The Problems And Policies Of Economic Development


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THE PROBLEMS AND POLICIES OF ECONOMIC DEVELOPMENT:
AN APPRAISAL OF RECENT EXPERIENCE
World Economic Survey 1967-Part One
UNITED NATIONS

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UHITED HATIOHS
NewYerk, 1968

NOTE
Symbols of United Nations documents are composed of capital letters combined with figures. Mention of such a symbol indicates a reference to a United Nations document.
E!4488/Rev.1 ]
ST/E'CA/104

FOREWORD

This report, World Economic Survey, 1967, is the twentieth in a series of comprehensive reviews of world economic conditions published by the lJnited Nations. It is issued in response to General Assembly resolution 118 (II), in which the Secretary-General was requested to prepare an annual review and analysis of world economic conditions and trends. The report is intended to meet the requirements of the Economic and Social Council and other organs of the United Nations for an appraisal of world economic conditions which may serve as a basis for recommendations on economic matters. It is also intended to stimulate interest in and discussion of international economic problems anaong a more general public audience.
Each year .since 1955, the World Economic Survey has contained a study of a particular problem concerning economic development. Among the subjects examined have been economic growth in the first post-war decade, balance of payments problems in relation to economic growth, inflation, post-war commodity trade and policies, experience and policies relating to investment and saving, industrialization and economic development, foreign trade and economic development, the appraisal of development plans, the financing of economic development, and problems in the implementation of development plans.
Part One of the present Survey examines the principal features of economic progress of developing countries during the period 1955 to 1965. As part of the preparatory work for a second United Nations Development Decade, this review seeks to draw certain pertinent lessons from the recent experience relating to problems and policies of economic development. It is hoped that the Survey will

provide a helpful background to discussions in United Nations forums on designing a concerted programme of action for the 1970%o
Part One of the Survey consists of an introduction and five chapters. The first chapter contains an empirical examination of the dimensions and diversity of recent achievements and problems. The second chapter examines in some detail progress and problems encountered by developing countries in the principal sectors of economic activity, particularly in agriculture and industry. The third chapter is devoted to a consideration of problems of mobilizing both human 'and financial resources for accelerating economic development. The fourth chapter considers the recent planning experience of developing countries, with special emphasis on the use of the various policy instruments available for implementing plans. The final chapter examines some of the features of the international economic environment in which efforts to promote development are taking place.
Par.t Two of the Survey, which is issued as a separate volume, deals with the main features of the world economic situation, tt consists of three chapters. The first covers the growth of output and trade and changes in the allocation of resources in 1967 and early i968. The second chapter examines in some depth several topics of current ,concern in the fields of international monetary and trade policy, commercial policy developments and regional integration. The final chapter examines recent progress in economic reforms in eastern Europe.
The World Economic Survey is prepared in the Centre for Development Planning, Projections and Policies of the Department of Economic and Social Affairs of the United Nations Secretariat.

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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
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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 .......................................................... 61
33. Selected developing .countries: change in structure of manufacturing output,
1950-1965 .......................................................... 62
34. Developing countries: distribution according to investment, 1965 .......... 63 35. Selected developing countries: infrastructure components of capital formation,
average 1960-1963 .................................................. 65
36. Developing countries: installed capacity and production of electric energy,
1960-1965 .......................................................... 66
37. Distribution of crude birth rates, by country, 1966 or most recent year ...... 71 38. Developing countries: public expenditure on education in 1962 and growth
in school enrolment ratio, 1955-1963 .................................. 74
39. Developing countries: growth of employment ............................ 75
40. Developing countries : levels of foreign and domestic savings, average 1963-1965 78 41. Developing countries: level of domestic savings, by sector, average 1963-1965 79 42. Selected developing countries: changes in net domestic savings, 1955-1957
to 1963-1965 ...................................................... 80
43. Developing countries: government disposable income and its components,
average 1963-1965 .................................................. 81
44. Developing countries: elasticities of general government current revenue and
expenditure, 1955-1965 .... ........................................... 82
45. Developing .countries: changes in levels of general government savings, consumption and disposable income, 1955-1957 to 1963-1965 ................ 83
46. Developing countries: level of government total tax receipts and components,
average 1955-1957 and 1963-1965 ..................................... 84 47. Developing countries: time and savings deposits, 1955-1965 .............. 86
48. Developing countries: life insurance in force, 1955-1966 .................. 86 49. Growth in exports of .developing countries, 1955-1965 .................... 89 50. Developing countries: growth in exports, total and main commodities,
1955-1965 .......................................................... 90
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Pÿge 51. Developing countries : growth in exports of manufactures, 1955-1965 ........ 91 52. Developing countries: growth in exports of main manufactures, !955-1965 93 • 53. Developing countries: distribution according to ratio of exports of goods
and services to gross domestic product, average 1963-1965 ................ 111 54. Economically advanced countries: rate of increase in total production and
in imports from developing countries, 1955-1965 ........................ 112
55. Developing countries : destination and composition of exports, 1955, 1960, 1965 113 56. Developing countries: growth rates of exports to various regions, 1955-1965 113 57. Developing countries: average rate of increase in the quantum of exports
to developed market economies, by category, 1955-1965 .................. 113
58. Major developed market economies: imports and Kennedy Round tariff
concessions ......................................................... 119
59. Major developed market economies: changes in .tariffs negotiated in the
Kennedy Round .................................................... 121
60. International Monetary Fund: accommodation of developing countries, 1956-
1967 ............................................................... 126
61. 'Centrally planned economies: growth in real net material product and
components, 1955-1965 ............................................... 126
62. USSR : credit provided to developing countries, according to industrial destina-
tion, cumulated to end-1966 ........................................... 127
63. Capacity of plants built in developing countries with Soviet economic assistance,
up to end-1966 ..................................................... 128
64. Structure of resource transfers from industrial market economies to less developed countries and multilateral agencies, 1956-1966 ................ 130
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List of figures
Page I. Developing countries: rates of growth in real exports and in gross domestic
product, 1955-1965 ................................................. 26
II. Developing countries: relationship between export ratio and gross domestic
product, 1963-1965 ................................................ 28
III. Developing countries: growth in real gross domestic capital formation and
gross domestic product, 1955-1965 .................................... 29
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The Problems And Policies Of Economic Development