World Bank sees tough going for least-favored nations

For the world economy, the 1970s brought a steep rise in oil prices, the sting of high inflation, and a series of sharp recessions. While no nation escaped unscathed, developing countries have weathered these shocks more successfully than their richer, more industrialized brethren, according to the World Bank's just-released 1982 World Development Report.

But for many developing nations -- especially the poorest, concentrated in sub-Saharan Africa -- the economic outlook for the '80s remains uncertain, dependent on such volatile factors as world trade tensions, interest rates, and commodity prices.

''The development process is working. Fitfully, but it is working,'' says Bevan Waide, director of the World Bank's Country Policy Department.

Between 1973 and 1980, developing-country economies grew at an annual rate of 4.6 percent. Over the same period, industrial nations experienced economic growth of 2.4 percent annually, the report says.

Hit with fast-increasing bills for imports of oil and manufactured goods, developing countries found substitutes where they could, boosted exports, went further into debt, and still increased investment as a share of gross national product, the World Bank says. Through the mid-'70s, investment accounted for 25 percent of developing-country GNP, and about 22 percent of industrial-nation GNP.

Yet the economic position of many developing nations remains precarious. While middle-income developing countries should continue to narrow the gap between themselves and the rich industrial economies, the prospects of the poorest strata of nations remain a matter of ''grave concern,'' according to the development report. And for all developing countries, the onset of the '80s has brought sluggish growth, or worse.

In 1981, GNP in Latin America and the Caribbean fell 2.5 percent. Economic growth declined 0.5 percent in the developing countries of the Middle East and North Africa, and remained stagnant in sub-Saharan Africa. Of developing countries, only the trading nations of the Pacific rim were untouched by worldwide recession.

For the developing world, future economic growth levels will depend partly on some unpredictable factors:

Interest rates: Developing countries have seen their current-account deficits rise from $40 billion in 1979 to $115 billion last year. Interest payments on this debt have become a crushing load: Developing countries paid out $51 billion in interest last year, double the figure for 1979.

Trade: For more advanced developing nations, exports of manufactured goods have proved a strong source of growth. In 1970, 7 percent of the nonfuel manufactured products bought by industrialized nations were made in the third world. By 1980 the figure was up to 13 percent. The increased income benefited countries as diverse as South Korea, Mauritius, and Morocco.

But the sluggish world economy has exacerbated international arguments over trade. The real loser in such a dispute could turn out to be the third world.

''Nothing is more likely to jeopardize the strong growth momentum built up over the past 30 years than a renewal of protectionism,'' the report says.

Commodity prices: Over the past decade, many poor nations, such as Bangladesh , Tanzania, and Zambia, had their budgets squeezed by low world prices for non-oil commodities. Their future is heavily dependent on what the developed world will pay for coffee, sugar, and other staples -- and the outlook is not promising.

Over the next few years, says the report, prospects are for ''only a modest recovery from the present severely depressed commodity prices.''

Recovery in industrial nations: While ''it is increasingly an oversimplification'' to see the world economy as controlled solely by rich countries, the report says, developing nations won't be able to bounce back strongly from recession without a corresponding upturn in the developed world.

In any case, the World Bank is far from bubblingly optimistic about economic prospects in the third world. Last year, the bank predicted that GNP growth in developing countries would range from 4.5 to 5.7 percent annually over the 1980 s. That prediction has not changed. But, ''while we should in no way be overly gloomy, the chances that we will reach the high end of that range are now clearly less,'' the bank's Mr. Waide says.

For the poorest of poor nations, concentrated in sub-Saharan Africa, the outlook is even grimmer. ''Their progress, more than that of any other group, will depend heavily on generosity and initiative in the provision of aid,'' writes World Bank president A. W. Clausen.

of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.