Advocate of US aid says gain is mutual

By

John W. Sewell often feels he is banging his head against a wall. For many years he has been talking about the increasing economic importance of the developing countries to the United States. But Mr. Sewell, the lanky president of the Overseas Development Council, still does not see sufficient awareness of this close relationship in the nation's capital.

President Reagan, freshly reelected, has the freedom to take unpopular measures to aid the world's poor majority without fear of political retribution, Sewell notes. But he fears Mr. Reagan will not do so.

For instance, he says, the President could seriously revive the so-called ''North-South dialogue.'' The industrial countries and developing nations are already scheduled to discuss economic problems at meetings next spring of the Development Committee and Interim Committee, which are activities of the World Bank and the International Monetary Fund. Sewell would like to see the US at that two-day meeting support measures that help the developing countries deal with their massive debts. He urges an increase in foreign aid, and a reduction in protectionism.

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''My concern is that they (the developing countries) won't resume growth fast enough,'' he said in an interview.

Mr. Sewell's Washington think tank is generally regarded as ''liberal'' in its view of relations between the US and the third world.

For example, Sewell holds that the United States could obtain more genuine security by helping speed up the economic development of third-world countries than by stepping up military aid to them. He doubts that a new squadron of F-14s will really do much to increase the political stability or security of most developing nations. Thus he criticizes the Reagan administration's plan to step up military assistance almost $5 billion by fiscal 1987, while all other international financial assistance, such as regular foreign aid, Peace Corps expenditures, refugee aid, and so on, will go up only some $200 million.

This think-tank chief, however, does admit the developing countries must make better use of their resources. He is critical of inefficient and unprofitable state-owned corporations in many poorer countries. He has increasingly recognized the need for economic policy reforms in many third-world countries.

A number of facts illustrate the growing economic importance of the developing countries:

* Because of the remarkable growth rates of the developing countries in the 1960s and 1970s, their share of world output has grown from 15 percent in 1960 to 19 percent in 1979, and it could be as high as 25 percent by the year 2000.

* During 1974-79, US exports to oil-exporting and non-oil developing countries grew at an annual rate of 6 percent. They accounted for 38 percent of all US exports in 1980. They exceeded US exports to Japan and Western Europe combined and accounted for a much larger fraction of US gains in exports and export-generated jobs throughout the 1970s.

* The debt crisis has since hit US exports to the poorer countries. In real terms, the drop in US exports to these countries between 1980 to 1983 was $18.2 billion, costing perhaps 578,000 jobs. If the developing countries had continued to grow at, say, 5 percent, Mr. Sewell calculates, additional US exports would have generated 500,000 more US.

* Third-world stagnation cost US parent companies some $10.4 billion in income from their investments in developing countries between 1980 and 1983, Sewell reckons. That drop has worsened the US balance-of-payments.

Although he praises the leadership of M. Peter McPherson, administrator of the Agency for International Development, Sewell maintains that in general the Reagan administration has an inadequate third-world economic policy. He argues the US could get more from its foreign expenditures at little budget cost.

As one example, he suggests Washington could agree to a higher ''gearing ratio'' for the World Bank. At the moment, that international institution can make loans only up to the amount of its own capital, considered a very conservative loan-to-capital ratio. He would also like the bank to get an increase in its capital. Since most of that capital is not ''paid in,'' though available on call, it is not a major expense for most contributor nations.

He hopes the industrial nations will find more ways to stimulate private investment in the developing countries, such as multilateral guarantees against expropriation. He calls on the US to change its mind and back a new issue of special drawing rights (SDRs), a type of international money created by the IMF, which could be used by the poor countries to boost growth or service debts.

The administration has continued to support a limited amount of foreign aid and financial backing for the international development institutions. It pushed through Congress an eight-year extension of a special tariff deal for developing countries known as the Generalized System of Preferences. It has also emphasized encouraging developing countries to alter domestic policies to improve efficiency and stimulate private enterprise.

It remains to be seen where the second Reagan administration will draw the balance between urging bootstrap development measures and offering foreign assistance. Sewell holds that the US should be doing more to help out. Growth in the third world, he says, is ''mutually beneficial'' for growth in the industrial nations.

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