export problems, will therefore be kept under close review by the Organisation. Ministers exchanged views on balance-of-payments problems. They noted inter alia the persistence of the external- overall deficit of the United States and of the surplus of the E.E.C. countries combined. Appropriate economic policies are required, including measures to influence capital movements as well as the current account in a constructive way. Ministers stressed the need for both surplus and deficit countries to continue and intens¬ ify their efforts to reduce this persisting disequilibrium;. Opinions diverged on the share of responsibility of differ¬ ent countries in the search for equilibrium. Ministers were nevertheless- at one in recognising that common efforts would be needed as a contribution to a better equilibrium in the international balance of payments. (continued on page 44) Michel Debré, Minister 1er Economic Alfairs and Finance, France, talks viith Dr Schollhbrn, Secretary ol State ol the German Ministry lor Economic Aifairs. ! *fc ' It is a matter for concern that in the first seven years of the 1960's the following phenomena have coincided : Food production in the developing countries has grown more slowly than demand; The area of good new land that could easily be brought under cultivation in developing countries has been sharp¬ ly reduced; The population of developing countries has been growing at an increasing rate; Surplus stocks of grain in North America have rough¬ ly speaking been exhausted through exports to less- developed areas; © Development aid from the richer countries has on the whole stagnated; The debt burden of many developing countries has been rising fast. It is evident that the problem of how to satisfy the rapidly growing demand for food in the developing countries concerns not only these countries themselves, DEVEL0PIN6 but also the more wealthy nations. The Outlook for Food The unprecedented increase in the population of nearly all less-developed countries that has taken place, especially in the 1950's and the present decade, is like¬ ly to go on till the end of this century and to some extent COUNTRIES even beyond it. Even if family planning makes consi¬ derable progress, the population of the developing countries is likely to continue to grow much faster than that of the developed industrial societies for many decades. Fortunately, per capita incomes are also in¬ creasing and will, we hope, increase faster in the future, At the OECD Ministers' Meeting a report but in poor countries a large part of any addition to personal incomes will be spent on food. It is, therefore, on the Food Problem of the Developing likely that in the foreseeable future demand for food in the developing countries will grow rapidly, more Countries was presented hy the Secretary rapidly than the production of food. This is because, in contrast to the last few decades General of OECD, Thorkil Kristensen. when the amount of land under cultivation in the deve¬ loping regions increased fairly rapidly (accounting for The Secretary General had been requested more than half of the increase in production in Latin America, the Near East and Africa and for more than to prepare this study by OECD's Deve¬ 40 per cent in the Far East), there will in future be little possibility for further increases in the area under cul¬ tivation, especially in the Far East. Thus the amount lopment Assistance Committee which at its of agricultural land per capita will decline. It is likely July iç66 meeting in Washington D. C. had that by the year 2000 each person in the farm popula¬ tion of the developed countries will have about twenty noted with concern the slow development of times as much land as the average person in the farm population of the developing countries. Compared with the Far East alone it would be 50 times as much. foodproduction in the developing countries It is true that production can be increased, even with in face of a rapidly rising population. The a low land-to-labour ratio, by raising agricultural yields. Japan, for example, has obtained considerable success in such labour intensive agriculture with very little land following article presents the main points per agricultural worker, and it may well be that the development in a number of other countries will follow made by the Secretary General in his report. a pattern somewhat similar to that of Japan. Introduction under favourable conditions of new varieties of maize, wheat and rice that have been develop- ed in countries like Japan, the United States, Mexico A Serious Effort should be made to Increase and Taiwan, can yield much more than most traditional the Flow of Aid crops (though the new techniques must be modified and carefully adapted to local conditions of soil and Unless the gross flow of aid continues to increase, climate). Moreover modern techniques can be applied the annual amount of repayment will be larger than to so-called agro-allied activities production and the inflow of new aid, and the developing countries distribution of fertilisers, pesticides and weed-killers, would become net exporters of capital to the rich irrigation installations and means of storage and trans¬ countries. Yet the flow of development aid has on the port of agricultural products and fertilisers. whole been stagnating since 1961 if deduction is made It would, however, take a rather spectacular speed¬ for the amortisation of existing loans. ing up of the increase in yields to make production What is needed is more aid, at least until exports of grow as fast as demand in the developing countries, the developing countries have risen sufficiently so that especially if allowance is made for the improvement in they can pay for all their imports, including food. The consumption per capita that should accompany gene¬ best solution would be to increase substantially aid in ral economic growth. Moreover modern techniques the form of cash in order to enable the receiving countries penetrate rather slowly into agriculture because of the to decide what they want to buy. It may, however, be very large number of farmers who have to learn and easier for the donor countries to provide more aid in adopt these techniques.