What about the world's back burner?

By , Gustav Ranis, professor of economics at Yale University, served as assistant administrator for policy in the US Department of State/AID in the Johnson administration.

This administration has had its hands full of dramatic budgetary and tax cuts. Other energies have been devoted almost exclusively to the strategic balance with the Soviets -- with little left over for the rest of the globe, least of all the third world. Now, finally, the calendar is forcing a look at what is cooking on that back burner.

What can we expect at that point?

The slightest exercise of realism argues against any new "Marshall Plan" (even for the Caribbean where it could be had on the cheap); against trade initiatives granting increased access to third-world exports; even against (usually favored) new private investment cofinancing schemes. There are a few dos and don'ts that should be sufficiently sensible and businesslike to appeal to openminded, even if hard-headed, Reaganites.

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* Don't make simple-minded extensions from curbing the excesses of the welfare state at home to the problem of poverty in the third world. Quite the contrary, East Asian experience has demonstrated that growth and equity are not fundamentally competitive but potentially complementary goals in the typical labor-surplus developing country -- and that assisting a country desirous of making changes in its own policies can indeed yield faster growth andm less poverty by means of greater productive participation of its poor, usually the small farmers, urban self-employed, and industiral entrepreneurs. Aid Becomes a doley only if it is used to help maintain leaky, narrowly based policies rather than change them.

* Don't let recipients assume they have a right to an annual aid allocation. We should avoid automatic country allocations, which hurt both parties -- even as we should seek greater automaticity on the overall availability of resources. This does mean that at times we would have to be willing to be quite passive with respect to a particular developing country for years on end -- but also ready to respond generously if and when that country proposes a sensible multiyear "growth with equity" strategy, and asks US helps in cushioning the inevitable transitional pains associated with difficult policy change.

* Don't assume that the South is made up of a few strategically placed parcels like the Mideast, Pakistan, El Salvador, Jamaica, Mexico, plus a great mass of humanity whose fate is quite irrelevant to US national interests. If ever the North needed the markets, resources, and better chances (though no certainty) for a "quiet life" in the South, it is now. Few observers will doubt that it was the continuing active demand from the third world -- largely fed by recycled petrodollars -- which served to cushion the recent world recession, and even fewer still doubt our ability to long survive a world containing a growing number of embittered second-rate nuclear powers.

* Do at least maintain current, modest levels of bilateral and multilateral development assistance to the poorer countries -- as well as support increases in the World Bank's gearing ratio so that more middle-income countries can be helped to graduate and become donors in their own right.

Adherence to such points permit the US to demonstrate its desire to be associated with the inevitable processes of change but only on the basis of nonpaternalistic, negotiated country-by-country agreements.

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