'Bank' report tells of '70s challenges
Washington — The 1970s were a tough economic decade for mankind. But the World Bank, with something like a sigh of relief, says in its annual report for 1980, "the world community demonstrated its ability to adjust to major and sudden change."
In perspective, the bank study argues that "although the decade, and particularly its closing months, may have witnessed a deterioration in the international environment, the 1970s will be remembered as a period in which a better perception of human, as well as economic, problems was developed."
The bank pointed to the aggregate economic growth of the developing countries , which averaged 5.3 percent a year in the 1970s, down only slightly from the 5. 6 percent annual rate in the 1960s.
By comparison, the gross national product of the industrialized countries -- their output of goods and services -- grew at an average rate of 3.1 percent in the 1970s, down substantially from 5 percent in the 1960s.
However, this continued growth of the poor countries was not without cost, the bank says. There was a slackening in developmental momentum and an amassment of debts. The report adds: "The formidable task of adjusting fully to the new economic environment remains the main challenge to the developing countries as the new decade begins."
The bank cautions that "this community will be hard pressed to survive future decades filled with shocks and turbulences without consequent social upheaval" unless it absorbs the lesson of the 1970s -- that rich and poor nations must work together in a variety of economic spheres.
The economic shocks that rocked the 1970s were:
* A notable slowdown in the growth of the developed countries, coupled with high rates of inflation.
* A dramatic rise in the price of crude oil. This led to a deterioration in the terms of trade of the oil-importing countries; that is, they had to pay more for their imports of oil and imported capital goods and food in terms of the value of their exports.
* A massive buildup of liquidity in the international capital markets.
* Unusually large fluctuations in commodity prices -- prices that are vital to most developing countries.
The poorest of nations suffered further difficulties, the bank notes. They faced protectionist pressures in the industrialized countries, a worsening food problem (especially in sub-Saharan Africa), mounting social pressures, and an increase in the number of poor.
The World Bank report is the latest in a series of international studies urging greater global cooperation. Other such studies include those by the Overseas Development Council, the US Presidential Commission on World Hunger, and the Commission on International Development Issues (chaired by former West German Chancellor Willy Brandt).
The high average growth rate for the developing nations masked wide differences. Generally, the richest developing countries fared best during the past 10 years. Taiwan, Singapore, and other middle-income countries of East Asia grew by 8 percent each year. But annual growth in the poor countries of sub-Saharan Africa was but 3 percent. In terms of growth in per capita incomes, the contrast was even more stark.