A.W. Clausen - an overview of the role of the World Bank

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Sometimes people regard economic conditions in the poorest of nations as hopeless. But not World Bank president A.W. Clausen. ''There must be hope,'' he said in an interview here. ''You cannot find solutions if you despair. And there's no reason to despair if you back off and look at what can happen.''

Mr. Clausen describes the progress of the developing countries as ''rather remarkable'' over the last 20 years. Longevity, health levels, literacy, standard of living - all have risen considerably.

Right now, admits the former chief executive of the Bank of America, the developing countries are still suffering from the world recession, though this ended in the industrialized nations last year. Moreover, the sub-Saharan nations have been hit badly by a severe and extended drought; the supply of foreign aid at concessional rates for the poorest countries are ''not as forthcoming as they have been in the past;'' and commercial banks are more reluctant to lend to the developing countries.

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Nonethless, he expects 1984 to be better for the poorer countries than 1983 because they will be able to sell more goods to the richer countries - if not stopped by protectionism. Moreover, commodity prices are ''inching up.''

Further, many of the developing countries have made adjustments in their domestic economies to provide greater incentives for growth and more efficient allocation of their limited resources, Mr. Clausen noted. And there has been ''progress on human resources'' - people in the developing countries are more educated, trained, and modern in their thinking.

''There are so many things that can be done, even with limited resources,'' he said.

Mr. Clausen called for more cooperation between the developing and developed nations, pointing out that economic growth in the poorer countries was of self-interest to the industrial nations. For example, the United States in 1970 sent some 29 percent of its total exports of goods and services to the developing countries. By 1980, that figure was approaching 40 percent.

When Mexico was hit by its debt crisis, US exports to that nation fell by some $10 billion. By US Treasury estimates, each loss of $1 billion in exports costs some 25,000 to 30,000 jobs in the US, the World Bank executive noted.

Mr. Clausen hopes that ''noninflationary, sustainable economic growth'' in the industrial nations will stem and reverse the increase in protectionism. But it will take a combination of growth, an open trading system, a flow of capital resources from rich to poor nations, and proper economic adjustments in the developing countries to return these nations to the rapid growth of the 1960s and 1970s, he said.

During the 1970s there was much discussion of a New International Economic Order (NIEO) involving changed relationships between the developing and industrialized countries. But this talk has greatly diminished.

One reason, Mr. Clausen figures, is that the world is now ''multipolar'' rather than ''bipolar'' - that is, in economic terms it is not just the rich North vs. the poor South.

Nowadays there are increasing South-South or even South-North economic relations, he said. You find Indians investing in Africa, and South Koreans investing in the United States.

One of the difficulties with the NIEO, he said, is that there is no consensus as to what it really means. But in some cases, proponents have urged the creation of new international organizations.

But Mr. Clausen maintains that existing international institutions such as the World Bank and the International Monetary Fund, though not perfect, are strong, tested, operative, and ''evolving to be more sensitive to the needs of today.''

The United States has cut back on its financial assistance to the International Development Association, the concessional lending arm of the World Bank. Mr. Clausen called for the support of IDA and other such international institutions. ''It's a better world - a far better world - because of these institutions,'' he said.

Because of the US decision to limit its contribution to IDA to $750 million annually over the next three years, IDA will have only $9 billion rather than the $12 billion sought by some 30 other contributor nations to make low-cost loans to the poorest nations over a three-year period starting July 1. These countries include China, India, sub-Saharan nations, Bangladesh, and Nepal.

It will be more difficult for these nations to advance their living standards , predicted Mr. Clausen.

Mr. Clausen has been campaigning for other donor nations to contribute supplemental funds to IDA to make up for some of the reduced lending ability. He promised to do ''whatever it takes'' to persuade other well-to-do nations to help out, ''including standing on the corner and singing, monkey on my shoulder or on a leash.''

He complained: ''One of the things that the US really does not fully understand is its role of leadership . . . how much other nations look to the US for leadership, even in this area.''

Mr. Clausen boasted of how IDA development projects, on average, have had a 17.9 percent economic rate of return. ''That's a resounding success,'' he said.

The Reagan administration has decided to devote a somewhat larger portion of the money available for foreign aid to bilateral aid; that is, sending aid directly from the United States to the developing country, as vs. multilateral aid through such institutions as the World Bank.

Mr. Clausen, who became president of the World Bank in 1981, noted that only 30 percent of bilateral development money goes to the poorest of the developing countries, whereas better than 95 percent of IDA funds are lent to nations with per capita incomes of about $1 a day. To reduce IDA and not switch more bilateral aid to the poorest countries ''compounds the tragedy,'' he said. These countries are not creditworthy in commercial money markets and cannot afford World Bank loans at higher interest rates.

Right now the World Bank, which in fiscal 1983 with its affiliates made loans and credits in excess of $15 billion, is in the middle of a study of its future role in global affairs. The bank's staff are looking at the world environment, the role of the bank within that system, and the financial objectives and needs of the World Bank. Given Mr. Clausen's view of the bank as ''a fantastic institution,'' the study will undoubtedly find the bank should continue to have an important role in world development.

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