United Nations Conference on Trade and Development

Transcription

1 United Nations Conference on Trade and Development Distr, GEîIERAL TD/B/369/Add.l 9 August 1971 Original: ENGLISH TRADE AND DEVELOPMENT BOARD Eleventh session Geneva, 24 August 1971 Item 4 of the provisional agenda RËVIE1Î OP INTEîïïJATIONAL TRAEË -да levelopment 1971 Part One Recent Trends in Trade and Development* Report by the secretariat of UNCTAD CHAPTERS II - V** * This report, for the eleventh session of the Trade and Development Board, contains some preliminary material from Part One of the review (covering trends in trade and development) \diich is planned for the third session of the Conference. This preliminary material focuses mainly on developments in 1970, Part Two (covering major policy developments) will be prepared only for the third session of the Conference. (See TD/b/357, provisional agenda for the eleventh session of the Trade and Development Board, item 4). ** Chapter I, "Summary", is contained in ТВ/В/369. GE

2 Explanatory Notes Chapter II III IV V CONTENTS Overall Trends in International Trade A. Growth of world trade B. The network of world trade C. The intra-trade of the developed market-economy countrios D. Tho commodity composition of \jorld trade E. General econord-c factors affecting world trade F. The trade of the socialist сгтtries G. Prospects for export earnings of developing countries in 1971 and 1972 Export Performance of Developing Countries A. Export trends by oil exporting status, by income level, and by geographical region B. Exports to developed market-economy countries C. Exports to socialist countries D. Trade among developing countries E. Trends in exports of developing countries by comaodity F. Commodity price trends G. Trends in terms of trade and purchasing power of exports Foreign Exchange Resources for Development A. Official and private financial flows B. Sources and uses of foreign exchange C. The relative importance of exports, not loans and grants, and all othor flows (not) in accounting for import levels D. Imports of developing countries Growth in Developing Countries Paragraph Page ill '

3 T^\BLSS Table Page II-l -brld exports by major economic groups 2 II-2 Growth of value, volume, and unit values of exports 3 IÏ-3 ValuG of exports by origin and destination 5 II-4 Intra-trade of economic groupings of developed countries 7 III-l III-2 III-3 III-4 III-5 Exports (f.o.b.) by category of developing country,, compared with world trends 14 Distribution of the exports of developing countries, by major markets, I960 and 1970 Exports of developing regions to the major developed marketeconomy countries -- Growth rates (in per cent) for , and values ($ billion) in Share of developing countries, by region, in total imports of the major world markets, I960 and Rates of growth of exports of developing countries to main markets, by major coimnodity groups, III-6 Developing countries: coriimodity export prices, ÏII-7 Terns of trade of developing countries 28 III-8 Exports of developing countries to the world: quantura, value and purchasing pov/er 29- IV-1 Net flow of financial resources to developing countries 31 IV-2 IV-3 Receipts and uses of foreign exchange resources of developing countries, i960 and Imports (c.i.f.) by category of developing country, compared with vrorld trends 40 IV-4 main sources of developing countries' imports, I960 and Г/-5 Imports of developing countries by corûmodity classes, I960, I968 and V-1 GNP by category of developing country, compared váth world ti-ends 47 V-2 Real product by category of developing country, compared with world trends 48 V-3 Estimated growth of real product, V-4 Gross national product and exports of developing countries Annox Table Structure of exports from developing countries to major economic, areas, I960, 1966, 1967, I968 and 1969 Chart IV-1 Foreign exchange flows related to imports 37/38 l6

4 EXPLANATORY NOTES References to "dollars" ($) indicate US dollars, unless otherwise stated. References to tons indicate metric tons, unless otherwise stated. The term "billion" signifies 1,000 million. Annual rates of growth and change refer to compound rates, based on initial and final year data. Details and percentages in tables do not necessarily add to totals, because of rounding. The following symbols have been used in the tables in this Review; One dash (-) indicates that the data are nil or negligible. One dot (,) indicates that the data are not applicable. Two dots (..) indicate that data are not available or are not separately reported. An oblique stroke (/) between years, e.g., 1965/66, indicates a season or crop year. Use of a hyphen between years, e.g., , signifies the full period involved, including the beginning and end years. Gross product (tables I-l. V-^1. V-2.?~3 and V-A) Aggregate and per capita growth rates of real product for the major economic groups and regions were obtained as the weighted average of the individual country growth rates, with estimated base-year GNP (at 1969 prices) as weights, (Where GNP figures weré not available, GDP has been used instead). Estimates for the socialist countries are based on figures published by ECE secretariat of GDP in 19б7, valued at 1963 "average" prices (see Economic Survey of Europe in Part l). These figures were carried forward to 1969 and 1970 and back to 1963, using data on the growth of net domestic product or "real national income produced" and on changes in prices. For the perioddl , for which no price indices were available, it was assumed that I969 and 1970 "average" ^prices were similar to those of The main sources used for these tables are the following: United Nations, Monthly Bulletin of Statistics. June 1971 United Nations, Yearbook of National Accounts Statistics 1969, New York 1970 United Nations, Démographie Yearbook New York 1970 EGA, Economic summaries of data (various Issues) EGAFE, Economic Survey of Asia and the Far East 1970 (E/CN.11/L.283) ECLA, Economic Stuvev of Latin America 1970 (E/CN.82/868 and Add.l and 2) ECE, Economic Survey of Europe in Part I (E/ECE/753) EGE, Economic Survey of Europe in Part I (E/ECE/777) IBRD, World Tables. Washington DC, January 1971 IMF, International Financial Statistics. May 1971

5 OECD, Latest Information on.national Accoimts of Less Developed Countries (Nos. 1 to 5) OECD, National Accounts of less developed countries , Paris, June 1970 OECD, Main Econoriiic Indicators. Jime 1971 OECD, Economic Surveys; Yugoslavia. November 1970 US-AID, Economic Data Book (latest issues) US-illD, Gross national product, growth rates and trend data by region and countiy. RC-VJ-138, 15 May 1971 TJS-MD, Estimates of gross national product for non-communist countries, calendar year 1969 in current market prices. RC-137, 23 April 1971 Country groupings The country coverage of the various geographical regions and major economic groupings used in this report is based on the classification in the United Nations Monthly Bulletin of Statistics (see July 1971 issue, table 52). Specifically, developed market economy countries includes Canada and the United States^ Europe other than the socialist countries of Eastern Europej Australia} Japan; New Zealand; and South Africa. developed market economy countries). (Turkey and Yugoslavia are thus Included among Socialist countries Include those of Eastern Europe, namely Albania, Bulgaria, Czechoslovakia, Democratic Republic of Germany, Himgary, Poland, Romania and the USSR, and of Asia, namely China (mainland), Mongolia, Democratic People's Republic of Korea and Democratic Republic of Viet-Nam. Developing countries include all countries in Africa (except South Africa), A.sia (except Japan and the socialist countries of Asia), the ikaericas (except Canada and the United States), and Oceania (except Australia and New Zealand), and also include Malta.. Developing Africa includes all countries in Africa except South Africa. Developing Latin America includes Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, Venezuela, Costa RLca, El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic, Haiti, Panama and Cuba. The remaining.countries in the Americas are included in other Merica. Developing West Asia Includes Bahrain, Cyprus, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Muscat and Oman, Saudi ilrabia. Southern Yemen, Syria, Trucial Oman, Quatar and Yemen.

6 Developing South and East Asia includes all countries in Asia except Turkey, developing countries of West Asia, socialist countries of Asia, and Japan, The designations employed and the presentation of the material in this review do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country or territory or of its authorities, or concerning the delimitation of its frontiers.

7 Chapter II Overall Trends in International Trade A. Growth of world trade 1. The value of world exports in 1970 rose by $39 billion, or 14.4 per cent, reaching a new high of $312 billion (see tables II-l and II-2). International trade thus grew in 1970 for the twelfth successive year, and-at a slightly, higher rate than in 1969, which itself was a record year for the 1960s. This rise in 1970 reflected Increases in both volume and price. Price and quantum data are available for the exports of the developed market-economy countries and the developing countries only, representing between them some 90 per cent of total world exports in These data show an Increase in the export price index of 5.2 per cent in 1970 (up from an increase of 3.2 per cent in I969), and a rise of 9.1 per cent in the volume of exports (down from the 10,9 per cent increase in I969). The growth of world trade has been accelerating in recent years, the last three years having.witnessed successively higher rates of growth, which averaged well above the rate for I96O-I968 (see table II-l), At the same time the world's "propensity to trade" has risen steadily since i960, the volme of world imports having grown substantially faster than real output. Thus, while the volume of world imports grew at 8,3 per cent per annum between I960 and 1970, world real output grew at 5.2 per cent.^ 2. The developed market-economy countries were again the major source of expansion of world trade. Their exports grew in value by 15.6 per cent in 1970, raising their share of world exports from 70.9 per cent in I969 to 71.7 per cent in 1970, Over the decade the share of the developed market-economy countries in world exports rose by nearly 5 percentage points, while that of the developing countries declined by almost 4 percentage points (from 21.3 per cent in I960 to 17.6 per cent in 1970); the share of the socialist countries also declined over the decade (by 1 percentage point, to \ / This buoyant tendency in world trade and in the world's propensity to trade is clearly a phenomenon of great importance, though its causes and significance are perhaps not yet fully understood. Among factors which have undoubtedly played a role are the trade liberalization measures negotiated in GATT, the impact of the Kennedy Round of tariff reductions, trade liberalization and economic groupings among developed countries, the maintenance of a high growth of output, and - until recently - the relative stability of the international monetary system. Of possible importance also, and perhaps more significant from a long-term point of view, is the impact of technological change, which is bound to influence profoundly the pattern and dynamism of world trade.

8 Table II-l World exports by ma.ior economic groups Grouping Current value (f.o.b.) (billion dollars) Annual growth rate (per cent) Share in'world exports (per cent) i i World^ , Developed market economy coiuitries Developing countries i Socialist countries i i 10.7 a/ Excluding the trade of China (mainland), Mongolia, Democratic People's Republic of Korea and Democratic Republic of Viet-Nara with each other. Source; United Nations Monthly BTalletin of Statistics. July 1971; UNCTAD Handbook of International Trade and Development Statistics. 19б9,

9 Table II-2 Growth of value, vol-ume and unit values of exports Annual growth rates (per cent) World-^ (a) Value (b) Volume (c) Unit value Developed market economv coimtries (a) Value (b) Volume (c) Unit value Developing countries (a) Value (b) Volume (c) Unit value Socialist countries (a) Value Í ^ Excluding exports of socialist countries. Source ; UNCTAD secretariat estimates, based on values and on index numbers of volume, in United Nations Monthly Bulletin of Statistics. July 1971.

10 TD/B/369/Add.l page 4. / 10.7 per cent in 1970).-' Latest available estimates shov/ exports of developing countries to have grown in value terms by 11.6 per cent in 1970, which is not very different from the high of 11.8 per cent achieved in 1969.^ In volume terms, the export growth of developing countries was up by 8,6 per cent in 1970 (see Chapter I, Chart I-l, ТВ/в/Зб9). The socialist countries were able to increase the rate of growth in the value of their exports from 10.5 per cent in 1969 to 11,1 per cent in Among the developed market-economy countries, the most rapid growth of imports (26 per cent) was shown by Japan, This was well above the 1969 increase of 16 per cent, bnpoidis continued to grow rapidly in Italy (20 per cent in 1970 and 21 per cent in 1969) and in the Federal Republic of Germany (20 per cent and 24 per cent). The United States showed an import groirth rate of 11 per cent (8,6 per cent in 1969), and imports into the United Kingdom grew by 11 per cent (5 per cent in 1969). Imports into France, on the other hand, grew at a much lower rate in 1970 than in the previous year (10 per cent and 24 per cent respectively). For the EEC as a whole the growth of imports declined from 21,9 per cent in I969 to 16.8 per cent in 1970, while for EFTA it rose from 10,0 per cent to 15.4 per cent, largely as a result of the acceleration in the United Kingdom. B, The network of world trade 4. A grouping into developed market-economy countries, developing countries and socialist countries provides a basis for analyzing nine trade flows (see table II-3).. Trade within the group of developed market-economy countries grew more rapidly than world trade in 1970, increasing further the share of this trade in total world trade. Trade among the socialist countries grew by 10 per cent, more slowly than world trade. Trade among developing countries probably also grew more slowly than the I4.4 per cent registered for world trade, though precise data are not yet available. ЕзгЬз from the developing countries to the socialist countries were the fastest growing of the nine trade flows in 1970 (due particularly to a sharp Increase in exports from Cuba), For the socialist countries, exports to developing countries grew by 11.6 per cent in The growth rate of socialist countries' exports to each other Increased somewhat, relative to I969 while that of exports to developed market-economy countries declined from 14 per cent to 11 per cent.. 1/ Comparing the shares in world exports to the shares in world GKP of the three major groupings, the share of the socialist countries in world GNP exceeds their share in exports, the share of the developed market-economy countries in GNP and exports are similar, while the share of the developing coimtries in GNP is less than their share in exports. 2 J It should be noted, however, that many of these figures (and especially those for developing countries) are still subject to revision.

11 Table II-3 Value of exports by origin and destination Origin Developed market Economy countries Destination I Developed market economy countries! Developing coimtries! Socialist countries A. Percentage shares of world experts,!.o.b Developing Countries Socialist Countrie s I i Developed market Economy countries B. Annual average rates oí growth ,6 Developing Countries / 9-13^ Г Socisd i st Coimtries , , ^ Only very preliminary data are available; UNCTAD secretariat estimates indicate that the increase was at least 9 per cent and may have been as high as 13 per cent. Source ; UNCTAD secretariat based on United Nations Monthly B-ulletin of Statistics. June 1971, UNCTAD Handbook of International Trade and Development Statistics and on national sources.

12 5. An important feature of world trade is the growing importance of trade carried on within preferential trading areas and under special arrangements, particularly among the developed countries. Such preferential trading arrangements are likely to become of even greater importance in view of the possible enlargement of the European Economic Community, and have an obvious significance for the interpretation of data on the network of world trade flows. Further insight may therefore be gained by examining the relative importance of these trade flows. Those considered here are the total intra-trade of EEC and CMEA, that part of EFTA intra-trade which is subject to preferential arrangements, and trade conducted under the TJS-Ganada Automotive Products Agreement, It appears, as may be expected, that trade under special arrangements has been growing more rapidly than world trade (see table II-4) In I960 such trade was only 16 per cent of the world total, but by 1970 accounted for 24 per cent. This trade grew by 20 per cent in 19б9 even though this growth rate declined in 1970 to 15 per cent, it was nonetheless higher than the growth of world trade. The declaration in 1970 was caused by a slow-down in the growth of intra-eec trade, as well as in trade imder the US-Canada Automotive Products Agreement, The latter actually declined in absolute terms, probably as a result of the prolonged strike in the United States automobile industry. The share of developing countries in the total imports of developed countries participating in economic groupings, excluding the intra-trade shown in table II-4, fell from 29.0 per cent in I960 to 25.8 per cent in 1969, and declined further to 25-0 per cent in 1970.^ This substantial fall was largely accounted for by EFTA and the United States, although EEC also showed a significant decline. For Canada and the CMEA, the share of the developing countries in total imports (excluding intra-trade in the case of the CMEA and preferential imports of automotive products in the case of Canada), increased over the decade. C. The intra-trade of the developed market-economv countries 6. The growth of trade among the developed market economy countries remained at the record high rate of close to 17 per cent registered in This took place despite a substantial fall in the rate of growth of real output in those countries, and probably reflects in part a faster rate of inflation in In the United States, in particular, the rate of growth of imports from other developed market-econony 1/ It is significant that the share of developing countries in world trade has continued to decline, even if the intra-trade of these regional groupings is excluded from the total. In this case, the decline is from 24.5 per cent in I960 to 23.2 per cent in 1970, (including intra-trade, the share declined from 21.3 per cent to 17.6 per cent; see paragraph 2 above.)

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14 coimtries was maintained at 11 per cent (the same as in 1969) despite an actual decline in real GNP in 1970, During 1970 Japan was the fastest growing market within this trade floii, its growth of imports from other developed market-economy coimtries almost doubling, from 17 per cent in 1969 to 29 per cent in 1970, This was associated with a slight fall in the high grovrth rate of real GNP, from 11,9 per cent in 1969 to 10.9 per cent in 1970, and with an accelerated increase in the rate of inflation, from 4.3 to 6.6 per cent. In Western Europe, the intra-trade of EFTA rose at almost the same rate as that of EEC, This reflected both a reduced growth rate of EEC intra-trade (26.1 per cent in 1969 and 18.8 per cent in 1970) and an accelerated growth of EFTA intra-trade (from'10.7 to 17.6 per cent). The growth rate of United States iraports from the developed market-economy countries rose, from 10,8 per cent in 1969 to 12,2 per cent in 1970, despite an absolute decline in real GNP; the rate of inflation in the United States increased from 4.7 to 5.1 per cent. Of the total increase of 24.7 billion in the intra-trade of the developed market-economy countries in 1970, EEC accounted for some $11 billion, EFTA for $5.5 billion, the United States Í33.2 billion, and Japan $2.0 billion. D, The comnodity composition of world trade 7. The commodity structure of the various trade flows reflects the different kinds of exchanges that make up the total pattern of world trade. Thus, the developed marketeconomy countries tend to trade with each other industrial products that are similar in nature.^ On the other hand, in their trade viith the developing countries, the developed market-economy countries tend mainly to exchange goods in different industrial classes. Involving essentially the export of technology-intensive manufactured. goods in exchange for foodstuffs and raw materials, together with other manufactured 'goods One of the promising ways in which the developing countries can enter intraindustry trade is via the manufacture of components,-' 3/ and here multinational corporations may play an important role. Thus, a number of tractor, computer and electronics 1 / In terms of the SITO the bulk of this trade is in sections 5 (Chemicals) and 7 (Machinery and Transport Equipment), which are also the two most rapidly expanding industrial sectors in International trade. 2/ In terms of the SITC, the developing countries are essentially exporters of goods in sections 0-4, and parts of 6 plus 8 to the developed countries, in exchange for goods in sections 5 and 7. 2/ This is also a feature of the exports of the socialist countries, where industrial co-operation arrangements plaji- a similar role.

15 firms already produce their component parts in a variety of countries (including some developing countries) for ultimate assembly and for distribution on the world market.^ In this way one of the major present competitive advantages of the developing countries, namely, their low wage costs, can be utilized. Unfortunately, available statistics do not permit the measurement of this kind of trade flow even at an aggregative level. Qualitative evidence suggests that it is beginning to be important and is likely to become more important. It is indeed one of the ways in which the developing countries can benefit from the Generalized System of Preferences. E. General economic factors affecting world trade 8. The expansion of world trade in 1970 took place against the background of two important features of world economic development, viz., the substantial slow-down in the rate of growth of real output in the major developed market-economy countries, and the speed-up in the rate of inflation in most of those comtrles. For the OECD countries as a whole, which includes most of the developed market-economy countries, the rate of growth of output fell from 5.0 per cent in 1969 to 2,6 per cent in 1970,^ (Excluding the United States, the fall was much less marked, from 7.1 per cent in 1969 to 6.0 per cent in 1970.) The annual average rise in the general price level was 2.6 per cent in the period 196O-I965 and increased to 3.4 per cent from 1965 to 1968; the increase in I969 was 4.7 per cent and there was a rise of 5.5 per cent in 1970, 9. These two features may have had conflicting impacts on the growth of world trade, the slower growth of real output reducing the growth of world imports with accelerating inflation tending to speed up the growth. In the particular circumstances prevailing 3/ in 1970 the impact of inflation seems to have predominated,-' 10. An important implication of inflation in the developed countries has been the rise in the price of manufactured goods in international trade. Thus the index of average unit value for manufactured goods in world trade rose by only 7 per cent during the 1/ See also "Manufacturing of components through international sub-contracting as a means of expansion and diversification of exports of manufactures from developing countries - Report by the UNCTAD secretariat" (TD/b/C.2/107). 2/ See OECD, Economic Outlook. July / The inflation meant, however, that the high growth rate of world trade in value terms was not reflected in corresponding growth in volume; in terms of volxxme, the growth of world exports in 1970 actually fell some 1,8 percentage points below the rate of per cent achieved in 1969.

16 five years from 1963 to 1968, experienced a rise of approximately 3 per cent in 1969, and during 1970 rose at the unprecedented rate of over 6 per cent, resiulting in an overall increase from 1963 to 1970 of 17 per cent.^ This acceleration in the rate of increase in the prices of manufactured goods in world trade is reflected in the average import unit values for the developing countries, which have increased 2/ substantially in recent years.-' 11. The link between the accelerating inflation in the developed countries and the average prices of manufactured goods in world trade is clear, as is the link between.the latter and the average prices which the developing countries pay for their imports. Nevertheless, the overall impact of the recent inflationary tendencies in the developed countries on the trade and development of the developing countries is difficult to assess. Thus, it would appear that one implication of these inflationary tendencies, accompanied as they were by demand pressures in many of the developed countries, may have been a positive impact on the demand for the exports of developing countries, although the trend of demand seems to have weakened appreciably since the middle of з / (See paragraph 15 below.)-' At the same time, it should be noted that, ^hile all the developing countries will presumably be uniformly affected by the rise in import prices brought about by the inflationary tendencies in the developed countries, not all of them are In a position to benefit correspondingly on the export side, and hence individual developing countries may find themselves particularly squeezed by the impact of the inflation. In any case, the situation cannot but be considered as unhealthy from the point of view of the world economy and certainly from the point of view of the developing countries.^ l J In the first quarter of 1971 there was a continuation of this accelerating trend. The index (1963 = 100) has been estimated at / See below (Chapter III, paras. 36 to 38), for a fuller discussion of trends In average import unit values, ' See below (Chapter III, paras. 36 to 38) for a fuller discussion of trends in export prices and the terms of trade* h j A further important point in this connexion is that inflation in the developed countries will greatly reduce the purchasing power of aid extended to the developing countries at a time when the amount of such aid (in current prices) has been growing only slowly, (see Chapter IV, paras. 62 to 67)..

17 F. The trade of the socialist countries 12. In 1970 total exports of the socialist coimtries grew by 11.1 per cent, reaching an estimated figure of $33.5 billion (see table II-l). This growth rate was slightly higher than that of the previous year (10,5 per cent) and significantly above the annual average for the earlier years of the 1960s (7.8 per cent). The export growth rate of the socialist countries remained below that of the developed market-economles, both in recent years and for the decade as a whole. In 1970 about 60 per cent of total exports of the socialist countries was to other countries in the same group, down from more than 70 per cent in I960. An Important factor in this connexion is the relative stagnation of trade between the socialist coimtries of Eastern Europe and the socialist countries of Asia since the early 1960s. 13. Exports of socialist countries to the developed market-economy countries increased by 11,1 per cent during 1970, the bulk being accounted for by exports from the socialist countries of Eastern Europe to the developed market-economy coimtries of Europe. An interesting development has been the growing importance of EFTA countries as a market for exports from the socialist countries of Eastern Europe. Indeed, while those countries' exports to EEC stagnated in 1970, their exports to EFTA grew by 23 per cent, and thus reached the same level as their exports to EEC ($2.2 billion). Exports of the socialist countries to North America increased by 10 per cent in 1970, but the amount involved is still very small. Exports to Japan increased by 12 per cent, following relative stagnation in Exports from the developed market-economy coimtries to the socialist countries increased by 18 per cent in 1970, which was much faster than in the previous year (12 per cent) and than the average for the 1960s (10 per cent). The most dynamic component of this flow has been the exports of Japan to the socialist countries; between 1969 and 1970 Japan Increased its exports to the socialist countries of Eastern Europe by 31 per cent, and to those of Asia by 41 per cent. G. Prospects for export earnings of develouing countries In 1971 and In the light of the available evidence it seems likely that the growth of developing countries' export earnings in the present year will be somewhat below that of 1970, Several factors point in this direction. Thus, data for the first fevr months of 1971 reflect a weakening of a wide range of primary commodity prices from the levels of the previous year,^ Against this must be set, however, the impact of the \ See Chapter III, section F, for a discussion of commodity price trends.

18 increases in oil prices in mid-february for Persian Gulf езгьз and in March for shipments from Mediterranean countries, Nigeria and Venezuela, reflecting the changing market situation and action co-ordinated through OPEC, (see paragraph 32 below) Another indication of a slower growth of export earnings in after the upsurge recorded up to mid emerges from the trade returns for the OECD countries for the early part of These suggest that the stagnation which marked the second half of 1970 was succeeded by only a modest revival; excluding oil from the Middle East, recent trends in exports appear to have shown little growth. Thus, while the increase in oil prices should help to maintain the growth of the value of exports from developing countries in 1971, the expansion is unlikely to reach the very high rate of the previous year. 16. If the recovery in the developed market economies continues, and leads to an acceleration in their rate of growth in 1972, in line with the hopes of policy-makers, a return to a more vigorous rate of expansion of export earnings in 1972 would result. It can be expected that such a development will be further assisted as the Generalized System of Preferences is put into effect. Ж See also "Salient Features of World Trade and Development in 1970" )/Misc.6, paragraph 12).

19 Chanter III Export Performance of Developing Co-untries A., Export trends by oil-exporting status, by income level, and by geographical region 17. The remarkable growth in exports of developing countries by 11,8 per cent in 1969 was followed by a further increase of 11,6 per cent in 1970, reaching a level of $55 billion (see table III-l). The performance in the last two years stands in sharp contrast to the 6,2 per cent average annual growth from i960 to 1968, 1970 was the third year of rapid and uninterrupted expansion. Higher prices for some commodities have been an important factor which, on balance, accounted for about one-third and one-fourth of the growth in the value of exports in 1969 and 1970 respectively. The major oil-exporting countries - providing 28 per cent of their total export earnings - have experienced lower export growth rates in the last two years than did the other developing countries taken together. Between I960 and 1968, the expansion of exports from the oil-producing countries proceeded at an average annual rate of 8,2 per cent, compared with 5.4 per cent for other developing countries, A sharp reversal of the trend in 1969, however, produced a 15,4 per cent rise in exports of the latter countries and a rise of only 3.7 per cent for the major oil-exporting countries, whose exports in 1970 grew by 10 per cent, compared with 12,2 per cent for the other developing countries. 19. Table III-l also brings out clearly the wide variations in export performance among developing countries at different Income levels. The fastest growth of exports in 1970, as well as during the rest of the decade, has been from the group ' 'f countries with per capita GNP in 1969 in the range of $ Countries in 'this group supplied 34,2 per cent of the total езгьз of developing countries in 1969, though they had only 15.9 per cent of the total population of developing countries. A similar contribution to exports of 34 7 per cent was also made by the group of countries with per capita GNP above $400, accounting for another 7.5 per cent of the population of developing countries. Moreover, exports from this group of countries have been expanding at rates which sre only a little below those of the first categoiy. Gauntries with per capita GNP between $151-$250, accounting for per cent of total population, supplied only 11.5 per cent of developing countries' total exports. The major disproportions between shares in exports and in population occurred for the group of countries with per capita

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21 incomes of $150 or below; their share in total exports was 13 per cent, while they have 63.5 per cent of the total population of developing countries.^ Exports from these countries have grown by less than 3 per cent on average from i960 to 1968 though in 1969 and 1970 the growth of exports was comparable to that of the developing countries as a whole. 20. The region where exports from developing countries were most favourably affected by the recent general buoyancy of world trade was Asia, where the value of exports grew by close to 13 per cent in In South and East Asia the rate of growth of exports was 14 per cent in each of the last two years, about three times as fast as the average annual rate during the rest of the 1960s, while for West Asia the 11,2 per cent growth in 1970 was above that of 1969 as well as of the average for I96O-I968. For Latin America the growth of exports by 9.4 per cent n 1969 and by 10,9 per cent in 1970 represented a sharp departure from the generally depressed rates of the earlier years of the decade, when it averaged only 4.5 per cent, Africa experienced a marked fall in the growth of exports from the high of 16.4 per cent achieved in 1969; the increase in 1970 was 9.8 per cent, which was more in line with the region's longer-term average rate of 7.8 per cent. This reflected a steep fall in the growth of exports from North iifrica - 6,2 per cenb in 1970, compared with 14.2 per cent in Exports from other developing countries in Africa, while they grew more slowly in 1970 than in the previous year (1 0,7 per cent, compared with 17,8 per cent), rose nearly twice as fast as the average for 196O-I968, B'. Exports to developed market-economy countries 21, The developed market-economy countries are the most important market for the developing countries, taking some 74 per cent of their exports (see table 111,2). 'Exports of developing countries to the developed market-economy countries increased in 1970 by 10.9 per cent, thus slightly exceeding the previous year's increase ]/ Even excluding the three countries in this group with very large population - India, Pakistan and Indonesia - the remaining countries accounted for 16,6 per cent of the total population of developing countries, while their share in total exports of developing countries was 8.2 per cent.

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23 of 10,7 per cent, but not quite matching the 11,7 per cent growth in 1968 (see Table 111-3)^ With a faster increase of total imports into the developed market-economy countries in 1970, however, the share of developing countries in this market fell, from 18.9 per cent in 1969 to 18.2 per cent in 1970, Though exports of manufactured goods from developing countries are increasing rapidly, the bulk of these exports still consists of primary goods and raw materials, for which demand is growing relatively slowly. 22. The fastest growing market for the exports of developing countries is Japan, where there was an increase of 22.7 per cent in 1970 (see table III.3). In absolute terms, however, exports to EEC showed the largest increase in 1970, amounting to $1.26 billion, 1 ш slightly from the 1.49 billion increase in ^Developing countries in Africa accounted for almost one-half of this rise, and *Latin America for over a quarter. Developing countries' exports to EFTA grew by 7,8 per cent in 1970, up from the previous year and the average for I96O-I968, The largest gains in this market were made by developing countries in Africa. Exports to the United States from developing countries increased by 8.5 per cent, compared with 8,3 per cent in the previous year and 4,6 per cent during I96O-I968. South and East Asia showed the fastest growth in this market, though at a rate lower than the year before, while exports from West Asia declined in Latin America showed an 8.3 per cent increase in exports to the United States, a marked improvement over the negligible increase the year before, '23. During the 1960s world exports have groim faster than exports from developing countries, and hence the share of those countries in world trade has steadily declined. Their share has also declined in all the major markets of the developed ^market-economy countries, except Japan, where it Increased slightly, from 36 per cent in I960 to 39.6 per cent in 1970 (see table III.4). ile South and East Asia still hold 15 per cent of the Japanese market (a decline from 19.6 per cent in I960), the share of West Asia has doubled 1/ It should be noted, however, that the high rate of growth- of exports to the developed market-economy countries in 1970 reflects a very rapid expansion during the first half of the year, follovred by relative stagnation during the second half. See Chapter II, paragraph 15 above.

24 Table III-3 Exports of developing regions to the ma.ior developed market-economv countries Growth rates (in per cent) for , and ; values ($ billion) in 1970 Exports to: Region Total developed market economy countries of which: Japan EF,C USA EFTA Total Developing Countries Growth rates Value ,6 Latin America' Growth rates i Value Africa Growth rates , West Asia Value i i Grovrth rates , Value South and East Asia Growth rates , , Value I Sources ; United Nations, Monthly Biilletin of Statistics. June 1971, and UNCTAD, Handbook of International Trade and Development Statistics

25 Table 111-Л Share of developing countries by region in total imports s J of the ma.ior world markets. I960 and 1970 (Percentages) Share in total imports of; Exporting region World i Developed market economy countries USA I of which; EEC EFTA I ; Japan Total Developing I Countries b f Latin America I , ' Africa I ,1 4.0 West Asia Л South and East I Asia For reference ; Total imports I jfrom all sources i i ($ billion) I 1' 1 i Sources; United Nations, Monthly Bulletin of Statistics. Jime 1971, and UNCTAD, Handbook of International Trade and Development Statistics a/ f.o.b. Ъ/ Total also covers developing countries and territories not included in the regions shown below.

26 over the decade, reaching 13.3 per cent by The developing countries' share of the United States market declined markedly in the 1960s, from ДО.2 per cent in I960 to 25.7 per cent in The share of Latin America in this market registered the largest decline, from 2Д.З per cent to 11,Д per cent. Countries in Africa and West Asia both lost ground in the United States market over the decade; in fact, South and East Asia was the only major region able to increase - its share in this market (from 8.0 per cent in I960 to 8,7 per cent in 1970). 2Д. Notwithstanding the inability of the developing countries to maintain their shares in the markets of most of the developed market-economies, the proportion of their ovm exports going to those countries has been increasing, and this applies to all the major regions, with the exception of Latin America. At the same time, there has been some trend towards the diversification of markets within the group of developed market-economy countries for most of the regions. Latin America provides the most dramatic example, where its export dependence on the United States market has decreased from Д1.9 per cent in I960 to 29.5 per cent in 1970, ijhile the share of its exports going to EEC has Increased, West Asia also has reduced its dependence on EEC, and increased three-fold over the decade the proportion of its exports going to Japan (to 20.8 per cent in 1970,.practically all of which is oil). For Al rica, on the other hand, the proportion of exports going to the main market, the ESC, has risen to Д6.3 per cent. Of all the developing regions, the developing countries of South and East Asia send the smallest fraction of their exports (6Д.З per cent) to developed market economy countries, and the largest (28,6 per cent) to developing countries, mostly those within the same region. The United States and Japan, however, have both become more important over the decade as export markets for South and East A.sia. C. Exports to socialist countries 25. Exports from developing countries to socialist countries Increased by 26 per cent in 1970, thereby exceeding the very high growth rate of 16 per cent recorded in the previous year. The last two years thus witnessed a reversal of the stagnation which had occurred over the years ^ and the groiyjth of Д/ This relative stagnation reflected the stagnation of exports from Latin America and from South and East Asia, On the other hand, exports to the socialist co-untries from ibfrica and West Asia increased steadily during this period, though very slowly.

27 exports was greater even than that experienced during the years of expansion in the first half of the 1960s. The share of the socialist countries in the total market for the exports of developing countries reached a high of 6.5 per cent in 1965, declined to 5 per cent by I968, and increased again to 5.8 per cent in 1970, The bulk of these exports v/ent to the socialist countries of Eastern Europe, the USSR being the major single market. This export trade is shared primarily by a few developing countries, three of which (Cuba, UAR, and India) accounted for some per cent of the total exports to CMEA countries in recent years, 26. More than 80 per cent of the exports from developing to socialist countries consists of food and raw materials (see annex table). The most important items in this group are sugar (from Cuba), coffee, tea, and cocoa (mainly from Brazil, India, Ghana and Nigeria), cmde rubber (from Malaysia) and textile fibres (from Ji'sR, Syria, Argentina, Aifghanistan, and Sudan), Manufactured goods (SITC 5-8) accounted for 16 per cent of these exports in 1969^ the predominant items being textile yarn and fabrics, supplied mainly by India and the UAR, copper (from Zambia), tin (from Malaysia), and clothing and footwear supplied mainly by Iran, India and the U/vR, 2 7. There have been some significant changes in the commodity composition of this trade since I960, Thus the share of manufactured goods rose from 7,9 per cent in i960 to 15.8 per cent in 1969, reflecting an average annual rate of growth of 9,5 per cent. Also, the share of food, beverages and tobacco increased, accompanied by a fall in the share of crude materials. The rise in the share of food products reflected largely the Increased importance of sugar since I960, for which Cuba vras the main supplier. -D, Trade among developing countries 28. The share of intra-trade in the total exports of developing countries fell during the 1960s, from 22,3 per cent in I96O to 19.4 per cent in 1970, (See table III,2), Mong the major geographical regions, South and East Asia sends the largest proportion of its exports to developing countries (mostly within the same region), though it also has fallen over the decade (from 34.3 per cent to 28,6 per cent between I96O and 1970), Only for Latin ihnerica did the share 1/ The share of manufactures rises to 26 per cent if Yugoslavia is also included among developing coimtries.

28 going to developing countries rise during the 1960s (from 17.9 per cent to 19,8 per cent) and this reflected the vigorous.growth of intra-regional trade in Latin America, which increased its share from 7.9 per cent to 11,3 per cent of total exports. In contrast, trade among developing countries in other regions fell as a proportion of total exports, 29, In general, manufactured goods plaj^ a more important role in the intra-trade of developing countries than in their exports to the developed countries, though such trade is still mainly in primarji^ commodities (see annex table). In 1969 (the latest year for which data are available) their intra-trade in manufactured goods increased by 20 per cent, i.e. at about the same rate as developing countries' total exports of manufactures and their exports to the developed countries, but over the decade as a whole the growth of intra-trade in manufactured goods (at 11 per cent) was below that of developing countries' exports of manufactures to the developed countries (13.8 per cent). E. Trends in exports of developing countries by commodity 30, Although the share of primary products in the exports of developing countries has steadily declined over the decade, these still ассгш! for some 75 per cent of the total. Thus, despite the fact that manufactures continue to be the developing coimtries' most dynamic export sector, commodity trade is still the predominant influence over their total export earnings. In , the value of primary commodity exports of developing countries (SITC sections 0-Д) was 9.5 per cent higher than in the previous year; xjithin this broad category, exports of food, beverages and tobacco Increased by 6,7 per cent, fuels by 7.9 per cent, and raw materials by 16,3 per cent (see table III.5 and annex table). This represented a very favourable performance for primary commodities, the best for any year during the 1960s, 31, The high growth rate f or raw materials was quite exceptional,- as compared to the 5.7 per cent increase in the previous year, and even more vrlth the negligible rise of 0,5 per cent per annum from I960 to 1967, For food, beverages, and tobacco the 6,7 per cent growth in 1969 was substantially, above the A.9 per cent rate achieved in 1968 and xras also well above the 3.8 per cent averaged during the earlier years of the decade. 1/ This is the latest year for which the commodity breakdovm of developing countries' exports is available.

29 Commodity Groupé Table III-5 Rates of growth of exports of developing countries to main markets, by ma.ior commodity groups Percentages Exports to; ^ s Developed Market Economy Countrie;3 World Total North America i of which; Í EEC EFTA Japan Developing Countries o OC jlci-lxs OountrieE Food, beverages anc tobacco (0 + 1) w ^ Л Л Fuels (3) ^ Raw materials (2 + Л) ^ A Non-ferrous metals (68) ^ Manufactures (5-8 less ^ » , ! i a/ Figures in brackets refer to the SITC. ^ Average annual growth rate. Sources; United Nations Monthly Bulletin of Statistic?, March and May 1971, m d IMCTAD, Hondbook of International Trade and Development Statistics,1969

30 32, Exports of manufactured goods (SITC 5-8, less 68) grew by 21 per cent in 1969j thereby maintaining the veiy high growth rate of the previous year. This was substantially above the 12 per cent average for , The share of manufactured goods in developing countries' exports increased from 9.3 per cent in i960 to 15.6 per cent in I968 and to 16.8 per cent in At the. same time, their exports of manufactures increased during the 1960s faster than world trade in manufactures (1Д.2 per cent per annum, from I960 to 1969, compared with 10,8 per cent for world trade), and hence their share in world trade in manufactures rose from 3,9 in I960 to Л.9 per cent in I968 and 5,1 per cent in Most commodity groups shared in this expansion. The fastest growing group in I969 xias machinery and transport equipment, where exports from the developing countries grew by Д2.1 per cent, substantially above the high growth rate of 26.7 per cent in 1968 and the average for I96O-I967 of 17.9 per cent. This group, however, accounted for only 2.2 per cent of developing countries' exports in Chemicals, xjhich also still accoxmt for only a very small share (1,7 per cent) of total exports grew by 15.3 per cent in I969 (compared xd.th 10.8 per cent in 1968 and 11,7 per cent in I96O-I967). Iron and steel exports (amounting to a mere 0.7 per cent of developkng coxxntries' total exports) grew by 17.7 per cent, and textiles (З.Л per cent of total exports) by 10,3 per cent, which was well above the 6.9 per ce.it achieved in 1968 and during I96O-I967, 33. During the 1960s the eзort earnings of the developing countries increased by $22,Д billion, or by 81,Д per cent. Of this increase, petrolexmn accounted for $8,6 billion (38,Д per cent), food and raw materials for $5,8 billion (25.8 per cent), base metals for $2.1 billion (9.2 per cent), and other manufactures for $5.8 billion (25,8 per cent). Exports to the developed market-economy countries accounted for 7Д per cent of the increase (EEO 27.2 per cent, the United States 16,9 per cent, Japan 16.Д per cent, and EFTA 7.6 per cent). Japan was the major market for the езалетп of exports of raw materials, accounting for Л2 per cent of the increase in these exports over the decade, EEC was the main market for the expansion of fuels and base metals, (accounting respectively for 38 and 41 per cent of the total increases), and also played a significant role in the expansion of food products and raw materials. The United States dominated in the expansion of exports of manufactures, accounting for over 35 per cent of the total increase.

31 F, Commodity price trends ^ 34. From an average of less than 1 per cent a year during I96G-I968 the export tmit value index of all goods entering international trade (excluding exports of socialist countries) increased by over 3 per cent in 19б9> and by as much as 5.2 per cent in The sharpest price gains in 1970 were in manufactures, the export unit value index of which climbed by more than 6 per cent, but the rise of 2.9 per cent in the export price index of primary commodities was also considerabi by the standards of the.1960s, In turn, the export unit value index of the developed market-econonçr countries rose in 1970 at a considerably faster rate than that of the developing countries per cent for the former as against 2.8 per cent for the latter.'^ 35. Prices of primary commodities (other than non-ferrous metals) exported by developing countries showed a significant Increase, of close to 3 per cent, in 1970, following the 4 per cent rise in the previous year (see table III.6). Underlying the overall improvement was a continuation of the upward movement in food prices, which were nearly 8 per cent higher than in 1969; prices of minerals were marginally higher than in 197Û, and prices of agricultural raw materials showed a 3 per cent f a X l, ^ Data for the first quarter of 1971 show a weakening of most commodity prices, with the important exception of petroleum following the recent Increase in prices which, over the last decade, had failed to recover from the depressed level of the early 1960s, For the six major Gulf petroleumproducing countries (Iran, Saudi Arabia, Kuwait, Iraq, Abu Dhabi and Qatar), 1/ Unless otherwise stated, the discussion in this section is based Ion price and unit value indexes compiled by the United Nations Statistical Office. 2/ The sharp increase in export prices of developed countries was mainly a consequence of strong and persistent inflationary pressures in these countries. For a more detailed discussion of recent tendencies in primary commodity prices, see UNCTAD, The Current International CoEimodity Situation and Outlook (TD/B/C.1/109), 7 June 1971.

32 TD/B/369/Add.l paga 26 ITV cv <Л cv (Л to NÎ> VO vo i i гнгн rh íh p H rn гн г4 S l s 5S2â Ç- n > О а Я а ч^ >0 с я 3 5 я U^ СГ\ О ON О?s S 9 а S а Н а гн «Н á а 8 а Sí гн г4 а я CV гн > s^âas^a?îaasâ'8&sîsaae3 г4 i -i i - H i - H H H i - l r H CVCVrHi-CrH? S S НгНН гн ( I гн гн -4 гн г4 г4 -Н гн г4 CV (V Н гн гн ' î H M» I <Ы <D g T! «W+j cr4.sc S «a. h ü +> H " c l bo l i s p 0) \0 as s 4 СО»Л г4 ftv \û г4 Н я в а S гч гн 1-4 âsssga^rgbâg сч г4 1-4 гч г4 г4 г4 NÛ СП я а СП ICN CN* Я 8&8аяяа Sí а а g 8 гн г4 гн t I g^ggbg&^^bbggass г4гн г4 Н г 4 г 4 г 4 г 4 г 4 г 4 г -4 >Г\ г4 г4 CV CV CV СО O' СО О ON O' О CJN C '-O C J N r4 r rv c n O ''í-c V аааяяаа 'а oo«r*'4^»rnoooocncv'4-«4cvf40toc'- ~яаяя'^ ^а ' '^яаяяа я a iêsbg - - а з г4 O' CV О Я Я а а АП O' СП а я я а g СП С'» CV -<í CV.н а В г4 CV г4 г4 g я г4 гч чо О СП 1Г» г4 г4 >í O' to а а а я Я в S в я íg г4 cv f4 г4 г4 CV CV np а Я - S а я а» з я а а а С'-гЧО'СО'ОО'СО-.^ C'--sícnr4vÍNÍ'^íVfV гч с сь -SÍ O' г4 г4 COCO'OOCy'Anr4CVO'C'-Ancn-4^COCO'^CVAn»n-<rtCV ^ O ncn C V C V C V i4 O ^'0 vd r4 O O r4 r4 O O ^O in (Tv 00 гч МР ^t> X :! я- J^OV с I I а а ' ^ 0} Й4 S g I н*н р р Ю0 -, в тз р р с с р «ч 5 S 5 тз тз S ' ч», S 5 СЧ я S Р -ÑÍ гч -4 Н *0 I + с + CVcnv l i Oí g Н Е-* -<Е-1Е-< М 14 И4 М М Н из а: О) с с * I H 0} Ф g 5 5 S Н ISI К-)

33 it is estimated that, as a result of the agreements recently concluded between those countries and the major oil companies, the average "posted" price of their crude petroleum will be over 20 per cent higher in 1971 than in For Libya, Nigeria and Algeria, "posted" prices are expected to rise by raore than 25 per cent. G. Trends in terms of trade and purchasing power of exports 36, Notxjithstanding a 3 per cent rise in export prices in 1970, the terms of trade of developing countries fell slightly in that year (from 103 in 1969 to 102 in 1970, 1963=100), due to the more rapid increase in their import prices (see table III,7). With the continued rise in import prices and the levelling off in those of ei^ox-ts, the preliminary estimates for the first quarter of 1971 show a further deterioration in the texras of trade. Excluding petroleura, however, there uas a slight improvement in the terms of trade in 1970, over and above the A per cent increase of the year before. This divergence between the two series has persisted throughout most of the decade, reflecting the overall stability of crude petroleum prices, Betxjeen 1962 and 1970, the average yearly deviation (from the 1963 base) in the terms of trade index for all exports was negligible, but for non-petroleuiu exports it was a positive 3 percentage points. This, is not without significance, considering that non-petrolexam exports constitute about txro-thirds of the developing countries total exports, and that the number of petrolегтт exporting countries remains relatively small. 3 7, Table 111,7 reflects a tendency for rising export prices to be offset by parallel movements on the import side, resulting in only minimal year-to-year changes in the terms of trade (the ratio of export to import pricos) of developing countries,, This is particularly evident in the last two years, when both export and import.prices were rising rapidly by the standards of the 1960s. To the extent that movements in export unit values of the leading developed market-economy countries will be reflected in the trends in developing countries iraport unit values, the rise in the latter can be largely explained in terms of the sharp price increases that have occurred in those countries in recent years. 38, Concern with the.terms of trade of developing countries derives from the fact that, given the volxime of excports, they determine the purchasing power of exports, i.e. the volume of goods and services that exports can procure. In the last two years, the growth in the value of developing countries exports, at close on 12 per cent, has been about twice that averaged from I960 to 1968, With the

34 гч гч гч с с\г гч гч гч гч СО СО О н Н гч гч 1> н с р Й > с - и р CUH vo О > -<íc'a О О О гч Н гч CV -HÍ-CO н гч гч гч WN4Û CJ4 О О СЗЧ н н X с Ti T i S л СП н р си: 1 гч( н н HI 1 Í >] <0 S Ti J Ен СИ 0 и 3 il с чо!> чо ОН чо чо Он ^ : I ил чо : Н 1 гн " i L сл чо : ч, I! н ю (лг р ; ч н кд н T i :! ч Й ; Н н. чо - bq -Р н, «гч ш ы Oj! ' ч^ & сл r\i CV О О О гч гч Н сл сл О О О н н н -<t сл н О О О н н н сл сл О О О н н сл с\г н О О О н н н с О О О гч н сл -Nj- О О О н н ^ Си О -н «Си н н Ч cd cd Ф > > тз сб -р -р Н «Н -Р C\í Hj гч гч чо сл сл О О О н н н с сл 1Л О О О н н н ил сл с\г О О О н н н ил CV сл О О О н н н чо чо О О О сл Hj- 04 ON н н СЛСЛ с О О О н н О О О н н н С\2сл О О О н н сл CV (лг О О О н н н г- с О О О >!> О а т гч -р с н! ё! «и 0 н! н 1 -р я с g гч -р е в тз н I с ю Ч 4^ +3 с д н CQ - 'Й -р сю Ü и Н Т5. в н Е>ш н TS к î> Ф т) TÍ гч Й Ti â Tí <= Си с ю с +5 -Н +3 м Ф -Р Си!>< чз Н ад ' Ф в Й Р Ф Н ш t> Ш Р Й Н Ф с Й г Й ê ^ н с X Н Ф Р T i Си О W ч 0 0 Р TÍ н н < 4 & р 0 и 0 с O i -р е в rû гч Р н *гн 0 р в \S > Ü го ЕН 0 0 'Tí ад Й н н р Н -Р ft T i СО р Й 0 н а н 0 > н В СО 0 и н > е XÎ Й TÍ р W -р н 0 сti н CQ и 0 -р Н и н \ и Ti ад -Р 1> CQ н н Н Ü ft р Ш О н е ад Ü н н î> kl Си с р Си р н к к с р -, ад 'И Н T i Р Ti. Й Р Ti Р с «

35 sharp rise in import prices in 1970, however, the purchasing 'poxjer of their exports grew by only 7.5 per cent in that year, compared to 9.6 per cent in the preceding year. Excluding petroleum, the corresponding rates were 11,6 per cent in 1969 and 9.1 per cent in 1970, or two to three times the rate of Д.5 per cent for the earlier period (see table 111,8), Table III-8 Exports of developing countries to the worlds quantum, value and purchasing power (Average annual percentage rate of growth) Including petroleum Quantum - Value 1 i Purchasing > a/ : powers-! r i i! i ' Excluding petroleum Ч. 6 Д Д ' 7.Д 13.2 i t * I\ \ Source; United Nations, Monthly Bulletin of Statistics (March, April and June 1971)I and UNCTAD, Handbook of International Trade and Development Statistics ' ^ Change in the value of exports, deflated by the relative change in the import unit value index.

36 A. Official and private financial floxjs Chapter БГ Foreign Exchange Resources for Development 39. The total net flo\j of financial resources from the developed market-economy countries and multilateral agencies to developing countries in Africa, Asia and Latin America is estimated to have increased by about $1.3 billion in 1970, reaching a level of some $13.7 billion (see table IV-l).'^ This represents an increase of 10.7 per cent over the figure for a considerably higher rate of increase than in the previous year and than the average for the decade. Most of this 1970 increase was accounted for by a sharp rise in direct private investment. However, these figures refer to flows in current prices, and hence make no allowance for the impact of inflation in the developed countries, vihich has been accelerating in recent years. Thus, in real terms the / flow of resources increased by about 7 per cent over I Bilateral official flovrs, which account for close to half of the total, increased by only 2.3 pel* cent in 1970, The share of grants in the total continued to decline, though the increase in grants by 2 per cent in 1970 was in marked contrast to the 6 per cent decline registered in I969. Loans on concessional terms rose by 2.8 per cent in 1970, far below the rate of increase of 10 per cent in 1969 and the average annual Increase of 23 per cent dxiring I96O - I968, Other bilateral official flows increased in 1970 by 39 per cent to $701 m x llio n. The increase in this component in 1970 reflected almost entirely official export credits; and was largely accounted for by Japan. 1/ The bulk of this flow originated in the sixteen member countries of the Development Assistance Committee of OECD, viz., Australia, Austria, Belgium, Canada, Denmark, France, the Federal Republic of Germany, Italy, Japan, Netherlands, Norvjay, Portugal, Sweden, Switzerland, the United Kingdom and the United States. 2/ Estimate derived by using the import unit value index for developing countries as a deflator.

37 A t Ч и +> g ü ы с Й» *н OÍ и I < тч <H M!» g г <1) >О) +3 SY 0>(Q ks н «н «и +5 i*ни ы J и ih S'

38 Д1, Private flows continued their upward trend in 1970, growing by 13 per cent..among the components, the major increase in 1970 was in direct investment, which grew by 36 per cent (following a decline in 1969)I this increase was largely accounted for by Increased out-flows from the United States. Guaranteed private export credits increased in 1970, but portfolio investment declined, reflecting in part a fall in total sales of long-term obligations in world capital markets in the face of rising costs of borrowing. 42, Much of the increase in net financial flows to developing countries in 1970 was 'due to the multilateral agencies, whose net disbursements increased by 30 per cent in 1970 (down somewhat from the 40 per cent increase in the year before). Net flows from these agencies were estimated at about $1.4 billion in ДЗ. The ratio of the net flow of financial resources from countries members of DAC to developing countries in Africa, Asia, and Latin America and to multilateral agencies was estimated at 0.70 per cent of the combined GNP of the developed market-economy countries in about the same as in 1969, and about $5 billion short of the 1 per cent target recommended in Conference decision 27(11).^ The United States, \.ihich accounts for 37 per cent of the total DAC flow, increased its total flow significantly in 1970, both absolutely and as a proportion of GNP, largely as a result of a sharp rise in direct private investment; the levelling-off of flows from other countries, particularly the Federal Republic of Germany and Italy, kept dovm the ratio of net flows to the combined GNP of DAC countries. 44-, Official development assistance (i.e., bilateral grants and similar flovis, bilateral loans on concessional terms, and contributions to multilateral institutions) increased by 3 per cent in With this modest increase, the share of official development assistance in the combined GNP of the developed market economy countries fell from 3/ If flows to Southern European countries are also included, there was a drop from 0.75 per cent to 0.7Д per cent. Grants by private voluntary agencies were reported by DAC for the first time in 1970; if they are included, the 0.74 per cent figure becomes 0.78 per cent. It should be noted that the flow concept related to the 1 per cent target is not quite the same as that used in table IV-1. The latter includes flows from multilateral agencies to developing countries, v/hile the 1 per cent target includes flovrs te multilateral agencies from DAC countries.

39 roughly 0.35 per cent in 1969 to 0.33 per cent in 1970,^ continuing the downward trend since the middle of the I960s. For the United States official development assistance fell further in 1970, to the lowest level since The share of grants in total official development assistance from DAG countries has declined, from over 75 per cent in the early 1960s to about one-half by the end of the decade.^ The share of grants in new commitments also diminished, but was offset by the lengthening of loan maturities and grace periods, accompanied by a lower average rate of interest, with the result that the overall concessional element in grant and loan commitments taken together remained largely unchanged between 1969 and 1970, at 85 per cent.'^ B, Sources and uses of foreign exchange 45. Table 17.2 shows the structure of the balance of payments for developing countries as a whole, distinguishing separately the oil-exporting countries for which the payments structure differs enormously from that of countries not exporting oil. Net official and private financial flows are, on balance, very small for oil-exporting countries, and their exports far exceed their inports. The bulk of financial flows has gone to the non-oil-exporting developing countries, and these flows have comprised a fairly constant proportion of foreign exchange resources available for imports per cent in I960 and 26.8 per cent in For the non-oil-exporting countries the flow of services and private transfers now makes, on balance, a small net foreign exchange contribution, which is of growing importance. 46. Claims on resources, requiring pajraients to the developed countries, have been growing very rapidly during the 1960s. For the oil-producing countries the figures are largely determined by the sharing arrangements between those countries and the oil companies, and by the groirth of oil exports. The outflow amounted to $4 billion in ''or the other developing countries, the net' outflow on account of interest and Investment 3/ The change is from 0,36 to 0.34 per cent if flows to Southern European countries are included. Under the International Development Strategy for the Second Development Decade, the target set for the mid-1970s is 0.7 per cent - a goal which has won acceptence among several DAG member countries but is the subject of reservations by others. 2/ To a considerable extent, this reflects a change in Government policy in the United States regarding food aid, which is now extended in the form of soft loans rather than as quasi-grants. Certain other countries have also deliberate!; chosen to increase the loan content of their overall programmes. 3/ The concessional element is calculated with an assumed discount rate of 10 per cent.

40 О c^ O' s у I tí s cq 01 *H p ii s I cbс«и i> s 4-( 0) to с -р «>р )

41 income gre\j from 1.5 billion in I960 to $4.0 billion in rising from 6.0 per cent of availabilities to 8,1 per cent.^ For these countries the outflow on account of miscellaneous capital items, including "capital flight", also increased rapidly, from 0.25 billion to $2 billion, between I960 and According to estimates based on data of the IBRD, the external indebtedness (public and publicly-guaranteed debt outstanding, including undisbursed) of 80 developing countries for which information was available stood at $60 billion at the end of 1969, having groto at an annual rate of 13 per cent since the end of The sum of interest and amortization payments has also grown - from $2.6 to $5.0 billion between I96I and 1969 (or by almost 9 per cent per annum). 48. Between the beginning and the end of 1970, the total reserves of developing countries i.e. including gold, special drawing rights (SDRs), reserve positions with the IMF, and foreign exchange - grew by $2.6 billion (I6.4 per cent), to reach $18,1 billion. This increase was the biggest in any year during the past decade, even excluding the $853 million allocated to developing countries in the form of special drawing rights (SDRs) 2/ on 1 January ' Most of this gain in reserves, however, was accounted for by seven countries; Libya ($672 million, a rise of 73.2 per cent); Brazil ($530 million, up 80.7 per cent), China (Taiwan) ($181 million, up 40.9 per cent), Zambia ($145 million, up 39.3 per cent), Argentina ($134 million, up 24.9 per cent), Philippines ($130 million, up per cent), and Peru ($113 million, up per cent). All other developing countries together showed an Increase of only $650 million, a rise of 6 per cent, which was the same average rate of Increase as was experienced by all developing countries during the 1960s. The important contribution of SDRs to the external liquidity of developing countries is already becoming apparent. Thus, excluding the seven countries mentioned above, if the $694 million of SDRs allocated in January 1970 to the other developing countries were subtracted, the aggregate reserves of those countries would show a slight decline over the year, instead of a rise of $650 million. \ J In addition, amortization payments on loans can be roughly estimated to have been at least $3' billion for these countries in / On 1 January 1971 a second round of SDRs provided a further $747.5 million to developing countries.

42 С. The relative importance of exports, net loans and grants, and all other flows (net) in accounting for imoort levels 49. Individual developing countries differ enormously in the relative importance of merchandise exports and of other items in the balance of payments in accounting for actual import levels. Chart IV-1 depicts graphically a few key characteristics of the structure of the balance of payments during the period of 80 developing countries with more than 1 million population. The vertical axis shows exports (f.o.b.) as a percentage of imports, and the horizontal axis shows net loans and grants as a percentage of imports. Thus the dot for each country on the chart shows the relative importance of these tvro sources of foreign exchange in accounting for imports. The chart also gives an insight into the relative importance of all other balance-of-pavments flows (net). ^ Since "exports" plus "net loans and grants" plus "all other flows, net" are by definition equal to imports, the 4-5-degree line connecting the points of ICG per cent coverage of imports by "net loans and grants" (horizontal axis) and by "exports" (vertical axis), marks the path through which "all other flows, net" are zero. Thus, for any country on this line (such as Malaysia or Ethiopia) these net residual flows are zero; for any country below this line, the residual flows (net) are positive; and for any country above they are negative. To facilitate reading of the chart, two other 4,5-degree lines are traced, corresponding to the situation i-jhere "all other floiis, net" represent respectively an outflow or an inflow of foreign exchange equal to 50 per cent of imports. Thus a country's position on the chart sums up three major characteristics of 2/ its balance of payments structure.-' _ 50. The chart reveals wide variations in the balance-of-payments structure among developing countries. Thus exports as a percentage of imports vary from as much as 200 or more for several countries (mostly oil-exporters) to as little as 40 per cent, or even less, for others. Several countries vfith a low ratio of merchandise exports to imports (e.g. Lebanon, Panama, Yemen and Jordan) have substantial net export earnings from services. Net loans and grants as a percentage of imports are even slightly negative in Argentina (which means that amortization payments on old loans slightly exceeded new loans and grants during the period), while in a number of countries the net flov/ of loans and grants corresponded to half or more of their imports. Fcr most countries, the net residual flows do not exceed 50 per cent of imports. 1/ These include direct private investment, services, private transfers, changes in reserves, interest and investment income and net residual flows. 2/ See Review of International Trade and Development, (TD/B/309/Rev.l), paragraphs and annex Table A-4, for a description of sources and qualifications on the data.

43 C H A R T IV - 1 EXPORTS (f.o.b.) a s p e r g e n t 21 O F IMPORTS 180 SAUDI ARAB ilr A Q - VENEZUELA FOREIGN EXCHANGE FLOWS R ELA TED TO IMPORTS M A JO R C O M P O N EN TS O F T H E B A L A N C E O F P A Y M E N TS S T R U C T U R E O F 80 D E V E LO P IN G C O U N TR IE S W ITH M O R E T H A N 1 M IL L IO N P O P U LATIO N 226 I MAURITANIA A V E R A G E CONGO (Dem. Rep.) 140 LIBERIA 120 ARGENTINA \ \\ IVORY COST \ \\ CHILE ^ TANZANIA URUGUAY NIGERIA PERU BRAZIL» INDONESIA \ TRINIDAD- ALGERIA * CAMEROON MALAYSIA ^ H A IT I «BOLIVIA HONDURAS I ECUADOR / \7..г.лм COLOMBIA. s a l v a d o r X ^ ^'^'^'^s ie r r a l e o n e c e y l o n X ^ «g u in e a b u r m a \ - * m o r o c c o CHINA (Taiwan) N IC A R A G ^ \ g H'.NA -...T Z T r i... DOMINICAN REP. PHILIPPINES- # «SENEG AL SINGAPORE \ SENEGAL UAR CAMBODIA. ^ «C O STA R IC A \ I.P A R A G U A Y CENT.AFR.REP. \ \\ YUGOSLAVIA MEXICO JA '^^^A «THAILAND YEMEN (D.P.Rep.) V e THIOPIA MADAGASCAR «NEPAL 60 KENYA.. AFGHANISTAN.40 \» PANAMA \ \ - KOREA (Rep. of) \ _ \ \ YEMEN \ \\ \ «JO R D A N ' \ I I I I N Source ; See paragraphs , Review of International Trade and Development 1970, TD/B/309/ReV.1 LAOS VIET-NAM IRep.ofl ' I I Г N E T LO AN S A N D G R A N TS AS P ER CEN T O F IMPORTS