World Development Report, 1980

Part I Adjustment and growth in the 1980sPart II Poverty and human developmentAnnex World Development Indicators

The World Bank August 1950

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WorldDevelopment

Report1980

The World BankWashington, D.C.

August 1980

11

© 1980 by the international Bankfor Reconstruction and Development / The World Bank

1818 H Street, N.W., Washington, D.C. 20433 U.S.A.All rights reserved.

ISBN 0-19-502833-3 clothISBN 0-19-502834-1 paperback

ISSN 0163-8058

The Library of Congress has cataloged this serial publication as follows:

World development report. 1978-

[New York] Oxford University Press.

v. 27cm. annual.

Published for the World Bank.

1. Underdeveloped areasPeriodicals. 2. Economic development

Periodicals. I. International Bank for Reconstruction and Development.

HC59.7.W659 330.9'172'4 78-67086

HC59.7

.W659

Foreword

This third World Development Reportis published at a time of difficultyand uncertainty for the world eco-nomyparticularly for the devel-oping countries. They must adjustto external payments imbalances,higher energy prices and slowergrowth in world trade. That ad-justment will slow their growthfor at least the next few years.There is much that they them-selves can do to ease the slow-down and to speed the expectedsubsequent recovery. But the bur-den of adjustment must be shared:the industrialized and centrallyplanned countries and the princi-pal oil exporters also have a majorrole to play.

The first part of this Report isprimarily about the economic pol-icy choices facing both developingand richer countries and about theimplications of these choices forgrowth. The outlook for growththat it discusses is a cause for deepconcernparticularly for low-in-come countries and, among them,for the countries of Sub-SaharanAfrica. More generosity and ini-tiative in the provision of conces-sional aid by richer countries isurgently needed.

It is vital, moreover, that suc-cessful adjustment should not un-duly sacrifice either the currentliving standards of the poor or themeasures needed now to reducepoverty in the future. Growth isvital for poverty reduction, but itis not enough. The second partof the Report reviews other ways to

reduce poverty, focusing on hu-man development, an importantcomplement to the approaches topoverty alleviation emphasized inthe two previous World Develop-ment Reports.

Human developmenteduca-tion and training, better healthand nutrition, and fertility reduc-tionis shown to be important notonly in alleviating poverty directly,but also in increasing the incomesof the poor, and GNP growth aswell. The vital message is that somesteps we all have long known tobe morally rightprimary educa-tion, for examplemake goodeconomic sense as well.

The laudable objectives of hu-man development, though, are farfrom easy to achieve. Nor are theywithout cost. The Report draws onyears of World Bank experiencein the analysis of projects, sectorsand national economies, and inresearchto examine the causesand effects of progress in humandevelopment and what it takes toimplement successful programs inthis area.

While there is now increasingrecognition that growth does notobviate the need for human devel-opment and other steps to reducepoverty, it must be stressed that

Robert S. McNamara

the converse is true as welldirectsteps to reduce poverty do notobviate the need for growth. ThisReport emphasizes that the directattack on poverty, if it is ultimatelyto be successful, must be com-bined with measures to ensurethat the economies of the devel-oping countries continue to ex-pand. The active support of thericher nations is required to assistthis process through the provisionof capital and technical knowledgeand through the opening of theirmarkets to developing-countryexports. There is a real risk thatthe domestic economic problemsof these richer countries will causethem to give inadequate attentionto the immense problems of thedeveloping world, and to the hard-ships that narrow or short-sightedpoliciesin energy, trade and fi-nancial assistancecan inflict.

This Report reflects the work ofmany of my colleagues in the WorldBank. The judgments expresseddo not necessarily reflect the viewsof our Board of Directors or thegovernments they represent. Asin previous years, the Report in-cludes the World DevelopmentIndicators, which provides tablesof social and economic data formore than 100 countries.

111

iv

This report was prepared by a team led by PaulIsenman and comprising Nicholas Hope, Timothy King,Peter Knight, Akbar Noman, Rupert Pennant-Rea andAdrian Wood. The Economic Analysis and ProjectionsDepartment prepared the data and projections used inChapter 2 and in the World Development Indicators.The authors would like to acknowledge the substantialhelp received from many contributors, reviewers andsupport staff. The work was carried out under the generaldirection of Bevan Waide and Hollis Chenery.

Contents

1 Introduction 1

Part I Adjustment and growth in the 1980s 3

2 The outlook for developing countries 3

Adjustment and recovery 3

Factors affecting growth 6

Regional growth in the 1980s 11

3 International problems and policies 14

Energy 14Trade 18Capital flows 25

Part II Poverty and human development 32

4 Poverty, growth and human development 33

Dimensions of poverty 33Three decades of poverty reduction 35Poverty and growth 35Sources of growth 36Raising the incomes of the poor 40

5 Human development issues and policies 46

Education 46Health 53Nutrition 59Fertility 64The seamless web 68

6 Implementing human development programs: some practical lessons 71

Political support 71Easing the financial constraint 72Developing administrative strengths 75Ensuring that services are used 78International assistance 80The importance of persistence 81

7 Priorities and progress in regional perspective 83

Issues for planners 83Sub-Saharan Africa 85South Asia 88Middle-income regions 90Lessons for planning 94

8 Summary and conclusions 95

Statistical appendix to Part I 99

Bibliographical note 102

Annex World Development Indicators 105

V

Text tables2.1 Summary of prospects for growth 62.2 Growth of exports and imports, 1970-90 72.3 Percentage shares in world exports of goods and nonfactor services 72.4 Net imports of oil by oil-importing developing countries, 1975-90 82.5 Developing countries' savings and investment rates, 1980-90 92.6 Current account deficits of oil-importing developing countries, 1970-90 102.7 Debt-service ratios of developing countries, 1977-90 102.8 Growth of GNP per person by region, 1960-90 112.9 Developing countries' GNP per person, 1980-2000 133.1 Shares of net world trade in commercial energy, 1977-90 163.2 World merchandise trade, by country group, 1970 and 1977 213.3 Product composition of developing countries' merchandise exports to industrialized countries

and other developing countries, 1977 243.4 Commercial bank claims on developing countries, 1976-79 273.5 Average spreads over LIBOR for external borrowing, 1974-79 273.6 Aid flows to developing countries and multilateral institutions, 1975-90 293.7 Distribution of DAC donors' bilateral official development assistance, 1970-78 304.1 Agricultural population in relation to crop area 394.2 Irrigation and income, selected projects 434.3 Dependency ratios, by income group 435.1 Public expenditures on elementary and higher education per student, 1976 465.2 Primary school enrollment, by income group 475.3 Farmer education and farmer productivity 485.4 Rates of return to education 495.5 Public education spending per household, by income group 505.6 Differences in life expectancy within countries 556.1 Taxes as a percentage of GNP 737.1 Sub-Saharan Africa: GNP per person 85

Statistical appendix tablesSA.1 Growth of population, GNP and GNP per person, 1960-90 99SA.2 Commercial primary energy production and consumption, by country group, 1977-90 99SA.3 Composition of world commercial primary energy supply, 1970-2020 99SA.4 Growth of merchandise exports, by product category and country group, 1960-77 and 1977-90 100SA.5 Direction of merchandise trade, 1970 and 1977 100SA.6 Capital flows and debt of the developing countries: oil importers and oil exporters, 1975-90 101SA.7 Capital flows and debt of the oil-importing developing countries:

low-income and middle-income, 1975-90 101

Figures2.1 Growth of GNP per person: industrialized and oil-importing developing countries, 1965-80 52.2 Developing countries' growth of GNP per person, 1970-90 62.3 Energy production and consumption growth, by country group, 1980-90 82.4 Developing countries' savings and investment rates, 1960, 1980 and 1990 82.5 Net flows of medium- and long-term capital to developing countries, 1980 and 1990 93.1 Petroleum prices, annual averages, 1972-80 143.2 Actual and projected shares in world primary energy supply, 1970-2020 163.3 Growth of developing countries' merchandise exports, 1963-73 and 1973-77 193.4 Growth of developing countries' merchandise exports, by destination, 1973-77 243.5 Developing countries' use of borrowed funds, 1970-90 253.6 International bond issues, 1972-79 284.1 Three decades against poverty 344.2 National income and national poverty 364.3 Population distribution by age, 1980 40

vi

4.4 Income of poorest groups 405.1 Enrollment ratios, by region, 1960-75 475.2 Death by age groups, developing and industrialized countries, 1980 545.3 Trends in birth and death rates, 1775-2050 645.4 Income and fertility, 1978 665.5 Influences on fertility 665.6 Policy and poverty 696.1 Literacy rates, selected developing countries, 1950 and 1970 817.1 GNP per person 1960, 1970 and 1980 857.2 Literacy, by region, 1945-75 857.3 Life expectancy, 1960 and 1978 857.4 Sub-Saharan Africa: life expectancy in relation to income per person, 1978 877.5 South Asia: life expectancy in relation to income per person, 1978 897.6 Middle East and North Africa: life expectancy in relation to income per person, 1978 927.7 Latin America and the Caribbean: life expectancy in relation to income per person, 1978 927.8 East Asia and Pacific: life expectancy in relation to income per person, 1978 93BoxesGNP and trade prices 4Taxes and energy 15Fuel from food 17Stabilizing export earnings 20Multilateral trade negotiations: the Tokyo round 21Migration and money 22Food, farming and foreign exchange 23Military spending 29Human resources and growth: macroeconomic evidence 38Small is productive 42A strategy that backfired 44Schooling, screening and productivity 49The benefits of women's education 50Unemployment among the educated 51Big is not necessarily bad 52Oral rehydration 56Lessons of experience 58Food and the poor 61Alternative population projections 65Contraceptive technology 69How much would it cost? 72China's barefoot doctors 74Self-help in Sri Lanka 75Rural poverty unperceived 77Private costs of using public services 79The banjars of Bali 80Tradeoffs in Sri Lanka 90Sex, length of life and development 91

VI'

Definitions

Country groups in the analyticalframework of this Report are asfollows:

Developing countries are di-vided, on the basis of 1978 grossnational product (GNP) per person,into: low-income countries, with a GNPper person of US$360 and below;and middle-income countries, with aGNP per person above US$360.The countries in each group areshown in the tables of the WorldDevelopment Indicators beginningon page 105.

Oil-exporting developing coun-tries comprise Algeria, Angola,Bahrain, Bolivia, Brunei, Congo,Ecuador, Egypt, Gabon, Indo-nesia, Malaysia, Mexico, Nigeria,Oman, Syria, Trinidad and Tobago,Tunisia, Venezuela and Zaire.

Capital-surplus oil exporterscomprise Iran, Iraq, Kuwait, Libya,Qatar, Saudi Arabia and UnitedArab Emirates.

Oil-importing developing coun-tries comprise developing countriesnot classified as oil-exporting de-veloping countries or capital-surplus oil exporters.

Industrialized countries are the

members of the Organisation forEconomic Cooperation and De-velopment, apart from Greece,Portugal, Spain and Turkey, whichare included among the middle-income developing countries.

Centrally planned economiescomprise Albania, Bulgaria, China,Cuba, Czechoslovakia, the GermanDemocratic Republic, Hungary,the Democratic Republic of Korea,Mongolia, Poland, Romania andthe USSR.

Organisation for Economic Coo pera-tion and Development (OECD) mem-bers are Australia, Austria, Belgium,Canada, Denmark, Finland, France,the Federal Republic of Germany,Greece, Iceland, Ireland, Italy,Japan, Luxembourg, the Nether-lands, New Zealand, Norway,Portugal, Spain, Sweden, Switzer-land, Turkey, the United King-dom and the United States.

The OECD Development As-sistance Committee (DAC) com-prises Australia, Austria, Belgium,Canada, Denmark, Finland, France,the Federal Republic of Germany,Italy, Japan, the Netherlands, New

Zealand, Norway, Sweden, Switzer-land, the United Kingdom, theUnited States and the Commissionof the European Community.

The Organization of Petroleum Ex-porting Countries (OPEC) comprisesAlgeria, Ecuador, Gabon, Indonesia,Iran, Iraq, Kuwait, Libya, Nigeria,Qatar, Saudi Arabia, the UnitedArab Emirates and Venezuela.

Economic and demographic terms aredefined in the technical notes tothe World Development Indicatorson pages 158 through 165.

Billion is 1,000 million.

Tonnes are metric tons (1,000kilograms).

Growth rates are in real terms un-less otherwise stated.

Symbols used in the text tables areas follows:

Not available.(.) Lessthanhalftheunitshown.n.a. Not applicable.

1 Introduction

Developing countries start thedecade facing two major challenges.First, they must strive to continuetheir social and economic devel-opment in an international climatethat looks less helpful than itdid a decadeor even a yearago.Second, they must tackle theplight of the 800 million peopleliving in absolute poverty, whohave benefited much too little frompast progress. This Report examinessome of the difficulties and pros-pects in both areas, looking as farahead as 2000, but paying particularattention to the next 5 to 10 years.

One of its central themes is theimportance of people in develop-ment. Adam Smith's observationthat the prosperity of a nation isdetermined mainly "by the skill,dexterity, and judgment withwhich its labor is generally applied"has lost none of its truth. In thedifficult economic conditions of thepast six years, as in earlier years,most of the fastest-growing devel-oping countries without oil havehad well-educated populations.Better health and more educationcan also help the poorest peopleclimb out of their poverty.

The economic outlook

As in the two previous WorldDevelopment Reports, economic projec-

tions for the developing countrieshave been carried out, drawing onthe World Bank's analysis of whatdetermines country and regionalgrowth. These projections are

intended to illustrate the likelyoutcome of different policies, ratherthan to provide precise forecasts.Two sets of projections are pre-sented in Chapter 2, based ondiffering growth rates in the indus-trial world and policy responsesin developing countries. This yearthe analysis has been extended toprovide separate estimates for oil-importing and oil-exporting devel-oping countries, as well as byregion and income level.

The analysis indicates that worldeconomic growth will be sluggishduring the next few years, as oil-importing countries reduce theircurrent account deficits and adaptto higher energy costs. But thepolicies adopted during the adjust-ment period will have some effecton growth thenand even moreon the recovery expected after 1985.

International finance will play acrucial role in the 1980s: unlessthe developing (and other oil-importing) countries can fund theirlarge projected balance-of-paymentsdeficits, output and growth will beseriously affected. The domesticpolicies of developing countrieswill also be crucial: the moreefficiently they use their imports,their investments, and their energysupplies, and the more they increasetheir saving and investment, thefaster will be their growth. Thefate of poor people in developingcountries will likewise be decidedlargely by domestic opportunitiesand policies.

None of this, though, detracts

from the importance of the roleof industrialized countries. Chap-ter 3 examines three of the eco-nomic links that bind the worldtogethertrade, energy and capi-tal flowsand analyzes the fun-damental issues in these areas, is-sues that must be resolved chieflyby the industrialized countries.Because they take about 65 per-cent of developing country exports,their growth rates and trade poli-cies largely determine how muchthe developing countries can ex-port. Because they account formore than half of world energyconsumption, it is their conserva-tion (or lack of it) that has thebiggest impact. And most of theforeign capital that the developingcountries need must come throughthe industrial world's banks ordirectly from its aid programs.

The role of human development

The past three decades have seensome impressive changes in thelives of people in the developingworld. Average incomes havedoubled. Average life expectancyhas increased from 42 to 54 years.The proportion of adults who areliterate has risen from about 30percent to more than 50 percent.There has been a significant closingof the gap between industrializedand developing countries in lifeexpectancy, literacy and primaryschool enrollment.

But there is still a long way togo. More than three-quarters of a

1

billion people have barely enoughincome to keep themselves alivefrom week to week. In the low-income countries people on averagelive 24 years less than they do inthe industrialized countries. Some600 million adults in developingcountries are illiterate; a third ofthe primary school-age children(and nearly half of the girls) arenot going to school.

This state of affairs is the startingpoint for Part II of the Report. Chapter4 provides an overview of thevarious ways of attacking absolutepoverty. The sources of growth,and policies to accelerate it, areexamined, as are a wide range ofmeasures - employment creation,land reform, schooling and so onto raise the incomes specificallyof poorer groups.

The rest of the Report,beginningwith Chapter 5, singles out forcloser examination one particularapproach to povertyhuman de-velopmeiitwhich epitomizes the

2

familiar idea that poor peopleshould be helped to help them-selves. Better education, health andnutrition have long been consideredimportant ends of development.They can also raise incomes andreduce fertility. Human devel-opment alone cannot overcomeabsolute poverty; but it is anessential complement to other stepsto raise the productivity andincomes of the poor.

Chapter 5 provides a detailedlook at education, health, nutritionand fertility. In each of these areas,it explains why the poor are de-prived, and discusses the policiesneeded to overcome their depriva-tion. Special attention is given tothe practical consensus that hasrecently emerged in several areasinduding nutrition policy, primaryhealth care and the role of familyplanning programs in reducingfertility. These different areas ofhuman development influenceeach other; education is seen to

be of central importance.Chapters 6 and 7 draw conclu-

sions from experience with humandevelopment programs. Chapter 6shows how common financial,administrative and political con-straints have been eased, andconsiders the role of foreign assist-ance. It also looks at ways ofovercoming the cultural and eco-nomic barriers that stop poor peopleand their childrenespecially theirdaughtersfrom using humandevelopment services.

Chapter 7 focuses on broaderplanning issuesincluding thetradeoffs between growth andpoverty reduction, and the alloca-tion of resources between humandevelopment and other activities.It examines these and more specifichuman development issues asthey apply to the different regionsof the developing world. ChapterS contains a summary of the mainarguments and conclusions ofParts I and II.

Part I Adjustment and growth in the 1980s2 The outlook for developing countries

World economic prospects havedeteriorated since last year's WorldDevelopment Report was published.

The real price of oil is likelyto be at least 80 percent higher in1980 than in 1978. As a result,capital-surplus oil-exporting na-tions will run current accountsurpluses of around $110 billionthis year and oil-importing de-veloping countries deficits of morethan $60 billion.1 This prospectrevives questions about the inter-national financial system's abilityto recyde enough fundsto indus-trialized and developing countriesto maintain import levels andeconomic growth rates. Further-more, the real price of energy canbe expected to rise during the1980s.

For reasons only partly con-nected with higher oil prices, theoutlook for growth in the indus-trialized countries and in worldtrade has worsened. The widespreadresurgence of inflation in 1979 and1980 has prompted governmentsto take strong deflationary meas-ures; the industrial economies areexpected to show only sluggishgrowth in 1980 and 1981. Thisinevitably slows their demand fordeveloping countries' exports. The1980s are thus off to a slower startthan anticipated a year ago.

Given these two developments,the world faces the need to ad-justto payments imbalances andexpensive energyon a scale corn-

1. See page viii for definitions of countrycategories.

parable to 1974-75. But the adjust-ment must take place at a timewhen the outlook for capital flowsespecially aid for the poorestnationsis worse than before. Thisadjustment will be spread overseveral years; while it lasts, theworld economy and most devel-oping countries are likely to growmore slowly than in the 1970s.Provided the adjustment is suc-cessful, a significant recovery shouldbe possible from the mid-1980sonward.

Higher oil prices have clearlyimproved the prospects of thosedeveloping countries with oil toexport, where a fifth of the de-veloping world's population lives.Their GNP per person grew 2.8percent a year in the 1960s, com-pared with 3.1 percent for theoil-importing developing countries;but in the 1970s the oil exportersaccelerated to an annual 3.5 per-cent growth, while the oil importersslowed to 2.7 percent. (The dis-parity was even larger when GNPis adjusted for changes in thepurchasing power of their exportssee box overleaf). With muchincreased oil revenues, at least forthe first half of the 1980s, the oilexporters' growth will be con-strained more by the productivityof domestic investment than bytheir ability to borrow abroad.

Adjustment for oil-importingcountries

All oil importers, developing andindustrialized alike, face a cen-

tral challenge over the next fewyearsto adjust to higher oil pricesand sluggish world trade whileminimizing their loss of growth.They are subject to a formidableconstraint: their ability to importmore has declined, both becauseimports (particularly of energy)are more expensive and becausethe export outlook has deteriorated.These countries went through asimilar adjustment in 1974-78, andthere is much that can be learnedfrom this earlier experience.

The adjustment process has twostages. First, when there is a sud-den increase in the cost of importsrelative to export earnings, countriessqueeze importsand so growthslows sharply. Because too sharpa fall is disruptive, both econom-ically and politically, countriesaccept large current account defi-cits and finance them from bor-rowing or aid. During the earlieradjustment period the currentaccount deficit of oil-importingdeveloping countries rose sharplyfrom 2.3 percent of their GNPin 1970 to 5.1 percent in 1975;from 1978 to 1980 it went from2.3 percent to 3.9 percent. Growthis falling off in these countries in1980, but less sharply than in 1975(see Figure 2.1).

The second stage is to reducethese current account deficits tolevels that can be financed overthe medium term. At the sametime output and trade must berestructured to meet the new cir-cumstances. This structural changerequires heavy investment. New

3

GNP and trade pricesWhen a country's terms of trade shiftsubstantially, changes in national prod-uct in constant prices do not accuratelyreflect changes in its purchasing power.The volume of imports that can bebought with a given volume of exportswill rise if the terms of trade improve, fallif they deteriorate. There is no generallyaccepted way of measuring these changesin purchasing power; but a rough mea-sure is obtained if export earnings areexpressed in terms of the imports thatthey will buyand any gain or loss isadded to GNP.

Among the developing countries, theoil exporters and oil importers provide avivid example of the difference such anadjustment can make to the apparentbenefits of GNP growth. In 1974, the yearoil prices rose most sharply, the oilexporters' output (as measured by theirGNP per person in constant prices) rose4.4 percent; but their "corrected" GNProse 18 percent (see figure). That wasexceptional: gains and losses from terms-of-trade changes are typically muchsmaller. But for the 1970s, the adjustedannual average GNP growth of 11 majoroil-exporting developing countries was2.4 percentage points higher than for 25major oil importers, compared with 0.2percentage points if the adjustment isnot made.

Terms-of-trade effects are caused by avariety of factors: with the correction,the GNP of oil importers grew signifi-cantly more slowly than without itin1971, for example, long before oil prices

rose. The reason was that commodityprices were depressed; two years laterthey were booming, and the correctionaugmented the growth rate.

Terms-of-trade effects ongrowth of GNP per person,1970SO(1977 prices)

Percent

20 Oil-exporting developing countries

'I

15

- GNP (corrected)

10

0

10 Oil-importing developing countries

/ GNP (corrected)

GNP/ ..-.' /

1970 72 74 76 78 1980

energy sources must be developedand energy conserved, and in indus-trialized and developing countriesdeclining or inefficient industrieshave to be replaced by competi-tive ones. So growth can pick upduring the second stage, but it isstill slowed by the continuingneed for adjustment.

Slower growth compounds thepolitical difficulties that can arisewhen governments pass on worldprice increases to consumers, par-ticularly to politically powerfulurban consumers, or cut back onpublic services. No less important,governments are concerned thatrapid increases in the price of basic

4

imported goods can cause severehardships for the poor. These con-straints can prolong the adjustmentperiod. And there is a need to strikea balance between investments witha short-term payoff and those, suchas infrastructure or education, whichare vital for longer-term growth.

Judged against initial pessimismabout their ability to adjust, thedeveloping countries generallyconfounded expectations in 1974-78.In 1974 and 1975 their growth ratesfell less than those of industrial-ized countries (Figure 2.1), helpingto moderate the slowdown in worldtrade growth. Their adjustmentwas helped by substantial increases

in official aid and other capital andby borrowing a significant part ofthe oil producers' recycled sur-pluses. Nonetheless, the result ofthese efforts was slower growth:in 1975-78, GNP per person in theoil-importing developing countriesgrew 2.3 percent a yearabovethe 0.8 percent in the 1975 trough,but still well below the 3.7 per-cent average for 1965-73. Andsome countries experienced seri-ous fiscal and external debt prob-lems. The poorest African countrieswere the biggest cause for con-cern; their GNP per person grew1.6 percent a year in the 1960s,but only 0.2 percent in the 1970s.On average their people are asbadly off at the end of the decadeas they were at the beginning.

The oil-importing developingcountries that coped best duringthe earlier adjustment period were:

Those that reacted to the de-cline in their import capacity bya temporary slowdown in growthaccompanied by a drive to ex-pand exports. Import capacity (andhence output growth) was restoredquickly. Most of these countrieshad grown rapidly and diversifiedtheir exports during the previousdecade; a good example is Singapore.

Those that, while maintain-ing import growth by foreign bor-rowing, used the borrowed fundsmainly to sustain high levelsof productive investmentincludingBrazil and South Korea.

Those that benefited fromgood harvests resulting fromimproved agricultural policies andfavorable weather (such as India)or rising migrant remittances (suchas the Yemen Arab Republic).

Several of the developing coun-tries that improved their economicpolicies and did well during sixdifficult years had previous recordsof slow growth and poor economicmanagement: for them, improveddomestic effici,ency went a longway toward offsetting the effects

Figure 2.1 Growth of GNP perperson: industrialized andoil-importing developingcountries, 1965-80(1977 prices)

Percent

of a deterioration in the worldeconomy. And they are now muchbetter placed to weather the cur-rent slowdown and recover in the1980s.

The 1970s have shown that suc-cess in adjustment should bemeasured not just by the volumeof recycling, or the share going todeveloping countries, or the reduc-tion of developing-country deficitsto affordable levels.These are allimportant, but they must be viewedin the context of the growth thatthe developing countries achieve.A key factor in that growth is theperformance of the industrializedcountries; in the 1970s their erraticgrowth and incomplete adjust-ment had a depressing effect onthe oil-importing developing coun-tries (Figure 2.1).

Adjustment in the 1980s

As in the 1970s, the adjustmentrequired can be seen from bothglobal and domestic viewpoints.Globally, the oil importers' deficitsare the counterpart of the surplusesof the capital-surplus oil exporters.Although each oil-importing coun-

try has powerful reasons for wantingto expand exports and restrainimports, they cannot all succeedsimultaneously while the oil sur-pluses persist. The attempt to doso through uncoordinated domesticdeflationary policies (especiallyif augmented by protectionism)will slow world economic growtheven more. Because of their weightin the world economy, the indus-trialized countries in particularshould maintain import growthrecognizing that this may involvelarge payments deficits.

On the domestic front, adjust-ment in the 1980s should benefitfrom the knowledge gained fromexperience. Moreover, it is nowapparent that higher real energyprices are here to stay; so there ismore incentive to take the difficultsteps necessary to conserve energyand to develop domestic energyproduction. A number of countriesthat were large oil importers in1973 are now projected to comeclose to self-sufficiency in the1980s (for example, Pakistan andColombia) or be major exporters(such as Mexico).

Unfortunately, however, thereare several reasons why this ad-justment may prove more difficultfor many countries than the 1974-78 adjustment was.

Some developing countriesdid not adapt effectively duringthe 1970s, and ended up with highdebt-service obligations or slowergrowth (and in some cases both).In addition, many countries nowhave less room than before tosqueeze either energy consump-tion or imports without reducinggrowth. In some countries (Indiaand Tanzania, for example) short-ages of fuel have already impededthe transport of food and otherkey commodities.

Oil surpluses could stay at ahigh level for longerboth becausemore conservative developmentprograms among the oil producers

may boost imports less rapidlythan in the 1970s, and because thereal price of oil is likely to rise,not fall as it did in 1974-78.

The prospects for capital flowsare less favorable. Official financeincluding aidwhich played animportant role in 1974-75 is notyet responding to developingcountries' needs; commercial bor-rowing is likely to cost more; andboth borrowers and lenders arelikely to be more cautious. Inaddition, more of what is borrowedwill have to be used for repaymentsof principal and interest on olddebt (see page 25).

The industrialized economiesface more serious difficulties thanin the mid-1970s, when adjustmenttended to be viewed as a phasefrom which they would quicklyrecover. But the growth of the1960s and early 1970s has not beenregained; and although their slow-down may not be as marked in1980-81 as in 1974-75, no quickrecovery can be expected.

The current economic malaiseof the industrialized countries re-sults from much more than higherenergy prices. Inflation in some ofthem is running several percentagepoints above its peak in 1974; theyhave plainly decided that it mustcome down and stay down beforerapid growth can be resumed, andthat deflationary measures are thebest way of achieving this. Thereare question marks, too, over theirlong-term growth potential. Pro-ductivity growth has slowedsharply: on average it increased3.9 percent a year in 1963-73, butonly 1.7 percent a year since 1973.This stems from a complex of fac-torsamong them, incompleteadjustment to higher energy costs,sluggish investment and a mis-match of skills in the labor marketthat cannot be rectified quicklyor easily.

Overall, even with a well-directedpolicy response by all countries,

5

Note: For more detail, see Table 2.8 and Table SA.1 in the statistical appendix to Part I.

growth in the oil-importing devel-oping countries is likely to besignificantly slower in 1980-85than in the 1970s-and still furtherbelow the average in the 1960s.

Key factors affecting growth:1980-85 and 1985-90

To help analyze the outlook, twosets of illustrative projections havebeen prepared. Designated Lowand High, they are based on alter-native policy responses to currenteconomic difficulties. Each scenariois internally consistent with respectto policies and outcomes. The Lowcase shows an unsuccessful adjust-ment in 1980-85; though paymentsimbalances are reduced, growthremains depressed, and inadequatefoundations are laid for recovery

1950-55

1995

6

-90

Figure 2.2 Developing countries'growth of GNP per person,1970-90 (High case)overoge annuol percentoge growth, 1977 prices)

All oil importers All oil exporters$ ,-

1970-so

2 3 4

after 1985. The High case repre-sents a much more successfuladjustment, with growth slowingless in 1980-85 and acceleratingmore thereafter (see Figure 2.2).

Because of the differences ingrowth rates between oil-importingand oil-exporting developing coun-tries, estimates for them are shownseparately (see Table 2.1). Theprojections of this Report are notdirectly comparable to those of lastyear's, but they represent a sub-stantial fall in growth expectationsfor the oil importers over the nextfive years.2

The oil exporters have buoyantprospects throughout the decade(see Table 2.1). But the oil im-porters will grow more slowly in1980-85 than in the 1970s, evenin the High case; with a successfuladjustment and a strong revival inworld trade after 1985, their growthshould accelerate in 1985-90. Bycontrast, their recovery would beweak in the Low case. Sub-SaharanAfrica has the most disturbing out-look. Even in the High case, itsgrowth in 1985-90 would be ameager 1 percent per person-farbelow the average for the oil im-

2. The projections of this Report differ fromthose of last year's for several reasons. Forexample, only two sets of projections havebeen prepared-a Low case, which is com-parable to last year's Low case, and a Highcase, which is closer to last year's Basecase than its High case. In addition, Iranand Iraq are now included among capital-surplus oil exporters; and improvementsin data have led to revisions of somehistorical aggregates.

porters; and in the Low case av-erage incomes would actually belower in 1990 than they were in1980.

Whether the outcome will becloser to the High or the Low casewifi depend on the policies pursuedby industrialized countries, thecapital-surplus oil exporters andthe developing countries them-selves. At this early stage in theadjustment process, it is unclearhow successful their policies willbe in restoring growth, for theworld as a whole or for developingcountries. The estimates this yearshould therefore be treated withmore than usual caution. But thereare some disturbing signs that theseeds of the Low case are alreadybeing sown: on current prospects,aid for low-income countries isfar from certain to meet the mod-est requirements of the High case,and some middle-income coun-tries are experiencing both debtand political difficulties.

Thus, without a strong policyresponse during the adjustmentperiod, the Low case is the likelieroutcome. And a number of factors,induding serious political instability,major problems in capital marketsor a breakdown of world economiccooperation, could bring about amuch worse outcome.

But the High case remains achiev-able-depending on policies infour key areas: the growth andstructure of international trade;the changing pattern of energy

Table 2.1 Summary of prospects for growth(average annual percentage growth, 1977 prices)

Country group

Population1980

(millions)

GNP perperson, 1980

(1977 dollars)

Growth of GNP(High case)

Growth ofGNP per person

1970-80

Low case High case

1980-85 1985-90 1980-85 1985-90 1980-85 1985-90

Low-income oil importers 1,133 168 4.1 4.6 0.9 1.0 1.3 1.7 2.4Sub-Saharan Africa 141 186 3.1 3.8 0.2 -0.3 0.1 0.1 1.1

Middle-income oil importers 701 1,275 4.9 5.7 3.1 2.0 2.4 2.6 3.5

Oil exporters 456 753 6.3 5.9 3.5 3.0 3.0 3.5 3.4

Industrialized countries 671 7,599 3.3 4.0 2.4 2.5 2.5 2.8 3.5

production and consumption; in-vestment and productivity in thedeveloping countries; and the inflowof capital. (A broader view of thedeterminants of economic growth-including the effects of humanresources-is discussed in Chapter4.) In each area, the emphasis ison what is required to increasegrowth; policy prescriptions arediscussed in Chapter 3.

International trade

With slow growth expected in theindustrialized countries in 1980-81 and with much larger currentaccount deficits for all the oil-importing countries, world tradegrowth will slow from the 5.5 per-cent a year it averaged in the 1970s.But if, as the High case assumes,the industrialized economies areable to average GNP growth of 3.3percent a year in 1980-85-seeTable 2.1-and if further protec-tionism is avoided, world tradecould rise by an averge of 5.2 per-cent a year in 1980-85 (see Table2.2). Thereafter, with the indus-trialized countries' GNP projectedto grow 4.0 percent a year in1985-90, it should accelerate.Exports of developing countriescould expand at 6.4 percent a yearin 1985-90, compared with 5.5percent in 1980-85.

As with growth, the trade out-look differs sharply between oilexporters and oil importers-underlining the important effectsof terms-of-trade changes. In the1970s export volume for oil-ex-porting developing countries grewat about two-thirds the rate of thatof the oil importers; but becausethe price of their exports rose somuch faster, their import volumewas able to grow twice as fast. Forthe capital-surplus oil exporters,the terms-of-trade benefits wereeven greater.

Although the terms of trade ofthe oil-importing developingcountries are not projected to de-

a. Goods and nonfactor services except for centrally planned economies, for which netnonfactor services are included as net exports.

teriorate markedly in the 1980s,exports will still have to growfaster than imports in 1980-85 toreduce current account deficits.But for low-income oil importers,and especially Sub-Saharan Africa,exports could grow more slowlyin 1980-85 than in the 1970s-underlining their need for foreignassistance to maintain their im-port capacity. With a strongrecovery of world trade in 1985-90, their export prospects wouldimprove and export growth couldexceed that of imports.

If the High case is achieved, theshare of developing countries inworld trade would increase from20.1 percent in 1977 to 21.3 per-cent in 1990 (see Table 2.3). Thestructure of their trade could changemore dramatically, with exports

Table 2.3 Percentage shares in world exports of goodsand nonfactor services (High case)

of manufactures growing abouttwo and a half times faster thannonfuel primary exports. As a result,developing countries' exports ofmanufactured goods would risefrom 24 percent of their total ex-ports in 1978 to 39 percent in1990 and from 10 percent to 14percent of world manufacturingtrade.

The biggest gains are likely tobe in machinery and transportequipment (from 6 to 16 percentof developing country exports), inwhich Brazil, India and South Korea,for example, have become increas-ingly competitive in internationalmarkets. The developing countries'importance as markets for the in-dustrial world would also increase:in 1978 they and the capital-surplusoil exporters already accounted for

Non factorIvianufactures 5ervices Total

7

Table 2.2 Growth of exports and imports, 1970-90 (High case)(average annual percentage growth rates, 1977 prices)

Exports Imports

Country grou p 19 70-80 1980-85 1985-90 1970-80 1980-85 1985-90

Oil-importingdeveloping countries 5.6 5.7 6.8 4.6 4.7 6.3

Low-income 2.6 0.9 3.7 0.1 2.1 2.8Middle-income 5.9 6.1 7.0 5.2 4.9 6.5

Oil-exportingdeveloping countries 3.5 4.6 4.5 8.6 7.6 6.3

All developing countries 5.1 5.5 6.4 5.4 5.4 6.3Industrialized countries 6.0 5.4 5.8 4.8 4.3 5.3Capital-surplus

oil exporters 2.7 1.8 2.0 21.1 10.9 7.3Centrally planned economies 6.6 5.1 5.2 8.1 5.8 5.2

World 5.6 5.2 5.7 5.8 5.2 5.7

1977 1990 1977 1990 1977 1990

10.1 14.3 28.8 30.6 20.1 21.3

79.6 76.3 67.7 65.6 62.9 65.6

10.3 9.4 3.5 3.8 17.0 13.1

100.0 100.0 100.0 100.0 100.0 100.0

(1977 prices)

Primarycommodities Fuels

Country groups 1977 1990 1977 1990

Developingcountries 35.0 34.0 24.2 28.2

Industrializedcountries 55.6 56.5 16.0 19.3

Other countries 9.4 9.5 59.8 52.5

Total 100.0 100.0 100.0 100.0

Figure 2.3 Energy production andconsumption growth, by countrygroup, 1980-90 (High case)

(uoeruge unroof growth, inritron borrrls of oil equivalent per

IndustriolizedCountries

Centrallyplanned

Capital-surplus oilexporters

Developingcountries:

vi ,uhivh

Net oilexporters

Net oilimporters

Total

2 4 6 8 10Percentage increase

almost a third of North America'sexports of manufactures, almosta half of Japan's and a fifth ofEurope's.

Energy

Although uncertainty inevitablysurrounds the prospects for newenergy discoveries, the supply ofenergy is likely to remain tightduring the 1980s. World produc-tion of primary energy from all(commercial) sources is projectedto increase 3.8 percent a year overthe decade (see Figure 2.3)-aboutthe same as the industrializedcountries' GNP growth in the Highcase, but considerably below that

of the developing and centrallyplanned economies. As a result,real energy prices can be expectedto rise further-though the rise islikely to be moderated and theenergy constraint on growth eased ifthe industrialized countries achieveprogress in both energy conserva-tion and production (Figure 2.3and Table SA.2 in the statisticalappendix to Part I). The workingassumption is that real oil priceswill on average rise 3 percent a year.

For the industrialized countries,net energy imports (mainly oil,plus gas and coal) are projected toremain at some 20 million barrelsa day of oil equivalent (mbdoe)throughout the 1980s. Among thedeveloping countries, the oil ex-porters are expected to increasetheir energy exports by a third;some of today's oil importers eitherwill be net energy exporters atsome stage during the decade, orwill have greatly reduced theirenergy imports by 1990.

But most developing countrieswill continue to import much oftheir energy needs. For all oil-importing developing countries,the "energy gap" under the Highcase is likely to widen from 5.6mbdoe in 1980 to 6.3 mbdoe in 1985(see Table SA.2). By 1990 the gapwould have increased to 7.5 mbdoe,even if the countries succeed (asprojected) in more than doublingproduction and restraining con-sumption growth. Their bill for

8

25

20

15

10

0

Figure 2.4 Developing countries'savings and investment rates,1960, 1980 and 1990(percentage of GOP, current prices)

Peroen

30 Low-income Middle-income

imported oil for energy use (thatis, excluding oil for such things asfertilizer production) would risein nominal terms from $29 billionin 1978 to some $107 billion in1985 and about $200 billion in1990 (Table 2.4). Without a rapidexpansion of exports and substantialfinancial support from abroad, theycould find their growth severelyconstrained by the cost of energyimports. Individual country analysissuggests that oil imports as a per-centage of export earnings will risesubstantially for many countriesfrom 1930-85, particularly amongthe low-income countries.

Investment end efficiency

Developing countries have raisedtheir savings and investment ratesconsiderably in the past 20 years(see Figure 2.4). Further increases-and, still more important, im-provements in the productivity ofexisting and new investment-canmake a major contribution toadjustment and growth, as theexperience of the 1970s has shown.Previous World Development Reportshave discussed the importance ofefficiency and policies for promot-ing it; Part II of this Report con-siders another important elementin efficiency-the human factor.

The 1970s have shown which

Table 2.4 Net imports of oil by oil-importing developing countries,1975-90Oil imports for energy use only 1975 1978 1980 1985 1990

Volume (millions of barrels of oil per day) 4.9 5.8 5.3 5.8 6.9Low-income countries 0.4 0.4 0.3 0.3 0.4Middle-income countries 4.5 5.4 5.0 5.5 6.5

Cost (billions of dollars) 22.1 29.2 57.8 107.2 198.0Low-income countries 1.8 2.1 3.3 6.0 11.1Middle-income countries 20.3 27.1 54.5 101.2 186.9

Price per barrel c.i.f.Current dollars 12.33 13.70 29.80 50.30 78.30Constant 1980 dollars 19.60 17.13 29.80 35.10 40.85

Investmentsung

F1960 itO 90 1960 80 90

measures can raise efficiency fairlyrapidly. In agriculture, examplesinclude balanced packages of irri-gation, inputs of fertilizer andselected seeds, extension servicesand credit, and ensuring adequateproducer prices. Efficient indus-trialization can be helped by policiesthat discourage undue capitalintensity and do not protect domes-tic industry excessively. Manycountries have learned from painfulexperience how to improve theefficiency of publicly owned enter-prises and how to apply morerigorous economic criteria toproject selection.

But even with greater efficiency,more investment would be neededto achieve the High case-especiallyin the low-income countries. Theywould have to raise their invest-ment to more than 23 percent ofoutput by 1985, and to 25 percentby 1990, matching the alreadyhigh level of the middle-incomecountries. Some increases in sav-ings rates are possible (see Table2.5), although there are real limitsto how far consumption in low-income countries can be restrained.But substantial increases in invest-ment can be achieved only withmore capital from abroad. For low-income Africa foreign resourceswill be required to finance about40 percent of investment, and forlow-income Asia 13 percent. Bycontrast, higher savings rates inthe middle-income countries couldreduce their dependence on for-eign resources by 1990.

Intern ation a! capital flows

The analysis of trade, energy anddomestic investment highlightsthe role that foreign capital mustplay in a successful adjustmentby the developing countries. Butthe actual capital inflow will dependon both the needs of countriesand on the likely availability andcost of capital from all sources (seediscussion in Chapter 3).

Private

$35.6billioe

commercialterms

1980Total net inflow:

$74.6 billion

Private foreigndirect invrstment

$10.0 billion $billion

Multilateral _.J Bilateralofficial loans official loans$5.0 billion $3.3 billion

The projected pattern of netfinancing for all developing coun-tries is shown in Figure 2.5. Butthe needs of developing countriesfor finance differ widely. Oil-exporting developing countries nowlook to be less dependent on foreigncapital in the 1980s than was an-ticipated a year ago. Over the nextfive years, they can achieve High-case growth financed largely fromtheir oil revenues. After runninga current account deficit (beforeofficial transfers) of more than $10billion a year in 1975-77, theycould have a surplus of about $2billion in 1980.

Official $billiondevelopment

assistance

Grants

Bilateralloans

Multilateral- loans

Nate: Uses of medium- and long-term capital (billions 0f dollars> are:

By the mid-1980s, however, thereal value of oil export earningsis likely to be falling for somecountries. If their imports are torise to the level required for theHigh case, the oil exporters wouldhave a current account deficit by1985 of around $16 billion. Tomaintain their growth in the sec-ond half of the 1980s, they wouldneed to borrow more heavily; theirnet private borrowing could risefrom only $7 billion in 1985 toaround $25 billion in 1990. Privatecapital would meet about two-thirds of their financing require-ments in 1990 (see Table SA,6).

Private foreign-direct investment

$24.6 billion

/Bilateral L Multilateral

official loans official loans$8.6 billion $12.4 billion

a. Defined as net imports of goods and services (except interest) minus private (but not official) transfers. See tables SA.6and SA.7 in the statistical appendts to Part I.

9

Table 2.5 Developing countries' savingsand investment rates, 1980-90 (High case)(percentage of GOP, current prices)

Gross domestic Gross domesticinvestment saving Resource gap

Country group 1980 1985 1990 1980 1985 1990 1980 1985 1990

Low-income countries 21.2 23.0 25.0 18.7 19.8 21.2 2.5 3.2 3.8Africa 16.3 16.0 18.3 9.1 8.6 11.3 7.2 7.4 7.0Asia 22.0 24.0 25.9 20.2 21.4 22.6 1.8 2.6 3.3

Middle-incomecountries 25.3 25.4 25.7 23.2 23.8 24.5 2.1 1.6 1.2

All developing countries 24.6 25.0 25.6 22.4 23.1 24.0 2.2 1.9 1.6

Use

Oil importers Oil exportersAll deoelaping

countries

0980 1990 0980 1990 0980 0990

Current account deficit before interest payments 42.7 42.2 -11.1 30.2 31.6 72.4Jnterest payments 18.3 62.0 0.8 17.5 27.2 79.4Changes irs reserves (net of changes in short-term debt) -4.4 23.5 20.2 2.6 15.8 26.1Total finance required 56.6 127.7 18.0 50.2 74.6 177.9

1990Total net inflow:

$177.9 billion

Figure 2.5 Net flows of medium- and long-term capital to developingcountries, 1980 and 1990 (High case)(cii rrrnl prices)

For oil-importing developingcountries the outlook is very differ-ent Although their current accountdeficit in 1980 is smaller as a per-centage of GNP than it was in1975, in constant prices it is roughlythe same (see Table 2.6).The low-income countries in particularface serious financing problems.To achieve High-case growth of1.7 percent per person a year in1980-85, their current account def-icits would have to rise to 3.8percent of GNP by 1985 (the sameas in 1975) and would rise furtherby 1990. Since the low-income oilimporters have only limited accessto commercial funds (other thansome short-term borrowing andsuppliers' credits), deficits of thissize can be financed only if:

Aid from DAC and OPECmembers trebles in current pricesover the decade.

Support from the multi-lateral institutions is increasedcorrespondingly.

The share of the low-incomecountries in bilateral aid from theindustrialized countries increasesto around 50 percent from about40 percent at present.

This requires only a marginalincrease in the aid performance ofthe industrialized countries-from

10

0.34 percent of their GNP in 1979to 0.35-0.36 percent of GNP in1985, then staying at this level.Unfortunately, aid prospects arenot encouraging (see Chapter 3)-and this has serious implicationsfor low-income countries. For ex-ample, the Low-case assumptionfor DAC donors-lower GNPgrowth, aid falling to 0.30 percentof GNP by 1982, with 40 percentof bilateral aid to low-incomecountries-would account for 0.3percentage points of the differencein average annual growth for low-income countries between theLow and High cases.

For the middle-income oil im-porters, bilateral official finance isnot likely to be as freely availablefor funding current account deficitsin 1980-81 as it was in 1974-75.And lending by the multilateral

institutions at market or near-market terms will depend onincreases in the capital that backstheir bond issues.

As for private finance, somecountries that have borrowedheavily in the past and alreadyhave high debt-service obligationswill need to be cautious aboutfurther borrowing. Given the High-case outlook for their currentaccounts, the debt-service pay-ments of middle-income oil im-porters will peak at around 29percent of their exports of goodsand services in 1985 (see Table 2.7).

In the High case, private finance(including direct investment)provides a slightly larger propor-tion of the middle-income oilimporters' net financing require-ment in 1985 than in 1990, thoughsmaller than in 1980 (see TableSA.7). If the Low case comes about,developing countries' exportgrowth would fall more than theirimport growth-and hence theywould remain about as dependenton nonconcessional finance as inthe High case. If the necessaryfinance could not be obtained-because of concern about credit-worthiness, for example-growthcould slip even lower than the Lowcase, and the number of countriesin serious debt difficulties wouldincrease.

The extraordinary expansion ofprivate commercial lending todeveloping countries that tookplace in the 1970s is unlikely tobe repeated during the current

Table 2.7 Debt-service ratios of developing countries, 1977_90a(High case)

a. Interest and amortization payments on debt divided by exports of goods and services.Figures are from individual country analysis of 25 major oil-importing developing coun-tries and 11 major oil-exporting developing countries.

Table 2.6 Current account deficits of oil-importingdeveloping countries, 1970-90 (High case)

Country group

Current account deficitS

1970 1973 1975 1978 1980 1985 1990

Billions of dollars, current pricesLow-income 1.2 2.3 5.4 5.7 10.0 18.6 32.0Middle-income 7.1 4.4 34.2 21.4 51.0 59.7 72.2Total 8.3 6.7 39.6 27.1 61.0 78.4 104.2

Billions of dollars, 1977 pricesLow-income 2.2 3.2 6.1 5.0 7.1 9.2 11.8Middle-income 13.2 6.0 38.3 18.5 36.1 29.5 26.7Total 15.4 9.2 44.4 23.5 43.2 38.7 38.5

As percentage of GNPLow-income 1.6 2.2 3.8 2.7 3.6 3.8 3.9Middle-income 2.5 0.9 5.3 2.2 4.0 2.6 1.8Total 2.3 1.1 5.1 2.3 3.9 2.8 2.1

a. Excludes official transfers.

(percent)

Country group 1977 1980 1985 1990

Oil-importing developing countriesLow-income 10.1 9.2 11.3 11.5Middle-income 19.8 25.7 28.6 22.1

Oil-exporting developing countries 16.0 15.4 13.5 12.9

adjustment; but the increases pro-jected for the High case are notimplausibly high. In nominalterms, net private lending to alldeveloping countries would riseonly 3.2 percent a year in 1980-85. This would lower debt-serviceratios for oil exporters and slowtheir increase for oil importers.The 11 percent (nominal) annualrise projected for net private lend-ing in 1985-90 would stem largelyfrom increased borrowing by theoil exporters. Indeed, if majorborrowers do adjust successfullyin 1980-85, by building up theirexport base and earning good re-turns on capital invested, privatelending may well rise more thanis projected.

Regional growth in the 1980s

Whether the Low or the High caseis achieved, most of the past dec-ade's disparities in growth ratesbetween different groups of develop-ing countries can be expected tocontinue in both halves of the1980s (see Table 2.8). There aretoo few oil exporters to identifysystematic differences by regionand income group in their pros-pects; but the aggregate figuresfor the oil importers hide widedifferences.

With strong economic manage-ment, continuing agriculturalprogress and more aid, growth perperson in low-income Asian coun-tries could be substantially higherin the 1980s than in the 1970s. Butit would still be well below that ofmiddle-income oil importers, andin the Low case it would not bemuch more than 1 percent a yearfor the decade. The situation forlow-income Africa is worse. Thesecountries face a desperately hardadjustment period-coming on topof the economic stagnation of the1970s. Even under the compara-tively optimistic assumptions ofthe High case, their growth wouldbe negligible in 1980-85. The

plight of these poor Asian andAfrican countries-particularly thelatter-deserves special attentionfrom the international community.

As they adjust to less buoyantexport prospects and higherenergy costs, middle-income oilimporters can also expect slowergrowth-from 3.1 percent per per-son a year in the 1970s to a rangeof 2.0-2.5 percent during the firsthalf of the 1980s. It would takethe favorable international envi-ronment and successful adjustmentof the High case for growth in thesecond half of the 1980s to exceedthe average of the 1970s (andmatch that of the 19605).

The slowdown in 1980-85 wouldbe most marked in Latin Americaand the Caribbean-from 3.5percent in the 1970s to 2.2-2.6percent in 1980-85. Even with astrong recovery after 1985, growthfor the 1980s could still fall belowthat of the 1970s. In East Asiaand the Pacific there would also bea slowdown in 1980-85, and these

countries too would not repeattheir extraordinary growth of the1970s. But they have made contin-uing progress in raising savingsand investment rates, in expandingexports and in reducing popula-tion growth. As a result, they arelikely to continue to achieve fastergrowth per person than any otherregion.

Growth in the comparativelyhigh-income countries of SouthernEurope has been slowing, and thetrend could continue in the 1980s,since these countries are verydependent on oil imports and ontrade with Western Europe. Somewill join the European Communityduring the 1980s; the terms oftheir entry and how rapidly theyadapt to membership will have amarked effect on their growth.

Finally, for the middle-incomeoil importers of Sub-Saharan Africaand the Middle East and NorthAfrica, the slow growth of thepast two decades seems likely tocontinue into the 1980s.

11

Table 2.8 Growth of GNP per person by region, 1960-90

Country group

Population,1980

(millions)

GNP Average annual percentage growthper

person,1980

(current 1960dollars) -70

1970-80

Low case High case

1980-85

1985-90

1980-85

1985-90

Low-income oil importers 1,133 216 1.6 0.9 1.0 1.3 1.7 2.4Africa (Sub-Saharan) 141 239 1.6 0.2 -0.3 0.1 0.1 1.1Asia 992 212 1.6 1.1 1.1 1.5 2.0 2.6

Middle-income oil importers 701 1,638 3.6 3.1 2.0 2.4 2.6 3.5East Asia and Pacific 162 1,175 4.9 5.6 4.1 4.1 4.7 5.2Latin America and Caribbean 256 1,775 2.7 3.5 2.2 2.4 2.6 3.8North Africa and Middle East 30 667 -0.2 0.4 0.0 oi 0.6 0.8Africa (Sub-Saharan) 125 867 2.4 0.9 1.3 1.3 1.6 1.4Southern Europe 128 2,950 5.4 3.2 2.2 2.2 2.5 3.4

Oil importers 1,834 751 3.1 2.7 1.8 2.2 2.4 3.2

Oil exporters 456 968 2.8 3.5 3.0 3.0 3.5 3.4

All developing countries 2,290 791 3.1 2.9 2.0 2.3 2.6 3.3All low-income 1,310 245 1.7 1.7 1.2 1.8 2.1 2.5All middle-income 980 1,521 3.4 3.1 2.1 2.4 2.7 3.4

Capital-surplus oil exporters 69 4,614 7.3 5.0 2.3 2.3 2.8 2.8

Industrialized countries 671 9,684 3.9 2.4 2.5 2.5 2.8 3.5

Centrally planned economies 1,386 1,720 na. 3.8 3.3 3.3 3.3 3.3

Note: More detailed information, including GNP and population growth rates, is inTable SA. 1 of the statistical appendix to Part I.a. Calculated in 1977 dollars.

Compared with the industrializedcountries, growth per person indeveloping countries will be slightlylower. The resultant widening inincome disparities occurs primarilybecause of slow growth in thelow-income countries and in thetwo slowest-growing middle-in-come groups. Research for this Reportsuggests that average growth perperson of about 1.5 percent a yearin low-income countries and about2 percent in middle-income coun-tries is needed to prevent thenumber of people in absolute pov-erty from rising. Thus, for theseslow-growing groups (except SouthAsia in the High case) the extentof absolute poverty is likely to in-crease during the decade.

Policy implications by countrycategories

Given current policies, growth inoil-importing developing countries,with their total population of 1.8billion, is likely to be unacceptablylow. The steps needed to movetoward, or beyond, the High casecan be summarized by countrygroup.

For the oil-importing devel-oping countries, faster growthdepends heavily on economicmanagement. This requires effortsto increase exports and invest-ment, and to improve the efficiencywith which existing and new in-vestment is used. But increasingtheir import capacity and theirability to service debt will requirebuoyant export markets, and morecapital from abroad.

The oil-exporting developingcountries can grow rapidly; butthey must invest their oil revenuesproductively in the early part ofthe decade, and ensure that effi-cient production is encouraged inthe nonoil as well as oil sectors ofthe economy. This will enhancetheir creditworthiness for theexpanded borrowing needed to

12

maintain strong growth after 1985.The capital-surplus oil ex-

porters can contribute to efficientrecycling by expanding theirholdings of real and financialforeign assets, by avoiding disrup-tions in oil supplies or sharp pricefluctuations, and by extending moredirect financial supportconces-sional and nonconcessionaltodeveloping countries. And they canhelp the developing countries toexpand foreign earnings by buy-ing more from them and by con-tinuing to provide employmentfor their migrant workers.

The industrialized countriescan help by avoiding excessivedeflation and by promoting tech-nical and policy innovations toovercome structural constraints,thus encouraging a rapid resump-tion of sustained growth. They willassist developing countries (andthemselves) by importing morefrom them; this requires tradeliberalization as well as economicgrowth. The industrialized coun-tries should reverse the tendencyfor their aid to fall as a shareof GNP and should encourageprudent expansion in lendingfrom their commercial capitalmarkets to developing countries.The low-income countries in par-ticular need more external finan-cial support than is currentlyin prospect. The richer centrallyplanned economies also have thecapacity to extend considerablymore aid to developing countriesand to expand trade with them.

What would be required for evenfaster growth?

It will take the kind of strong effortsdiscussed above to reach the Highcase. But that growth is itself lowmeasured against that of the 1960sand the first part of the 1970s, andby any reasonable expectations fordevelopment. Both for the worldeconomy and especially for the

developing countries, the poten-tial exists for substantially fastergrowth. While the chances of ex-ceeding the High case seem slim,it is important that all countriesrecognize the advantagesand thefeasibilityof higher growth.

What would it require? Oneimportant element is more effec-tive adjustment by the industrial-ized countries, particularly to higherenergy costs. Another is a liberaltrade environment, with lessprotection for products in whichdeveloping countries have anactual or potential cost advantage(this would help to reduce infla-tionary pressures). A third is moreprogress by all countries in pro-ducing and conserving energy, andsome reasonable assurance thatsupplies would not be suddenlydisrupted. Improvements in effi-ciency and some further increasesin domestic savings in developingcountries would also be valuable.Finally, capital flows to developingcountries would need to increasesubstantially. Given increases indeveloping-country exports (andthus in debt-servicing capacity)and in the efficiency with whichcapital is used, developing coun-tries would become increasinglyattractive customers to commerciallenders. If the industrialized coun-tries grew more rapidly, they wouldfind it easier to provide more aid.

With good progress in all theseareas, GNP per person in thedeveloping countries perhapscould grow 4.3 percent a year inthe second half of the 1980s (com-pared with 3.3 percent in the Highcase). This would mean growthof 3.9 percent a year in the oil-exporting developing countries,3.6 percent in the low-income oilimporters and 4.6 percent in themiddle-income oil importers.

Achieving these results wouldrequire much more internationalcooperation than now seems likely.Aid of at least 0.5 percent of in-

dustrialized countries' GNP wouldbe essential; still higher aid flowsapproaching the 0.7 percent UNtargetwould raise growth furtherand help to reduce disparities be-tween low- and middle-incomecountries. In addition, economicmanagement would have to improveconsiderably. International effortsto encourage the steps required toincrease growthincluding thosenow being considered as part ofthe International DevelopmentStrategy of the United Nationsare therefore very much to bewelcomed.

Broader implications of theprojections

Since World Development Report,1979 was published, there havebeen major attempts to advancethinking and policies on develop-ment. The OECD study Facing theFuture (Interfutures) was a resultof three years' research on pros-pects for the global economy. TheIndependent Commission on Inter-national Development Issues (theBrandt Commission) published itsfindings in North-South: A Programfor Survival, which called for boldreforms to avoid an otherwisegrave future for intemational eco-nomic and political relations. Theanalysis of the present Reportstrongly endorses the Commis-sion's emphasis on the interdepen-dencethrough trade, energy andcapital flowsof all countries, aswell as its emphasis on the impor-tance of renewed efforts to reduceworldwide poverty.

There has been continuing, in-tense debate over an appropriatestrategy for the Third Develop-ment Decade. But all agree on theneed to raise the growth of thedeveloping countries

The advantages of higher growthare striking. To illustrate, Table

Table 2.9 Developing countries' GNP per person, 1980-2000(:1977 dollars)

2.9 shows what would happen toGNP per person if the faster (thanHigh-case) growth mentioned abovecould be achieved. Developing-country growth of about 1.9 per-cent above the Low case (and0.9 percent above the High case)would start in 1935 and be main-tained until the end of the century.The difference in growth may notseem large, but by 1990 for alldeveloping countries it makes adifference of more than a seventh.By the end of the century, averagereal incomes with the faster growthwould be almost two-fifths abovethose in the Low case and one-sixth above those in the High.And it is only with this sharpacceleration that growth of in-come per person in developingcountries would match that of theindustrial countries.

What does this growth meanfor people's lives? The samemethod for estimating the linkbetween income growth and povertyreduction used in the previous twoWorld Development Reports suggeststhe following effects. In 1980 thenumber of people with incomesbelow the absolute poverty line isapproximately 780 million. Withthe Low case this number wouldactually increase over the nextdecade to 800 million; in the Highcase it would fall slightly, to 720million. If it were possible to achievethe faster growth mentioned, thenumber could fall sharplyto 590

million. The differencereducingthe number of people in povertyby between 60 million and 190million during the next 10 yearsis a powerful reminder of the ben-efits of higher growth. And as dis-cussed in Chapters 4 and 5, growthin incomes is also vital for betternutrition, health and education, aswell as for lower fertility.

The challenge of the decade

The world will reap great benefitsfrom rapid growth. Without it,hundreds of millions of very poorpeople will live and die with littleor no improvement in their lot.Many developing countries willfind it hard to maintain politicalstability.

The developing countries faceformidable obstacles on the wayto rapid growthmany of whichthey will have to overcome them-selves. But through their policieson trade, aid and other capital flows,the industrialized countries andthe capital-surplus oil exportershave a striking impact on howmuch the developing countries canaccomplish. Much will depend onthe degree of international coopera-tionwhich at present threatensto fall short of what is needed.For poverty, growth and politicalstability, the implications of theLow caseitself not the worst pos-sible outcomeshow that theworld can ill afford such failures.

13

Country group 1980

1985 1990 2000

Lowcase

Highcase

Lowcase

High Fastercase growth

Lowcase

High Fastercase growth

Low-incomeoil importers 168 177 183 188 206 218 215 261 311

Middle-incomeoil importers 1,275 1,408 1,448 1,585 1,719 1,813 2,009 2,423 2,843

Oil exporters 753 873 896 1,012 1,058 1,085 1,360 1,475 1,591All developing

countries 615 679 702 761 825 866 955 1,139 1,320

3 International problems and policies

The analysis in Chapter 2 hasemphasized that the internationaleconomic outlook poses particularlydifficult choices for policymakersin the 1980s. A sustained recoveryof the world economy from theslowdown expected in the next fewyears will depend largely on thepolicies pursued in the three areasof international concern discussedin this chapterenergy, trade andcapital flows. Particular attentionis paid to policies aimed at ensuringthat current account deficits arefinancedand over time reducedwith minimal loss in the growthof developing countries. Whereprojections are given, they areconsistent with the High casedescribed in Chapter 2, but thespecific policy issues discussedhere are not related to any particularset of projections.

Energy

Recent increases in petroleum prices(Figure 3.1) have ensured that theeconomic impact of energy willremain a central concern of policy-makers everywhere. Their pastconcern, however, has achievedonly limited success in producingcoordinated energy policiesinpart because of the emphasis givento managing immediate balance-of-payments difficulties. Whilethis issue is again important, alleconomies will also have to adaptto higher energy prices. The long-term outlook is uncertain, butprudent energy policy shouldassume that real energy prices will

14

rise for the foreseeable future. Tem-porary fluctuations aside, whathappens to prices will be determinedby trends in energy conservationand production: this section con-siders each in turn, paying particularattention to the position of devel-oping countries.

Conservation

Industrialized countries. Thegreatest scope for conservation lieswith the industrialized countries;they account for more than half ofworld energy consumption (andmore than a third of production).1On average the industrializedcountries use about eight timesas much commercial energyper person as the middle-incomedeveloping countries and morethan 40 times as much as thelow-income countries. This ispartly because they are moreindustrialized; but their agricul-ture and households are also moreenergy-intensive. They have beenreducing the ratio of energy useto GNP: between 1973 and 1977this ratio fell 16 percent in Japan,13 percent in France, 12 percent inthe Federal Republic of Germany,10 percent in both the UnitedStates and Italy, 9 percent inCanada and 7 percent in the UnitedKingdom. Moreover, Japan andWestern Europe have held theirabsolute volume of petroleum useconstant since 1973, and the UnitedStates has done so since 1973.

1. The word "energy" means commercialenergy unless otherwise specified.

This represents considerableprogress, but it is still inadequate.The evidence of the past six yearsshows that pricing policies (includ-ing taxes) have a major role to playin curbing energy demand (and,no less important, in encouragingdomestic production). But politicaldifficulties have often inhibitedgovernments from passing higherenergy prices through to finalconsumers. These difficulties havebeen most acute in the UnitedStates and Canada, less so inEurope and Japan.

Solutions need to be found thatconvey the right price signals tousersand here taxation can help(see box)and provide incentivesto producers. If higher prices meanthat existing producers reap large

Figure 3.1 Petroleum prices,annual averages, 1972-30

(dollars per barrel)

30

25

20

15

10

5- Constant 1972 prices

01 I I I I I

1972 73 74 75 76 77 75 79 80

Prices weighted by production shares.Deflated by manufactured export prices.

windfalls, some of their extraprofits can be appropriated directlyfor example, by a "windfall profitstax" (the US solution) or by a"petroleum revenue tax" (as in theUnited Kingdom).

Developing countries. Ex-cluding the capital-surplus oilexporters, they account for onlyabout 13 percent of the world'suse of commercial energy (andabout 15 percent of production).About half of all the energy pro-duced by low-income oil-importingcountries is noncommercialfromwood and dung, for example. Astheir economies develop, much ofthis will have to be replaced bycommercial energy. Even withappropriate pricing and otherconservation measures, the con-sumption of commercial energyin developing countries is pro-jected to rise more than 80 percentin the 1980s, compared with GNPgrowth of about 70 percent. (By

contrast, energy consumption inthe industrialized countries isprojected to rise by just over 30percent and GNP by about 40percent.) By 1990 the developingcountries' commercial energyrequirements are likely to rise toaround 17 percent of world use(See Table SA.2 in the statisticalappendix to Part I).

In curbing demand growth,developing countries have experi-enced many of the same diffi-culties as industrialized countriesand usually more acutely.Domestic pricesparticularly ofdomestically produced energy -often have not been raised in linewith world prices. Until recently,domestic petroleum prices inIndonesia, for example, were lessthan 40 percent of the world price;Egypt, Ecuador and Venezuelahave also underpriced their oil.This is a major reason why energyuse in relation to GNP has tended

Taxes and energyTaxation policy has played only a smallpart in conserving energy in the past sixyears. Although higher base prices forenergy have encouraged more econom-ical use, their effects have been mutedbecause energy taxes have not risenas much. Gasoline provides a goodexample: while crude oil prices rose threeand a half times in real terms betweenthe beginning of 1970 and mid-1979, realgasoline prices in the seven largestindustrialized countries rose between3 percent (Canada) and 37 percent (Italy).As a proportion of the final price, taxesfell in all seven countries (see table).

The sharp rise in oil prices in 1973-74reduced the relative importance of taxa-tion in every kind of petroleum product;little has been done since to restore it. Inthe early and mid-1970s, the reluctanceof governments to add to inflation oftentook precedence over conserving energyby raising its price. There is now greateremphasis on conservation (an emphasisstrongly endorsed by the major oil pro-ducers), with higher prices having a keyrole to play.

Energy taxation has two other advan-

tages. First, the revenues can be used tomitigate the overall effects on the cost ofliving (through subsidies, for example, orincreased transfer payments). Second,taxes can be varied so as to cushion theshock of sudden increases in oil prices.Higher prices can be passed on in fullover a periodbut smoothly, with taxessometimes rising more than oil prices,sometimes less. This could reduce un-certainty and assist energy planning byhouseholds and firms.

Effective rates of gasolinetaxation, 1970 and 1979

to grow much faster since 1973 inenergy exporters than in energyimporters like Brazil and SouthKorea. Some countries (Brazil, Indiaand Pakistan, for example) havetended to pass on higher prices todomestic users relatively quickly;and others are now moving in thesame direction. The alternativesubsidizes energy usethus drain-ing budgets and discouragingconservation.

While there is a natural reluc-tance to inflict hardship on lower-and middle-income groups byraising energy prices, energysubsidies (if essential) should bereserved for products consumedprimarily by poorer people. Eventhen, care is needed to prevent thoseproducts from being diverted toother uses. On grounds of equityor efficiency, there is little justifi-cation for subsidizing gasolineand domestic electricity (which inmost developing countries areconsumed primarily by richergroups), industrial fuels andthe energy used by public sectoragencies.

Production

The oil exporters. For most majoroil exporters, oil is the one reliablesource of finance for their devel-opment over the medium term (atleast 10-20 years). Accordingly,how much oil they produce dependson a variety of factorssuch ashow much investment their econ-omies can absorb productively andwithout social disruption; the actualand prospective price of oil; andthe (expected) yields on the foreignassets that can be bought withoil revenues.

For the capital-surplus oil ex-porters, current revenues far exceedimmediate investment needs; theiroil exports are not expected toexpand rapidly. The other oil-exporting developing countries aretherefore projected to increase theirshare of energy trade (see Table

15

Country

Gasoline taxas percentage

of pretax price

1970 1979

Canada 82 48France 290 180Germany, Federal

Republic of 264 126Italy 364 209Japan 142 72United Kingdom 257 47United States 44 18

a. These imports are not allocated to country groups.

3.1). This will require increasedinvestment in exploration andexploitation; yet spending onexploration and the ratio of provenreserves to production are declin-ing in some countries, while thedomestic consumption of oil isrising in all.

Both oil exporters and importersshare a common interest in ensuringthat oil price rises and supplies donot change sharply or unpredict-ably. Steady changes would helpinvestment planning and financialmanagement in the importing coun-tries; and all countries stand togain from a stronger, more stableworld economy.

New supplies of energy. In1974 producers and governmentsmay have doubted that real oilprices would be maintained, sothere was less pressure to committhe funds needed to develop alter-native energy supplies. Today suchdoubts have disappeared. Butconsiderable uncertainty remainsabout the returns from developingsome potential alternatives to oil;and energy projects take manyyears to come on stream, and re-quire large capital outlays. Theprojections in Figure 3.2 (andTable SA.3) take a positive view

16

90

80

70

80

50

40

30

20

10

0

1970

of what can be achieved; Withstrong efforts to develop thesealternatives, the share of petroleumin the world supply of primarycommercial energy could fall from46 percent in 1930 to 38 percentin 1990; by contrast, its share fellby only two percentage pointsbetween 1970 and 1980.

In addition to raising the profita-bility of developing domesticpetroleum and other conventionalsources of energy, higher oil pricesstimulate research into new waysof producing, converting and usingenergy of all kinds. Many alterna-tive sources are still in their tech-nical and economic infancy, while

Figure 3.2 Actual & projected sharesin world primary energy supply,1970-2020

100%

980 1990 2000 2010 2020

othersnotably nuclear powerface opposition on environmentalgrounds. This is an importantsource of uncertainty about pro-duction prospects, particularlyover the long-term; but in the next5-10 years production will be de-termined mainly by projects nowin the pipeline. For technologicaland financial reasons, the devel-opment of supplies of new energyto the stage of commercial pro-duction is mainly a task for theindustrialized countries. How itis achieved will also influence theprospects for energy productionin developing countries, consideredin the rest of this section.

Developing countries' energyproduction. Since 1973 severalcountries (including Cameroon,Ghana, Guatemala, Ivory Coastand the Philippines) have startedproducing petroleum; existingproducers (such as India, Malaysiaandstrikingly soMexico) haveexpanded capacity. Althoughexploration generally has beeninadequate, discoveries of exploit-able oil and gas deposits have beenmade (for example, in Chad, Pakistan,Tanzania and Thailand). Severaldeveloping countries (includingIndia, Turkey, South Korea andthe Philippines) have expandedcoal and lignite production; others(among them Argentina, Brazil,Cameroon, Ivory Coast, Uruguayand Sri Lanka) have taken meas-ures to increase hydroelectricityoutput; a few (most notably Indo-nesia and the Philippines) aretapping significant geothermalsources; and Brazil leads the worldin producing alcohol fuel forautomobiles.

In the 1980s progress shouldacceleratebut will require largeincreases in investment. The maingains are likely to be in petroleumand natural gas, coal, and primary(other than thermal) electricitygenerationmainly hydro andnuclear. But much also needs to

-- -I -- her

Hydro

Nuclear

-- - -- -I

Table 3.1 Shares of net world trade in commercial energy, 1977-90(High case)(percent)

Estimated Projected

Country group 1977 1980 1985 1990

Share of exports

Capital-surplus oil exporters 70 64 63 65Oil-exporting developing countries 23 28 31 33Centrally planned economies 7 8 6 2Total 100 100 100 100

Share of imports

Industrialized countries 79 78 77 73Oil-importing developing countries 21 22 23 27Total 100 100 100 100

Memo item

Volume of total net trade(millions of barrels per day)

33.9 30.2 32.8 34.0

Of which bunkers and othera 4.6 4.6 5.8 6.5

be done to increase the suppliesof the kinds of energy that areparticularly important for poorpeople.

Petroleum and natural gas.While the oil-importing developingcountries have only about 2 percentof the world's proven oil reserves,their share of ultimately recover-able oil reserves may be 15 percent.One study (undertaken for theWorld Bank) estimated that 23 of70 countries surveyed each mighthave ultimately recoverable re-serves of at least 750 million bar-rels. (For comparison, net importsof oil for energy use by develop-ing countries will amount to about110 million barrels in 1980.) Torealize their full potential, mostcountries must step up explorationactivities; the same study judgedthat exploration was inadequatein 51 of 58 countries that werenot producers.

Gas is widely spread; manycountries can significantly expandproductionboth for domesticenergy use and for petrochemicalsduring the decade. A lot of gasassociated with oil production isnow wasted by venting or flaring;much of it could be recovered.

Coal. For most developingcountries, coal is still a minor fuelused mainly in electricity genera-tion andin larger coal producers(such as India, Turkey, South Koreaand Yugoslavia)in industrial ap-plications. Coal can substitute foroil in electricity generation, butthe potential for increased use islimited largely to new capacitysince converting existing plants isoften uneconomic.

Primaiy electricity. Two-thirdsof the electricity generated in devel-oping countries is used in industry(compared with 40 percent in theindustrialized countries). Hydro-power, currently accounting for44 percent of electricity output, canbe greatly expanded in many devel-oping countriesparticularly in

Latin America. Despite consider-able geothermal potential in up to30 developing countriesamongthem Kenya, Mexico, El Salvador,Nicaragua and the Philippinesgeothermal capacity will producerelatively little electricity in the1980s. But nuclear power couldproduce 11 percent of the total by1990 (2 percent in 1980)mainlyin the major existing producers(Argentina, Brazil, India, SouthKorea and Pakistan) but in othercountries as well (for example,Romania, Thailand, Yugoslavia andthe Philippines).

Other sources. Any significantincrease in the production of oilfrom tar sands in developing coun-tries depends on a major tech-nological breakthrough. Solar andwindpower are also unlikely

to make much of a contributionover the next 10 years; shale oiland methanol have rather morepotential. Alcohol produced frombiomass (cereals, sugarcane, beetsand so on) is now used as a partialsubstitute for gasoline. The tech-nology for producing it is wellestablished. A key question is theextent to which agricultural landshould be diverted from food tofuel production (see box).

Energy for the poor. The poor,especially those in rural areas, relyon noncommercial energy forcooking and heating; these formsof energy provide more than 85percent of rural requirements inmany countries. Yet their suppliesare dwindling, thus inflicting sev-eral sorts of hardship. Much timeis spent just in gathering fuel (for

Fuel from foodAlcohol produced from sugarcane orgrains is becoming competitive withgasoline as real petroleum prices rise.Conventional automobiles and truckscan run on "gasohol," a mixture of alco-hol and (at least 80 percent) gasoline.With engine modifications, they couldrun on pure alcohol; such engines arealready being produced in Brazil. By1977 the estimated national ratio of alco-hol to gasoline use in Brazil was 4.3 per-cent; in 1979 it had risen to 19 percent,and will rise further as more cars run onpure alcohol.

Brazil's alcohol is still derived almostexclusively from sugarcane, but alcoholcan be produced from a variety of crops.Ethanol, the cheapest alternative to gaso-line in the 1980s, comes from fermentingsugar crops, principally sugarcane; rootcrops, mainly cassava; and cereals,especially corn and potentially sorghum.The United States also has ambitiousplans for producing alcohol fuel, pri-marily from corn. The US target of 2billion gallons of ethanol by 1985 wouldrequire 20 million tons of corn or itsequivalent, one fifth of the current USexportable grain surplus. And other foodexporters (including Argentina, Austra-lia, New Zealand, the Philippines andSouth Africa) either have already launched

or have the potential for large "gasohol"programs.

This development could indirectlyaffect the availability and price of foodfor developing countries that either im-port grain on commercial terms or dependon international food aid to meet theirdeficits. Current plans in Brazil and theUnited States envisage that the area ofcultivated land would be expanded togrow fuel crops, so that food production(and therefore price) is not significantlyaffected. In practice these goals may notbe fully achievable.

Whether ethanol proves economic inother countries will depend on landavailability, markets and prices for foodexports, and the development of suchalternative sources as wood, sorghumand agricultural waste. In the next fiveyears or so, the quantity of agriculturalproduction diverted into alcohol is likelyto be small (with the exception of Braziland the United States). But as morecountries consider ways of reducingpetroleum import costs, the "food orfuel" issue may become more serious.A satisfactory solution will require amajor effort to develop alternative bio-mass sources of energy, including cropsthat can be grown economically onmarginal land.

17

example, 5 to 19 work days amonth for each family in uplandNepal); often the gatherers arechildren who might otherwise bein school. In many countries (in-cluding the entire Sahelian beltfrom Senegal to Somalia) forestland is being turned into desert.This pernicious process wouldbe (at least partially) arrested ifaffordable energy were madeavailable. As well as this, burningdung and vegetation carries healthrisks, and every year deprives thesoil of enough fertilizer to produce20 million tons of grainenoughto feed 100 million people.

Although there are no easy so-lutions to these energy problems,the essential policy initiativesremain as described in last year'sWorld Development Report. Existingforests must be husbanded, newones planted. Roughly 50 millionhectares (125 million acres) offuelwood planting may be requiredby the year 2000 to meet domesticneeds for cooking and heating indeveloping countries. Their pres-ent rate of afforestation is lessthan a tenth of what is needed toensure self-sufficiency in fuel-wood by then. More efficient waysof burning wood (for example, im-proved stoves) can help; but new,technologies need to be devised touse the sun, the wind and otherrenewable energy sources. Andbetter use should be made ofother traditional fuels (for ex-ample, through biogas generation,which does not destroy the fertilizervalue of animal wastes).

The need for energy strategies

In the developing countries, nationaland regional planning is urgentlyneeded to evaluate fuel mineralsand other energy sources, to examineconventional and new technologies,and to assess the likely trends indemand for commercial and non-commercial energy.

But many countries do not have

18

formal energy strategies and ade-quate sector plans. Planning con-tinues to be hampered by lack ofessential data on fuel deposits, onconsumption patterns and on howenergy demand and supply arelikely to respond to income andprice changes. Geological andgeophysical surveys and detailedmarket studies are still requiredbefore effective planning can takeplace. Many countries also lacksome of the technical and mana-gerial skills required to undertakethe preliminary studies, draw upan energy plan and oversee theexploitation of domestic energyresources.

Countries facing these constraintscan benefit from external capitaland technical assistance. Althoughsome assistance has been providedalready (for example, by the UNDPand the World Bank), there isscope for considerable expansionof these activities.

International trade

International trade has beenemphasized in previous WorldDevelopment Reports for two rea-sons: first, trade is a principalmeans of promoting economicefficiency and growth; second, astrong trade base tends to be aprerequisite for attracting foreigncapital. Given the world economicoutlook, these benefits acquireadded significance; but two policyquestions stand out.

What developments in worldtrade (and the resulting effects onthe distribution of payments defi-cits) will contribute most to rapidgrowth?

With a less buoyant outlookfor world trade, do developingcountries face a changed tradeoffbetween producing for the foreignor for the domestic market?

The first question turns mainlyon the policies of the industrialand oil-exporting countries: they

are discussed first. The secondquestion is largely a matter fordeveloping countries: their poli-cies are considered in the secondpart of this section.

Trade policy for industrializedcountries

Most industrialized countries willrun current account deficits in1980. How they respond to thesedeficits will largely determine theclimate for world trade. If they allsimultaneously attempt to restrainimports while boosting exports,shrinking markets for each others'exports will defeat their purpose,and world trade and output willsufferas happened in acute formin the 1930s.

After the 1973-74 oil price rises,some of the major trading nations(especially Japan and the FederalRepublic of Germany) acted quicklyto reverse the deterioration in theirtrade accounts. They were able todo so because some industrializedcountries (notably the UnitedStates) and most developing coun-tries financed much larger currentaccount deficits, and because sur-pluses of the major oil-exportingcountries were quickly reduced.Avoiding an excessive slowdownin world trade and output in theearly 1980s requires that industri-alized countries, as a group, runlarger deficitsand for longer.

The countries best placed to runlarge deficits and thereby supportgrowth are those with the capacityto borrow heavily (or run downreserves)and those with the low-est inflation, since deflationarypolicies aimed at curbing inflationwill tend to moderate demand forimports. Industrialized countriesthat restrain domestic growth tocontrol inflation should minimizethe effect on world trade by main-taining their demand for importsand avoiding beggar-thy-neighborsupport for exports. They can dothis by refraining from deliberate

14

12

10

S

6

exchange-rate depreciation, byavoiding subsidies to exportersand by opening their markets toimports.

Each of these policies will alsoserve to dampen inflation. With-out them, the industrialized coun-tries will find that the developingworld cannot maintain its growthor its demand for their exports.

The outlook for exports. Thesluggish demand from the indus-trialized countries expected in theearly 1980s will harm developingcountries' exportsparticularly ofprimary commoditiesas it did dur-ing 1973-77. The growth of develop-ing countries' exports deceleratedsharply in that period; their exportsof primary commodities fell aftergrowing at around 4 percent a yearin 1963-73 (see Figure 3.3). Evenexcluding fuels, primary com-modities account for about 55

Figure 3.3 Growth of developingcountries' merchandise exports,1963-73 and 1973_77a(average annual percentage change, 1970 prices)

Nonfiprimaryproducts

Martufac- Totaltures

IL1-

a. Excludes exports to centrally planned econ-omies (about 7 percent of developing-countryexports in 1977(. Country groups correspond toUN classification. Developing countries includecapital-surplus oil exporters and exclude SouthAfrica and most of southern Europe.

percent of the merchandise exportsof developing countries and theyhave grown roughly in line withthe industrialized countries' GNP.

There is no reason to expectthis relation to change, especiallyas exports of some agricultural prod-ucts remain constrained by heavyprotection in Japan and WesternEurope. Even if demand were togrow rapidly, the developing coun-tries may not be able to expand thevolume of their agricultural exportsvery much (because of supplyconstraints), though they wouldbenefit considerably from higherprices. In the short-term, mostprimary producers would beassisted by improved schemes tostabilize revenues or prices (seebox overleaf). If the industrializedeconomies begin to pick up, therewould be a recovery in demandfor primary products.

The outlook for manufacturedexports is much brighter; as in1973-77, their growth is likely tobe comparatively robust. At pres-ent, they account for only about10 percent of the imports (and lessthan 2 percent of the consumption)of manufactured goods in theindustrialized countries. But theyare concentrated heavily in someproducts, and therefore have at-tracted protectionist attention. Thedeveloping countries most directlyaffected by protection have been themore successful exporters (particu-larly the major East Asian exportersof manufactures and Brazil); but theyhave continued to expand their ex-ports rapidly by diversifying intonew product lines. Current restrk-tions on items other than textiles andclothing are not (with some minorexceptions) an insuperable barrier torapid export growth.

Harder to assess (but clearly im-portant) is the longer-term disincen-tivefrom both current restrictionsand risks of their expansiontocountries at earlier stages of exportdevelopment. Generally, they do not

have the manufacturing and market-ing skills required either to export awide range of manufactures or toadapt quickly to changes in marketconditions.

While no new major restrictionswere imposed in the past year,some measures were consolidated.In some sectors (particularlytextiles and clothing) elaboratemechanisms to control importshave become more entrenched,reducing the chances of their earlyremoval. In some industrializedcountries, imports of footwear andsome consumer electronic goodsare still subject to fairly stringentquotas. In shipbuilding, althoughsubstantial subsidies remain,there has been progress recentlyin cutting capacity in uncompeti-tive countries. France and theUnited Kingdom, in particular,have taken steps to reduce generalsubsidies to industry.

The Tokyo round. The latest(Tokyo) round of multilateral tradenegotiations (MTN) was largelycompleted in April 1979; it madevaluable progress in some areas(see box on page 21); in some others,the results were a disappointmentfor the developing countries. None-theless, the MTN agreementshave considerable potential toliberalize trade.

The extent to which this potentialis realized, especially by develop-ing countries, will depend on howthe agreements are implementedand on the outcome of continuingnegotiationsthe most importantof which pertain to the safeguardclause. This attempts to limit theemergency protection that can beadopted on the grounds of seriousinjury to domestic industry. Safe-guard measures have been invokedfrequently against imports fromdeveloping countries (often out-side the legal framework of theGeneral Agreement on Tariffs andTradeGATT). The main dis-pute holding up agreement is

19

4

+0

21973-77

Stabilizing export earnings

Two international facilities already existto help stabilize the export earnings ofdeveloping countries.

The IMF's compensatory financingfacility. A country in balance-of-pay-ments difficulty is eligible to draw up to100 percent of its quota, if exports fallbelow a defined trend for reasons gen-erally beyond its control. After the facil-ity was liberalized in December 1975,drawings by members rose sharply.Compared with 57 drawings totalingSDR 1.2 billion (about $1.3 billion) in1963-75, 107 drawings totaling SDR 4 bil-lion ($4.9 billion) were made from Janu-ary 1976 to March 1980accounting fornearly a third of the total credit ex-tended by the IMF to all its members.

The scheme has several advantages:(a) it applies to exports in generalevenreceipts from tourism and workers' re-mittances qualify for support if data areavailable; (b) drawings are not at theexpense of other rights to draw on IMPresources; and (c) potential access isnow largeabout $16 billion for oil-importing developing countries once theseventh general review of quotas takeseffect. But there are disadvantages too:because the amount a country can bor-row is determined by its quota, it maybe relatively little for countries (suchas Zambia) that are heavily dependenton a single commodity export withsharply fluctuating prices. And it pro-vides no compensation for a sharp in-crease in import requirements (for ex-ample, if a harvest fails)which canbe equally unpredictable and outside amember's control. (The IMF is studyingthe possibility of giving assistance tomembers adversely affected by highercosts for food imports.)

The European Community's Stabexscheme. It covers the 58 African, Carib-bean and Pacific (ACP) countries thatare members of the Lomé agreement;12 primary products were covered at theoutset, 44 are eligible for support underLomé 2. Proposed funding for Stabex inLomé 2 is $775 million for 1980-85,

compared with $575 for Lomé 1.There are some minor reforms in the

new agreement but the principles re-main the same. To qualify for support,a commodity must have accounted forat least 6.5 percent (7.5 percent underthe old agreement) of a country's totalexports to all destinations in the pre-ceding year, or 2.0 percent (2.5 percentpreviously) for the 44 ACP membersthat are least developed, landlocked orislands. A Stabex transfer can be madeif export earnings of a qualifying prod-uct fall below its average earnings overthe four preceding years by 6.5 percentor more (2.0 percent for the 44 specialcases)down from 7.5 and 2.5 percentunder the old agreement.

Stabex transfers to the 35 least-devel-oped countries are grants; to othercountries they are interest-free loans,to be repaid over seven years with twoyears' grace. Under Lomé 2 a relatedbut different facility for minerals willalso be introduced. A major advantagefor ACP countries receiving paymentsis that Stabex offers "untied" foreignexchange on concessionary terms. Butit is small, does not fully cover earningslosses resulting from inflation, and is notas automatic as its (complex) rulessuggest.

In addition, there is the UNCTADCommon Fundagreed upon in princi-ple, but with legal and technical ques-tions still to be resolved. The originalproposal was for a fund of $6 billion$4.5 billion to stabilize 10 "core" com-modities, with a "second window" of$1.5 billion for other measures (productdiversification, research and process-ing). The idea is that a central fundwould finance buffer stocks under sep-arate international commodity agree-ments (ICA5), and would thereby stabi-lize commodities prices. The currentproposal is for $400 million for buffer-stock financing (from member govern-ments and deposits by ICAs) and asecond window of $350 million fromvoluntary contributions (by April 1980,$170 million had been pledged).

whether safeguard measures canbe invoked selectively againstspecific countriesan approachfavored by some industrializedcountries but opposed by devel-oping countries.

If developing countries sign (and

20

actively participate in) the Tokyoagreements, they are likely to addsignificantly to the benefits theyobtain from it. Under its terms,only signatories can participate inthe implementation and surveil-lance of the governing codes of

conduct. But most developingcountries so far have refused tosignpartly because of dissatis-faction with the progress madeand partly because they maintainthat they should benefit from thecodes without being bound bytheir provisions.

The reciprocal obligations ofdeveloping countries are a sensi-tive issue that will be increasinglyimportant in future negotiations.in particular, the status of thosedeveloping countries that are majorexporters of manufactures and arereaching a more advanced stage ofdevelopment ("the graduates") isunresolved. If their eligibility forspecial treatment were reduced,there would be more scope for thelower-income countries to benefit.

The extent of the gains from theMTN nevertheless depends mainlyon the industrialized countries.Stagnation or slow growth of theireconomies reduces alternativeemployment opportunities fordisplaced workers, and aggravatesprotectionist sentiment. (There isin fact no evidence that compe-tition from developing countriesis a major cause of unemployment.Several studies have shown thata balanced increase in trade withdeveloping countries has insig-nificant effects on employment inindustrialized countries, especially ascompared with the job losses dueto technological change; otherstudies show employment gainsfor some countries.)

In turn, protection impedeseconomic recovery by slowing themovement of resources fromlow- to high-productivity sectors,thus exacerbating inflation. Andimports can reduce inflation directly,restraining the price rises thatdomestic producers seek andincreasing the pressure on themto improve efficiency. A 1978 surveyin the United States of all consumergoods (except food and automo-biles) found that imports from

Table 3.2 World merchandise trade, by country group, 1970 and 1977(percent)

Asia and Latin America were onaverage 16 percent cheaper thandomestic products of similarquality.

Pressures for protection can beoffset by policies to improveproductivity within particularindustries and to ease the move-ment of resources between indus-

a. Includes centrally planned economies and unallocated trade (usually about 1 percent).

tries. Policies to improve mobilitywere discussed at length in lastyear's World Development Report.These include quick and adequatecompensation for affected individ-uals, retraining schemes and thecreation of new industries, andremoving obstacles to labor mobility,such as nontransferable pension

rights. These measures complementefforts to raise employment andgrowth and to reduce inflation.But if adjustment policies are notproperly designed and implemented,they can delay rather than assistrestructuring.

Trade issues for capital-surplusoil exporters

After the 1973-74 oil price increasesthe oil-exporting countries rapidlyexpanded their imports-therebymoderating the world economicslowdown. The imports of thecapital-surplus countries are un-likely to grow in the 1980s at theextraordinary rate (more than 20percent a year) of the 1970s; butthey are expected to grow almosttwice as fast as the imports of theindustrialized countries (9 percenta year compared with 5 percent).This will offer buoyant opportuni-ties for exporters in developingcountries-but within limits, sincethe oil-exporters' market is stillrelatively small (see Table 3.2).

Multilateral trade negotiations: the Tokyo round

Several novel features are contained inthe MTN agreements, including the in-corporation of preferential treatment fordeveloping countries into the legalframework governing trade and codes onnontariff barriers. But they largely ex-clude existing quantitative restrictions ontextiles, clothing and agriculture.

Tariffs. Industrialized countries are toreduce tariffs 35 percent (simple average)over eight years, affecting trade worthabout $125 billion (1976 values). Thesimple-average tariff cut on developingcountries' traditional exports wouldamount to 25 percent for industrial and7 percent for agricultural products. Thetariff reductions are less than average onproducts eligible for the generalized sys-tem of preferences; they are larger onfinished manufactures than on semi-manufactures.

Nontariff barriers. The aims are asfollows:

S To prevent increases in protectionarising from use of arbitrarily deter-mined customs values as a base fortariffs.

To reduce discrimination againstforeign suppliers for government con-tracts valued at SDR15O,000 (about$200,000) or more.

To regulate export subsidies and,for countervailing duties, to requireproof that subsidized imports causedmaterial injury to the domestic industryin question.

To ensure that technical regulationsadopted for such reasons as health orenvironmental protection do not createunnecessary obstacles to trade.

To prevent procedures for importlicensing from constituting barriers totrade.

Framework for conduct of trade. Thisreforms several aspects of the GATTsystem. Its main features are: providing alegal basis within GATT for preferentialtreatment of developing countries, andspecial treatment of the least-developedcountries; increasing the regulation oftrade measures adopted for balance-of-payments purposes; recognizing thedeveloping countries' need to take safe-guard action not only for new industries

but also for modifying their productionstructure; revising GATT procedures forsupervising adherence to internationalrules.

Others, Antidumping measures andrestrictions on trade in dairy and certainmeat products were amended.

Provisions for developing countries. Asidefrom the framework agreement, specialprovisions include:

A five-year delay in implementingthe customs code, and longer exemp-tions for certain goods.

Fewer entities to be covered by thegovernment procurement code; andtechnical assistance for tendering bids.

Delays of up to two years in apply-ing the import-licensing code.

Export subsidies to nonagriculturalproducts are not flatly prohibited; butdeveloping countries should avoid usingsubsidies to harm the interest of tradingpartners, and phase them out gradually.

Aside from the safeguards clause, theareas of continuing negotiations are com-mercial counterfeiting, adequate accessto vital imports and restrictions onagricultural trade.

21

Origin

Destination

Oilim portingdevelopingcountries

Oil_exportingdevelopingcountries

Capital-surplus Industrializedoil exporters countries Worlds

1970 1977 :1970 1977 1970 1977 1970 1977 1970snd1977

Oil-importingdevelopingcountries 17.4 20.5 3.5 8.4 1.5 3.1 69.0 61.8 100,0

Oil-exportingdevelopingcountries 21.8 21.5 3.9 2.2 0.5 0.8 66.6 72.6 100.0

Capital-surplusoil exporters 20.2 20.6 1.7 4.3 0.8 1.2 74.4 69.6 100.0

Industrializedcountries 18.2 16.4 4.7 6.7 1.5 5.6 71.0 65.7 100.0

Worlds 18.0 16.9 4.1 6.1 1.3 4.3 65.4 62.2 100.0

Migration and moneyEmigration once played a crucial role inreducing poverty in Western Europe:about 50 million people are estimated tohave left for the "new world" in thesecond half of the 19th century. Wholefamilies moved then, for good. Todaymany of the migrants are male workerswho go abroad for a period and sendmuch of their earnings home. Manyof them are illegal; some of their remit-tances go unrecorded or enter officialbalance-of-payments accounts in waysthat make it hard to disentangle themfrom other flows.

While estimates are imprecise, thebroad picture is clear. There were roughly20 million migrant workers in the worldin the late 1970s, of whom 12 millionwere from developing countries. Some6 million were in the United States(mostly Mexicans); 5 million in WesternEurope; and 3 million in the Middle East(other main destinations include theWest African coast and the mines ofSouth Africa). The number in WesternEurope increased from 2 million in theearly 19605 to 6 million in the early 1970sand then declined, but this was morethan offset by an upsurge in migrationto the oil-rich countries of the MiddleEast. More than 2 million of the migrantworkers in Europe are from developingcountries (mainly Algeria, Morocco,Tunisia, Turkey and Yugoslavia); in theMiddle East about 2 million come from

other countries of the region, most of theother 1 million from South Asia.

Remittances to developing countrieshave grown rapidly, from about $3 bil-lion in 1970 to an estimated $17.5 billionin 1930, with more than $3 billion goingto South Asia, about $5 billion to theMiddle East and North Africa and closeto $7 billion to Southern Europe. Remit-tances are about a fifth as large as mer-chandise exports in South Asia, and inthe Middle East and North Africa (ex-cluding the capital-surplus countries).The proportion is especially high inPakistan, Bangladesh, Jordan, Egypt,Morocco and the two Yemens. Othercountries where remittances are particu-larly important include India, Turkey,Greece and Yugoslavia.

There has been controversy over thenet benefits to developing countries whenskilled people emigrate. The "braindrain" represents a serious loss of man-power for some countries, and there aresocial costs as well. But governments canoften take steps to encourage vocationaleducation and training to meet a demandfor skillsin order to increase remit-tances while retaining enough trainedpeople within their countries. In anyevent, most of the objections apply lessstrongly to the unskilled or semiskilled,the majority of migrant workers; forthem, migration offers a chance ofdramatic improvement in their oftenmeager incomes.

The share of the oil-importingdeveloping countries' exports go-ing to both the capital-surplus andother oil-exporting developingcountries increased sharply be-tween 1970 and 1977 (Table 3.2)exports to each group grew atannual rates exceeding 20 per-cent. Some developing countries(including South Korea and India)have won major contracts for "turn-key" plants and for constructionand consultancy services; these areasoffer many export opportunities.

Remittances from migrantworkers in the oil-rich states haveboosted the foreign exchangeearnings of some developingcountries considerably (see boxabove). Labor shortages remain

22

a significant constraint on growthfor several oil-exporting countries.But migration raises sensitivesocial and political issues forcountries of origin and destination;if investment programs in thecapital-surplus oil exporters aremore conservative and slow growthpersists ir the industrialized coun-tries, migration is likely to growless rapidly in the 1980s.

Trude policy for developing countries

Slower growth in world trade doesnot change the principles that shouldgovern the trade policies of devel-oping countries. Generally, thepolicies that maximize benefits fromtrade in good times will also maxi-mize them in bad. But the likely

slowdown in trade poses markedlydifferent policy problems for oil-exporting and oil-importing devel-oping countries. As discussed inWorld Development Report, 1979, themain trade issue for oil exportersis to prevent their sharply increasedforeign earnings from discouraginggrowth of other exports and im-port substitutes.

For oil-importing developingcountries, the likelihood of a diffi-cult external environmentrisingoil prices and slower growth inworld trade and capital flowsin-creases the urgency of taking stepsto earn and save foreign exchangethrough export promotion andimport substitution. The unfavor-able environment makes it harderfor the developing countries toachieve rapid export growth butmakes it more important to do so.Also of great importance areefforts to reduce the import require-ments of their overall growthstrategiesby some combinationof curbing nonessential imports,shifting production toward lessimport-intensive items and re-placing more imports by domesticproduction.

BALANcE BETWEEN EXPORT PROMO-

TION AND IMPORT SUBSTITUTION. Sev-

eral factors indicate caution in em-phasizing import substitution.

Most developing countriesnow have trade policies that areheavily biased toward import sub-stitution at the expense of exports.These biases commonly result fromexcessive reliance on quotas andadministrative controls, and indis-criminate use of tariffs. Frequentlysuch policies have been intro-duced in response to temporarybalance-of-payments crises butthen maintained for long periods.They result in misallocated re-sources and create a constituencyfor retaining protection. Reducingthe general bias toward importsubstitution should therefore con-tinue to be of high priority.

Inward-looking policies mayprevent developing countries fromtaking advantage of the consider-able export opportunities that willexist in the industrialized countrieseven if their growth slows, andmay also retard the growth ofdeveloping countries' trade witheach other.

World trade could recoverstrongly by the mid-1980s-and

experience (particularly in the1950s) illustrates the costs of ex-cessive export pessimism, both interms of lower import capacity andinefficiency in highly protectedindustries.

Pricing and other policiesthat encourage efficient exportgrowth encourage efficient importsubstitution as well.

Emphasis on selective import

substitution can, however, helpgrowth. Many countries have un-exploited opporhmities for importsubstitution through the produc-tion of energy (see pages 16-17)and food (see box). And inmost countries-including SouthKorea, for example-it played animportant role in initiating in-dustrialiation. But South Korea,unlike many countries, eliminated

food, farming and foreign

Before 1939 only Western Europe amongthe world's regions was a net importer ofgrains. Today only North America andOceania are not. Trade in grains hasrisen from 25 million tons in the late1930s to 181 million tons in 1979-from4 percent of global production to 14 per-cent. North America now accounts for20 percent of world grain production and80 percent of world grain trade.

The largest rise in net imports sincethe early 1960s has been in the middle-income developing countries-from 13percent to 23 percent of their consump-tion (see table). Of the low-incomecountries, there has also been a sharprise in Sub-Saharan Africa. In 1980 foodand beverage imports are estimated to be$7.7 billion in low-income countries (17percent of their merchandise imports)and more than $36 billion in middle-income countries (9 percent). Historically,a 10 percent increase in average incomeshas led to a 7 percent increase in grainimports in developing countries.

The growth of imports has placed severepressure on the grain handling and dis-tribution systems of developing coun-tries (when domestic production isincluded, their marketing and distribu-tion capacity is today handling roughlyfour times the tonnage of only 20 yearsago). In times of food shortfalls, dis-tributional bottlenecks are often a moreimportant constraint than the ability toprocure ithports. Both these constraintsargue for a measure of self-sufficiency infood but within limits: the earnings for-gone as a result of diversion of resourcesfrom other agricultural (or nonagricul-tural) investment can be substantial. In-creased food production should be partof a broad-based effort to stimulate agri-culture.

From 1955 to 1975 more than 150 mil-lion hectares of new farmland were

exchangebrought into production in developingcountries (more than the acreage devotedto cereals in the United States, Canada,the EEC and Japan combined). But thisexpansion has slowed since the mid-1960s, and it can be expected to accountfor no more than a quarter of incrementalfood production in the 1980s.

Hence the importance of increasingyields. Typical constraints include: un-due emphasis on large-scale irrigation atthe expense of smaller projects; wastefuluse of water; inadequate support for re-search and extension; and pricing policiesthat discriminate against agriculture.Several countries went a long way toremoving these constraints during the1970s. India is a good example. In theearly 1970s prices to farmers were raised,and there was increased emphasis onsmall-scale irrigation and agricultural ex-tension. Helped by good weather, thesepolicies contributed to record graincrops in 1977-78 and 1978-79; in 1979-

Grain consumption and trade

80, when the country experienced one ofits worst droughts, output fell 8 to 9percent-but the crop was still the thirdlargest ever (some 20 percent biggerthan in 1973-74, when there was a com-parable drought).

Water may become a critical con-straint in agriculture in the next 25 years.Over the past 50 years the area underirrigation has trebled. Costs of irrigationhave risen far more rapidly than watercharges generally; the result is inefficientuse and a lack of funds for maintainingand operating irrigation systems. Waterwastage is immense: in many parts of theworld only 25 percent of water releasedfrom dams is used to grow crops. Im-proved management of water systemswould result in major increases in grainproduction. But for large parts of theworld and many of the world's poorestpeople, the key to greater food produc-tion lies in a breakthrough in drylandfarming (see Chapter 4, page 37).

Excludes Albania, Cuba, Mongolia and Southern Africa (South Africa,Lesotho and Zimbabwe).

Includes capital-surplus oil exporters and excludes Southern Europe (Greece,Portugal, Yugoslavia, Romania and Israel).

Thailand and Argentina.

23

(millions of tonnes)

Country

Average annualconsumption'

Average annualnot trade balance'

1960-63 1977-79 1960-63 1977-79or country group

United States 139.8 173.5 32.7 94.9Canada 15.1 22.5 10.2 17.7EEC 92.0 118.3 -21.5 -8.0Other 50.3 83.6 -3.0 -18.5Eastern Europe 64.3 106.5 -6.4 -12.4USSR 119.0 217.6 7.3 -17.9China 112.3 225.2 -4.0 -8.7Developing countries5 254.1 427.3 -11.1 -36.0

Low-income 139.3 214.0 -5.6 -8.7India 73.1 109.4 -4.1 -1.3

Middle-income 101.3 191.8 -12.7 -44.7Major exporters' 13.5 21.5 7.2 17.4

24

Figure 3.4 Growth of developingcountries' merchandise exports,by destination, 197377'(average annual percentage change, 1970 prices)

Nonfuelprimaryproducts

To developing countries

To industrializedcountries

Fuel Manufac- Totaltures

a. Country groups correspond to UN classifi-cation. Developing countries include capital-surplus oil exporters; industrialized countriesinclude South Africa and most of SouthernEurope.

the bias in favor of producing forthe domestic market at an earlystage of industrialization. Thatresulted both in a surge of export-led growth and in rapid and efficientgrowth in production for the do-mestic marketillustrating thestrong underlying complementari-ties between the two.

SOME PO55ISILITIE5 FOR EXPANDING

EXPORTS. The industrialized coun-tries' market for finished manufac-tures offers developing countriesthe biggest scope for expandingexports. But they have opportuni-ties for raising exports in otherareas as well.

Processed primary products.Primary producers face more seri-ous export constraints than coun-tries exporting manufactures. Formany of them, processing theirprimary products offers a way ofincreasing the value of export

earnings. For some primary prod-ucts, the potential gains fromincreased processing can be ex-aggerated: some stages of processingcertain commodities (for example,nickel and bauxite) are highlycapital- or energy-intensive; others(for example, some edible oils)can cost less to transport in theirunprocessed form. This does notnecessarily mean that such pro-cessing activities are unsuitable fora developing country, but in thesecases a more careful evaluation ofthe costs and benefits is required.

The decision to do more pro-cessing, however, is seldom in thehands of developing countries alone.The tariff structures of industrial-ized countries typically impose low(or no) duties for unprocessed pri-mary products; but in many casesthese rise progressively with thedegree of processing (often to highlevels). Unfortunately, this pro-tects advanced stages of pro-cessing in the importing countriesand inhibits exports of processedproducts from developing coun-tries. Another brake on processingis that transport charges for pro-cessed products, where set by"conferences" of shipping firms,may not reflect genuine differencesin the costs of carrying processedrather than raw materials. The lo-cation of processing activities isalso influenced by the policies oftransnational corporations.

Trade between developingcountries. Recent growth in"south-south" trade has been robust, andthe outlook is promising. Devel-oping countries' exports of bothmanufactures and nonfuel primaryproducts to each other have beengrowing faster than they have toindustrialized countries (see Figure3.4). UN data (in which develop-ing countries include capital-sur-plus oil exporters but exclude thesemi-industrialized nations ofSouthern Europe) show that tradebetween developing countries ac-

counted for barely more than aquarter of the increase in theirmanufactured exports during 1963-73, but almost half in 1973-77.

Most of such trade in manufac-tures is from more- to less-indus-trialized developing countries, orbetween adjacent countries thatare not otherwise major exportersof manufactures. In the compo-sition and characteristics of theproducts, south-south trade differssignificantly from developing coun-tries' manufactured exports toindustrialized countries; in par-ticular, it is more skill- and capital-intensive, with a higher proportionmade up of engineering and them-ical items (see Table 3.3). Trade incapital goods, including turnkeyplants, is expanding very rapidly;but its value is still small.

Regional integration schemesoffer a means for expanding south-south trade, but experience hasbeen mixed. They often lead to

Table 3.3 Product compositionof developing countries' mer-chandise exports to industrializedcountries and other developingcountries, 1977"(percent)

Machineryand

UN classification (South Africa andmost of Southern Europe are included inindustrialized countries).

Includes capital-surplus oil exporters.About 80 percent for electronics and

electrical machinery; much lower sharesfor other products.

transportequipment 19.9 30.2 53.5'

Textiles 10.2 16.3 48.4Clothing 23.1 6.2 85.3Chemicals 7.4 11.6 50.3Iron

and steel 3.0 5.1 49.6Other manu-

factures 36.4 30.6 67.2

Total 100.0 100.0 62.4

S hare ofproductgroup

To going toindus- To indus-

trialized developing trializedProduct group countries countries countries

14

12

10

8

6

4

2

+0

2

inward-looking policies, with highprotection and low overall tradegrowth. But they could play a big-ger role if properly designed andimplemented. One promisingavenue for improving the bene-fits from regional cooperation isto coordinate large-scale invest-ments to avoid excess capacity (asmembers of ASEANthe Asso-ciation of South-East Asian Nationshave begun to do). But the mainvehicle for expanding south-southtrade is more likely to be thosegeneral policies that liberalize de-veloping countries' import regimesand strengthen their export capa-bilities (for example, by expandingexport credit and insurance facilities).

Capital flows

The links between the growthprojected for developing countriesand the capital flows required tosustain it received close attentionin Chapter 2. The projected capitalinflow to developing countriesreflects judgments both about theavailability of finance and theamounts the countries will wantto borrow. But the flows that infact materialize will be determinedby savings and investment behaviorin the industrialized countries andthe capital-surplus oil exportersand specifically on how much oftheir saving they choose to investin the developing world.

This choice cannot be forecastwith precision. The High casedescribed in Chapter 2 requiresaid and commercial capital fromindustrialized countries totalingabout 0.5 percent of their GNP in1990. By historical standards, thisis not a large amount: it was 0.3percent of their GNP in 1970 andstill about 0.5 percent in 1975.

It implies, however, a substantialturnaround from 1930, when theindustrialized countries themselvesare likely to have a net inflow ofcapital (before official transfers)

of about 0.5 percent of GNPthecounterpart of their current accountdeficit. Moreover, by 1990 muchof the projected net capital inflowto developing countries would beneeded to meet interest paymentson loans. The share of gross lendingthat is available for buying importsand adding to reserves would fallsharply during the 1980s (seeFigure 3.5).

Clearly, the uncertainties inthese projections are high. Consid-erably more resources could beavailable to developing countriesover the decade, and the resultcould be more growth. But it looksas though their capital inflow willbe relatively modest in the 1980s,because of constraints both ontheir capacity to borrow and on thesupply of funds.

Fcctors cifjecting borrowing decisions

In general, the oil exporters facefew financial constraints on theirgrowth. Their major challenge(especially if the real price of oilcontinues to rise throughout the1980s) is to use their oil revenuesefficiently and not to exceed theircapacity for absorbing investment.If they succeed, they will not needmuch foreign capital over thenext five years or so. For majorborrowers (such as Algeria orMexico) this means that debt-service ratios will tend to declinedespite strong economic growth.

Later in the decade, however,their position will change. Theinitial surge of revenues from theoil price rises of 1979-30 will havebeen digested; their ability to absorbmore foreign investment produc-tively will have risen. With oilproviding them with a strong creditstanding, the oil exporters couldchoose to finance further rapidgrowth by more foreign borrowing.

The position of the oil-importingdeveloping countries is altogetherdifferent. In 1978 net oil imports(for energy uses) cost them $30

1970

1975

1980

1985

1990

Figure 3.5 Developing countries'use of borrowed funds, 1970-90(High case)(percenhigr shares) Gross

medium-nd Ioog

(9 billion)

billion; in 1980 the same amountof imports would cost them about$65 billion. Their potential financinggap is widened further by slowgrowth in the industrializedcountries, as a result of which theirexports in 1980 could be about $6billion lower than they mightotherwise have been. In the short-term this means they will runhigher current account deficits thanin earlier years for any given rateof growth.

In these circumstances thepolicy options of the low-incomeoil importers are limited. They can-not borrow much capital on com-mercial terms, nor would it beprudent to do so. Their growthrates depend essentially on threefactors: their own efforts to raiseinvestment and saving; the avail-ability of concessional finance; andhow efficiently they use domesticand foreign resources. Withoutmuch more aid (beyond theincreases currently projected),GNP per person in these countriesis unlikely to grow faster than1.7 percent a year in the first halfof the 1980s.

The hardest decisions lie withthe middle-income oil importers,for whom prudence will have toremain the watchword. In theshort-term (perhaps until the end

25

Availabir forimports and

Amortization Interest reserves

25 50 75 100

of 1981), they can resort to thetemporary expedients of com-pressing imports and runningdown inventoriesand in somecases using foreign exchangereserves (which were boosted byheavy borrowing in 1977-78).These measures will not preventexternal deficits from rising, somore finance will be needed tomaintain growth, even at thecomparatively low rates of 1977-80.

But these countries may findtheir options increasingly restrictedby a key constrainttheir credit-worthiness for larger and largeramounts of borrowing on com-mercial terms. This means not onlycreditworthiness as perceived bylenders, who may be willing tocontinue to lend to countries thathave demonstrated an ability tomanage their debt. Developingcountries themselves must deter-mine how much they will benefitfrom continued heavy commercialborrowingallowing for theirexisting levels of debt and debt-servicing obligations, their uncer-tain export prospects and the likelyreturn on additional investment.Some countries have already runinto debt-servicing difficulties.In the absence of more officialfinance, the wise policy for someoil importers may be to borrowless and accept slower growthin the near term, while currentaccount deficits are reduced anddebt-servicing capacity and credit-worthiness are strengthened.

Countries that can finance higherdeficits and more rapid growth willalso have to take steps to restruc-ture their domestic economies andtheir external payments. They, too,will be faced with the need to raiseexports rapidly, to use importsefficiently, to control domesticexpenditure and inflation and toinvest productively so that theirdebt-servicing ability and credit-worthiness will not be impaired.A lesson that has been learned

26

from the 1970s is that foreigncapitalespecially on commercialtermscannot substitute for struc-tural adjustment but can ease it.

The outlook for capital vilability

To meet their needs in the 1980s,developing countries will seekfinance from private sources(mainly commercial banks, but alsobonds and direct investment) andfrom official sources, both onconcessional and on market terms.

OUTLOOK FOR CAPITAL FROM COM-

MERcIAL BANKS. Despite the in-creased liquidity of the internationalbanking system, arising from thesurpluses of the capital-surplus oilexporters, developing countries wififind it harder to maintain rapidgrowth in borrowing in the 1980sthan they did in the 1970s. Apartfrom the considerations of credit-worthiness already discussed, theycan expect greater competition forfunds and direct constraints onbank lending. These factors arelikely to affect borrowing more inthe next few years than over thewhole of the decade.

Increased competition.Developments in the 1970s havehighlighted the need for heavyinvestment in the industrial econ-omies, to overcome structuralweaknesses. The increased cost ofenergy provides a strong incentivefor governments to stimulate bothpublic and private investment inenergy programs. Investment isthus unlikely to be compressed muchfurther, even in the short-termwhen demand will be depressed.Unless savings rates rise sharply,the industrialized countries are notlikely to eliminate their currentaccount deficits as rapidly as theydid in 1974-78especially as thereal price of oil is expected to risefurther in the 1980s.

Borrowing by industrializednations is therefore likely to takea larger share of the surpluses of

the capital surplus oil exportersthan in previous years. In addition,the European centrally plannedeconomies are likely to increasetheir demands on the capital mar-ket. They have been substantialborrowers in the past and (apartfrom the USSR) are net importersof energy with large debts to service.Finally, China seems poised to enterthe market to finance ambitiousmodernization; over the decadeChina could become a sizableborrower.

While developing countries willtherefore face more competitionfor loans in the 1980s, this doesnot mean that net lending to themwill not increase. But the pace willbe slower than in the past, and theywill probably pay higher spreads(the margin over interbank depositrates) than they have done in recentyears. Interest rates themselves arelikely to be higher as wellbecauseof competing demands for funds,and because of restrictive monetarypolicies (in the next few years, atleast) in industrialized countries.

From 1976 to 1978 the relativeease of monetary policy (especiallyin the United States) helped toboost international liquidity andthus facilitate the rapid expansion ofcommercial lending. The currentstance of monetary authoritiessuggests that the 1980s will seetighter monetary policy to combatdomestic inflation. But the dramaticfluctuations in interest rates overthe past year underline the potentialfor error in this kind of prediction.

Constraints on banks. Thetwo previous World DevelopmentReports have noted the potentialconstraints on commercial banklending to developing countriesthat arise from portfolio concen-tration, higher debt-equity ratiosand the associated concern of bankregulators. The danger to devel-oping countries is not that bankswill stop lending to them; ratherthat lending growth will slow be-

cause individual banks or bank-ing groups may have to restraintheir lending-and it will take timefor new lenders to expand theiractivities.

The main factors behind theseconstraints still exist and may havebecome more acute. The rapidgrowth in lending by the mainmoney center banks in the UnitedStates, the Federal Republic ofGermany and Japan has meant thattheir capital base (shareholders'equity plus retained earnings) hasfailed to keep pace with lending.For the major US banks at least,how much they can lend in thefuture will be affected by how fastthey can expand their capital. Butthis is difficult in a world of lowspreads, high inflation (which in-creases loans and deposits relativeto capital) and low prices for bankstocks. Second-tier banks that arecomparatively underlent relativeto their capital will probably ex-pand their international lending.But because these banks are smaller,less experienced and probably morerisk-averse than the large inter-national lenders, developingcountries are likely to pay morefor their services.

In addition, some banks maywish to limit their exposure in somecountries, since lending has beenvery concentrated (see Table 3.4).Regulatory agencies reinforce thiscaution: they have become increas-ingly concerned that foreign lendingshould not pose a threat to domes-tic banking systems. The effect ofregulatory constraints on lendingis not certain; it depends on theattitudes of regulators. In the past,banks have been free to interpretquite liberally the guidelineswithin which they operate. Therehave been moves to tighten con-trol of international lending (forexample, banks are increasinglyhaving to report foreign and do-mestic operations on a consolidatedbasis); but the monetary author-

ities of many countries as wellas the Bank for InternationalSettlements are concerned to avoidundue constraints.

While these factors may causelending to developing countriesto grow more slowly, banks couldbe encouraged to lend more ifspreads (between deposit and lend-ing rates) widen. These spreadshave a major influence on theprofitability of lending; they havenarrowed considerably since 1976(see Table 3.5), but this trendseems to have been arrested in1950. Since 1977 spreads have notbeen a major element in the cost

Table 3.5 Average spreads over LIBOR for externalborrowing, 1974_79a

Source: Bank for International Settlements and US Federal Reserve Board.Rankings according to outstanding claims on June 30, 1979.Excludes offshore banking centers-Bahamas, Barbados, Bahrain, Bermuda, Cayman

Islands, Hong Kong, Lebanon, Liberia, Netherlands Overseas Territories, New Hebrides,Panama, Singapore and West Indies.

of borrowing; at current levels ofboth spreads and interest rates,the latter should have more effecton the developing countries' will-ingness to borrow.

OUTLOOK FOR OTHER FORMS OF

PRIVATE FINANCE. Both bondsand private direct investmentoffer some alternative to banklending, though their main impactwill be felt in the longer term.

The bond market. Develop-ing countries made few inter-national bond issues before theend of 1975, when outstandingexternal bonds of 96 developing

LIBOR is the London interbank offered rate, the rate charged by banks in London fordealings with each other.

Spreads reflect the credit standing of the borrower as well as market costs. This explainsthe very low difference in 1975.

Calculated as an annual average from monthly averages for the Eurodollar bid (deposit)rate plus one-eighth of a percent.

27

Table 3.4 Commercial bank claims on developing countries, 1976-79

Country'or group

Percentage compositionof amounts outstanding'

1976 1977 1978 June 1979

Brazil 16.7 16.6 16.2 16.1Mexico 16.2 13.4 11.4 11.7Venezuela 6.2 6.0 6.9 7.5Spain 6.6 7.6 6.5 6.5Argentina 3.0 3.2 3.4 4.8Subtotal, 5 largest borrowers 48.7 46.8 44.4 46.6

Next 5 borrowers 17.4 18.7 18.8 18.0

Next 10 borrowers 20.4 19.6 19.9 19.2

All others 13.5 14.9 16.9 16.2

All developing countries 100.0 100.0 100.0 100.0

Amount (billions of dollars) 110.5 151.1 203.9 221.5

(percentage points)

Item 1974 1975 1976 1977 1978 1979

All developing countries 1.13 1.65 1.72 1.55 1.20 0.87Typical industrialized

country (France)b 0.58 1.42 1.09 0.92 0.63 0.36

Difference 0.55 0.26 0.63 0.63 0.57 0.51

Memo item

LIBOR rate' 11.32 7.74 6.26 6.54 9.48 12.12

countries totaled an estimated$5.5 billion. (By comparison, theWorld Bank alone then had out-standing bond issues of $12 bil-lion.) And only a handful of(mafrily higher-income) develop-ing countries had tapped the bondmarket: Israel accounted for 40percent of outstanding bonds,while Argentina, Mexico andSpain together contributed a fur-ther 35 percent.

Issues by developing countriesincreased rapidly after 1975 (seeFigure 3.6). They totaled $6.0 bil-lion in 1978, of which $5.9 billionwas the debt of middle-incomecountries. But their share of aslow-growing (if turbulent) marketfor international issues turned downsharply in 1979, to $3.9 billion(compared with issues by the in-ternational organizations of $8.3billion).

Over time, bond issues shouldbecome more important as a sourceof funds for developing countries.But the bond market is a con-servative one in which investoracceptance is acquired only slowly;borrowers must approach themarket cautiously until they es-tablish sound reputations. Thissuggests that in the foreseeablefuture bonds will not substituteto any great extent for commercialbank lending.

This conclusion is reinforced bythe regulations imposed on bondtransactions in many countries.These regulations do not dis-criminate among borrowers; theyare intended to protect nationalinvestors and currencies. But theireffect is to favor establishedborrowers and to make marketsinaccessible for inexperiencedborrowers. For example, the Se-curities and Exchange Commis-sion imposes strict disclosurerequirements on public offeringsin the US bond market that newborrowers often find difficult tosatisfy. The United States and

28

Figure 3.6 Internationalbond issues, 1972-79

Bill,,,, ,fd,lh,r,

most European countries restrictthe foreign bond portfolios of sometypes of institutional investor.And in practice a foreign borrowermust make a successful publicoffering in another foreign bondmarket before it can enter theJapanese market. Governments andregulatory agencies could help de-veloping countries by improvingtheir access to bond markets, butquick results cannot be expected.

Direct foreign investment.Direct investment could providemore capital to developing coun-tries, with the capital-surplus oilexporters playing an increasinglyimportant role. But in the short-term its potential is limitedpartly because many projects takeso long to come on stream, butalso because developing countriesare often concerned about foreignownership and influence in theireconomies. Because the risks arehigh, the foreign investor typical-ly requires high returns on capital(and in some cases substantialcontrol of the enterprise). Anymajor increase in direct invest-ment is likely to need greateragreement between governmentsabout the role of transnational cor-porations. Barring that, directinvestment over the next 5 to 10years would probably grow at onlyabout 3 percent a year in real terms.

OUTLOOK FOR OFFICIAL CAPITAL.

Given this relatively uncertain out-look for private capital flows, officialagencies will have to help securethe financing needs of the develop-ing countries (especially the low-income oil importers), as they didin 1974. Finance from the cen-trally planned economies is mod-est and probably will remain so.Official capital from the indus-trialized countries and the capital-surplus oil exporterstogether withthe international financial institu-tions they supportwill effectivelydetermine the capital inflow to low-income countries and will supple-ment the middle-income countries'private borrowing.

Prospects for concessionalassistance. The aid projectionsthat underlie the High case areshown in Table 3.6. They showaid from DAC donors reaching nomore than 0.36 percent of projectedGNP in 1985 and 1990. Measuredagainst the target (0.7 percent ofGNP) established by the UnitedNations for the Second Develop-ment Decade, the performance ofDAC donors has been most dis-appointing. Real growth from 1965to 1979 averaged only 1.5 percent ayear. Excluding countries that havealready reached the UN target(Denmark, Netherlands, Norwayand Sweden), the aid performanceof most of the remaining 13 DACmembers deteriorated from 1975to 1979. There is little assuranceof significant progress in responseto the Brandt Commission's call forrapid growth in aid, and the evidentneeds of developing countries.

Recent actions give cause forconcern. The aid cuts announcedby the British Government could.cause their aid to fall to 0.38 per-cent of GNP by 1985, from the0.48 percent average for 1977-79.Aid bills continue to face difficultiesin the US Congress, suggesting thatsupport from the biggest donor islikely to remain the lowest, relative

1972 74 76 78 79

to GNP, of all large industrial na-tions. Some countries, such asJapan and the Federal Republic ofGermany, have indicated theirintent to continue their recent im-provements in aid flows. Never-theless, achievement of the projectedoverall increase (a tripling of aidin nominal terms, or 4 percent realgrowth throughout the decade) isfar from certain; it depends onstrong growth in industrializedcountries as well as on main-tenance of their aid shares.

Economic difficulties in theindustrialized countries are animportantbut not a sufficientreason to explain their lack of sup-port for aid. Most governmentssimply have not found it expedientto expand foreign assistance whilerestricting domestic spending. Thefailure even to maintain the shareof aid in GNP will have seriouslong-term economic and politicalconsequences for the developingcountriesparticularly for the poor-est among them. The inadequateprovision for development aidcontrasts starkly with the sumsdevoted by all countries to mili-tary expenditures (see box).

Close examination suggests,however, that political factors willinhibit a rapid redistribution ofconcessional aid. France and theUnited States, in particular, main-tain strong political ties with some

Table 3.6 Aid flows to developing countries and

higher-income aid recipients. None-theless, there is an extremely strongcase for donors to provide at least50 percent of their aid to low-income countries; this redistribu-tion is built into the capital-flowprojections underlying the Highcase in Chapter 2. If it fails totake place, total aid flows fromDAC members will have to bevery much higher ($85-90 billionin 1990 rather than the projected$69 billion) to achieve the pro-jected bilateral flow to the low-income nations.

Official capital on marketterms. The other major source offunds for developing countries isofficial capital on nonconces-sional terms (that is, with a grantelement of less than 25 percent);this is provided principally throughofficial export credits, government-to-government lending, the WorldBank and the regional banks andthe International Monetary Fund.While it offers limited support forthe low-income countries, formiddle-income countries it hasbeen and could remain a veryimportant supplement to privatecapital.

Prospective aid from OPECmembers is also uncertain. TheArab countries that are the majordonors have been generous intheir support of developing coun-tries in the past. In the peak year,

Preliminary figures.Reporting by DAC members has changed to a uniform system (see the technical notes

for Table 16 of the World Development Indicators). Under the old system of reporting, the1975 figure was $13.6 billion, the 1978 figure $18.3 billion.

Includes OECD countries that are not members of DAC.

1975, the oil producers togethergave 2.7 percent of their GNP asaid, while the major Arab donorsSaudi Arabia, Kuwait, Qatarand the United Arab Emiratesgave proportionately much more(a range of 5 to 15 percent of theirGNP). By 1978, however, aid inreal terms was only about 60 per-cent of what it had been in 1975;estimates for 1979 indicate a furtherreal decline.

The increase in oil revenuesshould permit a substantial in-crease in the oil producers' aid in1980 and beyond. OPEC donorshave not yet agreed to boost sub-stantially their aid through multi-lateral channels; much thereforedepends on the expansion of thenational programs of the majorbilateral donorsthe four men-tioned above, plus Iraq and Libya.Iraq has become the third largestOPEC donor in absolute terms,partly because of its interest-free

29

Military spendingAlthough data are imprecise and esti-mates vary widely, one estimate putsglobal military expenditure at morethan $400 billion in 1977. The propor-tions of GNP that industrialized anddeveloping countries devoted to it wererather similar (see table). For indus-trialized countries, the outlay on armswas 17 times higher than that on aid.And for developing countries, it wasone-and-a-half times more than oneducation and health combined.

Public expenditures on defense,aid, health and education, 1977(percentage of GNP)

Educa-Country group Defense Aid Health lion

Industrializedcountriesa 5.6 0.33 3.0 5.9

Developingcountrie&' 5.9 n.a. 1.0 2.7

a. Include centrally planned economies.b. Include centrally planned economiesand capital-surplus oil-exporters.Source: World Military Expenditures andArms Transfers 1968-77 (US ACDA)

multilateral institutions, 1975-90(billions of dollars)

(High case)

Country group 1975 1978 7979a 1980 1985 1990

DACh 13.8 20.0 22.3 25 44 69(As percentage of GNP) (.36) (.35) (.34) (.36) (.36) (.35)

OPEC 5.5 4.3 4.7 5 10 15(As percentage of GNP) (2.71) (1.35) (1.28) (n.a.) (n.a.) (na.)

Centrally planned economiesand otherc 0.6 1.1 1.0 1 2 2

Total 19.9 25.4 28.0 31 56 86

loans to poorer countries to com-pensate them for higher oil prices.

Improving aid to benefit thepoorest. To maintain energy im-ports at their 1978 levels, thepoorest oil-importing countriesneed extra aid of about $2.2 bil-lion in 1980 (for 36 low-incomecountries). This could be providedby increasing aid from DAC andOPEC donors by only 8 percent.Yet even this additional aid willnot be made available withoutstrong efforts; and it would notcompensate for the losses in tradeand aid from the slowdown inworld growth.

Besides expanding aid, donorsshould redistribute it toward thepoorest nations. Some donorssend a comparatively high pro-portion of their aid to the middle-income countries. In 1978 DACdonors distributed 38 percent oftheir bilateral aid to low-incomecountries (see Table 3.7) and 52percent to middle-income coun-tries (data on the country distri-bution of the remaining 10 percentare unavailable). Although onlyseven DAC donors currently giveless than 55 percent of their bi-lateral aid to low-income countries,this group includes the four largestdonorsFrance, the Federal Re-public of Germany, Japan and theUnited States. Bilateral aid to thelow-income countries from OPECdonors has fallen since 1976 andthere is scope for redistribution.Flows from multilateral institu-tions, by contrast, are concentratedmore on the poorest countries.

Official export credits are diffi-cult to separate statistically fromassociated officially supportedprivate flows. Together, however,they have grown rapidly over thepast two decades; in 1978 netdisbursements from DAC membersto developing countries were morethan $13 billion (exceeding netbilateral aid from the DAC coun-tries for the first time, and con-

30

Table 3.7 Distribution of DAC donors' bilateral official developmentassistance, 1970-78

siderably above private directinvestment of $11 billion). Con-tinuing growth is likely, but thelimitations on what is financed byofficial export credits (usually,only specified capital goods) re-strict their ability to compensatefor slow growth of other capital.

Government - to - governmentlending affords a more direct meansof assisting developing countries.The greatest potential seems to liewith OPEC governments, whichprovided $2.5 billion a year in1975-76 (mainly on market termsto low-income countries) comparedwith their aid of $5.5 billion a year.Current and projected surplusesof the capital-surplus oil exporterscould support a much larger volumeof such lending.

The role of multilateral insti-tutions. While the machineryexists to assist developingcountries in the difficult timesahead, the international agenciesare hampered by a shortage ofresources, especially to financelonger-term adjustment. Most oftheir proposed major capitalincreases and replenishmentshave run into authorization orappropriation delays.

The Inter-American Develop-ment Bank's capital increase(agreed to in 1979) was to sustainnominal lending growth of about14 percent a year, but legislativeratification has been delayed. TheAsian Development Bank's cur-rent replenishment period extendsto 1982, during which time bothconcessional and nonconcessionallending in nominal terms are

expected to grow 12 percent a year.The African Development Bank,despite the expansion of resourcesresulting from the admission ofnonregional members in 1980, willbe similarly constrained. The aidprogram of the European Com-munity under the Second LoméConvention, and the UnitedNations Development Programwill increase at a somewhat slowerrate.

Higher inflation will erode thereal value of capital increasesand replenishments. The capitalincrease for the World Bank wasintended to support 5-6 years oflending growing at a nominalrate of 12 percent a year with animplied inflation of 7 percent ayear (at present, that inflation ratelooks a distinct underestimate).The sixth replenishment of IDA (aproposed $12 billion) was plannedto provide for an annual realincrease in loan commitments of5 percent for fiscal years 1981-83(July-June). Again, however, thereal resource flow will be erodedby inflation.

Against this backdrop, the Boardof the World Bank has accepted aproposal that will provide loans tosupport developing countries'structural adjustment programs.But agreement has not yet beenreached that these loans willbe in addition to the previouslyplanned lending programs. Overthe decade, unless the internationalagencies get more funds, they willonly be able to reallocate fundsalready earmarked (and allowedfor in the High-case projections

Percentage shares

Country group 1970 1975 1976 1977 1978

Low-income countries 47 44 38 35 38Middle-income countries 44 46 51 56 52Unallocated by country 9 10 11 9 10

Total 100 100 100 100 100

in Chapter 2). Ways of increasingtheir lending capacity should beconsidered, within the constraintsof the capital available to themfrom the industrialized countries.

The IMF. The seventh quotaincrease is expected to becomeeffective in 1950, raising the quotasof the oil-importing developingcountries to around $16 billion.And in response to members'needs for financial assistance toease their current adjustmentproblems, the Fund is studyinginitiatives designed to raise theamount of finance it offers; toextend credit for longer periods;

and to emphasize its role as asupplier of finance. The maturityof loans under an extended arrange-ment has already been lengthenedfrom S to 10 years to encourage asmooth transition to lower deficits.For countries that have severedeficits the IMF has been willing,in some instances, to providefinancial support amounting to sixtimes their quotas.

Iviore multilateral finance is needed

From 1970 to 1978 multilateralflows on nonconcessional termsgrew 11 percent a year in realterms (concessional flows grew 12

percent). On present plans, theyare likely to grow at less thanhalf these rates between now and1990. But there remains a dear needfor additional resources to allowthe developing countries to adjustto changed external conditions andat the same time maintain acceptablegrowth. Without such resources,the chances of successful adjustmentin 1980-85 will be much reduced;consequently, the recovery pro-jected for 1955 -90 would be weak-ened and longer-term develop-ment goals jeopardized.

31

Part II Poverty and human development

An unfavorable world economicenvironment casts shadows overthe lives of people in developingcountries; the poorest in particularface acute hardships. Part I of thisReport has stressed the steps thatdeveloped and oil-producingcountries in particular must taketo improve the international en-vironment for growthwithoutwhich, efforts to help the poor willbe of limited avail. Part II concen-trates on certain other measuresto reduce absolute poverty.

In the 1970s it was increasinglyrecognized that economic growthalone would not reduce absolutepoverty at an acceptable speed.So those involved with develop-mentincluding the ILO and theWorld Bankgave attention tofour different, though largelycomplementary, strategies: increas-ing employment, meeting basicneeds, reducing inequalities inincome and wealth, and raisingthe productivity of the poor.

This part of the Report drawson all these approaches to over-coming poverty. But it combinesthem with a strong concern forgrowth. And it integrates themwith a related strand of thinkinghuman resource development,here called human developmentto emphasize that it is an end aswell as a means of economic pro-gress.1 Human developmentencompasses education and train-

1. Earlier World Development Reports havecovered other aspects of developmentpolicy. In 1978 the central topic was theproblems and prospects of low-income

32

ing, better health and nutrition,and fertility reduction.

The focus is on absolute povertya condition of life so character-ized by malnutrition, illiteracyand disease as to be beneath anyreasonable definition of humandecency. Yet within a particularsociety at a particular time, povertyis often (and for many purposesshould be) defined relative toaverage living standards. It wouldbe wrong, for example, to use thesame poverty line in appraisingpolicy, say, in Argentina andBangladesh. Relative poverty isalso important because the dis-tribution of assets, incomes andpower has a profound impact onprospects for reducing absolutepoverty. And reducing relativepoverty is regarded as importantin itself in most countries.

Despite these links betweenabsolute and relative poverty, thereare fundamental differences. Equalsharing of poverty or of low lifeexpectancy is not the purpose ofdevelopment. Conversely, somepolicies that benefit large num-bers of poor people have an am-biguous effect on the overalldistribujion of income and mayeven make it more unequal.And while countries differ consid-erably in the priority they attachto distributional objectives, thereappears to be unanimity on theneed to reduce, and at some point

Asia and Sub-Saharan Africa. In 1979industrialization, employment and urbani-zation were the main issues addressed.

eliminate, absolute poverty.The role of human development

in alleviating poverty has beendebated for several hundred years.In Europe in the 16th to 18thcenturies, there was a vigorousdispute between those who believedthat education would make the poormore productive and better citizens,and those who believed that itwould make them challenge theestablished order. (With hindsight,both were clearly right.) Politicalas much as economic considera-tions impelled the United Statesand Japan toward universal primaryeducation in the 19th century.

Economists, meanwhile, haveseldom given prominence to thequality of the labor force, especiallyin their formal models. In the 1950sand early 1960s, there was a waveof optimism about the contributionof education to economic devel-opment. Partly for want of quickand obvious results, enthusiasmthen waned. But research continuedand the chapters that follow drawtogether its results.

The case for human developmentis not only, or even primarily, aneconomic one. Less hunger, fewerchild deaths and a better chance ofprimary education are almostuniversally accepted as importantends in themselves. But in a worldof tight budgetary and manpowerconstraints, the governments ofdeveloping countries must askwhat these gains would costandwhat the best balance is betweendirect and indirect ways of achievingthem.

4 Poverty, growth and human development

The poor are a mixed group. Somecope reasonably well; others areon the margin of survival. Theirwell-being can fluctuate widely: themarriages and ceremonies after theharvest are in stark contrast to thehunger and illness that often pre-cede it. A good crop with a newseed, or the chance to work on anearby road project, may push apoor farm family's income to thepoint where they can buy a plowwith a metal blade or some clothingfor their children. But two yearsof inadequate rain, or a bout ofillness, may cost them their landor their livestocka degree of vul-nerability that understandablymakes for caution and aversionto risk.

The poor have other things incommon, apart from their extremelylow incomes. A disproportionatenumber of themperhaps two infiveare children under 10, mainlyin large families. More than three-quarters of them live in (often veryremote) rural areas, the rest in ur-ban slumsbut almost all in verycrowded conditions. Many poorfamilies own a small piece of land,some animals or some tools. Butboth they and other poor peoplelive mainly by working long hoursmen, women and children alikeas farmers, vendors and artisans,or hired workers.

As much as four-fifths of theirincome is consumed as food. Theresult is a monotonous, limiteddiet of cereals, yams or cassavawith a few vegetables and in someplaces a little fish or meat. Many

of them are malnourished to thepoint where their ability to workhard is reduced, the physical andmental development of their chil-dren is impaired, and their resis-tance to infections is low. Theyare often sickwith tropicaldiseases, measles and diarrhea,and cuts and scratches that willnot heal. Complications of child-birth are a common cause of death.Of every 10 children born to poorparents, two die within a year;another dies before the age of five;only five survive to the age of 40.

The great majority of poor adultsare illiterate; their children, thoughhaving a much better chance ofattending school than in the past,usually do not complete more thana year or two. Unable to read aroad sign, let alone a newspaper,their knowledge and understand-ing remain severely circumscribed.Yet they learn about the possibilityof a better life from direct observa-tion, from friends and relatives,and perhaps from small improve-ments in their own circumstances;and they hope that their childrenwill somehow be able to climbout of poverty.

Dimensions of poverty

It is difficult to measure the extentof poverty. To begin with, abso-lute poverty means more than lowincome. It also means malnutrition,poor health and lack of educationand not all of the poor are equallybadly off in all respects. There isalso room for disagreement about

where to draw the line betweenthe poor and the rest, and aboutthe correct way to calculate andcompare incomes and livingstandards at different times andin different places.

To compound these difficulties,the data are inadequate. House-hold surveys, if they exist, some-times underrepresent the poor. Veryfew follow the fortunes of indi-viduals and families through time,or disaggregate the household toexamine the well-being of women,children and the elderly. Nor isdirect observation necessarilya reliable basis for generalization,especially in the countryside,where many of the poor arebeyond the gaze of the casualvisitor to villages and rural devel-opment projectsaway from theroads, away from the markets andproject sites, or on the outskirtsof the villages.

Despite all this, no one seriouslydoubts that a very large numberof people are extremely poor.Taking as the cutoff a level of in-come based on detailed studies ofpoverty in India, the number ofpeople in absolute poverty indeveloping countries (excludingChina and other centrally plannedeconomies) is estimated at around780 million. In 1975 about 600million adults in developing coun-tries were illiterate; and only two-fifths of the children in thesecountries currently complete morethan three years of primary school.In 1978, 550 million people livedin countries where the average life

33

HealthLife expectancy at birth (years)

Education

a. Excludes centrally planned economies

PopulationAverage annual percentage growth

34

GNP per person (1980 dollars)

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

a. Excludes all centrally planned economies

Increase,

Includes Bulgaria, Czechoslovakia, German DR, Hungary,Poland, Romania, USSR

Includes Albania, Cuba, North Korea, MongoliaExcludes China

Developedcountries

1950

1978

Middle-incomecountries

1950

1978

Low-incomecountries

1950

1978

1975

1 Low-incomecountries

I

1950

Literate TtI

Illiterate

0

Middle-incomeCountries

20 40

Average annual 1,rowth, 1950-80 percent)

60 80 too

,,,,,,,, ,I

Developed coUflte,es

,,, ,,,,, ,,,,, I

Middle-income countries'

,,, ,,,,,,,,,",, ,,, ,,,,,,,,

,,I I??',,,,, ,",I "

1950 1960 1978 1950-78

Industrializedcountries 66.0 69.4 73.5 7.5

Middle-incomecountries 51.9 54.0 61.0 9.1

Low-incomecountries 35.2 41.9 49.9 14.7

Centrally plannedeconomies' 62.3 67.1 69.9 7.6

Adult literacy rate (percent)

1950 1960 1975

Industrializedcountries 95 97 99

Middle-incomecountries 48 54 71

Low-incomecountries 22 29 38

Centrally plannedeconomies 97 98 99

1950-60 1960-70 1970-80 1980

Industrialized countries 1.2 1.0 0.7 2000

Middle-income countries 2.4 2.5 2.51980

Low-income countries 1.9 2.5 2.32000

Centrally plannedeconomies 1.9 1.7 1.3

1950

a. Includes Bulgaria, Czechoslovakia, German DR, Hungary,Poland, Romania, USSRb. Includes Albania, Cuba, North Korea, Mongoliac. Includes China

2000

Figure 4.1 Three decades against poverty

IncomeGNP per person" (198O dollars) 1950 1960 1980

Industrialized countries 3,841 5,197 9,684 1950

Middle-income countries 625 802 1,5211980

Low-income countries 164 174 245

1950Average annual growth (percent) 1950-60 1960-80

1980Industrialized countries 3.1 3.2

Middle-income countries 2.5 3.31950Low-income countries 0.6 1.71980

lodutrol,zed Middle. income

Low-incomeCountrie

4

3

2-

0

3.1 3.0

1.3

ftIIIIiiIIiiiftIft1PfiIII

Lite rate

Illiterate

Industrial i,ed countries

Life expectancy at birth (years) 50 ruittion people

0 to 20 30 40 50 60 70 80

Adults in all developing countries (percent) -50 million people

Total population (billions) - tOO m,ll,on people

0 2 3 4

expectancy was less than 50 years,400 million in countries where theaverage annual death rate of chil-dren aged one to four was morethan 20 per 1,000-20 times thatin the industrialized countries.

Nor is there any serious dis-agreement about who the poor are.Half of the people in absolutepoverty live in South Asia, mainlyin India and Bangladesh. A sixthlive in East and Southeast Asia,mainly in Indonesia. Another sixthare in Sub-Saharan Africa. Therestabout 100 million peopleare divided among Latin America,North Africa and the Middle East.With the partial exception of LatinAmerica (where about 40 percentare in the towns) the poor areprimarily rural dwellers, over-whelmingly dependent on agri-culturethe majority of themlandless (or nearly landless) labor-ers. Some minority groupsforexample, the Indians in LatinAmerica and the scheduled castesin Indiaare also overrepresentedamong the poor. And there is atendency for absolute poverty inparticular places, families andsocial groups to persist from gen-eration to generation.

Three decades of povertyreduction

In aggregate, however, consider-able progress has been made inreducing the incidence of povertyover the past 30 years (see Figure4.1). Progress would have beengreater still but for the dramaticgrowth of population, which hasdoubled the number of people inthe developing world since 1950and has begun to slow downthough as yet slightlyonly sincethe mid-1960s.

Since 1950 income per personin the developing world has doubled.But in low-income countries, theaverage increase has been halfthat, and in both low- and middle-

income countries the incomes ofthe poor have grown more slowlythan the average. The proportionof people in absolute poverty indeveloping countries as a groupis estimated to have fallen duringthe past two decades (thoughprobably not in Sub-SaharanAfrica in the 1970ssee Chapter2). But because population hasgrown, the number of people inabsolute poverty has increased.

There has also been progressin education. The proportion ofadults in developing countries whoare literate is estimated to haveincreased over the past threedecades from about 30 percent tomore than 50 percent; the propor-tion of children of primary-schoolage enrolled in school rose from 47percent in 1960 to 64 percent in1977. These advances have beenshared by most countries and re-gions, including those that initiallywere furthest behind, such asSub-Saharan Africa. But the qual-ity of schooling remains low inmany countries; and because ofpopulation growth, there has beenan increase of about 100 millionin the absolute number of illiterateadults since 1950.

The most striking advancesagainst poverty have been inhealth. Average life expectancy inmiddle-income developing coun-tries has risen nine years over thepast three decades. In low-incomecountries, the increase has beeneven greater-15 years. But eventhough infant mortality rates(which are a major determinant oflife expectancy) have fallen sub-stantially in developing countriessince 1950, there now are so manymore children born that the abso-lute number of infant deathsprobably has not declined.

Another way of viewing theprogress of the past three decadesis to compare the developing withthe industrialized countries. Thegap in income per person between

them has widened, even in pro-portional terms (though in the caseof the middle-income countriesonly slightly). But the gaps in edu-cation and health have narrowedby 15 percentage points in adultliteracy and five years in lifeexpectancy.

Poverty and growth

Most poor people live in poorcountries. Whether absolute pov-erty is measured by low income,low life expectancy or illiteracy,there is a strong correlation betweenthe extent of poverty in a countryand its GNP per person (see Fig-ure 4.2 overleaf). This suggeststhat the solution to poverty is eco-nomic growth. There is a great dealof truth in this proposition, butit needs to be carefully qualified.

First, comparing countries, therelation beween the extent of theirabsolute poverty and the level ofGNP per person is (as the disper-sion of points in Figure 4.2 shows)far from perfect. Because ofdifferences in income distribution,the proportion of the populationbelow the poverty line in 1975 wasmore than twice as high in Colom-bia as in South Korea, even thoughthe average incomes of the twocountries were close. Sri Lanka isa low-income country, yet the lifeexpectancy of its people approachesthat of the industrialized countries.Some middle-income countries,such as Morocco and the IvoryCoast, have literacy rates belowthose of the average low-incomecountry.

Second, looking at changes overtime within particular countries,the connection between growthand poverty reduction over periodsof a decade or two appears inexact.There is general agreement thatgrowth, in the very long term,eliminates most absolute poverty;but also that some people may(at least temporarily) be impover-

35

100

50

45

40

0

100

90

so

70

60

50

40

30

20

10

0

36

Figure 4.2 National income andnational poverty

Venezuela

Kenya

\Ie,iicoArgentina

South Korea

Colombia

Senegal

Proportion ofpopulation aboveabsolute incomepoverty line, 1975

higeria

Venezuela /Singapore

Lifeexpectancy, 1978

Percent

0 500 1,000 1,500 2,000 2,500 3,000

GNP per person (dollars)

a Absolute income poverty line is income of 45thpercentile in India,b Refers to year specified in each section of figure,expressed in the prices of that year

ished by developmentas when atenant farmer is displaced by hislandlord's tractor or a shoemakerby mass-produced shoes. Becauserelevant data are sparse andunreliable, however, it remains amatter of dispute how consistentlygrowth over comparatively shortperiods has reduced the propor-tion of the population in absolutepoverty.

What is clear is that differentcountries have had different ex-periences. The proportion below

the absolute poverty line apparentlyhas not fallen in some slow-grow-ing countries (induding rural Indiabetween 1956 and 1974) or insome periods in faster-growingcountries. But it appears to havefallen markedly over the past 25years in several fast-growing coun-tries (including Thailand andYugoslavia) and in some slower-growing ones (including CostaRica and Sri Lanka). The associ-ation between economic growthand improvements in educationand health has also been imperfect.

Third, the connection betweeneconomic growth and poverty re-duction goes both ways. Few woulddispute that the health, educationand well-being of the mass ofpeople in industrialized countriesare a cause, as well as a result, ofnational prosperity. Similarly,people who are unskilled and sickmake little contribution to a coun-try's economic growth. Develop-ment strategies that bypass largenumbers of people may not be themost effective way for developingcountries to raise their long-rungrowth rates.

The rest of this chapter looksmore closely at some of the ele-ments of absolute poverty and atpolicies to deal with it. Sinceeconomic growth (despite thequalifications) is crucial to reducingpoverty, its causes will be con-sidered. The focus then shifts tofactors and policies that particu-larly affect the incomes of thepoor. Under both headings thepotential contribution of humandevelopment is examined.

Economic considerations andpolicies will predominate. But itis importantto stress the contri-bution (over long periods) ofsocial, political and cultural factorsto the poverty of particular coun-tries and particular groups. Norshould this chapter's emphasis onbetter education and health as ameans to raise incomes detract from

their tremendous importance asends in themselves.

Sources of growth

Economic growth comes about intwo ways, both of which can bepowerfully influenced by govern-ment policy. One is building upa larger stock of productive assetsand human skills. The other isincreasing the productivity ofthese assets, skills, and the coun-try's natural resources. This in-volves moving capital and laborbetween sectors, developing newinstitutions, inventing and intro-ducing new techniques of produc-tion and new products, makingbetter choices among existingtechniques, and taking steps tocut costs and eliminate waste.Growth thus involves continuouschangeit has aptly been de-scribed as a process of perpetualdisequilibrium.

NcUural resources

The natural resources of countriesare not consistently correlated witheither income levels or incomegrowth. Some of the richest andmost rapidly growing economiesAustria, Japan and South Korea,for examplehave few natural re-sources; some well-endowed ones7tire, for instancehave remainedpoor.

Nonetheless, no account of thecauses of national prosperity andpoverty should overlook land, water,minerals, energy and climate.Many countriesamong themArgentina, Australia, Saudi Arabiaand the Soviet Unionowe a goodpart of their affluence to naturalresources. Nor is it coincidentalthat most poor countries are inthe tropics and, more particularly,that many of the poorest peoplein the world live in the arid andsemiarid regions of Asia and Africa.

But the link between natural re-sources and income is affected by

75 - China ,_Cuba

7°Sri Lanka

65 - Viet NamBrazil

60

Burma

-Sri LankaThailand

- Chile Trinidad & TobagoUruguay

SingaporeSouth Korea

TanzaniaSomalia

--. Morocco Adult literacy

Ivory Coast rate, 1975

Yemen AR

I II0

Ycor80 -

90

Ito

70

00

50

40

Ivory Coast

Yemen AR

population density (see page 39).It also depends on the availabilityof capital and skills and on thedevelopment strategy adopted.And it is very much a function ofworld demand and the state oftechnology. Malaysia's early prog-ress was founded on tin for plat-ing and rubber for automobiletires. Bangladesh's jute industrysuffered from the invention of syn-thetic fibres (especially because,in contrast to Malaysia, little rele-vant research was undertaken). Atechnical breakthrough in "dry"farming wouldperhaps more thanany other feasible technical ad-vancetransform the prospects ofa large proportion of the world'spoor.

Investment in physiccd capital

The accumulation of physical capitalis a necessary and very importantpart of economic growth. Theproductivity of workers inindustrialized countries is greaterthan in developing countries partlybecause they have more capital toassist them. Similarly, most of theinnovations and structural changesthat generate growth dearly requiresubstantial physical investmentin roads, machines, inventories,irrigation systems and so on.

Developing countries that haveinvested a higher proportion oftheir output have on average grownfaster, but the contribution ofinvestment to growth has variedwidely. Some, including the fast-growing East Asian countries, havemanaged to squeeze as much ashalf an extra unit of annual outputfrom each extra unit of capital.Others, such as Ghana and untilrecently Uruguay, have investedto much less effect.

Part of the discrepancy is attrib-utable to differences in the shareof investment devoted to activities(such as housing) that do notcontribute directly to production,but more to variations in the

efficiency with which productiveinvestment has been allocated andused. This efficiency has in turndepended on the availability ofnatural resources and skified laborand on government policies towardagriculture, industry and foreigntrade (discussed at length in thepast two World Development Reports).

It has sometimes been suggestedthat income inequality is conduciveto higher investment (since therich save a larger proportion oftheir incomes than the poor). Butin practice this relation is muffledby government and corporate savingand by variation across countriesin incentives and attitudes to saving.High investment rates are observedboth in countries with relativelyunequal income distributions, suchas Brazil and Kenya, and in countrieswith relatively equal distributions,such as China and South Korea.Low investment rates also appearcompatible with income distribu-tions that are both more unequal,as in Senegal, and less unequal,as in Burma.

Human resources

It has long been recognized thatthe qualities of a nation's peoplehave an important influence on itsprosperity and growth. This is notsimply because better labor addsto output in the passive way that,say, more fertilizer or bettermachinery does. It is also becausehuman beings are the source ofideas, decisions and actions oninvestment, innovation and otheropportunities.

Technical, scientific and profes-sional skills are clearly essentialto producing many modern goodsand services. Entrepreneurial andadministrative abilities are vitalin both public and private sectors.Less immediately obvious, butequally fundamental, are the skills,knowledge and attitudes of thegreat mass of ordinary workers,including small farmers and traders.

What governs the quality ofhuman resources, and how can itbe improved? There is no simpleanswer, no simple best policy. Oneimportant ingredient is practicalexperience. Another consists of theknowledge and attitudes thatchildren acquire from their parentsand from society at large. Thenthere are the many different kindsof formal education and training:general primary and secondaryschooling, technical and vocationalschooling, general and specializedhigher educationall of whichimpart specific skills, enhance theability to learn further and moldattitudes toward work and change.

Partly because measurement isdifficult, the evidence is not com-pleteeither on the contribution ofhuman resources to production andgrowth, or on what determines theirquality. But a lot of research hasbeen done on the economic contri-bution of formal education. In allcountries more educated peopletend to earn moreto a degreethat makes educational spending(especially for primary educationand especially in developingcountries) often appear an attrac-tive investment (see pages 48-49).

Studies have also shown thatprimary schooling can contributeto the productivity of farmers (seepage 48) and to industrial pro-ductivity. In addition, there is evi-dence that basic education cancontribute to national growth (seebox overleaf). Developing coun-tries with higher literacy rates havetended to grow faster, even afterallowances are made for differ-ences in incomes and physicalinvestment, and they have hadhigher physical investment rates.

The results of this research re-inforce a body of less systematicobservations, and some historicalevidence, that formal educationcan aid economic development.The outstanding growth recordsof Japan and South Korea prob-

37

Human resources and growth: macroeconomic evidenceHow can the effect of human resourceson growth be assessed? The microeco-nomic studies of the effects of education,nutrition and health on the incomes andproductivity of particular people andenterprises provide important evidence.So do the "growth accounting" exercises,which have in effect added up the resultsof microeconomic studies to measurethe contribution of human resources toaggregate growth.

But microeconomic evidence is notenough. For example, it has sometimesbeen suggested that the higher earningsof more educated people are partly offsetby indirect reductions in the earningsof less educated people-and thus thatthe microeconomic evidence overstatesthe effects of education on total (oraverage) income. Conversely, though, ithas been suggested that the earnings ofmore educated people may understatetheir contribution to total production,innovation and growth.

It is thus important to complementthe microeconomic evidence with studiesthat look directly at the relation betweenhuman development and aggregate growth.One way of doing this is through historicalcase studies. Another is by cross-countrycomparisons-looking at a large sampleof countries to see whether those withbetter, or more rapidly improving, humanresources have grown faster. Cross-countrystudies, however, must tackle two basicproblems-in addition to shortages andinaccuracies of data, which are particularlysevere for developing countries.

Disentangling other influences. Acorrelation across countries betweenhuman resource indicators and growthmay be generated-or obscured-by otherfactors (such as income) that influenceone or more of the variables. Many ofthese other factors-such as income levels,investment rates and even some aspectsof natural resources and climate-can bemeasured; their influence can be controlledfor by multivariate statistical methods.Other relevant factors-culture and eco-nomic policies, for instance-cannot beso readily measured, and hence are diffi-cult to control for.

This problem, however, can be sub-stantially overcome by focusing on changesover time within countries, rather thanon levels at a particular time. That elimi-nates the influence of factors (politics andinstitutions, say) that affect both thelevel of income and the level of humandevelopment in particular countries. Eventhen, though, the possibility remains thatsuch unmeasured factors are influencingthe rates of change in all the variablesof interest. To reduce this risk, additionalvariables can be used to allow for, say,regional or cultural differences.

Establishing the direction of causa-

tion. Even if it were possible to controlfor all other influences, the existence of acorrelation between human resources andeconomic performance does not answerthe question of which is causing which-especially pertinent, since there are reasonsfor believing that the causation flows inboth directions.

One way of addressing this questionis to look at the sequence of events. Thetable in this box, for example, comparesliteracy rates and life expectancy in 1960

Literacy, life expectancy and growth

Deviation from expected value derived fromequations relating adult literacy and life expec-tancy to GNP per person for all developingcountries. For example, in the top part of thetable, South Korea's literacy rate in 1960 was43.6 percentage points higher than expected fora country at its income level.

Unweighted mean.

with growth over the period 1960-77.It shows that the 10 fastest-growing devel-oping countries started the period withliteracy rates that were on average, despitesubstantial variation, 16 percentage pointshigher than would have been expectedat their income levels. It also shows thatthe 10 developing countries with thehighest life expectancy in relation totheir income levels in 1960 subsequentlyattained growth rates that on average were1.6 percentage points above those of allthe developing countries for which dataare available.

Another (complementary) approach isto use "simultaneous equations" tech-niques to estimate the relations in bothdirections at once, thus trying to identifythe strength and characteristics of eachwhile allowing for the existence of theother.

As part of the background work forthis Report, the methods outlined abovehave been applied to the recently enlargedand improved data base from which theWorld Development Indicators aredrawn (see the studies by Hicks andWheeler mentioned in the bibliograph-ical note). The purpose of these studiesis primarily to double-check at the macro-economic level the results derived fromthe microeconomic and experimentalwork discussed in Chapter 5. Thus theyattempt to measure not only the effectsof human development on growth, andof growth on human development, butalso the effects of the various humandevelopment indicators-education,health, nutrition and fertility-on eachother.

The results, and especially the estimatedmagnitudes of the effects, are not beyonddispute. But in general they reinforce theother evidence. Among the most clear-cut results are these: (1) increases inliteracy contribute both to increasedinvestment and (given the level of invest-ment) to increases in output per worker;(2) literary, as well as nutrition and income,affects life expectancy; and (3) variationsin life expectancy, literacy, income andthe strength of family planning programsexplain between them most of the varia-tion in fertility rates across countries.

The impact of health (measured bylife expectancy) and nutrition on economicgrowth is less clear-cut. Although lifeexpectancy on its own, controlling forincome, appears to have a positive effecton both investment and output per worker,these effects largely disappear when othervariables that influence life expectancyare introduced. Increases in averagecalorie supply appear to have a clear,positive effect on growth; but the possi-bility cannot yet be ruled out that thismay reflect the effect not of nutrition butof agricultural output.

35

Singapore 7.7South Korea 7.6 43.6Hong Kong 6.3 6.4Greece 6.1 7.5Portugal 5.7 1.7Spain 5.3 1.2Yugoslavia 5.2 16.7Brazil 4.9 8.6Israel 4.6Thailand 4.5 43.5

Average':top 10countries 5.8 16.2

Average':83 developingcountries 2.4 0.0

Top 10 Life Growthcountries expectancy: rate ofranked by life deviation GNPexpectancy from norm, per person,in relation 1960' 1960-7 7to income (years) (percent)

Sri Lanka 22.5South Korea 11.1Thailand 9.5Malaysia 7.3Paraguay 6.9Philippines 6.8Hong Kong 6.5Panama 6.1Burma 6.0Greece 5.7

Averageb:top 10countries 8.8

Average':83 developingcountries 0.0

Top 10countries Growth rate Literacy:ranked by of GNP deviationgrowth per person, from norm,of GNP 1960-77 1960'per person (percent) (percent)

1.97.64.54.02.42.16.33.70.96.1

4.0

2.4

ably could not have been achievedwithout their distinctively earlymass literacy and numeracy, which(together with land reform, moreadvanced education and good eco-nomic management) contributedto increased agricultural produc-tivity, to the expansion of labor-intensive manufacturing andexports, and to their remarkableability to adapt to changes in tech-nology and world demand. At theother end of the spectrum, thepoor economic performance of thecountries of Sub-Saharan Africais at least partly attributable toextremely low literacy and thescarcity of highly educated andexperienced people.

Knowledge, skills and attitudesare not the only aspects of humanresources that affect economicperformance. A healthy and well-fed labor force is more physi-cally and mentally energetic thanone that is sick and hungry, andtherefore gets more work doneand is more innovative. This isconfirmed by a number of experi-ments and project-level studiessee pages 55 and 60. The aggre-gate evidence is less clear-cut.

At the same time, however, thereare examples that refute anysuggestion that education, healthand nutrition are in themselvessufficient to induce rapid growth.Burma and Jamaica, for example,with high levels of literacy and lifeexpectancy for their income levels,achieved annual growth rates ofon'y 1.0 and 2.0 percent per personover the period 1960-78. It is alsopossible (though difficult ifeconomies heavily dependent onpetroleum, other minerals or ex-patriate skilled labor are exduded)to find cases of fairly rapid growtheven with low levels of literacyand life expectancyPakistan inthe 1960s is an example.

The linkage is imperfect partlybecause literacy and life expec-tancy are crude indicators of edu-

cation and healthand are oftenmeasured inaccurately as well.But the main reason is that growthalso depends on other factorsthe availability of natural resourcesand physical capital and the effi-ciency with which all resourcesare used.

Without modern inputs, theright technology and ready accessto markets, even educated farmersfind it hard to innovate (see page48); and they can be discouragedfrom increasing production by lowprices. Without rapid accumulationof physical capital, and policiesto ensure that this is associatedwith rapid growth of productiveemployment opportunities, theearnings of even a healthy andeducated labor force will stagnate.Without the right mixture ofeducation and training, shortagesof specific skills will hold backgrowth, while chronic surplusesof other sorts of manpower mayemerge.

Popu1ction

Another important influence onthe growth of income per personis population growth. One wayit has an effect is by increasingpopulation density. In some sparselypopulated countries, this in itselfmight (within limits) have a bene-ficial effect on average incomesas it has done in Argentinabypermitting and stimulating more

efficient exploitation of naturalresources. But in many countrieshigh and growing densities arelikely to be a continuing sourceof poverty. In 1975 the agriculturalpopulation per hectare of croplandin Egypt, Bangladesh and prob-ably China was already more thanfive times that in the Netherlands(see Table 4.1). The scope forcompensating by higher yieldsper hectare is limitedin Egyptbecause yields are already closeto those in developed countries,and in Bangladesh (where yieldsare much lower) by the high costof improving water management.

Population growth can affecteconomic growth in other ways,too. In some circumstances, fasterlabor force growth can permitfaster growth of income perperson. That may have happenedwith the flow of foreign workersinto Switzerland and the FederalRepublic of Germany in the 1960sand early 1970s. But in the greatmajority of developing countries,including most of those whose cur-rent population density is low, thegrowth of income per person couldbe accelerated by slower popula-tion growthfor three reasons.

Lower fertility would reducethe proportion of people who areyoung and not productive. Atpresent, two-fifths of the peoplein developing countries are underthe age of 15; in developed

39

Table 4.1 Agricultural population in relation to crop area

Country

Crop area,1975

(100,000 hectares)

Agriculturalpopulation

per 100 hectaresof crop area, 1975

Projected agriculturalpopulation in 1990per 100 hectares ofcrop area in 1975

Bangladesh 951 660 980Burundi 126 256 380Dominican Republic 100 302 430Egypt 286 687 890India 16,720 244 310Indonesia 1,860 458 540Pakistan 1,945 204 280South Korea 242 641 520

Japan 557 289 130Netherlands 84 107 60

Figure 4.3 Population distributionby age, 1980

40

Developingcountries

countries the ratio is about aquarter (see Figure 4.3). In theFederal Republic of Germany andthe Soviet Union, for example,there are two people of workingage for every one who is too youngor old to work; in Mexico andNigeria, there is only one.

Slower growth of the laborforce would mean that less invest-ment, hence a smaller sacrifice ofconsumption, would be needed tomaintain or increase the amountof capital per worker. In most de-veloping countries the working-age population has roughly doubledin the past 25 years. At its currentgrowth rate it will double again inthe iext 25 years. In Japan andFrance, by contrast, the working-age population would at its presentgrowth rate take about 90 years todouble.

Human resources could bedeveloped more effectively. About25 percent of the population of atypical developing country is ofprimary-school age, compared with15 percent in developed countries.As a result, for any given amountof spending on education, a devel-oping country has to have eithera lower enrollment rate or lowerspending per child enrolled. Oneof the earliest economic effects ofdeclining fertility is a (relatively)smaller school-age group. The

number in this group in Colombia,for example, doubled between1950 and 1970; but because of afertility decline that began inthe mid-1960s, it then increasedonly slightly in the 1970sandfell as a proportion of the totalpopulation. In South Korea, wherefertility has fallen steadily, thenumber of school-age children hasstopped growing.

There are other effects apart fromreducing pressure on the formaleducation system. Studies indeveloped countries (even thosecontrolling for socioeconomicclass) have shown that childrenin smaller families tend to belarger, more intelligent, and tohave a longer life expectancy.When high fertility is associatedwith repeated and closely spacedpregnancies, the mother's healthcan suffer; the resultslow birthweight and early weaningthendamage the child's health. In theColombian town of Candelaria,for example, the likelihood ofmalnutrition among preschoolchildren in low-income familieswas directly related to how manybrothers and sisters they had.Furthermore, a child's capacity tolearn is affected by the amount

24

22

20Sri Lanka Yugoslavia

18India South Korea

16

ArgentinaPhilippines

Costa RicaTurkey

Malaysia sMexico

Honduras Perut/ Brazil

I I I

0

o Venezuela

Spain

a. Dates as in Table 24, World Development Indicators.

and quality of attention receivedfrom parents and other adults inthe first few yearsand that isgenerally less in large families.

Raising the incomes of the poor

Faster growth of average incomesis essential to reducing absolutepoverty, especially in low-incomecountries, where half or more ofthe people may be poor. But growthalone is not enough. This is partlybecause rising population istending to swell the numbers inabsolute poverty even where theyare a diminishing share of thepopulation, and partly because inmany developing countries thereis a large gap between averageincomes and the incomes of poorergroups. It is also because (exceptat fairly high average incomes)growth tends to widen this gap.

This pattern is described by theKuznets curve, which shows thatthe incomes of the poorest 40percent of the population normallygrow more slowly than the averageuntil income per person reachesa range of $700 to $900 (see Figure4.4). Beyond this range, the incomesof poorer groups tend to grow fasterthan the average. Thus the distri-

2

Rise inaverage incomes

of bottom 40 percentfor each 1 percent rise in

GNP per person

Age

f 80+riT 70-74III 65-69

I 60-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-14

5-90-4

I I III II I II14121086 420 02 6 8101214Percent

a. Include ndustnalized countries, the USSRand Eastern Europe.

Figure 4.4 Income of poorest groupsShore of buttons 40 procesS so GNP Percent

500 1000 1500 2000 2500

GNP per person (1978 dollars)

14

12

10

1000 2000 3000 100

GNP per parson (1978 dollars)

bution of income typically is lessunequal in developed countriesthan in developing countries.

The initial rise in inequalityoccurs chiefly because the impulsesand opportunities for harnessingmodern technology in a backwardeconomy are unevenly spread.Those who perceive (and can takeadvantage of) these opportunitiesforge ahead of those who stay intraditional lines of activitywhoin some cases may be undercutand impoverished. As develop-ment proceeds, though, the modemsectors in industry, commerce andagriculture become increasinglydominant, drawing most of thelabor out of the traditional sectorsand pulling up the earnings of thosewho remain in them.

The Kuznets curve is not an ironlaw. As Figure 4.4 shows, somecountries lie well above it, othersbelow. (Information on changesin income inequality in particulardeveloping countries confirms thatthey do not all follow a path of thesame shape.) Much depends ongovernment policy, which can re-duce the unevenness of the mod-ernization processand accelerategrowthby promoting productiv-ity gains in traditional small-scaleagriculture, increasing the rate atwhich labor is absorbed into themodern industrial sector, and notconcentrating public investmentand services on a few places andsocial groups.

In addition, governments cantake measures to reduce the in-equality of incomes by improvingthe distribution of productive assets(land, capital, labor skills); avoidingprice and wage policies that bene-fit the urban middle classes at theexpense of small farmers; discour-aging the exploitation of publicposition for private gain; and mak-ing taxes more progressive. Theycan also take measures to improvethe lot of the dependent poorchildren, the aged and many women.

The rest of this section looksmore closely at the range of thingsthat can be donein the contextof strategies aimed at increasingaverage incomesto raise theincomes of those in absolute poverty.

Land and land tenure

Land reform - the redistributionof land ownership in favor of thepoorhas been tried in manycountries, with mixed results. Insome (South Korea, for example) ithas raised the incomes of the ruralpoor considerablythough betteraccess to credit and extensionservices for small farmers hasproved an essential adjunct. Inmost developing countries thereis scope for further land reform.

Because small farms tend toapply more labor per hectare andto use land and capital at least asproductively as large farms, landreform will usually increaseagricultural output after a periodof adjustment (see box overleaf).But it faces social and politicaloppositionfrom landlords andfrom urban groups that benefitfrom the bigger marketed sur-pluses of large farms.

As an alternative to distributingindividual parcels of landwhichis easier where resettlement onuncultivated land is possible, as inBrazil, Indonesia and Upper Voltasome countries (Algeria, Chinaand Peru, for example) have estab-lished cooperatives and communes.But these have tended to encounter,in varying degree, serious prob-lems of incentives and management.Other countries have revised landtenure rules: greater security oftenure gives tenant farmers moreincentive to invest. Schemes thatencourage landlords of share-croppers to share the cost of seedsand fertilizers have also tendedto increase efficiency. But rent con-trol has proved hard to enforceespecially if there have been plentyof landless laborers willing to

replace existing tenants, or iflandlords (in their alternate rolesas moneylenders and employers)have been able to compensate forloss of rent by extracting morefavorable terms from their tenantsin other transactions.

Despite the difficulties, land andtenure reform (in urban as well asrural areas) remains a vital ele-ment of poverty reduction inmany countries, and it meritsstrong support.

Capital and credit

The poor conspicuously lackevery kind of physical capital, buttheir poverty limits their demon-strated ability to respond to goodinvestment opportunities (suchas new seed varieties) by savingmore. The alternative is to borrow,which can enable the poor not onlyto buy pumps and fertilizers fortheir farms, and tools and materialsfor their workshops, but also toget their children educated, to payfor transport to better jobs in urbanareas, and to tide themselves over pe-riods of illness and unemployment.

But government efforts to helpthe poor by supplementing tradi-tional informal sources of credithave had only limited success. Forlong-term credit especially, lenderswant collateralso those with fewassets, or who want to acquire in-tangible assets (such as education)are at a substantial disadvantage.In addition, governments andpublic agencies usually have notcharged an interest rate high enoughto make credit programs self-sup-porting. And the limited amountsof subsidized credit available haveoften been channeled away fromthe poor toward more influentialgroups.

For the poor to benefit fromphysical investment, however,they do not necessarily have toown or control the assets them-selves. Public investment (andprivate investment by people who

41

Small is productiveAlthough most farms in developingcountries are small, the small minorityof large farms account for most of thearea. Yet there is wide-ranging evidencethat (comparing similar types of agricul-ture) smaller farms outperform largerfarms in value added per acre. Forexample:

India. The Farm Management Studiesof the 1950s, covering about 3,000 farmsin six states, found that the larger thefarm, the smaller its output per acre. Norhas the green revolutionhigh-yieldingvarieties of seedchanged this conclusion.The National Council of Applied EconomicResearch surveyed 4,000 householdsthroughout the country in 1965-69, 1969-70 and 1970-71; more than 2,500 of themwere farming throughout the period.Although the productivity gap betweenlarge and small farms tended to narrowas the green revolution spread, it remainedsignificanteven after controlling fordifferences in land quality and irrigation.The proportion of land under high-yielding varieties did not vary by farmsize. Tests relating capital and labor useto farm size showed that as farms becamelarger, they used proportionately lesscapital and laborand particularly thelatter, which costs less on small farmsmaking use of family labor than on largefarms relying mainly on hired labor.

Brazil. The World Bank and SIJDENE,the official regional development authority,carried out a detailed study of 8,000 farmsin the poor northeastern region in late1973 and early 1974. It revealed that theintensity with which land and labor were

used declined sharply and consistentlyas farm size increased. Depending on thesubregion, small farms applied 5 to 22times as much labor per hectare as largefarms, although the proportion of high-or medium-yielding soils did not varysignificantly with the size of the farm.Small farms tended to employ morelabor than profit maximization wouldwarrant, probably in part because familymembers have difficulty in obtainingemployment elsewhere, while large farmsemployed less.

Such studies suggest that redistributionof land in larger farms into smaller onesin many cases would increase output andemployment (and of course equity)significantly. But there are importantqualifications. Forexample,whereliteracyrates are low among small farmers,middle-size farms tend to be quicker toadopt innovations. After a certain pointfragmentation inhibits productivitygrowth, and significant land is lostthrough field boundaries (for example,in parts of Asia a holding of one hectaremay comprise 15 or 20 tiny parcels). Forsome combinations of crops and soils,mechanizationand thus large fieldsmay increase output: research in SouthAsia provides little support for the yield-increasing effect of tractor cultivation,which may simply cause agriculturallaborers, to get fewer days of work. Butwhere labor is in relatively short supply,and timely cultivation and harvestingare critical to increasing yields, largemechanized farms may be economi-cally rational.

are not poor) can have a powerfuleffect on their earnings. Irrigationschemes, which can double theamount of labor required perhectare of land, raise the incomesof landless laborers, even thoughfarmers (especially those who owntheir land) derive even greaterbenefitssee Table 4.2. Similarly,roads that reach remote villagesand provinces where some of thepoorest people live have (in Liberiaand Thailand, for example) increasedtheir incomes by giving them accessto new seeds, insecticides andmarkets, as well as by enablingthem to move more readily to

42

places where they can earn more.The construction phase of infra-

structural investments can alsoprovide employment and higherwages for the poor. The record ofemployment through public worksis a checkered onethere have beentoo many cases where for one reasonor another local labor has notreceived much benefit or wherethe road or dam concerned hasbeen of little economic value.

But there are enough examples ofsuccessful schemes (as in Moroccoand the Indian state of Maharashtra)to suggest that the approach isworth pursuing, albeit with care.

Nor, as Chinese experience shows,need schemes of this kind be onlytemporary. With good organization,investment in rural infrastructurecan continue indefinitely. In thisas in all areas, governments shouldnot encourage excessive capitalintensity and thus discourageemployment creation. The policiesrequired, which were discussed atlength in Chapter 4 of last year'sReport, are partly a matter ofavoiding subsidies for capital andtaxes on labor, but also involvegeneral development strategy(including that for foreign trade).

Education, health, nutrition and fertility

The employment opportunitiesand earning power of many of thepoor are also limited (in ways tobe discussed further in Chapter 5)by sickness, insufficient food andlack of education. Their standardof living is also depressed by theirhigh fertility and large family sizeeach adult's earnings have tosupport more dependents than inricher families (see Table 4.3).

Better health and nutrition canpermit poor people to work moredays in each year (which amongother things increases their eligibilityfor employment in modem industry)and can increase their effectivenessat work. Studies of constructionprojects in India and Indonesiashowed that poor health andnutrition were among the factorswhich tended to make the use ofcapital-intensive techniques moreeconomical, even where labor wascheap and abundant.

Even a primary education canraise the productivity of smallfarmers (see page 48) and, thoughthis has been studied much less,make the poor better entrepreneursin other lines of business. More-over, basic education is usuallya precondition of employmentin modern manufacturing andservices. In Brazil, for example,the growth of modern industrial

employment is slowest amonguneducated people. Literacy andnumeracy are necessary not justin clerical work, but also in themany manual jobs that involvefollowing written instructions orkeeping simple records. Schoolinghas also been shown to increasethe capacity to learn from subse-quent formal training and practicalexperience.

It should be emphasized thatbetter education, health and nutri-tionwhile they may be necessaryto increase the earning power ofthe poorare not sufficient. Com-plementary measures are alsoneeded to expand the demand forlabor and to furnish the incentivesand material resources requiredfor innovation.

Nor will all the gains in incomethat can result from better educa-tion, health and nutrition amongthe poor necessarily accrue to thepoor. In some circumstances, theincreased productivity of a farmerwill partly benefit his landlordor consumers, for that matter, whomay be able to buy food morecheaply. These distributive issuesare difficult and poorly understood,

All studies control for changes in other influences on incomes.Household income per person.

but they do not detract from thefundamental point that poor healthand lack of education are likelyto aggravate the exclusion of thepoor from modern development.If the innovations of richer andbetter educated farmers increaseagricultural output and reduceits price, the .incomes of the poorfarmers who do not innovate willfall.

Table 4.3 Dependency ratios,by income group

Households ranked by income or expen-diture per person.

Children (0-14) and the aged (over 65for Peninsular Malaysia; over 60 for theothers) as percentage of the rest.

While others may benefit fromthe poor being educated, theconverse is also true. More andbetter extension workers areneeded to reach poor farmers.Technicians and accountants areneeded to run factories. Moremanagerial and administrativetraining and experience couldincrease the rate of industrial andagricultural expansion, createmore jobs and raise the incomesof everyone.

Resecirch nd technology

Nor should specialized scientificand technological education beoverlooked. Their role in reducingpoverty is particularly apparent inagriculture. The introduction ofhigh-yielding rice and wheatvarietiesthe green revolutionhas substantially improved the livesof poor consumers and (on bal-ance, with many exceptions) smallfarmers in the wetter parts of Asia.But more research is urgently neededon dry farming (the economic rateof return to this sort of researchhas typicJly been as high as 20-30percent) and on the cultivation ofpoor soils and subsistence cropson which many low-income farmersdepend. And in countries whereclimate and soil conditions varywidely from place to place, muchmore research is needed to deter-mine the best farming methodsfor each placein Tanzania thisis being held back by a shortageof scientists at local researchstations.

Industrial research also has apart to play in reducing poverty(as does research in such fields aseducation and health). Many tech-nical advances stem from workdone by large firms in industrializedcountries. The resulting innova-lions, which tend to be concentratedon capital-intensive methods oflarge-scale production, often bene-fit the pooras in the case of fertil-izer. But small enterprises are

43

Table 4.2 Irrigation and income, selected projectsHousehold income (current dollars)

Country Without With Absolute Percentageand beneficiary irrigation irrigation' increase increase

Cameroon (northern: rice)1978

Farmers 178 1,013 835 469

South Korea (Pyongtaek-kumgang: rice) 1976k

Farmers 286 500 214 75

Malaysia (Muda: rice)1974 190 361 171 90

Large-scale farmers 237 448 211 89Small-scale farmers 131 247 116 89Landless laborers 73 166 93 127

India (Uttar Pradesh: rice,wheat, sugarcane) 1978 181 359 178 98

Large-scale farmers 384 738 354 92Medium-scale farmers 218 464 246 113Small-scale farmers 148 264 116 78

Income group'

Averagehousehold

income(percentageof national

average)Dependency

ratio"

Peninsular Malaysia,:1973

Richest 10 percent 332 0.4Poorest 10 percent 18 1.2

Sri Lanka, 1969-70Richest 10 percent 240 0.5Poorest 10 percent 46 1.3

Nepal (seventowns), 1974-75Richest 10 percent 167 0.4Poorest 10 percent 51 1.2

disadvantaged, job creation islimited, and some of the goodsbought by the poor are not im-proved or made cheaper as rapidlyas those bought by the rich. Moreresearch, especially if undertakenin developing countries, couldreduce these biases. Progress hasalready been made, for example,in small-scale food processing andlabor-intensive construction.

Migrcition

Technology is one way of makingprogress in places where povertystems from poor land or poorclimate. Another is for people tomove to places where opportuni-ties are better. Expansion of ruralemployment, both on and off farms,will reduce the need for migration;but it is clear that the industrial-ization of poor countries (like thatof the now-developed countries)will in the long term require large-scale migration from rural to urbanareas. International migration has

A strategy that backfiredThe experience of two subclans in west-ern Kenya illustrates some of the inter-actions between education, migrationand agricultural development.

In the 1930s the head of the morepowerful subclan, anxious to conservehis people's land, caused the colonialadministration's schools to be built onthe land of the other subclan. This hadunexpected consequences.

The education received by membersof the less powerful subclan enabledsome of them to get jobs in the localtown. The money they remitted wasused to purchase improved livestock,to switch into cash crops (especiallycoffee) and to establish more schools.In addition, the movement of peopleto the town slowed the rate at whichland was subdivided, making the intro-duction of improved livestock (whichrequired a minimum grazing area) moreprofitable.

By 1974, although the division ofpolitical power was still the same, theless powerful subclan had become thericher of the two.

44

also been important in reducingpovertyparticularly in NorthernEurope in the 19th century, butalso more recently in Mediterraneanand other developing countrieswhere a significant proportion ofthe relatively unskilled labor forcehas migrated to the Middle Eastor elsewhere (see box on page 22).

The relation between rural-urbanmigration and poverty remainssomewhat controversial; but viewson this subject have evolved overthe past decade (see Chapter 6 ofthe World Development Report, 1979).It now is increasingly recognizedthat those who move generallymake themselves better off. Theirincomes go up, and they and theirdependents have better access tohealth and education services.Studies in India show that thechances of girls from poor fam-ilies going to school are more thantwice as high in large cities as inrural areas.

On the other hand, there is stillwidespread concern about thefiscal, social and political costs ofrapid rural-urban migration, which,by holding down urban wages andadding to pressure on governmentservices, retards the rate of im-provement in the living standardsof the urban poor. But these livingstandards, low as they often are,tend to be above those of the ruralpoor. Where they are not, as inCalcutta, migration usually ceasesor goes into reverse. Indeed, re-verse and repeated migration inresponse to changing job opportuni-ties has been found to be common.

The effects on those who remainin the countrysideother than thefamilies of migrants that benefitfrom remittancesappear to varyfrom case to case. In some, non-migrants gain because the labormarket tightens when people leave,and because there is less pressureon agricultural land. In others,remittances have been spent onconcentrating land ownershipto

the detriment of the poor. And ina few cases the exodus of brightyoung people may have held backagricultural progress. The impactof rural development programs onmigration is not clear-cut, either;land redistribution, expansion ofthe cultivated area, and lowerfertility reduce emigration; butimproved communications and thecommercialization of agricultureappear to increase it.

The extent to which the poorbenefit from migration dependspartly on the extent to which theyhave had access to at least a pri-mary education (see box). Illiteratepeople do migrate, and often gainsubstantially by it (though some-times they become destitutewanderers). But Indian evidencesuggests that they move mainlyto other rural areas. If they try tomove to urban areas, where earn-ings prospects are generally better,the uneducated are much morelikely (as a study of Bombay showed)to fail to get jobs and to be forcedto leave.

The same is true of internationalmigration. The poor and unedu-cated are less likely to find outabout opportunities for workingabroad. More important, theyhave less chance of being acceptedby prospective employers. It hasbeen estimated that more thanthree-quarters of the foreignersnow working in the Middle Eastare literate, and almost all of themhave some skills. Even if no formaltraining is needed, good healthis invariably a prerequisite of foreignemployment, and one which manypoor people are unable to fulfill.

Migration of all kinds can haveharmful social and economic effeds.But on balance the evidence suggeststhat, by enabling labor to be usedwhere it is most productive, migra-tion aids both growth and povertyreductionand would do so evenmore if the poor were betterequipped to migrate. Develop-

ment strategies that assume thatthe productivity of the poor mustnecessarily be raised in the placeswhere they now live may be bothinefficient and inequitable. Notleast, the children of the landlessin stagnant rural areas may be bestserved by a primary education thatwill increase their geographic, aswell as economic, mobility.

Transfers and subsidies

In industrialized countries themainstay of antipoverty policy isincome transfers aimed at offset-ting life-cycle poverty among theold and the very young, and atcompensating for loss of earningsthrough sickness, unemploymentand so on. In developing countries,too, these are important causes ofextreme poverty (though they tendto be mitigated more through theextended family); and they are nottouched directly by measures toraise earning power. Brazil, Turkeyand a number of other middle-

income countries have fairlyextensive social security programs.But the scope for such programsin low-income countries is neces-sarily limited.

An alternative approach, usedin both industrialized and devel-oping countries, is to subsidize(and sometimes also ration) itemsthat are particularly important forpoor people. Such subsidies canraise the real incomes of the poorconsiderablywitness the increasein Peru's infant mortality whensubsidies were reduced and unem-ployment rose in 1976. Indeed,the three low-income countrieswith life expectancy above 60 yearsall provide guaranteed or subsidizedfood. But programs of this sort(discussed further on page 62)have to steer a tricky course be-tween the financial rocks of generalsubsidization and the administra-tive and political rocks of effectivelyreaching the poor.

0 0 0

The next three chapters examinein more detail one aspect of antipov-erty policyhuman development.Chapter 5 looks at the consequencesand determinants of education,health, nutrition and fertility; atpolicies that affect them; and atthe way in which they (and incomes)interact. Chapter 6 considers someof the common practical problemspolitical, financial, administrativeof human development programs.Chapter 7, in the context of adiscussion of the several regionsof the developing world, addressessome practical questions of prioritiesand tradeoffs: How do the benefitsand costs of human developmentprograms compare with those ofthe other approaches to povertyreduction discussed in the presentchapter? How does the best alloca-tion of resources vary accordingto the circumstances of particularcountries and the specific objectivesbeing pursued?

45

5 Human development issues and policies

This chapter looks at the four mainareas of human developmenteducation, health, nutrition andfertilityand at the links betweenthem. In each, it considers thecauses and effects of poverty andvarious ways of breaking its gripon the poor and their children.

Ten years ago this chapter wouldhave been written very different-ly. In certain areas thinking haschanged substantiallyfor instance,about the nature of malnutritionand its causes. Good progress hasbeen made in unraveling somecomplex and highly controversialissuesfor example, the respec-tive roles of family planning andsocial development in reducingfertility. And in all areas, researchand practical experience have im-proved understanding of the na-ture of poverty and what can bedone about it.

Education

Every individual is born with acollection of abilities and talents.Education, in its many forms, hasthe potential to help fulfill andapply them.

In some societies the economicfunction of schooling is regardedas minorsince the cultivation ofthe mind and the spirit, curiosity,contemplation and reasoning havemore than economic purposes andjustifications. But in the contextof this Report, it is the role of edu-cation in overcoming povertyincreasing incomes, improvinghealth and nutrition, reducing

46

family sizethat receives mostattention.

A decade or two ago, there wasa widespread view that trainedpeople were the key to develop-ment. Universal literacy was apolitical objective in many coun-tries, but money spent on primaryschooling was often regarded asdiverted from activities that wouldhave contributed more to economicgrowth. Planners favored the kindsof secondary and higher educationthat directly met the "manpowerrequirements" of the modernsector. People who worked withtheir hands were thought notto have much need of formaleducation.

Over the past decade, viewshave changed substantially. Ade-quate provision of secondary andhigher education and trainingremains an important priority. Butthe value of general education atthe primary level is now morewidely recognized. This sectiondiscusses more of the evidencethat lies behind this change in

Table 5.1 Public expenditures on elementary and higher educationper student, 1976

views, and its implications fordevelopment strategy.

Recent progress

The major educational progressof the past two decades reflectsheavy investment by developingcountries. Their total publicexpenditure on education rose inreal terms (in 1976 dollars) fromabout $9 billion in 1960 (2.4 per-cent of their collective GNP) to$38 billion in 1976 (4.0 percent ofGNP). Costs vary widely byregionand by type of education(see Table 5.1). The potential forcontinued enrollment growth atdifferent levels will, of course, bestrongly affected by these costs.

But school attendance in someparts of the world remains low,especially among the poor, in ruralareas and by girls (see Figure 5.1and Table 5.2). This is not simplybecause schools are unavailablenot everyone who has an oppor-tunity for education accepts it.Among those who do enroll, more-over, in developing countries on

Note: Figures shown are averages (weighted by enrollment) of costs (in 1976 dollars) in thecountries in each region for which data were available.

Region

Higher (post-secondary)education

Elementaryeducation

Ratio of higher toelementary education

Sub-Saharan Africa 3,819 38 100.5South Asia 117 13 9.0East Asia 471 54 8.7Middle East and North Africa 3,106 181 17.2Latin America and Caribbean 733 91 8.1Industrialized 2,278 1,157 2.0USSR and Eastern Europe 957 539 1.8

average 40 percent drop out beforethe fourth year. In Brazil's poorrural Northeast region in 1974,despite an enrollment rate of 46

Figure 5.1 Enrollment ratios, by region, 1960-75(percent)

Middle East Latin Sub-Saharanand North Africa South Asia East Asia America Africa

UNESCO.

Table 5.2 Primary school enrollment, by income group(percent)

Poorest RichestCountry households households

Sri Lanka, 1969-70

Nepal, 1973-7411 towns

India: Gujaratstate, 1972-73

RuralUrban

India: Maharashtrastate, 1972-73

RuralUrban

Colombia, 1974

Large citiesAll urbanRural

Boys (aged 5-9)

percent (less than half the nationalurban average), nearly two-thirdsof the students dropped out beforethe second year-and it is estimated

Both sexes (aged 6-71)

Poorest Richesthouseholds households

Girls (aged 5-9)

Poorest Richesthouseholds households

Note: Enrollments are expressed as a percentage of the number in the age group. Poorestand richest refer (in the case of India, Nepal and Sri Lanka) to the bottom and top 10 percentof households ranked by expenditure per person, and (in the case of Colombia) to the topand bottom 20 percent of households ranked by income per person.

that at most 4 percent completedfour years. Even the completionstatistics conceal the very lowquality of some of the schoolingprovided (see pages 52-53).

Nonetheless, the very substantialgrowth in enrollment (Figure 5.1)is a sign of great educational advance.There are several mechanismsthrough which this has contributedto growth in incomes.

Effects of education on earning power

Schooling imparts specific knowl-edge and develops general reasoningskills (its "cognitive" effects); italso induces changes in beliefs andvalues, and in attitudes towardwork and society ("noncognitive"effects). The relative importanceof these effects is much debated,but poorly understood; both areextremely important.

In the cognitive area, developinga generalized capacity for thinkingand learning has to be found to bemore important than the specificsubjects learned. On-the-jobtraining, informal education andvocational training all build onlearning abilities acquired earlier.And although literacy and num-eracy deteriorate if left unused, theeducational experience still gen-erally provides an improved foun-dation for subsequent learning.

Many of the noncognitive effectsof schooling-receptivity to newideas, competitiveness, and will-ingness to accept discipline-aredirectly relevant to productiveeconomic activity. Others-toler-ance, self-confidence, social andcivic responsibility - are morepersonal or political in nature,but may also affect economicperformance.

Some of the evidence on theeffects of education rests on at-tempts to measure attitudes directly.Studies in several countries haveshown that "modernity" of outlooktoward activities ranging from vot-ing to family planning, saving and

47

Female (6-11)

Male (6-11)Male (6-11)

Male (6-11)

Male (6_Il)Female (6-11)

Male (12-17)

Female (6-11)Male (6-11)

- Male (12-17)Female (6-11)

/ZMale (12-17) Male (12-17)Female (12-17)

Female (12-17) Female (6-11)Female (12-17)

Ml (1823) Ml (1217)

M 1 (18 23)Female (12-17)

M Ic (28 23)Female (12-17)

Male (18-23) Female (18-23)

F m I (18 23) 823)

'60 65 70 75 60 65 70 75 60 65 70 75 60 65 70 75 60 65 70 75

69.6 94.662.0 89.551.2 60.0

70.3 89.8 65.8 81.9

29.5 77.8 15.3 71.2

22.7 53.9 8.6 50.942.1 77.7 30.8 69.5

24.6 54.6 16.6 52.940.4 86.3 42.1 87.0

80

70

60

50

40

30

20

10

0

I

working, is more influenced by thelevel of the individual's schoolingthan by any other factor. But thereare also many studies of the directeffect of schooling on individualproductivity and earnings, whichare examined here under two headsthose relating to the self-employedand those relating to employees.

THE SELF-EMPLOYED. The hy-potheses are straightforward: thatprimary education helps people toobtain and evaluate informationabout improved techniques andnew opportunities, to keep recordsand estimate the returns of pastactivities and the risks of futureones. More generally, primaryschooling is a training in how tolearn, an experience in self-discipline and in working forlonger-term goals.

Most of the empirical evidencecomes from agriculture - studiescomparing the productivity, yieldsand innovative activity of schooledand unschooled farmers. Not allthese studies controlled adequatelyfor other influences, particularlywealth; but many did (for example,by including farm size as a proxyfor wealth).

The general weight of the evi-dence (see Table 5.3) lends strongand consistent support to thehypothesesand is particularlycompelling because the studiesmeasure productivity directly, notthrough wages. Where the com-plementary inputs required forimproved farming techniques wereavailable, the annual output of afarmer who had completed fouryears of primary schooling wason average 13.2 percent more thanone who had not been to school.As expected, where complementaryinputs were not available, the in-crease in output resulting fromadditional schooling was on aver-age smallerbut still substantial.

Whether these increases shouldbe regarded as large or small de-

48

Table 5.3 Farmer educationand farmer productivity

With complementary inputs'Brazil (Garibaldi), 1970 18.4Brazil (Resende), 1969 4.0Brazil (Taquari), 1970 22.1Brazil (Vicosa), 1969 9.3Colombia (Chinchina),

1969 0.8Colombia (Espinal), 1969 24.4Kenya, 1971-72 6.9Malaysia, 1973 20.4Nepal (wheat), 1968-69 20.4South Korea, 1973 9.1

Average (unweighted) 13.2

Without complementary inputsBrazil (Candelaria), 1970 10.8Brazil (Conceicao de

Castelo), 1969 3.6Brazil (Guarani), 1970 6.0Brazil (Paracatu), 1969 7.2Colombia (Malaga), 1969 12.4Colombia (Moniquira),

1969 12.5Greece, 1963 25.9

Average (unweighted) 8.1

No information on availabilityof complementary inputs

Average of eightstudies (unweighted) 6.3

a. Improved seeds, irrigation, transportto markets and so on.

pends on the cost of achievingthem. It is thus significant thatstudies that went on to comparethe increase in production result-ing from education with the costsof that education (for example, inKorea, Malaysia and Thailand)found rates of return comparingvery favorably with investment inother sectors. It is, of course, im-possible to predict which placeswill offer scope for improved farm-ing techniques in 10 years' time,when children leave school. Insome, effects on farm productivitymay be low. But given past progressin agricultural research, it is prob-able that some places with stagnanttechnology now will offer greatlyimproved possibilities. Thus, ongrowth as well as equity grounds,

it would be short-sighted to leavea large part of the next generationof farmers illiterate.

EMPLOYEES. The second type ofstudy relates the educational levelsof individuals to their wages andsalaries. If education affects thecapacity to learn, innovate andadapt, its effects should be par-ticularly important for employeesdoing nonroutine or changingtasks. For employees in modernenterprises, primary education alsopromotes disciplined work habitsand responsiveness to furthertraining, as well as offering the ad-vantages of literacy and numeracy.

Studies of the rate of return toeducation for wage earners dealmainly with relatively large urbanenterprises; but a few have in-cluded small businesses and agri-cultural workers. All find thatmore schooling leads to higherearnings. And when the extra earn-ings resulting from primary educa-tion are weighed against its costs,high rates of return are consistentlyfound. Similar studies for secondaryand higher education find lower,though nonetheless substantial,returns (see Table 5.4 and box).

Investment priorities in education

Primary education is of particularimportance in overcoming absolutepoverty. But secondary, higher,vocational and adult educationand training also have major rolesto play.

PRIMARY EDUCATION. In coun-tries where it is far from universal,the case for increasing the propor-tion of children who complete pri-mary education is strong. Whilethere have been high economicreturns in the past, it has beensuggested that the rate of return toprimary schooling (especially incertain jobs) may decline as theproportion of the labor force withprimary education increases. But

Estimated percentageincrease in

annual farm outputdue to four years

of primary educationStudy rather than none

this may be offset by shifts in thepattern of production toward moreskill-intensive goods. In Table 5.4the rates of return to primaryeducation in countries with adultliteracy rates above 50 percent,while somewhat below those incountries with adult literacy below50 percent, are still strikingly high.

And in the few countries wherestudies have been done at differ-ent periods, rates of return haveusually declined, but only mildly.

There are also favorable effectson equity. As primary educationbecomes more widespread, addi-tional spending will be increas-ingly concentrated on backward

Note: In all cases, the figures are "social" rates of return: the costs include forgone earnings(what the students could have earned had they not been in school) as well as both publicand private outlays; the benefits are measured by income before tax. (The "private"returns to individuals exclude public costs and taxes, and are usually larger.) The studiesrefer to various years between 1957 and 1978, mainly in the latter half of the period.a. In this sample of 30 developing countries, those countries with low incomes also hadliteracy rates below 50 percent (at the time the studies were done). All the middle-incomecountries had literacy rates above 50 percent.

Schooling, screening and productivity

The interpretation of rates of returnto educationespecially secondary andhigher educationis still controversial. Ithas often been argued that educationalqualifications are simply a "screening"device, signaling an individual's produc-tive qualities to an employer withoutactually enhancing them. In somedeveloping countries, moreover, thepublic sectorand some heavily protectedparts of the private sectorare the mainemployers of university and even second-ary-school graduates: it has been sug-gested that the salaries they pay are oftenartificially inflated and bear little relationto relative productivity; and that educa-tional requirements serve merely to rationaccess to these inflated salaries. In bothcases, earnings differences associatedwith different levels of education wouldoverstate the effect of education onproductivity.

On the other side, it is argued thatschool "screening" is by no means allwasteful and is preferable to such otherscreening methods as caste or familyconnections. It is also argued that labormarkets are not so monopolistic, and

thus that relative wages are not suchimperfect indicators of productivity, asthose who have concentrated on theirinstitutional characteristics and determi-nants have supposed. In developedcountries the relative wages of differentoccupations have gradually but steadilychanged in response to increases in thesupply of educated labor. That the sameprocess operates even in the public sectorin developing countries is suggested, forexample, by the fact that the relativesalaries of teachers and civil servantsace much higher in Africa, where edu-cated manpower is much scarcer, thanin Asia, where it is more abundant.

The conventional economic interpre-tation of the association between school-ing and wages is further strengthened bya few studies showing that more educatedworkers have increased output in specificmanufacturing industries, by evidenceof substantial returns to education evenin agriculture and other traditional small-scale activities, where one would expecteducational credentials to be much lessimportant, and by the macroeconomicevidence discussed in the box on page 38.

rural areas, girls, and the pooresturban boys. In general, primaryeducation tends to be redistribu-tive toward the poor (see Table5.5). In contrast, public expendi-ture on secondary and highereducation tends to redistributeincome from poor to rich, sincechildren of poor parents havecomparatively little opportunityto benefit from it.

Primary education, especially ofgirls, has favorable effects on thenext generation's health, fertilityand education (see box overleaf).Finally, it enriches peoples' lives.Many would regard this as suffici-ent justification for universal pri-mary education, independent ofits other benefits.

sEcoNDARy AND HIGHER EDucATIoN.

Renewed emphasis on the impor-tance of primary education, andits high returns relative to sec-ondary and higher education,should not start the pendulumswinging too far in the other di-rection. High levels of knowledgeare necessary for many people whoserve the poor, both directly asteachers, health workers and agri-cultural extension workers, andindirectly as researchers, techni-cians, managers and administrators.While their skills must be developedto a considerable extent throughpractical experience and in otherways, there is for some purposesno better or cheaper substitute forthe formal disciplines of conven-tional schooling. Even allowing fordoubts about the estimated ratesof return to secondary and highereducation, and for the existenceof some educated unemployment(see box on next page), there areunquestionably severe shortagesof skilled people in many developingcountries.

More economical ways of pro-ducing skilled people need to befound. First, greater use of in-careerand on-the-job training should be

49

Table 5.4 Rates of return to education(percent)

Number ofCountry group Prim ary Secondary Higher countries

All developing countries 24.2 15.4 12.3 30Low income/adult literacy

rate under 50 percent' 27.3 17.2 12.1 11Middle income/adult literacy

rate over 50 percent 22.2 14.3 12.4 19Industrialized countries 10.0 9.1 14

Households ranked by income per person.Federal costs per household.Subsidies per household.

explored. Second, steps should betaken to reduce the high unit costsof secondary and higher education(shown in Table 5.1).

For example, the number ofuniversity specializations can bereduced, relying on foreign uni-versities (not necessarily in devel-oped countries) for specializedtraining in areas in which smallnumbers of students lead to ex-cessive teaching and equipment

50

Primary University

The benefits of women's educationEducating girls may be one of the bestinvestments a countiy can make in futureeconomic growth and welfareeven ifgirls never enter the labor force. Mostgirls become mothers, and their influencemuch more than the father'son theirchildren is crucial:

In health. Studies in Bangladesh,Kenya and Colombia show that childrenare less likely to die, the more educatedtheir mothers, even allowing for differ-ences in family income.

In nutrition. Among householdssurveyed in Sao Paulo, Brazil, for anygiven income level, families were betterfed the higher the mother's education.

In fertility. Education delays mar-riage for women, partly by increasingtheir chances of employment; and edu-cated women are more likely to knowabout, and use, contraceptives.

Yet in most parts of the developingworld, there are many more boys thangirls enrolled at school (see Figure 5.1).True, female enrollment grew faster thanmale between 1960 and 1977; but whenboys' enrollments were where femaleenrollments are today, they were grow-ing even faster. The educational bias ismost pronounced in South Asia, theMiddle East and North Africa, and parts

of Sub-Saharan Africa; but it exists tosome extent in every region.

Why? From the parents' point of view,education for their daughters may seemless attractive than for their Sons. Theymay fear that education will harm theirdaughters' marriage prospects, subsequentdomestic life and even spiritual qualities.A girl's education brings fewer economicbenefits if there is discrimination againsther in the labor market, if she marriesearly and stops working or if she ceasesafter marriage to have any economicobligations toward her parents.

But parents md their daughters dorespond rapidly to changing opportunities.When women took on key roles in theAnand Dairy Cooperative in Gujarat,India, education for girls became morevalued. When a nutrition project inGuatemala offered employment to edu-cated girls, the test scores of youngergirls improved.

More generally, education does increasethe chance of paid employment for girls.In Brazil married women with secondaryeducation are three to four times morelikely to be employed than those withprimary education onlywho in turn aretwice as likely to work as women withno education at all.

costs per student. Care must betaken to encourage repatriationand to prevent foreign trainingfrom becoming exclusively theprivilege of the children of therich and influential.

Correspondence courses candramatically reduce the cost ofsecondary and higher educationand teacher training. The KoreanAir-Correspondence High School,for example, provides secondary

education at about a fifth the costof traditional schools, and allowswould-be students who have toearn a living to continue their edu-cation at the same time. Recentstudies (in Brazil, Kenya and theDominican Republic) have alsoconcluded that correspondencecourses have effectively taughtpeople in remote areas.

In most countries the familiesof postprimary students pay toolittle for education. They are gen-erally much better off than thenational average: in Tunisia, forexample, the proportion of chil-dren from higher income groupsis nine times larger in universitiesthan in elementary school. Sincethe rewards from higher educa-tion are large, it is highly desirable(though often politically difficult)to charge tuition and other fees tocover costs. Scholarships can begiven to students whose familiescannot afford to pay.

The cost of secondary and highereducation makes it inevitable thatin most courthies demand for placeswill exceed supply for the fore-seeable future, although somecountries, such as South Korea,already have very high enrollmentrates. But economic considerationsare not the only relevant ones:secondary education often helps inlowering fertility and reducingchild mortality (over and abovethe effects of primary education).All developed countries havefound universal free secondaryeducation to be desirable in itsown right. The question for devel-oping countries is less "whether"than "when." Higher educationclearly also has scientific, culturaland intellectual objectives, as wellas economic ones.

VOCATIONAL EDUCATION AND TRAIN-

ING. Experience shows that it isoften inefficient to rely heavily onschools (as opposed to the work-place and short-term training

Income groap Primary Postsecondary

Poorest 20 percent 135 4 48 1Richest 20 percent 45 63 9 46

Table 5.5 Public education spending per household,by income group(dollars)

Malaysia, 1974b Colombia, 1974'

Unemployment among the educated

Unemployment statistics in developingcountries are sparse and often hard tointerpret. Evidence on open unemploy-ment (persons without a job and activelyseeking employment) indicates that it isprimarily an urban phenomenon heavilyconcentrated among workers in theirteens and early twenties. Since these arethe ages at which individuals typicallyleave school or university, there has beenconcern that educational expansion indeveloping countries will produce a grow-ing problem of "educated unemploy-ment." But despite the increased outflowof students over the past decade, partic-ularly secondary-school graduates, thereis no evidence of rising trends in openunemployment rates. Unemploymentstatistics from a number of countries do,however, suggest that secondary-schoolleavers experience higher rates of unem-ployment than the uneducated or thosewith postsecondary education.

By and large, educated unemploymentappears to be associated with the processesthrough which the labor market adjuststo an increased supply of school leavers.First, the earnings expectations or jobpreferences of school leavers may notkeep pace with changes in labor marketconditions brought about by increasednumbers of workers with educationalcredentials. Second, the structure of wagesmay be slow to adjustespecially if thepublic sector is a major employer ofeducated workers. School leavers maythen be encouraged to wait for jobs inwell-paid occupations rather than imme-diately accept a job that pays significantlyless; if the wage difference is high enoughand the probability of obtaining a higher-

paid job is sufficiently large, a period ofjob-seeking or unemployment will yielda higher expected "lifetime" income.

The educational pattern of unemploy-ment is consistent with this explanation.It is not worthwhile for uneducatedworkers to remain unemployed as theysearch for a well-paid job. At the otherextreme, highly trained people are scarcein many countriesso college graduatescan get well-paid jobs immediately. Butthose in betweenthe secondary-schoolleaversare neither assured of high-wagejobs nor completely out of the running;for them, there may be high returns toa full-time search for a job. Since theunemployed are young, with few depen-dents and often supported by their families,and since most of them eventually findjobs, neither the social nor the privatecosts associated with this unemploymentare as serious as might appear.

Moreover, the fact that some primary-and secondary-school leavers are unem-ployed does not imply that the economyis unable to make productive use of moreof them. Various studies have shownthat the social rate of return to investmentin education may be high despite thenumber of educated unemployed. Butin the eyes of governments, frustratedschool leavers or college graduates canform a politically volatile group. Somegovernments have therefore virtuallyguaranteed public-sector jobs for post-secondary leavers whether or not therehas been socially productive work forthem to do. This can result in a majordrain on government revenues and impedethe diffusion of educated manpower intomore productive uses as well.

institutions) to develop vocationalskills. Vocational and technicalschools often find it difficult tostrike the right balance betweengeneral preemployment trainingand the provision of specializedskills, and are often slow to adjustto the economy's changing needs.In many school systems wherecompetition for higher educationis strong, they also suffer from lowprestige.

By contrast, institutions thatprovide training in skills with wideapplicability as a foundation for

later on-the-job training or short-term courses (which may be neededmore than once in a lifetime) aremore likely to be successful, espe-cially if, as in Brazil, Chile andSingapore, there is coordinationwith potential employers.

ADULT EDUCATION. Certaintypes of adult education play auseful role. To be effective, adulteducation must be conducted bydedicated and responsible teachers,and must address specific, feltneeds; after a major review,

UNESCO concluded that the poorresults of most adult literacyprograms were due to lack ofdemand. Where there is an explicitneed, results have been better. Forexample, a recent review foundthat agricultural extensionwhichis essentially an applied form ofadult educationgenerally helpedto raise productivity; and theWorld Bank's experience withthe "training and visit" (T & V)approach to agricultural exten-sion, which puts great weight oncareful training and supervisionof field workers, is consistent withthis. In West Bengal, for example,T & V was introduced in 1975 andhelped to raise the proportion ofland area planted with high-yielding wheat and paddy varietiesfrom less than 2 percent to 40percent, in a single year. WhileT & V is effective even with illit-erates, literate farmers tend to bemore responsive to suggestedchanges.

Implementing investment priorities

The education received by poorchildren depends on three things.The first is accessibilityare thereschool places for them within areasonable distance from home?The second is usedo their par-ents send them to school, and arethey allowed or encouraged todrop out? The third concerns thequality of the education thatschools provide.

ACCESSIBILITY. Financing con-straints will often be compoundedby difficulties in reaching the poordistance, low-density popula-tions and poor communicationsso that building schools andsupplying books, equipment andqualified teachers is a difficult andexpensive task. For example, theNepalese government estimatesthat it costs more than twice asmuch to build and equip a schoolin mountainous regions as it does

51

in the plains; and attracting quali-fied teachers to remote areas hasproved to be extremely difficult.

There is often much that can beaccomplished by administrativeaction with relatively little capitalinvestment. Repetition of classesand early dropout may be theresult of excessively high promo-tion standards. In these circum-stances, the flow of students canbe accelerated by more automaticpromotionwhile maintainingquality by correcting some of thecauses of repetition or dropout.In many situations, resources canbe freed for extending educationby raising student-teacher ratios,which are the main determinantof unit costs (given teacher salaries)and are largely determined byclass size. Extensive research showsthat class size has surprisingly littleeffect on learning (see box). It isimportant to maximize the use ofavailable facilitiesby rotatingclasses, with staggered schedulingand double shifts in areas of highpopulation density. If there arenot enough pupils within anacceptable distance from school tofill individual classes, student-teacher ratios and the use of spacecan be significantly improved bytaking new students only in alter-nate years (as has been done suc-cessfully in a project financed by theWorld Bank in Malaysia) and byteaching more than one grade in aclass, as in another World Bank-financed project in El Salvador.

USE. Since most poor parentsbelieve that education wouldbenefit their childrenin terms ofstatus and the ability to stand upto officials and merchants, as wellas in a more narrowly economicsensethey must have strong rea-sons for not sending their childrento school if they have the chance.They may question whether theywill benefit themselves; they mayeven regard the school as a threat

52

Big is not necessarily badClass sizes vary widely in the developingworldat elementary schools, frommore than 60 in four countries (Chad,Malawi, Congo-Brazzaville and CentralAfrican Republic) to less than 25 inseven (Iraq, Barbados, Bolivia, Uruguay,Romania, Mauritania and Mauritius).Yet once classes have more than 40students, varying their size has almostno effect on student learning (thoughlarger classes may weaken disciplineand teacher morale). Between 15 and40, students learn more in smallerclasses (and still more in even smallerclasses), but the benefits are slight. Forexample, reducing an elementary-schoolclass from 40 pupils to 15 can beexpected to improve average achieve-ment (in a standard test) by only about5 percentage points. By the same token,a modest increasefrom 35 to 40 pupils,saymight reduce achievement by onlya single percentage point. While thereare obvious practical limits to increasingclasses much above 50, the researchdoes suggest that, for classes initiallybelow 50, little will be lost if they areincreased.

In sparsely populated areas, largerclassesif that means fewer schoolsmay increase the time it takes childrento get to school. That could be a genuinediscouragement, though in most placespopulation density is high enough notto make it so

to their traditional way of life; orthey may simply believe that socialor ethnic barriers are too great, orthe quality of the available school-ing too low, to make educationworth its costs. For poor families,the help of children at homeinanimal care, fetching fuel andwater, taking care of young chil-dren while adults work, and inagricultural work during busyseasonsmay conflict with a fixedschool schedule. For some families,malnutrition and poor health ofchildren may lead to poor atten-dance, inattention while in school,repetition of grades and, even-tually, dropping out. And there areparticular reasons that girls receive

less education than boys (see boxon page 50). Since the mere exis-tence of a school does not auto-matically mean it is used by allthose eligible to attend, specialmeasures may be needed to en-sure that the education offered isattractive to the families for whomit is intended (see pages 78-79).

QUALITY OF EDUCATION. This isgenerally low in developing coun-tries, and has been found (forexample, in studies undertaken inThailand, Malaysia and the Philip-pines) to be lower still for poorand rural pupils. Poor qualitypublic schools may lead the well-to-do to choose private schoolsfor their children, reinforcingsocial and economic inequality.

Casual observation and small-scale studies have long suggestedthat poor training of teachers, lackof textbooks, and inadequate schoolfacilities lead to poor educationalresults and provide a weak basisfor subsequent training. But broad-based evidence to demonstratethe extent of the resulting learninglosses has only recently becomeavailablefrom a large researchproject, the International Evaluationof Educational Achievement. Butonly four developing countries(Chile, India, Iran and Thailand)were among the 19 countriescovered.

While international compar-isons of student achievement mustbe approached gingerly, particu-larly when different languages ortesting styles can affect the results,a clear pattern nonetheless emergesfrom the study. Differences inaverage performance of studentsfrom the 15 developed countriesvaried somewhat from subject tosubject and country to country;but the differences by and largewere small. The developing coun-tries, however, did far less wellin all subjects tested, and at eachof the three age levels examined.

A typical finding showed the meanscore for students in a developingcountry to be in the bottom 5 to10 percent of students from adeveloped country. Some of thehandicaps of children in develop-ing countries may be due to lowerlevels of parental education (whichhas a substantial impact, particu-larly in the preschool years) orin some cases to prolonged mal-nutrition. But the evidence suggeststhat they are mainly a reflection oflow-quality schooling.

There are a number of promisingapproaches to improving education-al quality in developing countries.

The curriculum should takeinto account the linguistic andhome backgrounds of students.Frequently curricula are too de-manding, which only exacerbatestendencies to repeat classes ordrop out, particularly for thosefrom poor homes. Wheneverpossible, subjects should beillustrated with examples thatdraw on the child's experience.

The selection and training ofteachers should be improvedthrough more training facilities,greater use of in-service training,and more resourcesteachers'guides, advisory services, mass-media programs and bulletins. Thistakes time, however; for manycountries, better teaching will beas much a consequence as a sourceof improved quality in schools.

The design, production anddistribution of learning materialsshould be upgraded. This appliesparticularly to textbooks, becauseresearch indicates that increasingtheir availability is the most con-sistently effective way of raisingeducational standards. A nation-wide textbook project supportedby the World Bank in the Philip-pines significantly increased stu-dent learning while increasingcosts per student by only 1 per-cent. When school budgets aresqueezed, it is all too easy to cut

or defer spending on learningmaterials. But this is a costlyalternative if costs are consideredin terms of the education providedrather than simply per studentin school.

Properly designed and sup-ported radio projects have poten-tial for improving learning (and incertain cases reducing costs). Totake a well-documented example,in Nicaragua regular radio broad-casts achieved dramatic improve-ments in mathematics for primarystudents. Although new tech-nologies and growing experienceare increasing the educationalpotential of television, lack of ruralelectricity and the high costs ofcapital, maintenance and operationput it out of reach for most countries.

Research into these approacheshas indicated important potential,but it remains to be seen howmuch they can improve qualitywithin the constraints of politicallyfeasible budgets. This underlinesthe importance of finding cheapways to improve quality if theeducational gaps between devel-oping and developed countries, andbetween rich and poor in develop-ing countries, are to be narrowed.

Health

In general terms, the determinantsof health have long been well known.One is people's purchasing power(which depends on their incomesand on prices) over certain goodsand services, including food,housing, fuel, soap, water andmedical services. Another isthe health environmentclimate,standards of public sanitation andthe prevalence of communicablediseases. A third is people'sunderstanding of nutrition, healthand hygiene.

Knowledge is still evolving,however, on the relative importanceof these different factors, and onthe best ways to deploy government

resources to improve health. Bythe end of the 1960s it was increas-ingly plain that health care systemsmodeled on those in the developedworld were not the quickest,cheapest or most effective way toimprove the health of the majorityof people in developing countries.The 1970s have thus witnessedthe evolution of a much broaderapproach to health policy, indudingan emphasis on universal low-costbasic health care. But despite somesuccessful experiments, "primaryhealth care" is still more of aslogan than a nationwide realityin most developing countries. Tochange this is the greatest healthchallenge of the 1980s.

Life expectancy and mortality

There is considerable variationamong developing countries. In11 of the richer ones, life expectancyis 70 years or moreclose to theaverage level (74 years) in indus-trialized countries. But in low-income countries, life expectancyaverages only 50 years, and severalcountries are under 45. Thusdespite the health improvementsthat have occurred throughout thedeveloping world over the pastthree decades, the gap betweendeveloped and developing coun-tries remains wide.

Babies born in a developingcountry will on average live 20years less than those born in theindustrialized world. About halfof this difference can be explainedby what happens in the first fiveyears of life. Some 17 percent ofchildren in developing countries(and more than 30 percent inseveral of the poorest) die beforetheir fifth birthday; in industriali7edcountries, only about 2 percentdo. Mortality rates among childrenaged one to four in low-incomecountries are frequently 20-30times those in industrialized coun-tries, and sometimes even more.Although the gap tends to narrow

53

as average incomes rise, in anumber of countries with 1978incomes of more than $900 (in-cluding Jordan, Turkey, Algeriaand Guatemala) the chances of achild dying between its first andfifth birthdays were still at least10 times as great as in industrializedcountries. On average, for childrenin developing countries who reachthe age of five, further life expect-ancy is still eight to nine years

Figure 5.2 Death by age groups:developing and industrializedcountries, 1980

Percentage dead by the age of:5 15 50 65 over 65

Deaths by age group aspercentage of total deaths:

under 5 5-14 15-49 50-64 65 and over

less than in developed countriesand they are much more likely tosuffer from disease (see next page).

The very high death rates amongyoung children, combined withhigh birth rates, mean that atragically large proportion of thedeaths in a developing countryoccur among children under five(see Figure 5.2). For example, inBrazil in 1975 they were 48 percentof all deaths. In Sweden they were

54

Developing

Industrialized

1 percent. The main causes of childdeaths in developing countries arediarrheal diseases and respiratoryinfections, especially influenza andpneumonia. (It has been estimatedthat diarrheal diseases cause 5-10million deaths a year and respira-tory diseases 4-5 million, makingthem by far the biggest killers forthe population as a whole.)

Other diseases that make adultsill may be fatal in young children.Malaria, for example, has beenestimated to kill 1 million Africanchildren a year. Common childhooddiseases, such as measles, diphtheria,whooping cough and polio, whichhave either been virtually eliminatedfrom developed countries or elsereduced to minor nuisances, canbe fatal or crippling in developingones. A case of measles is oftenmore than 200 times more likelyto kill a child in a developing countrythan in an industrialized one. Allof these diseases can be preventedby vaccination, yet fewer than 10percent of the children born eachyear in the developing countriesare being protected.

A major reason that theseinfections so often lead to deathin preschool children in developingcountries is their interaction withmalnutrition, especially amongchildren between six months andthree years old. As a result, malnu-trition appears to contribute tobetween one-third and two-thirdsof all child deaths, and perhapseven more in the poorest countries.A comprehensive study of 35,000deaths in 14 communities in LatinAmerica found that 34 percent ofdeaths of children under five hadserious malnutrition as an under-lying or associated cause. Anadditional 23 percent of deathswere associated with prematurebirths, which themselves partiallyreflected maternal malnutrition.

Compared with children, adultmortality patterns in developingcountries show a much greater

similarity to those in developedcountries. There is also less differ-ence between urban areas indeveloped and developing countriesthan between rural areas, sincepeople who live in urban areashave higher incomes, are bettereducated and have better accessto health care. About 60-70 percentof physicians in Africa work inurban areas, where about 20 per-cent of the population lives. LatinAmerica is relatively well endowedwith physicians, but two-thirds ofthem serve the large cities whereonly a third of the population lives.This gap is much wider than canbe justified on the grounds thatspecialized referral services mustbe located in towns.

Some of the health problemsof developed countries, however,are magnified in developing ones.The need to achieve competitivecosts has led industries in somedeveloping countries to adopt lowerstandards of job safety than prevailin advanced countries, and accidentrates are high. Similarly, the numberof deaths per automobile is muchgreater than in advanced countries;for example, it is more than 100times higher in Nigeria than in theUnited States and 16 times higherper vehicle-mile. The joint use ofroads by pedestrians, animals,bicycles and motor vehicles is amajor reason for this.

Even though many of the diseasesand much of the death in develop-ing countries reflects an unhealthyenvironment, there are significantdifferences between rich and poor(see Table 5.6). The poor, whetherurban or rural, are more likelythan the rich to live where diseasesare endemic, and less likely to takepreventive measures or to seekprompt medical care even whenit is available. A poor family ismuch less able to tide itself overwhile a breadwinner is ill; even arelatively minor illness may plungeit from poverty into destitution.

I.Developing

Industrialized

0 20 40 60 80 100Percent

a. At current mortality rates.

Table 5.6 Differences in lifeexpectancy within countries

Illness

Nonfatal diseases are more commonand more serious in developingthan developed countries. But therelatively small proportion of peopleover the age of 65 in most developingcountries considerably reduces thesignificance of chronic, degenerativediseaseswhich affect about a thirdof the elderly in the United States,for example.

The most widespread diseasesin developing countries are thosetransmitted by human fecestheintestinal parasitic and infectiousdiseases, but also poliomyelitis,typhoid and cholera. These spreadeasily in areas without safe com-munity water supplies and goodhygiene practices. While they areleading causes of death in youngchildren, they are frequentlychronic and debilitating rather thancauses of acute illness or death.Their incidence is high. For example,the WHO estimated that in 1971about 650 million people hadascariasis (roundworms). A WorldBank study of construction workersat three sites in West Java, Indonesia,found 85 percent infected withhookworm.

Of the other diseases that usuallycause debilitation in adults ratherthan death, tuberculosis in particularremains extremely widespread.Most debilitating diseases trans-mitted by insects or other carriers

tend to be geographically moreconcentratedalthough in 1976it was estimated that 850 millionpeople lived in areas where malariapersisted despite efforts to controlit, and another 345 million in areaswith little or no control. Schisto-somiasis (bilharzia) is carried bysnails, which flourish in slow-moving water. It is severe in EastAsia, East Africa and in irrigatedareas of Latin America; an estimated180-250 million people are infected.

Trypanosomiasis (sleeping sick-ness) is found in a wide band inthe middle of Africa. It is generallyfatal if untreated in the early stages.Carried by the tsetse fly, it waslargely under control in the 1950s,but has revived because controlmeasures have slackened. Itconstitutes a serious risk to thelife and health of at least 35 millionpeople and has imposed great losseson animal herds. Chagas' disease,the Latin American form of trypa-nosomiasis, remains endemic inmany rural areas.

Onchocerciasis (river blindness),carried by the simulium fly thatbreeds in swift-running water, ishyperendemic in parts of WestAfrica and Central America. Insome areas it has led to the de-population of fertile river valleys.

Attempts have been made tocontrol these diseases by eliminatingdisease carriers through chemicaland environmental mechanisms,but with only limited and in someinstances temporary success. Insome cases effective drugs exist.Control requires a well-developedhealth service to monitor outbreaksof the disease and take remedialmeasures.

For children, illness obviouslydisrupts their attendance at schooland reduces their ability to con-centrate and learn. As for adults,research on the consequences oftheir diseases has been very limitedand has not produced consistentor generally applicable conclusions.

Some studies have shown thatmalaria control sharply reducedabsenteeismfrom about 35 percentto about 3 percent in one programin the Philippines in 1947. Anthro-pological research suggests thatsettlement on fertile lands hasoften been prevented by majordiseases. There have been surpris-ingly few detailed studies of theeffects of illness on productivityof individual workers; moreresearch is needed in this area.

It is also likely that disease dis-courages innovation, by makingpeople more reluctant to take risksor to commit themselves to activ-ities where precise timing is crucial.A study of Paraguayan farmerssuffering in varying degrees frommalaria found that severely affect-ed families obtained lower yields,cleared less land and avoided cul-tivating crops that required laborat specific times. In industry,capital may be substituted for laborwhere workers are frequentlyabsent because of endemic disease.

Difficulties of improving health

In its early stages, slowly decliningmortality in Europe largely reflectedimproved nutrition, housing andhygiene brought about by risingincomes. The spread of educationalso helped. The initial stages ofdeclining mortality in developingcountries have been based on anadditional factornew technologiesthat affect masses of people, suchas pesticides and vaccinations. Itis estimated that life expectancy indeveloping countries in 1970 wouldhave been eight years less thanwhat it was without the contribu-tion of these changes in publichealth technologies.

But some diseases, includingmost causes of diarrhea and manyrespiratory infections, cannot beprevented by currently availableimmunization or pesticides. Theirreduction comes through improve-ments in sanitary conditions and

55

Countryand region

Income(nationalaverage= 100)

Lifeexpectancy

(years)

Brazil, 1960-70Northeast region 54 47.9Southeast region 122 62.8

Tanzania, 1973Kigoma region 46 43.0Kilimanjaro region 215 55.0

Thailand, 1969-70North region 78 55.6Bangkok region 248 63.7

nutrition, and changes in individualhealth habits. These diseases havedeclined least in developing coun-tries and contribute most tomortality in those countries today.

There has been considerableconcern that developing countries,particularly in the high mortalityareas of Sub-Saharan Africa andSouth Asia, have not maintainedthe momentum of the 1950s inreducing disease. This is largelybecause countries have movedbeyond the "technological" phaseof improving health: the closerthey come to developed-countrylevels, the harder it is to progressat the same rate. It also reflectsthe fact that some communicablediseases have increased. Thenumber of cases of malaria, for

example, rose nearly threefoldbetween 1972 and 1976; otherdiseases have also spread, thoughnot so sharply.

These reversals have happenedpartly because authorities becameoverconfident and allowed controlprograms to run down. In addition,control became much more expen-sive in the early 1970s. Pesticideprices escalated and disease carriersdeveloped a tolerance for common,inexpensive pesticides (especiallyDDT). Economic development hassometimes made matters worse:small-scale irrigated agriculturehas expanded agricultural produc-tionbut also the habitat of snailsthat carry schistosomiasis.

Programs to control endemicdiseasesespecially malaria and

Oral rehydration

A simple innovation has revolutionizedthe treatment of a major killer in devel-oping countries. Diarrhea normally stopson its own accord after three to five days,but it occasionally causes a severe lossof body fluid; the resulting dehydrationis often fatal, particularly to young chil-dren. Replacing that fluid can preventmost deaths.

For more than a century, fluid has beenintravenously "dripped" into sufferersa method with obvious drawbacks incountries where there are few medicalfacilities. In the past 12 years it hasgradually been established that an oraldose has just the same effect. Even dur-ing diarrhea, the intestine continues toabsorb glucoseand glucose will carrywater and essential salts with it.

Oral rehydration had its most impres-sive initial success in 1971, in camps forrefugees from the Bangladesh war. Morethan 3,700 patients were treated in twomonths under extraordinarily difficultcircumstances, with a case fatality rateof 3.6 percent instead of the 30 percentbefore the treatment began. Oral rehydra-tion has since been used to prevent ortreat dehydration due both to choleraand to other diarrheas in many countriesof Asia, Africa and Latin America. Prop-erly delivered, it could save millions oflives a year.

The WHO currently recommends an

oral rehydration mixture consisting of:table salt (sodium chloride), 3.5 grams;bicarbonate of soda, 2.5 grams; potassiumchloride, 1.5 grams; and glucose, 20 grams.These ingredients are usually mixed andpackaged beforehand; the health worker(or a child's mother) simply dissolvesthe mixture in one liter of water. Pre-packaged mixes range in cost from $0.07to $0.10, and one to three packets mightbe needed while the diarrhea lasts.

There now is considerable interest inthe possibility that mothers could mix adose from the two ingredients that areavailable in most homessugar and tablesalt. But the recipe lacks potassium andbicarbonate (both of which are lostduring diarrhea), and using too much saltcould be dangerous for the child.

Home-mixing and the standard WHOformula are not, of course, mutuallyexclusive. One report (based on a fieldexperiment in Narangwal, India) recom-mended home-mixing for relatively mildcases of diarrhea, with a variant of theWHO formula used only for moresevere ones. This experiment placedprincipal responsibility for treatment inthe hands of auxiliary nurse-midwives(who live in the villages) and the mothersof affected children. While the incidenceof diarrhea changed little after the newtreatment was introduced, the casefatality rate declined by almost halffrom 2.7 per 1,000 to 1.5 per 1,000.

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sleeping sicknessnow exist inmost of the affected areas. Theycan be operated effectively withoutpeople changing their behavior(though this is less true of schisto-somiasis, since people as well assnails play a role in its transmission).Pesticides can often be used moreefficiently.

There is also room for bettercoverage by immunization pro-grams, even in areas not otherwiseprovided with government healthservices. Sierra Leone, for example,employs recruitment teams; theyenlist the help of local leaders ingathering together everyone whoneeds to be immunized imme-diately before the vaccinatorsarrive in the village.

Apart from these efforts, majorprogress in family health behaviorand in the provision of healthservices is needed. Simple treatmentcan frequently be effective: forexample, the lives of children withacute diarrhea can often be savedby feeding them a solution ofwater, salt and sugar (see box).Education, especially of mothers,is important. Studies in 29 devel-oping countries have shown thatinfant and child mortality wereconsistently lower the bettereducated the mothers; each extrayear of schooling on average meantnine per 1,000 fewer infant andchild deaths. Cross-country studies(see box on page 38) confirm thatliteracy has a strong, favorableeffect on life expectancy. And asdiscussed below (see pages 66 and67) family planning services cancontribute directly to better healthof mothers and children.

Improved water supplies andwaste disposal are important inthe long run in reducing disease.But they must be accompanied bybetter hygienic practices if theyare to be fully effective. Wherefunds are short, water supplynetworks in urban areas usuallydeserve priority over sewers, which

are more expensive and less criticalto health. (Latrines, septic tanksand other lower-cost alternativesto conventional sewerage are lesslikely to contaminate water sup-plies if the water is centrally treatedand distributed under pressure inpipes.) But water supply systemsmust be maintainedsomethingthat is frequently neglected. AWorld Bank review of villagewater supplies found two coun-tries in which systems were fail-ing faster than they were beingconstructed.

Although heavy investment inwater supplies is often warrantedas a means of raising living stan-dards, it is unlikely to producequick or dramatic improvementsin healthand is expensive forlow-income countries. Even publicstandpipes and yard taps, whilemuch cheaper than conventionalhouse connections with internalplumbing, can cost more than $40per person (in 1978 prices). Incontrast, immunization against allcommon childhood diseases costsat most $5 per child.

Availability of health care

The amount spent on health carevaries widely throughout thedeveloping world, though it istypically very low. Governmenthealth budgets in low-income Africaand Asia are usually less than $5per person a year (and frequentlymuch less). Private outlays are oftenlargerin Bangladesh, for example,individuals spent an estimated $1.50each in 1976, or three times whatthe government was spending. Butthe combined total of $2 compareswith about $700 in the FederalRepublic of Germany. This gapwould remain huge even if allow-ance were made for differencesin prices. It is thus not surprisingthat in the mid-1970s in Bangla-desh there were 9,260 people perphysician, 5,600 per hospital bed,and 42,080 per nurse or midwife,

compared with 490 per physician,80 per hospital bed, and 260 pernurse in the Federal Republic ofGermany. (Some of the middle-income countries, though, havealmost as many physicians perperson as the developed countriesdo.)

For many necessary but simplemedical tasks, paramedical workersare likely to do a better job thanphysicians, who may be dissatis-fied with their work in rural areasand so turn to private practice.In many countries, however, thereare even fewer nurses than there aredoctors.

In many developing countries,people typically live in scattered,often small villages and cannottravel far. They are thereforeunwilling or unable to seek outmodern health facilities in urbanareas, except in extraordinaryemergencies. Moreover, whererural health facilities are available,they are usually far too small toemploy a physician full timeandcertainly too small to make efficientuse of equipment and auxiliarystaff. Although occasional visitsby traveling doctors and nursescan help, they are obviously unableto provide services at short notice.They may also not develop suffi-cient individual rapport withpatients.

Primary health care

The widespread provision of basicpreventive and curative medicalservices is essential. But in anattempt to tackle both the broadercauses of health problems andadministrative, political and otherimplementation problems (seeChapter 6), the WHO and UNICEFhave recently sponsored a conceptcalled "primary health care" thatgoes far beyond these services. Itis an integrated approach to healththat also spans food production,education, water and sanitation;in addition, it emphasizes self-

reliance and partnership betweencommunities and government.

The concept has achieved wide-spread intergovernmental support,especially from the 1978 Interna-tional Conference on Primary HealthCare. This has been no mean politicalachievement; but in most countriesthe rhetoric still must be translatedinto more money and reorganizedhealth systems.

A key element of primary healthcare, or of any health care systemthat attempts wide coverage atrelatively low cost, is the use ofcommunity health workers (CHWs)with limited training both to pro-vide front-line services and to referseriously ill patients or specialcases to larger dispensaries andhospitals (see box overleaf). Thepotential duties among whichtheir time must be allocated arematernal and child health care,midwifery, family planning, treat-ment of injuries and helping tomove seriously injured people toreferral facilities. In addition, theymay organize immunization andmass treatment programs, provideguidance on nutrition, family plan-ning and hygiene, and monitor epi-demics, water quality and sanitation.

Although several examples (in-cluding Chinasee box on page74) have shown that effective pri-mary health care is feasible evenfor low-income countries, it makesfairly heavy administrative de-mands. An effective coordinatedapproach is neededinvolvingcareful selection and training ofCHWs, thorough supervision,referral of serious cases to bettertrained and equipped people, andadequate (but controlled) availa-bility of drugs and other supplies.Without this, CHWs are likely tobecome demoralized, discreditedand inefficientand their recom-mendations for curative and pre-ventive care disregarded.

Moreover, the emphasis thatthis Report (and others) gives to

57

Lessons of experience

National experience with primary healthcare systems is still very limited. TheChinese barefoot doctors date from themid-1960s (see box on page 74). Duringthe 19705 countries a', diverse as Iran,Brazil, Sudan, India, Jamaica, Botswanaand Tanzania began large-scale systems.Their experience has shown which arethe key requirements of success.

Political support and finance, It isvital to secure the support of a substantialshare of the country's "health establish-ment"; without this, sound medicalsupervision and adequate finance will notbe possible, and primary health care willbe little more than an empty gesturetoward the poor. It is also important toensure that this type of medicine is notmislabeled as "second ate."

The Community Health Worker(CHW) should work cooperatively withthe community, if possible through suchrecognized organizations as the localcouncil or village development committee(as they do in Botswana and Sudan). This

- builds community support and increaseschances of improving family healthpractices; hours of service, use of drugsand materials, and patient satisfactioncan also be monitored. The communityorganization should have access to thesupervisor of the CHW.

At least part of the Cl-lW's salary shouldbe paid by government so that healthofficials can retain some on Ira I. But somelocal finance or voluntar',' efforts alsomake the CHW responsive to localconcernsand in turn can make thecommunity more aware of the servicesoffered, The government of India isproviding a stipend of 600 rupees a year($76) to "volunteer" health workers.Whether local pressures work in theinterests of the poor depends on the

degree to which the local political systemreflects these interests. China has suc-ceeded in making the community entirelyresponsible for compensating the CHW.But overreliance on local finance maymean that the poorest communities getthe worst attention,

Recruitment and training. The CHWshould be mature enough to enjoy therespect of the community. Early programsstressed formal education as a qualificationfor the CHW, and thus recruited youngpeople. Reviews of experience in Sudanclearly indicate that such people are noteasily accepted by communities. Ideallythe CHW should have children andpersonal experience with health crises,Programs now recruit highly motivated,older people even if younger applicantsare better educated, The CHW also shouldlive in the community; this has beenfound to reduce turnover as well as ensurefamiliarity with local culture. In somecountries, such as Iran and Yemen, it hasbeen necessary to train both a male anda female CHW because of objections totreatment by members of the opposite sex,

Community health workers must begiven enough training, equipment andsupplies to ensure that only one patientin four or five is referred to higher levels.High referral rates undermine the com-munity's confidence in the CHW andalso increase the probability of patientsbypassing him or her, This conclusionhas been confirmed by studies in Mexicoand Thailand. Moreover, several countriesfeel that CHWs should have the chanceto develop their careers, by competingfor entry into higher grades. Sudan, forexample, is planning to confine its "medicalassistant" training programs to CHWs.

Supervision and supplies. Frequentsupervision of the CHW is essential. Theisolated, modestly trained CHW is rarely

confident of his or her skills and oftenencounters difficulties that instructorsdid not anticipate. Experience in Tan-zania underlines the need for sound, con-tinuous supervision. Supervisors shouldboth provide in-service training and en-sure that performance meets minimumstandards. Iran, Sudan and Botswanahave found that it is better to overesti-mate the amount of supervision neededthan to risk undermining the confidenceand credibility of the CHW. Workersshould be visited regularly by staff fromneighboring dispensaries, health centersand hospitals as well as from the office ofthe regional medical officer. This compen-sates for frequent transport difficultiesor competing demands on the supervi-sor's time. In addition, it ensures thata broad range of issues (from clinicalcare to drug management) are consid-ered, and that visits from the outside areregarded as routine, not part of a crisis.

Providing facilities for telephone orradio contact between CHWs and super-visors has provided backup and helpedavoid unnecessary referrals in Honduras,for example. Physicians or highly trainedhealth personnel often give curative workpriority over supervision of CHWssonontechnical personnel should also playa part in the supervision and monitoringof CHWs.

A standard, simple set of drugs shouldbe provided to CHWs; if budget cuts arenecessary, they should not fall on medi-cines and supplies for the CHW (as hassometimes been the case). Standards arerequired for the use of drugs andsupplies; and the drugs provided toindividual CHWs should be monitoredto identify misuse or misappropriation.Kenya has developed a model programfor managing drug use, based upon care-fully devised treatment standards.

primary health care should notdetract from the importanceorunderstate the difficultyof strik-ing the right balance betweencommunity level activities and theback-up system that providesreferral services and supervision.Rural health centers, urban clinicsor district hospitals should dealwith various illnesses that arebeyond the scope of a CHW (thougheven they may not need a full-

58

time physician). These should comeunder the umbrella of a referralhospital with laboratory, x-rayfacilities, an operating theatre andbeds. (China, interestingly, hasgiven much more emphasis to thereferral system than is generallyrecognized.) Depending on popu-lation densities, transport, andincomes, the hospital could serve100,000 to 250,000 people andoversee the activities of three or

more clinics and about 50 CHWs.The balance struck between the

various levels of the health caresystem wifi depend on many factors,including financial and politicalsupport for the objectives of pri-mary health care, administrativecapabilities, the receptivity of thoseto be served, the extent of urbani-zation, and national income. Higher-income countries can afford toreduce the ratio of persons covered

per hospital and clinic, and to staffand equip them better. But evenin industrialized countries, thereis a strong trend toward moreemphasis on paramedical workersto improve the spread and effec-tiveness of basic health care andto help keep costs down.

In many countries it is alsodesirable to make use of, andprovide some training for, tradi-tional health practitioners, such as"ayurveds" in South Asia and thetraditional birth attendants foundin almost every country. This ispartly because they often have thetrust of their patients and becausepatients pay for their services(enabling government funds to bespread farther); but it is primarilybecause in many countries, includ-ing some of those where the world'spoor are concentrated, these prac-titioners provide near-universalcoverage of people who, realistically,will not be reached by effectivegovernment health programs forsome time to come. Training canhelp them to improve their treat-ment, dispense some modernmedicines and participate in healthor family planning education.

In addition, there is stifi an urgentneed for research to develop meas-ures to prevent or treat commondisabling diseasesfor example,malaria, schistosomiasis and themain causes of diarrhea in childrenthat are simple and cheap enoughto be applied within the frame-work of a primary health caresystem.

Nutrition

Systematic efforts at nationalnutrition planning in developingcountries go back barely a decade.During that brief time there hasbeen considerable progress inestablishing the extent and causesof malnutrition and what can bedone to reduce it.

Ten years ago, malnutrition was

often thought to reflect primarilya shortage of protein (and in somecases, vitamins or minerals). Mostnutrition programs concentratedon providing high-protein food tochildren, usually in schools. Theemphasis today is different. Thereis now a wide measure of agreementon several broad propositions.

Serious and extensive nutri-tional deficiencies occur in virtuallyall developing countries, thoughthey are worst in low-incomecountries. They are usually causedby undernourishmenta shortageof foodnot by an imbalancebetween calories and protein.There may often be shortages ofspecific micronutrients and ofprotein, especially among youngchildren. But given the typicalcomposition of the diets of thepoor, to the extent that calorierequirements (as estimated by theFAQ and the WHO) are met, it islikely that other nutritional needswill also be satisfied.

Malnutrition affects old andyoung, male and female, urbanand rural dwellers; particularlyprevalent among children underfive, it reduces their resistance todiseases and is a major cause oftheir death. In many societies, girlssuffer more than boys.

Malnutrition is largely a reflec-tion of poverty: people do not haveenough income for food. Giventhe slow income growth that islikely for the poorest people in theforeseeable future, large numberswill remain malnourished fordecades to come.

Poor nutritional practices andthe inequitable distribution of foodwithin families also are causes ofmalnutrition.

The most effective long-termpolicies are those that raise theincomes of the poor, and thosethat raise food production perperson. Other relevant policiesinclude food subsidies, nutritioneducation, adding minerals or

vitamins to salt and other processedfoods, and increasing emphasis onproducing foods typically consumedby the poor.

These points will be amplifiedin the following discussion.

Prevalence of malnutrition

Evidence of serious malnutritionin almost all developing countriescomes from three main sources:estimates of food consumption,anthropometric and clinical studies,and data on child mortality.

The estimates of food consump-tion by different income groupsnormally show that in all butthe richest developing countries,consumption by large sections ofthe population is well below whatis needed for a minimally satisfac-tory diet. Undernutrition is mostwidespread in Africa (where inmany countries food supplies havenot even kept up with populationgrowth) and in South Asia. It isalso common in Latin America andthe Middle East. Estimates of thetotal number of malnourished peopleare surrounded by controversy:there is dispute about what calorieand protein requirements are onaverage "adequate"; individualsmay have requirements very dif-ferent from the average; and withinhouseholds food often is notdistributed in proportion to indi-vidual needs. Nevertheless, allowinga wide margin for uncertainties,the evidence is strong enough toconclude that several hundredmfflion people are undemourished.

Anthropometric and clinicalstudies (based on measures ofheight, weight for height, armcircumference, skin-fold thickness,blood tests and so on) show, forexample, that children fromwealthier families, or from familiesthat have migrated to developedcountries, tend to grow substan-tially taller than do children ofthe poor.

The data on child mortality

59

reflect the combined effects ofsickness and malnutrition. Infec-tions can reduce appetite and foodintake in several different ways,including the action of intestinalparasites; and they can reduce theproportion of nutrients that thebody absorbs. Undernutrition inturn weakens the body's immuniz-ing mechanismsand so lowers itsdefenses against the initial infection,while making it more susceptibleto further infections. As previouslynoted, malnutrition is estimatedto be a contributory cause of athird or more of infant and childdeaths in developing countries (seepage 54).

Kinds of malnutrition

Most malnutrition reflects a short-age of calories, protein, or both.But some diets are inadequatebecause they lack specific nutrients.Anemia, resulting primarily fromblood loss and too little iron, isthe most prevalent example of this.A recent estimate is that at least500 million people are anemic. Theconsequent fatigue, the apparentlethargy and apathy, and the adverseeffects on productivity and schoolperformance can be so commonin poorer societies as to appearnormal. It is estimated that morethan half the victims of anemiaare adult women in developingcountries. Anemia due to iron andfolic acid deficiency is commonamong pregnant womenandharmful, because it can lead topremature birth and a much lowerchance of survival for the newbornchild. The more children a womanhas, the greater the probability ofsevere anemiaso adding to thecycle of poverty, high fertility andlow rates of child survival.

Goiter is another common dis-order (affecting perhaps 200 miffionpeople) caused by a micronutrientdeficiencyin this case, iodine.Available evidence suggests thatiodine deficiency can stunt physical

60

and mental development, and reduceenergy and motivation. In com-munities that have an exceptionallyhigh incidence of goiter, 4 percentor more of children may bedeaf-mutes or cretins.

Vitamin A deficiency is alsoextensiveaffecting, it has beensuggested, half the children inmany developing countries. In anextreme form it can lead to blind-ness. But in less serious formsit can still lead to poor eyesight,undermining educational per-formance and adult earning power.It can also affect growth, skincondition and the severity of othernutritionally related illnesses.

Victims of malnutrition

Young children suffer most fromundernourishment, followed bypregnant and nursing mothers. Inmany countries, there is considerableevidence that girls are less wellnourished than boys. This isespecially true of South Asia,where newborn girls have signifi-cantly smaller chances of survivingto age five; in a number of countries,induding some in the Middlle East,girls are weaned substantially earlierthan boys (see box on page 91).

Most childhood malnutritiondoes not result in early death. Butit means severe hardship beginningat birth, which may prevent childrenfrom ever escaping the povertyinto which they were born. Mal-nutrition stunts growth; in severecases it may retard mental devel-opment even after its physicaleffects have been shaken off. Severalstudies have shown that childrenwho have recovered from severeclinical malnutrition during theirpreschool years continue to dosignificantly worse in intelligenceand other tests than their unaffectedclassmates.

There is also some evidence,less conclusive, of the harmfuleffects of mild long-term malnu-trition; some studies in developing

countries have shown that better-nourished children (as measuredby height for age) do better inmental tests. It is not always pos-sible to isolate nutrition fromother factors affecting intelligence,but there is some evidence of itsindependent effects.

Malnutrition also affects earnings.In part, this reflects the consequencesof childhood malnutrition onmental development and educationalachievement; but there are alsolinks between nutrition and physicalproductivity. In the long run, adultscan only be as energetic as theirdiets will allowotherwise theywould gradually become emaciatedand ill. For example, farmers whoare badly malnourished put in fewerhours per hectare than those whoare better nourished. Research onthe relation between nutrition andproductivity has not been extensive,but a few studies have suggestedthat greater height or weight leadsto greater physical productivity.

In contrast to most other indicatorsof well-being, malnutrition in manycountries appears to be at least asserious in urban as in rural areas.Surveys in India, Brazil, Thailandand Indonesia have shown thatthe proportion of the populationwith very low calorie consumptionis substantially greater in urbanareas. This is partly because of thehigher cost of food in many urbanareas (although not in those withfood subsidies) and higher expen-ditures for such things as houserents and public transport.

But to some extent it is a signthat living and working in citiesis less physically demanding thanin rural areas, rather than an indi-cator of greater malnutrition.

In any event, because the poorare primarily rural, malnutritionremains primarily a rural problem.Rural populations are also morelikely to suffer seasonal variationsin food consumption; they are mostaffected in the wet season, when twin

peaks in farm work and widespreadinfection often coincide with the pe-dod when food is in shortest supply.

Causes of malnutrition

To what degree is malnutrition,especially among young childrenand pregnant and nursing mothers,caused by (a) inadequate familyincomes, (b) ignorance of goodnutritional practices and (c) theinequitable distribution of foodwithin families? There is someevidence that all three factors areimportant, but that low incomesare the central cause.

The famines in Ethiopia in1973-74 and Bangladesh in 1974were not caused by a fall in theaverage amount of food availableper person. Rather, droughts causedlocal declines in farm incomes, sothat people in affected areas couldnot afford to buy food from theunaffected areas.

At the global level, if incomewere distributed differently, presentoutput of grain alone could supplyevery man, woman and child withmore than 3,000 calories and 65

grams of protein per dayfar morethan the highest estimates ofrequirements. Eliminating malnu-trition would require redirectingonly about 2 percent of the world'sgrain output to the mouths thatneed it.

Major crop failures, which simul-taneously reduce rural incomes andnational food supplies, can haveeven more catastrophic effects onnutrition. While improved trans-port and international movementof food will reduce the impact onprices, events such as the twomonsoon failures in India in 1965and 1966 can have a terrible impacton the poor: supplies of basicfood grains fell 12 percent andprices rose sharply. Relative to theprices of manufactured goods,they were 37 percent higher in1967 than in 1963-65, In addition,the crop failures cut the incomes

Food and the poorAs people get higher incomes, they eatbetterand spend proportionately lesson food. The chart shows householdspending patterns in Indonesia, but itsessence applies to every developingcountry. The richest households spend ahigher proportion of their total budgeton housing, fuel, light and water thanthe poorest do on all nonfood items.

The composition of diets varies, too(a fact whose implications for policy areexplored on page 62). The poorest 30percent of people in Indonesia obtainabout 40 percent of their calories fromcassava and corn and 46 percent fromrice, while the richest 30 percent obtainonly about 14 percent of their caloriesfrom cassava and corn and 59 percentfrom rice.

Not only is food the main element inpoor people's budgets; but preparing ittakes up a lot of their time. Rice must bethreshed, winnowed and hand-milled toremove the husk and bran; wheat andmaize must be threshed, winnowed andground to produce flour; cassava mustbe skinned, boiled, pounded, strainedand dried to get rid of its deadly prussicacid; spices must be ground by hand; andso onall before any actual cooking isdone.

Composition of expenditure, byincome group, Indonesia, 1976

Poorest Richestdecile decile

Median100

so

5°

40

20

011000 2000 5000 10000 20000

Monthly total expenditore(rupiah per person)

Other

Durablegoods

Clothing

Housing,fuel, etc.

Other food

vegetables& fruits

Meat, fish,eggs & milkCereals

One study in a Java village found thaton average a woman works 11 hours aday. Roughly six hours are spent onincome-earning activities (wage work,handicrafts, producing food for sale).The other five hours are spent around thehome (collecting firewood, looking afterchildren, sweeping and so on)and pre-paring food, which takes three hoursa day.

not only of farmers, but also ofagricultural laborers, petty tradersand workers in food-processingindustries.

Poor people spend the bulk oftheir income on food. In India in1973-74 the poorest 20 percentwere devoting 33 percent of theirtotal spending to foodyet onaverage ate fewer than 1,500 cal-ories a day each. At these verylow levels, the consumption ofcalories (usually derived from thecheapest kind of food) changesalmost proportionately with changesin income. As incomes rise, a littlemargin enters the budget (see box).

A lack of money is frequentlycompounded by poor nutritionalpractices, Several common beliefsabout nutrition have harmfuleffects and must be attributed pri-marily to ignorance rather thanpoverty. For children, the weaning

period is particularly critical.While it is desirable to continuebreastfeeding for the first year oflife, milk should be supplementedby solid food by six months ofage; this is often delayed. It is alsolikely that the poor nutrition ofpregnant and nursing mothersmay at least partly reflect a lackof knowledge. Several studies havefound that better-educated parentshave better-nourished children:that this reflects more than thehigher incomes of educated parentsis suggested by the fact that themother's education is more impor-tant than the father's.

Educationespecially girls' edu-cationmay also help remedy oneof the most serious and intractablenutritional problems: the way foodis distributed within the family.A variety of evidence indicates thatin most developing countries adult

61

women receive a lower proportionof their food requirements thanadult men; girls are likewise gen-erally less well-fed than boys. Asbetween adults and children, thepicture is less clear: in many coun-tries children under five (and partic-ularly up to age three, when they areless able to take food themselves)do much worse than adults; insome countries, though, this is notthe case.

These sorts of discriminationsometimes reflect difficult choicesmade under severe economic duress,including a justifiable concern forthe breadwinner. But they alsoreflect ignorance of nutritionalpriorities and deep-rooted culturalbiases. (Concern for this problemappears to have been one of thereasons for the Chinese experimentwith communal feeding during theGreat Leap Forward in 1953-59.It encountered massive socialresistance and was abandoned.)

Nutrition policies and programs

The causes and consequences ofmalnutrition suggest variouscures. Boosting food production(especially of food that poor peopleeat and grow) and raising the in-comes of the poor are the twocentral requirements in mostcountries. They can be reinforcedby other effortsfood subsidiesof various kinds, fortifying food,and educating people to knowwhat a good diet is.

AGRICULTURAL PRODUCTION. In-creased food consumption by thepoor is in most countries unlikelyto be sustained unless productionis raised as well. For nutritionalpurposes, much can be achievedby producing more of what thepoor traditionally eatsuch asmillet and other coarse grains androot crops. These are, in general,the cheapest source of calories.They have other advantages, too.Some of them require less irriga-

62

tion and drainage than other crops;and, in the case of root crops, manycan be grown throughout the yearand some are drought-resistant.In addition, both root crops andcoarse grains tend to be producedby small farmers, who would bene-fit if encouraged to produce more.

Coarse grains can often begrown together with low-costvegetable sources of protein.Although cassava is very low inprotein, studies show that its priceis so low that most of the peoplewho meet most of their caloricneeds by eating a lot of it are ableto buy enough protein-rich foodto balance their diets. But therehas not been enough emphasis onthe production of cheap sources ofprotein, such as the cheaper varietiesof beans and lentils.

Despite long-standing neglectin research, extension services,access to credit and so on, in recentyears there has been greater aware-ness of the importance of foodseaten by the poor. The internationalagricultural research centers (inparticular those in India, Colombia,and Nigeria) have increasinglyextended their research to thesecrops and have given more atten-tion to nutritional issues.

Food marketing and storageprograms can also have a majornutritional impact by reducingregional, seasonal and annual vari-ations in food supplies and priceswhich contribute significantly tomalnutrition. Market stability canalso be helped by better transportand roads.

FOOD suBsIDIEs. Few low-incomecountries have come near to nutri-tional adequacy without someform of food subsidies. Sri Lanka'sration-and-subsidy program in 1970provided about 20 percent of thecalories and 15 percent of the in-comes of the poorest quintile ofthe population. Largely as a result,severe malnutrition was reduced

to a remarkably low level for sucha poor country. Because of this,and Sri Lanka's health and educa-tion services, life expectancy hasreached 69 years. When subsidizedfood rations were sharply reducedin 1974, largely because of a steepincrease in the price of importedfood, Sri Lanka's death rate rosenoticeably (even after allowancesfor other plausible influences); itdeclined again in 1976 and 1977,when food became more plentiful.Large-scale food subsidies are alsocommon in the Middle East andNorth Africa; they have played asignificant part in improving thenutrition of the poor.

But general food subsidies havea major drawbackthey are veryexpensive. They have cost as muchas 10-20 percent of governmentspending in some countries, includ-ing Egypt, South Korea (tempo-rarily in 1974-75) and Sri Lanka.Much of the cost is for imports,which use up scarce foreign ex-change or aid. And some of thisgoes to people who do not reallyneed to be subsidized.

Countries with strong adminis-tration can organize income testsnot perfectly, but well enoughto cut costs. Sri Lanka, for example,could have done more for thenutrition of the poor in 1974 if ithad concentrated the availablerations on them. In 1978 it intro-duced an income test to restrictsubsidies to the poorer half of thepopulation. But for many countriesthis would not be administrativelyor politically feasible.

Alternative ways of restrictingsubsidies to poor people includesubsidizing cheap foods that othergroups tend to neglect. Sorghum,a low-status food, was introducedinto ration shops in Bangladesh in1978and in some rural areas wasbought by nearly 70 percent oflow-income households, but only2 percent of high-income house-holds. Subsidized foods may be

confined to particular places. InColombia the nutrition programassisted by the World Bank pro-vides nutritionally enriched foodsto specific age groups living in thepoorest geographical areas, with-out a specific family income test.

The high cost of subsidies raisesanother difficultykeeping the pricereceived by farmers high enoughto encourage food production.Governments may attempt to pushdown domestic food prices to cutthe cost of subsidy programs; andfarm prices may decline if too muchfood is imported for the subsidyprogrammore, that is, than thenet increase in food consumption.But countries (and food-aid donors)can aniicipate and avoid adverseeffects on incentives. Well-designedsubsidies should be able to reducefood prices for consumers and also(since this increases the effectivedemand for food) to maintain pricesfor farmers. And proceeds fromfood aid sold through subsidyprograms can, for example, be useddirectly or indirectly to supportagricultural programs. Introducingsubsidies requires care, however,since the political cost of abandon-ing them is likely to be high.

SUPPLEMENTARY FEEDING PROGRAMS.

Some countries have gone furtherand have tried to target assistanceon the nutritionally most vulner-ableyoung children and pregnantand nursing mothers. In some casesfood supplements have been givenfor home consumption; in otherschildren have been fed directly.In both cases, however, benefitshave been shared with the wholefamilysince if children get foodoutside the home, parents tend togive them less from the family pot.

Studies of some preschool feed-ing programs in the mid-1970sshowed that schemes providingchildren directly with 300 caloriesa day gave them a net increase inconsumption of about 100 calories.

And only a small minority werein the most vulnerable group ofallunder two years old. Suchschemes tend to be relativelyexpensive: in a number of theseprojects, annual food costs aver-aged $10-17 per child, withadministrative costs adding afurther $3-7.

FOOD FORTIFICATION. Addingspecific micronutrients to food atthe processing stage is commonin both developed and develop-ing countries. But there are twogeneral difficulties. First, those whodo not need the supplement stillget it, so that the cost per personneeding assistance may be high,even if the cost per person receivingthe supplement is low. Second, thepoor may buy little processed food,and even that may be from small,scattered processorsso that for-tification is hard or uneconomicto arrange.

The best results have comefrom adding iodine to salt to pre-vent goiter; almost all high-incomecountries and some developingcountries have succeeded withthis. Annual costs are much lessthan one cent per person. Suchprograms are not yet universal(but may not be effective if peopleget much of their salt from non-commercial sources or very smallproducers).

Vitamin A has been added to avariety of foods (including tea,sugar, margarine, monosodiumglutamate and cereal products)in several developing countries.It is both effective and cheapfor example, three cents a persona year could provide 80 percent ofGuatemalans with 75 percent oftheir daily requirements. Muchmore could be done.

Since anemia is so widespread,adding iron to food has been triedseveral times. There have beentechnical difficulties, but these maynow have been overcome. But

anemia is not due solely to irondeficiencies, nor is it easily cured;effective programs that can beuniversally applied are still someway off.

It may sometimes be moreeffective to administer extranutrients directly (orally or byinjections). India and Bangladeshhave done this with Vitamin A (atsix-month intervals). But reachingthose at major risk every six monthsis usually impracticable. Manycountries have provided iron plusfolic acid pills for pregnant women;others have reduced goiter byinjecting people with iodized oil(a single injection provides protec-tion for three to five years).

NUTRITION EDUCATION. There havebeen few, if any, striking successes,but the potential effect of nutritioneducation is so vast that theattempt to increase knowledgeabout nutrition requires continuingstrong support. Clearly, educationmust be realistic: urging poorfamilies to buy milk might beharmful if they can afford it onlyby eating fewer calories.

Recent research on breastfeedinghas confirmed the value of breastmilk, not only for nutrition butalso for transferring to babiessome of their mothers' immunityagainst infections. In contrast,bottle feeding in unhygienic con-ditions tends to increase the riskof infection, and is expensive. Therole of advertising in promotinginfant milk formulas in develop-ing countries at the expense ofbreastfeeding has been questioned.In 1979, at a meeting sponsoredby the WHO and UNICEF, severalmajor multinational food firmsagreed to curtail direct advertisingof infant formulas in developingcountries. An international codeof marketing is now under consid-eration by the WHO.

Nutrition education will becheaper the more it can be made

63

part of education in general, com-bined with information on familyplanning and health, or tied tocommunity organizations or othercredible and influential communi-cations channels. In addition, severalcountries have experimented withrehabilitation centers for the severelymalnourished, which not only savethe child but show mothers how tofeed their children at home. Othershave experimented with massmedia; relatively simple messagesthat do not risk being misinterpretedseem to have made people more

Figure 5.3 Trends in birth and death rates, 1775-2050(births and deaths per 1,000 population)"

50 Per 1,000 population

aware of good practices, thoughthey have not always been putinto effect. The enormous amountof commercial advertising sug-gests that the value of mass mediain promoting social programs hasnowhere been adequately exploited.

PRIORITIEs AND PLANNING. As inother areas, difficult choices mustbe made in tackling malnutrition.There are simply not enough fi-nancial, political or administrativeresources to implement all thepolicies and programs outlinedabove. Some countries are attempt-

64

ing to assess relative priorities withthe help of national food and nutri-tion plans. These should ideallybe supported by successive samplesurveys of nutrition status, foodconsumption and production pat-terns by income group and regionwhich can show, for example,the likely nutritional impact ofalternative subsidy or productionprograms. Such plans, especiallyif effectively followed up, also offera way to focus the attention of,say, agricultural ministries on theimplications of nutritional priori-

ties for agricultural research, pric-ing, extension and other policies.

Fertility

In the past 10 years striking progresshas been made in understandingthe causes and consequences ofhigh birth rates, and in helpingto resolve two controversial andimportant issues.

The dispute between thosealleging that family planningprograms had little effect on birthrates and those alleging that familyplanning alone could reduce birth

rates has been greatly narrowed ifnot wholly settled. The evidenceoverwhelmingly suggests that bothsocial and economic conditions andfamily planning are important indetermining birth rates, and thatthey are mutually reinforcing.

Accumulating evidence dearlycontradicts the fear that healthprograms, by lowering death rates,will boost population growth inthe long term. Although fertilityseemed unresponsive to fallingdeath rates during the 1950s and1960s, it has since declined in manypoor countriespartly in responseto lower death ratesand popula-tion growth is slowing down.

Demogrciphic trends und projections

Figure 5.3 compares past and pro-jected trends in birth rates anddeath rates in developed and de-veloping countries. Two pointsneed to be emphasized. One is therapid population growth in thedeveloping world, after death ratesplummeted in the postwar years,and the continued rapid growthprojected for the rest of this cen-tury. The second is the drop inbirth rates, which began in the1960s in the developing world,and the resulting gradual slow-down in the population growthrate since thenfrom a peak ofabout 2.4 percent in 1965 to 2.2percent now.

Since 1965, birth rate declinesof at least 10 percent have occurredin the world's two most populouscountries, China and India, and ina number of other major devel-oping countriesIndonesia, thePhilippines, Thailand, Turkey andSouth Korea. Moreover, the recentrate of decline has been faster intoday's developing world than itwas in the 19th century in Europeand the United States. England andthe Netherlands took about 50years to reduce their birth ratesfrom 35 to 20 per thousandorabout one point every three years;

Brrth rate Death rateDeveloping countries

.

20 Deat(rate"U10

Birth rate

0

Developed countrtes

1750 1800 1850 1900 1950 2000 2050Rate of population increase = birth rate - death rate

Crude birth and death rates, The projected increases in death rates after about 1980 reflectthe rising proportion of older people in the population,

Include industrialized countries, the USSR and Eastern Europe,

Indonesia, Colombia and Chilehave recently cut about one pointevery year from their crude birthratesthough generally from higherinitial starting points.

Thus the comparison of currentbirth rates between the rich andpoor worlds should not obscurethe progress some developingcountries are now making in lower-ing fertility. Higher incomes, morewidespread education and thegrowing acceptability of familyplanning programs have begun toreduce birth rates in most middle-income countries in Latin Americaand East Asia, and in some countriesand regions of South and South-east Asia. With continued socio-economic progress the fertilitydecline is projected to spread tothe rest of South Asia and, withsome delay, to Africa, during the1980s and 1990s.

Even with these fertility declines,however, world population willcontinue to grow. By 2000, WorldBank projections (which arebroadly consistent with other pro-jections, such as those of the UnitedNations) indicate it will have risenfrom the current estimate of 4.4billion to about 6 billion; the pop-ulation of the developing coun-tries (including China) is projectedto increase from 3.3 to 4.9 billion.India will grow from 672 to 974million people; Brazil from 126 to201 million; Nigeria from 85 to153 million. These projections arebased on the assumption that cur-rent rates of social and economicprogress, including the spread offamily planning and health andeducation services, will continue;if they change, so will populationgrowth (see box).

It is instructive to consider theconsequences of an accelerationof fertility decline such as to causethe rate of population growth inparticular countries to fall to zero10 years earlier than currentlyprojected. The size of the resulting

Alternative population projectionsHow sensitive are population projectionsto changes in fertility and mortality rates?To illustrate, compare two projections forBrazil. The current World Bank projectionassumes that the total fertility rate (TFR)a measure of births per woman, stan-dardized for age distributionwill declinefrom 4.9 today to replacement level (aTFR of 2.2) by 2015. The Braziliangovernment has not officially recognizedrapid population growth to be a problem,but it does permit family planning forhealth purposesand the use of contra-ceptives (mainly privately bought) isincreasing.

What would happen if fertility reachedreplacement level a decade earlier, in2005? This is what the Bank projectionsassume for Colombia, a country withlower average incomes and roughly similarlevels of literacy and life expectancy, butwhich already has a government-supportedfamily planning program and significantlylower fertility (TFR = 3.7). For Brazil tomatch Colombia would require a sharpbut not unprecedented fertility decline.Birth rates would need to fall from 36per 1,000 people in 1978 to just below20 in 2000less than the fall of one pointa year achieved in the past two decadesby South Korea.

The figure illustrates the differences inthe size and composition of the Brazilianpopulation in 2020, under the alternativeassumptions of replacement fertility in2015 (Case I) or in 2005 (Case II). Twothings to notice:

Under either projection, the propor-tion of children in the population willdecline substantially between 1980 and2020. The current school-age (5-14) group

Alternative populationprojections, Brazil

Population (o:illior,)

238.4

p1980 2020 I 2020 II

of 32 million will increase by 10 millionunder Case I, only 4 million under Case IIcompared with an increase of 14 millionin the past 20 years, and 21 million inthe past 40. In 2020 under Case II, childrenunder 15 would constitute only 15 percentof the population, compared with 26 today.

Even in Case II, the working-agepopulation would more than double, from70 million today to 163 million in 2020.On the other hand, the number of newentrants to the labor force would beconsiderably smaller. In 2020 Brazil willneed to find about 4.5 million new jobsunder Case I, but only 3.3 million underCase II.

Reaching replacement fertility in 2005,not 2015, would make a big differencein the eventual size of Brazil's stationarypopulation (reached about 70 years later):it would be 287 million rather than 345million.

stationary populations would bereduced by, for example, 200 mil-lion in India, 50 million in Nigeriaand 36 million in Mexico.

Poverty nd high fertility

Poverty and high fertility aremutually reinforcing (see Figures5.4 and 5.5). As discussed in Chap-ter 4 (page 39), rapid populationgrowth is not always harmful. Re-duction of population growth isnot an end in itself; nor does it forevery country or for every point intime increase the potential growthof income per person. But in the

circumstances prevailing in mostof the developing countries, rapidpopulation growth impedes eco-nomic growth by reducing invest-ment per person in physical capitaland human skills. For individualfamilies the number of childrenaffects how much parents can in-vest in each one's health and edu-cationand thus in their futureearning power.

Quantitative analysis suggeststhat social and economic factors(such as incomes, literacy and lifeexpectancy) accounted for as muchas 60 percent of the variation in

65

300

250

200

150

100

50

0

Age

65-4-

- 0-14

266.4

15-64

126.3

Totalfertility

7.0Sub-Saharan Africa

Mid. East & N. AfricaSouth

- AsiaEast Asia

Latin America & Caribbean

Worldwide norm'

S. Europe

0 500 1,000 1,500 2,000 2,500 3,000

GNP per person (current dollars)

See technical notes for Table 16 of the WorldDevelopment Indicators.

Derived from cross-country equation relating totalfertility rate to GNP per person.

fertility changes among develop-ing countries from 1960 to 1977.The strength of family planningprograms explained an additional15 percent.

The strength of family planningprograms is influenced substan-tially by socioeconomic factors(which account for about three-quarters of its variation). This helpsexplain why family planning pro-grams in countries with high fer-tility, such as Pakistan, oftenappear weak even after years inoperation. This weakness is oftenwritten off as simply lack of gov-ernment effort. What the results

Figure 5.5 Influences on fertility

Government commitmentto poverty alleviationand fertility reduction

Reduction in poverty:Higher female literacyLonger life expectancyHigher incomes

Other cultural and social factors

66

suggest, however, is that programstend to flourish where their servicesare in demand. Nonetheless, gov-ernment efforts are vital.

Socioeconomic determinantsof fertility

Fertility is an area of human be-havior where individual tastes,religion, culture and social normsall play a major role. Yet evidencefrom large groups of people sug-gests that differences in fertilitycan be largely explained by differ-ences in their social and economicenvironment. What are the mech-anisms by which low education,poor living conditions, high deathrates and lack of health andfamily planning services lead tolarge families?

Consider the issue from thepoint of view of parents and poten-tial parents. They receive pleasurefrom their children but have tospend time and money bringingthem up. Children are also a formof investmentshort-term if theywork during childhood, and long-term if they support parents indisability or old age. Since chil-dren are a source of satisfaction,one might expect richer parentsto want more of them. Yet the op-posite is true, for several reasons.

The first is that the alternativeuses of timeearning money, de-veloping and using skills, leisure

Family planning

Smaller desiredfamily size

tHigher age at

marriage

Lower ertility

t /

become more attractive. This isparticularly true for women, whoare primarily responsible forbringing up children; as theiropportunities for education andemployment improve and theirhorizons expand, they often wanta smaller family. Second, withincreasing income, parents appar-ently prefer healthier and better-educated, but fewer children.They are more likely to wantmore education for their childrenwhen they believe that future jobopportunities will be governedless by class origin or familybackground than by education andassociated skills. Since this tendsto be a consequence of develop-ment, it can help to explain fallingfertility over time. Third, thechildren of the poor work at homeand outside the home at an earlyage: for richer parents, children'swork is not so vital to familywelfare.

If children help to support theirparents in old age, the (low) currentcosts of raising children are asmall price to pay. Where motherscommand only low wages, thedifferences between children's andmothers' earnings may be small;work lost by the mother duringa child's infancy may be easilyrecouped by the child later on.Finally, in poor countries muchof women's traditional workinagriculture, crafts and petty retail-ingcan be combined with lookingafter children.

The link between householdpoverty and high fertility is furtherreinforced by high rates of infantand child mortality; in poor familiesmany births and the high proba-bility of infant deaths go hand inhand. In the first place a motherwho stops breastfeeding becauseher baby dies is biologically morelikely to conceive another. Parentswhose children die often try toreplace them; and where highmortality is common, social norms

Figure 5.4 Income and fertility,1978

6.0

5.0

4.0

3.0

2,0

1.0

0

(which respond only gradually tochanges in mortality) tend to en-courage "insurance" against theexpected loss of children. On theother hand, high fertility contrib-utes to high infant and child mor-tality: many births, especially ifthey are close together, can weakenboth mother and children.

FAMILY PLANNING. The link be-tween household poverty and highrates of childbearing is furthercemented by the fact that the poorstill have very limited access tomodern and simple means ofcontraception. The contraceptivesavailable are often expensive, par-ticularly in relation to the incomesof the poorand especially if theymust be bought from privatedoctors. For a poor family, limitingthe number of children may there-fore mean sexual abstinence,illegal abortion, infanticideor,at best, ineffective and difficulttraditional contraception. In somecircumstances, the psychologicalor financial costs of avoidingpregnancy may exceed the costsof having another child.

Family planning programs thatare well designed and implementedmay legitimize what relatives,friends, the community, the clanor village might otherwise havefrowned upon. These social normsare often influential. Recent evi-dence indicates that decliningfertility in 19th century Europewas not associated with economicfactors in any consistent way. Butit did follow a similar pattern acrossregions defined by a commonlanguage or cultureimplying thatthe idea of limiting family sizecan affect fertility independentlyof specific economic change.

The same tendency can be seentoday: even taking income andeducation differences into account,there are national and regionaldifferences in fertility (Figure 5.4)that appear largely the product of

cultural or religious differences.But culture never seems to havebeen an impenetrable barrier tofertility change. Once a high enoughlevel of development has beenreached, fertility has fallen withoutexception. Where there was a strongreligious or cultural resistance tocontraception, as in Ireland, fertilityfell through delays in the age atmarriage and an increase in life-long celibacy, rather than throughfamily planning.

AGE AT MARRIAGE. Recent de-clines in birth rates partly reflectrising age of marriage amongwomen. This has lowered the rateof population growth by lengtheningthe interval between generations,by shortening the period duringwhich women are likely to havebabies, and perhaps by givingwomen other interests beyondfamily and childbearing to takewith them into married life.

Like marital fertility, age atmarriage is strongly affected bysocial and economic conditions,including women's education andemployment opportunities. Theaverage age at marriage (correctedfor the proportion of women whonever marry) is 22 in the middle-income countries of Latin Americaand in Malaysia, Singapore andSouth Korea; but it is less than20 (sometimes much less) in manySub-Saharan African countriesand in Nepal, India, Pakistan andBangladesh.

Later marriage as a mechanismof fertility reduction has been mostimportant in Asia. In the 1960sin South Korea and PeninsularMalaysia, changes in the proportionof women married accounted forabout half as much of the declinein the crude birth rate as did changesin marital fertilityand were moreimportant than marital fertilitydeclines in Sri Lanka and thePhilippines. China has placed greatstress on delaying marriage in its

program to reduce populationgrowth.

In Latin America, later marriagehas been a less important ingredientof declining fertility.This has beenpartly because average age at mar-riage was already high comparedwith Asia, partly because muchof the fertility decline in suchcountries as Chile, Colombia andCosta Rica has been among olderwomen, and partly because child-bearing outside wedlock is morecommon. Fertility is generallyhigh and age at marriage lowthroughout Africa and the MiddleEast.

Population policy and familyplanning programs

Lower fertility is not an end initself, but one among several waysof improving human welfare. Norare the benefits of family planningsimply economic. Relatively fewcouples, even among the poor, wantas many children as their naturalfertility would allowwitness thehospitalization rates due to self-induced abortion in Latin America,and scattered evidence that someparents do not always do all theymight to avoid infant deaths,particularly of daughters. Poorwomen are particularly helped byfamily planning services; so arechildren, who can benefit from asmaller family.

The case for the public provisionof family planning services, andensuring that the poor have accessto them, is gradually becoming lesscontroversial. Some 35 developingcountries, with 78 percent of thedeveloping world's people, havean official policy to reduce popula-tion growth. An additional 14percent of the developing world'spopulation lives in countries wherefamily planning is supported forreasons of health and welfareincluding the health benefits thatcome from fewer children.

Some countries have had striking

67

successes. In Thailand contraceptiveuse increased from 11 to 35 percentof rural married women between1968 and 1975, and from 33 to 49percent of urban married women.In Indonesia the governmentexpanded its service in 1974 froma clinic-based approach, to onebased in villages. It currently has3,500 clinics, 25,000 village depotsand 40,000 village family planninggroups. The proportion of marriedwomen using modem contraceptivesincreased from 7.4 percent in 1974to 18 percent in 1977; it was 0.2percent in 1970.

Nor need a population policybe confined to the support offamily planning programs. A fewcountriesmost notably Singaporehave used tax and housing policiesto discourage large families. Directpayments for sterilization have beenan important part of the Indianprogram. China, which for severalyears has emphasized that latermarriage and small families arepatriotic, recently announcedbonuses and preferences for one-child families, and tax and housingpenalties for families with morethan two children. Raising thelegal minimum age at marriage(the median among all countriesis still only 15) might also help,although efforts to date have notbeen particularly successful (withthe possible exception of China).

IMPROVING ACCESS TO coNTRAcEP-

TION. Before 1960 family planningservices were provided largely byvoluntary associations. Mostprograms were small and offeredservices through health centersand private clinics, promotingsimple barrier methods (foam,condoms and diaphragms) andrhythm. In the 1960s oral contra-ceptives and the intrauterinedevice (IUD) became availableand sterilization and legal inducedabortions became more common.These required clinical support

68

and well-trained practitioners,making programs heavily depend-ent on the health system.

This has caused difficulties formany countries where medicalfacilities and personnel are toolimited to provide adequate familyplanning coverage. But if theyoperate within the framework ofthe health service, middle-levelhealth staff and people speciallytrained in family planning haveproved effective substitutes formedical specialists. In Thailandand South Korea the use of para-medical personnel for screeningpatients and supplying contracep-tive pills led to increased acceptanceof these pills. Family planning aidesin Pakistan and Bangladesh havelearned to insert IUDs, and in Indiato carry out menstrual regulation(inducing abortion of possible butunconfirmed pregnancies at anearly stage). On a trial basis, theyhave been trained to performsterilization.

Separate family planning serviceshave not been so successful. Thead hoc systems (in Pakistan, forexample) have at times involvedambitious programs of regularhome visits to persuade peopleto plan their families, and to supplycontraceptives. But without a sat-isfactory health network, it maybe difficult to supervise the staffand provide more specializedadvice or assistance to the fewpeople who develop complications.

A promising alternative approachis to use other administrative net-works. From time to time, Indiahas had government personnel,such as teachers and tax collectors,recruiting people for sterilizationalthough this became unpopularthrough abuse. The successfulfamily planning program in Indo-nesia (see box on page 80) hastaken advantage of strong com-munity organizations and madeextensive use of village workers,with clinics to which people can

be referred for further help.Several countries have greatly

increased the number of placeswhere pills and condoms can bebought, often at subsidized rates.But simple and safe barrier methods(condoms, diaphragms and spermi-cides) are still neglected in manydeveloping countries despite theirrenewed popularity in developedcountries. Their use could sensiblybe encouraged; research into waysof making them more practical indeveloping country settings isneeded (see box).

FUTURE PRIORITIES. Progress inreducing fertility will partly dependon increasing the demand for con-traceptionprimarily through socialand economic development thatsuccessfully reaches the poor, butalso through the growing under-standing that fertility is a matterof individual choice. It will alsodepend on providing effectivefamily planning services. Both willbe facilitated if contraceptives canbe made more convenient and lessprone to complications that needmedical attention. And the impor-tance of political commitment toa population policy should not beunderestimated. Countries with adual concern for social and economicadvance and for family planningwill be able to cut fertility ratessubstantially in the rest of thiscentury, and beyond.

The seamless web

Chapter 4 stressed that education,health, nutrition and fertility sig-nificantly affect the incomes of thepoor. This chapter has consideredseparately each of these main areasof human development, with spe-cial emphasis on the causes ofchange and the policies that canbring it about. But it is worth reit-erating that the different elementsof human development are keydeterminants of each other.

Contraceptive technology

Of the people who use some form ofbirth control (about two-thirds of themin developed and one-third in developingnations), roughly one-third are sterilized,about 20 percent use the pill, 15 percentthe intrauterine device (IUD) and 13percent the condom. Most of the remain-ing 19 percent use rhythm, abstinence,the diaphragm, contraceptive injections(which last one to three months), varioustypes of spermicide and such traditionalmethods as withdrawal, postcoital douch-ing and deliberate reliance on the anti-fertility action of breastfeeding. Thoughthere is evidence of widespread illegaland self-induced abortion, safe and legalabortion is available in only a few countries,and publicly provided in even fewer.

The amounts spent on research inreproductive sciences and contraceptionhave been smallless than 2 percent oftotal government spending on medical

research in the mid-1970s. And publicspending on applied contraceptiveresearch has fallen as much as 50 percentsince then. The (smaller) amount spentby pharmaceutical firms has probablyalso fallen, apparently because newmethods are not expected to be profit-able. Unless more is spent, new tech-nologiesvaccines, menses-inducingdrugs, pharmacologic methods for men,and much improved barrier contraceptivesthough technically within reach, areunlikely to be developed or tested formany years.

Applied contraceptive research is stilllargely directed at female contraceptives(about nine times more was spent onfemale than on male methods in 1978),partly because basic research on thefemale reproductive system has been moresuccessful. It is also geared almost exclu-sively to the search for new hormonal,drug-based and surgical procedures:more than $10 million was spent on these

in both 1977 and 1978. In contrast, spendingon the simpler barrier methods was lessthan $500,000despite their potential forimprovement (a biodegradable condomor a standardized plastic-based diaphragm,for example).

Present barrier methods are generallyviewed as too ineffective and inconvenientfor widespread use in developing countrieswhere sanitary conditions are poor,privacy is less, husband-wife communi-cations are more formal and abortionas a backup is more difficult to obtain.In the United States, however, use of thepill is falling, that of the diaphragmincreasing; consumer concern over theside-effects of both the pill and IUD hasincreased. Whether such concerns arewell-foundedand on this there is noconsensusthey are bound to spread todeveloping countries. In the 1980s theefforts to extend services to more peoplemay have to be complemented by a widerchoice of methods.

Public health careWater supply, sanitationand housing

Public education

Figure 5.6 Policy and poverty

Land ownership and tenureTechnology and researchDomestic savingExternal capitalInvestment allocationAgricultureExternal tradeTaxation and transfers

Food productionSubsidies/rationsFood fortification

Family planningIncentives

The seamless web of interrela-tions constitutes the core of Figure5.6; feeding into this core are thevarious areas in which policy affectspoverty. The diagram is illustrative,and the policies shown are not theonly determinants of poverty orof human development. As hasbeen stressed, climate, culture,religion and natural resources allshape the environment in whichdevelopment takes place andinfluence the choice of policies.So do political realities, adminis-trative constraints and the worldeconomy.

Some of the links are simplycommon sense: it is not surprisingthat the incomes of the poorsignificantly affect their health,education, nutrition and fertility.Poor people cannot afford decentfood and health care; they are morelikely to need their children'smeager earnings (or help in thehousehold and fields) so that thechildren cannot go to school. Andthey feel more need to have largefamilies to support them during

69

old age and disability. Averagenational income is obviously alsosignificant, especially since it af-feds the tax base and hence thegovernment's ability to financehuman development programs.

Some influences are less familiar.The effects of primary educationhave been stressed above in numer-ous contexts. For example, parentswith a primary education are morelikely to learn about (and be willingto try) improved health, hygieneand nutrition practices, thusreducing the chances that theirchildren will become ill or mal-nourished. Educated people aremore likely to have lower fertility:they more readily see the dis-advantages of having too manychildren to feed and educate; theyhave more alternative sources ofinterest and satisfaction thatcompete with children for timeand money; they are generally morewilling to accept new ideas, suchas the use of modern contracep-tives, and to seek family planningadvice. Because of the mother'spreeminent role in bearing andraising children, it is not surprisingthat her level of education is more

70

important than the father's.Health and nutrition both affect

whether children can attend schoolregularly enough to finish the pri-mary years, and whether they havethe mental and physical energyto learn. Malnutrition and diseasehave been found to be closelyconnected, each increasing thelikelihood and severity of theotherwith death often the endresult. Better health plays a keyrole in the demographic transitionto lower fertility: when the oddsare greater that children will surviveto support their parents in old ageor disability, parents tend to havefewer children. Although it ispossible (though not firmly estab-lished) that better nutrition mayincrease natural fecundity, its effectson the health, education and incomesof the poor all contribute indirectlyto reduced fertility.

Lower fertility itself affects theother aspects of poverty. The spreadand quality of education increasesbecause both the state and parentscan afford to spend more on eachchild when there are fewer of them.Large families have higher infantand child death rates and a higher

incidence of malnutritionthere issimply less food, money and timefor each child.

It is also important to take along view. Although a certainamount can be done with crashprograms such as vaccinationcampaigns and adult literacyprograms, sustained human devel-opment is usually a slow process.In general, a country's level ofhealth, education, nutrition orfertility at any given time largelyreflects its level 10, 20 or even 50years earlier. At any given level offamily income, children are morelikely to go to primary school iftheir parents have also done so;and because the home environmentencourages learning, particularlyin the preschool years, they arelikely to do better in school as well.

Human development is thustransmitted from generation togeneration in a virtuous circle; butequally, there is a vicious circlethat sentences the children ofdeprived parents to deprivationthemselves. Breaking out of the vi-cious circle into the virtuous one isthe essence of human development.

6 Implementing human development programs:some practical lessons

This chapter concentrates on fourkey questions that invariably affectthe way human development pro-grams are organized, and howeffective they are.

Political support. This has beencritical to the considerable successof human development programsin reaching the poor. Its absencealso helps to explain some of thefailures.

Finance. Money alone will notproduce human development. Buta shortage of funds is a com-mon, often binding constraint. Somethods that reduce unit costsor raise new revenues have aconsiderable role to play inexpanding services.

Administration. For manyprograms, administrative andinstitutional capacities may beeven scarcer than finance. Yetproject experience shows that theirimportance is frequently overlooked.

Demand. The way familiesand individuals respond to servicesis crucial to improving health,hygiene and nutrition; to whetherchildren from poor families go toschool or have to work instead;and to reducing fertility.

These four factors like education,health, nutrition and fertilityareclosely interlinked. For instance,financial and administrative con-straints can be eased by politicalsupport, which in turn will bestronger if programs can be madeless costly or administered morereadily, or if there is a heavy demand

for them. The links, though, arenot all complementary: for example,paramedical workers have lowersalaries than doctors, but they needmore supervision.

Human developmentneeds political support

Political support for human devel-opment cannot be taken for granted.The poor frequently are politicallyweak. They are often too sick,uneducated, geographically dis-persed and busy to be politicallyactive. Influential elites, particularlylarge landowners, may opposehuman development programs ifthey feel that their power and statusmight be undermined. They mightfeel, for example, that educatedchildren are less likely to settle forworking in serf-like conditions onhaciendas or plantations.

Even if there is no direct oppo-sition, the extent and form of humandevelopment programs will generallybe influenced by keen politicalcompetition for limited tax revenues.Because policymakers generallylive in urban areas, as do the mostpolitically active of the people whobenefit from public services, theseprograms tend to suffer from urbanbias (though reductions in urbansocial expenditures do not neces-sarily lead to increases in ruralexpenditures). But the health andeducation facilities available evento urban elites in poor countriesare generally inferior to those

available to the middle class in richcountries. A major political chal-lenge of the 1980s will be to adaptand extend programs to the poor,particularly those in rural areas.

Despite the difficulties, it hasusually been easier to obtain politicalsupport for health and educationprograms that benefit the poorwitness the large increases in schoolenrollment and life expectancythan for policies of, say, land ortax reform. Why? Largely because,unlike land reform or increasedtaxation, more knowledge, healthand vitality for the poor are notobtained by reducing them forsomeone else. Of course, suchprograms must be financed. Therich may have to pay more in taxesthan they get in direct benefits.But they are often prepared tosupport human development, inpart because it has a legitimacythat transcends culture, religion,ideology and class. This is particu-larly true if poor children areinvolved. The idea that all childrenshould have a fair startwithoutthe handicaps of disease, illiteracyand malnutritionis widespread.

In some circumstances, more-over, everyone gains. Those whoare not poor will benefit if endemicdiseases are eradicatedpreventionusually being cheaper than cure.Malaria control is an obviousexample: the main beneficiariesare the rural poor, who are mostlikely to be infected. But mosquitoesthat bite the infected poor may

71

fly on to bite the rich as well. InBrazil in 1974, an epidemic of spinalmeningitis aroused public concernin response, 30 million people werevaccinated within 10 months,stopping the epidemic.

Human development programsare also seen almost everywhereas contributing to national unity.Universal primary education inparticular can provide all citizenswith a common intellectual heritageand help overcome the potentiallydivisive effects of regionalism,tribalism, race and caste and classdistinctions. In addition, govern-ments often see human developmentas helping to build broad-basedpolitical support among potentiallyantagonistic groups.

The appeal of and political com-mitment to human developmentcut across ideological boundaries:China, Cuba and North Korea haveplaced great emphasis on suchprograms, but so have South Koreaand Costa Rica. Their appeal isreinforced by international andethical support. The UniversalDeclaration of Human Rights of1943 included the rights to food,health and education. The UnitedNations and its specialized agencieshave played an important role infocusing international attentionon human development and onpopulation issues. All the majorreligions also provide strong back-ing for efforts to improve the health,nutrition and education of the poor.

Easing the financial constraint

Finance ministers everywhere (withthe exception of some mineral-richcountries) find that available fundscannot meet the many competingdemands placed on them. In thepoorer countries, public revenue(taxes, other domestic revenue andforeign assistance) usually is lessthan 20 percent of GNP, whileexpenditures other than on socialprograms (agriculture, infrastruc-

72

How much would it cost?Take an illustrative list of human develop-ment needs: five years at school; adequatenutrition; primary health care no morethan an hour away; family planningservices; at least 20 liters a day of purewater within 100 yards of home; and apit latrine. How much would it cost agovernment in a developing country toprovide this for everyone?

The answer varies from country tocountry, depending first (and mostimportantly) on the standard of service;second on such factors as climate,communications and population disper-sion; and third on the balance betweencapital and operating costs (most budgetsdo not provide enough for the operatingcosts that an effective service wouldneed). But there are also two generalrules that affect cost: one, for any givenstandard the proportion of GNP requiredfalls as GNP rises, partly because higher-income countries have more educatedpeoplewhose wages are therefore rela-tively lowerto implement the programs,and partly because nonlabor costs risemore slowly than GNP. And two, mar-ginal unit costs usually fall as coveragerises, but only up to a point: the costs ofreaching the last 10-20 percent of thepopulation may be several times theaverage costs for the first 30-90 percentbecause of physical inaccessibility orinadequate demand.

Some examples from different countries:Education. The average gross enroll-

ment ratio for primary school in developingcountries in the early 1970s was about70 percent; central governments werethen spending an average of 1.7 percentof GNP on primary education. Fewgovernments have provided universalelementary education for less than 3percent of GNP. Peninsular Malaysiaspent 2.7 percent in the mid-1970s andhad a gross enrollment rate of 93 percent.

Nutrition. In 1979, when subsidizedrations were restricted to the poorer halfof the population in Sri Lanka, they still

cost 4 percent of GNP. Eliminating fooddeficits in Brazilwith its much higherincomecould cost from 1 to 2 percentof GNP in 1980, depending on the typeof food provided.

Health and family planning. Malay-sia's system of public health care coveredmore than 75 percent of the populationin 1974. It relied heavily on low-costparamedical staffand its operating costswere nearly 2 percent of GNP. Sri Lanka'sgovernment spent about 1.7 percent inthe mid-1970s. China's central govern-ment spent less than 1 percent on healthin 1978, but much of the primary caresystem was financed locally; Brazil's spentabout 2.5 percent of GNP in 1975, butpublic health insurance was biased towardhospitals and urban areascovering almost80 percent of urban dwellers but muchless of the 40 percent of people in ruralareas.

Water. A recent World Bank estimatesuggests that it would cost the Tanzaniangovernment about 1.8 percent of GNPa year over a 10-year period to supplyevery village with pure and reliable water,plus 0.8 percent for operating costs oncethe system is fully established. In Brazilthe investment needed to cover the wholepopulation by 2000 has been estimatedat less than 0.1 percent a year of a muchlarger and faster-growing GNP in ruralareas (allowing for higher costs to reachthe last 10 percent of the rural population)and perhaps 0.1 to 0.2 percent a year inurban areas depending on GNP growth.Coverage of the rural and urban popula-tions was 62 and 14 percent, respectively,in 1976. Operating costs are borne bythe users.

Sanitation. In Brazil, where 37 percentof urban houses had sewers or septictanks in 1976, extending the sewer networkto cover them all by 2000 would requireannual investments of about 0.2 to 0.3percent of GNP. Providing latrines inrural areas would cost only between 0.01and 0.02 percent of GNP.

ture, debt service, defense and soon) commonly exceed 12 percentof GNP. Yet governments that haveassuredvirtually everyone primaryeducation, health care, familyplanning services, adequate food,pure water and sanitation havegenerally spent more than 10 percent

of GNP (and often a good dealmore) on doing so.

The costs involved depend onmany factors (see box), among themost important of which are therange and standard of services.Thus governments in some poorcountriesnotably Sri Lanka and

probably Chinahave managedto provide the essential services(primary education, food supple-ments and basic health and familyplanning facilities) to almost every-one for less than 10 percent ofGNP. Typically, though, govern-ments are spending from 3 to 10percent of GNP for human devel-opment programs that are far fromcomprehensiveand whose effec-tiveness is often reduced by lackof money for operating costs (wagesfor health workers and teachers,maintenance of water supplysystems, gasoline for transporta-tion of doctors in rural areas,textbooks in schools).

How can financial constraintson human development programsbe eased? There are four ways:increasing taxes, reallocatingrevenues, reducing costs and usingresources other than those obtainedfrom national taxes and duties.

Increcsing tcx revenues

Many developing countries havealready made impressive progressin improving their tax-gathering(see Table 6.1). Since 1975, how-ever, tax ratios in developingcountries have not increased;although some obvious steps canbe taken (making taxes moreprogressive and reducing evasionand arrears), the scope for raisingtaxation is less now than it was20 years ago.

This is especially true of thepoorer countrieseven whereforeign trade is a substantial shareof output. Their tax administrationis generally weaker, there is usuallysubstantial unmarketed output,and their taxable surplus accountsfor a smaller share of their GNP.Even a tax-to-GNP ratio of 15 per-cent in such countries implies aheavy tax burden. Take India asan example: its taxable surplus maybe defined as all income beyondthe poverty line (defined there asthe income of the fortieth percentile

Note: Taxes include social security taxes.

in the distribution of income). Onthis basis, India's taxable surplusin 1975 was 41 percent of aggregateincome; the ratio of taxes to taxablesurplus therefore was 34 percentcomparable with the tax-to-GNPratios of industrialized nations.

Earmarking taxes for programswith strong ethical or politicalappeal can raise extra money whenfurther general taxation is notfeasible. In Colombia a share ofthe beer tax is reserved for publichospitals. Many Latin Americancountries finance their health andsocial security budgets by a pay-roll tax. (But payroll taxes coveronly formal employment, and theytend to reduce growth in jobs byraising the cost of labor relativeto capital.) Motor fuel taxes aregood for earmarking, for severalreasons. They are easy to collect,are progressive, help curb oil con-sumption, and have high revenuepotentialin some cases exceeding1 percent of GNP. But like allearmarked taxes, they should beused only sparingly, because theyincrease the rigidity of the waygovernment revenues are spent.

Reallocsting existing revenues

Public spending on human de-velopment can be increased byreallocating government revenuefrom less productive uses, including

wasteful showcase projects, sub-sidizing inefficient enterprises and,so far as security considerationspermit, military spending (whichon average in East Asia, SouthAsia and the Middle East exceedspublic outlays on education andhealth combined). And withinhuman development programsthere is often room to reallocatebudget shares away from high-costand less-urgent projects (such asurban hospitals and universitieslargely serving the relatively well-off) and toward more basic pro-grams (such as primary health careand education).

Keeping costs down

By modesty in standards and effi-cient choice of technology, govern-ments can provide services relativelycheaplyand without precludingfuture improvement. (For exam-ple, public standpipes can supplysafe water at some sacrifice in con-venience but at less than half thecost of individual house connec-tions.) This general approach willoften be opposed by teachers,doctors, architects, engineers andother professionals who insist onhigh standardsand correspond-ingly high costs. Not surprisingly,the financial constraint is then saidto prevent the extension of ser-vices to poor rural areas. Politicalleaders have sometimes felt thatit was better to accept unaffordablyexpensive standards than to riskthe charge that they were backing"second rate" projects. But theWorld Bank's experience in health,education and urban developmentprojects suggests that many govern-ments now see political as well aseconomic benefits from being ableto reach the poor by acceptinglower standards initially.

Chapter 5 discussed a numberof specific ways of economizingin health, education and nutritionprograms. China's barefoot doc-tors (see box overleaf) are an excel-

73

Table 6.1 Taxes as a percentageof GNPGroup ofcountries 1953-55

Percentage1972-76 increase

7 low-incomedevelopingcountries 11.2 16.0 43

17 middle-incomedevelopingcountries 12.1 16.4 36

Total (24developingcountries) 11.8 16.3 38

15 developedcountries 26.2 36.2 38

China's barefoot doctorsBest known for its use of "barefootdoctors" at the grass roots, China's ruralhealth care system has several other facesspecialized urban hospitals serving thesurrounding areas, well-equipped countyhospitals, and health clinics at communecenters. These facilities provide indis-pensable support for the extensive coverageprovided at the "brigade" levelcateringto a large village or several small ones.Each brigade sets up a program withfinancial support from the government;but once established, it must be self-financing (though the government mayhelp in exceptional circumstances). Amajority decision of the brigade membersis enough to start or end a program; indi-viduals can choose to joinand leaveit.

China's 1.6 million barefoot doctors(roughly one per 600 people) operate atthe brigade level in rural areas. Manyare women, selected by the brigademembers for training, and supported bythem during training (which usually takesplace in the slack agricultural season).After completing training, the barefootdoctors return to their brigade, continuingto devote part of their time to farm work.

Barefoot doctors are trained to useboth modern techniques and traditionalChinese medicineacupuncture andherbal cures, for example. By combiningthe two, they increase acceptance ofmodem treatment and reduce costssincethey prepare herbal medicines from locallygrown ingredients.

As a rule, the brigade program is

financed from four sources: an annualpremium paid by members; charges forthe service; appropriations from thebrigade's social welfare fund (collectedthrough a tax on each production team'sincome); and, sometimes, subsidies fromthe county government.

The annual premium, 1-2 yuan ($0.60-1.20) per person or 5-10 yuan ($3-6) perfamily, depending on the locality, is aconsiderable sum for peasants whoseincomes average only about 100 yuan($60) a year (only a small proportionof which is cash income). The brigade'ssocial welfare fund is a fixed percentageof its total income, so the contributionfrom the fund to the health programdepends on the brigade's income. Mem-bers pay for each visit to the brigadehealth station. In complicated cases, theymay have to go to the commune healthcenter or the county hospital. Chargesat the commune health center are nor-mally paid out of the brigade's healthfund; but patients attending the countyor specialized hospitals must pay at leastpart of the fees themselves.

Like other primary health care systemsrelying on community health workers,China's has faced problems of credibilityand training, and of uneven levels ofservice. Steps are now being taken toaddress these problems, including moreemphasis on initial and in-service trainingof barefoot doctors. The intention is toupgrade the services as funding and staffskills permit.

lent example both of keeping costsdown and of upgrading servicesas the economy growsthe Chineseare now providing their primaryhealth workers with additionaltraining and better support. Restrict-ing subsidies to those who cannotafford to pay for services can alsohelp keep costs down (see pages62-63 for examples of how thiscan be done in nutrition pro-grams). But overly narrow targetingmay sacrifice some political supportfrom middle- and upper-incomegroupssupport that may be criticalin establishing a program to reachthe poor, too. Various ways of cut-ting unit costs in higher educationby far the most expensive part

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of the educational systemwerealso discussed earlier (see page50).

Using resources other thannational tax revenue

The state invariably plays a centralrole in education, health and nu-trition programs. But it is by nomeans the only source of financefor human development. With theproper incentives, individuals, pri-vate firms and other nongovern-mental organizations can play animportant role.

Most food consumption, ofcourse, is privately financed.Moreover, the relatively well-offare often willing to pay for private

education and medical treatment.Where the expansion of privateeducation and health care is notinconsistent with national policy,this would allow scarce govern-ment funds to be concentrated onthe poor. But if the middle classesinvariably send their children toprivate schools, much of the nec-essary political support for high-quality public education may belost.

One way of mobilizing privatefunds for education is by restrictingthe number of places in publicuniversities, maintaining highstandards there, and then allowingthe private sector to cater to thosewho can afford it but do not succeedin the stiff competition for theplaces in public universities. Scholar-ships to public universities can beprovided for those who cannotafford tuition fees. This has beendone in South Korea, where 72percent of higher education enroll-ments are in private institutions,while in primary education (whichis virtually universal) 99 percentof the enrollments are in publicschools.

In some cases it is even possibleto charge the better-off enoughto subsidize services for the poor.In many countries, for example,fees for private and semiprivatehospital rooms are set well abovecosts and the surplus used to sub-sidize poorer ward patients. Thereare even better opportunities forthis type of cross-subsidy in urbanwater and sanitation systems,where the subsidy can be virtuallyautomatic. The well-off are gen-erally willing to pay more than theactual cost of the service becausethe alternative to being connectedto the public system is a privatewell or septic tank, at much highercost.

Local resources can also reducethe financial burden on the center.In Tanzania in the mid-1970s, self-help labor was equal to about 10

percent of the development bud-get. The Tanzanian governmenttypically provides constructionmaterials for projects, and thelocal communities provide thelabor. Self-help organizations existin many developing countries: oneexample is Sri Lanka's SarvodayaShramadana Movement (see box.)Most self-help projects in the

developing world involve build-ing such things as wells, schoolsand health clinics. But they do notstop there: in many countries localpeople provide food and housingfor primary school teachers. It ismore difficult, however, to mobilizesustained support for recurrentcosts than for one-time efforts, suchas construction projects.

Self-help in Sri LankaFrom small beginnings in 1958, theSarvodaya Shramadana Movement nowemploys some 6,000 full-time workersand reaches more than 10 percent of thecountry's rural population. It has full-scale programs in some 300 villages, butis active in another 2,500. It has organizededucation, health, nutrition, sanitationand housing; set up agricultural andhandicraft programs; and is starting topromote other small-scale rural industries.

The village of Panakura, in the poorhilly district of Kegalle, provides a goodexample of the Movement's work. SimonJayawickrama had graduated fromPanakura's primary school and was doingwell in the secondary school two milesaway; then he had to drop out in thetenth grade to help support his family.Through his former teacher and the localBuddhist monk, he made contact withthe Movement; with the help of the localSarvodaya workers in nearby Atulugama,Simon began working amongst Panakura's81 families. After intermittent visits overa two-week period, a first Shramadanaworkcamp was organizedto build aroad to the village. A second camp beganbuilding a community centerboth proj-ects chosen by the villagers themselves.

The Sarvodaya Movement providedcement, reinforcing rods and skilledlabor. For 15 weekends, 80 percent of thevillagers put in 6-8 hours of manual labora day. With the help of 100 young workersfrom Sarvodaya groups in other villages,they established a community kitchenwhere everyone pooled and preparedtheir food; took part in community medi-tation, singing, dancing and other culturalactivities; and held two daily communitymeetings (called "family gatherings")where everyone, young and old, had anopportunity to discuss their problemsand ways of solving them.

Following the workcamps, Simon and10 others went to the Sarvodaya regionaltraining institute at Kegalle for a two-

week leadership training course, On theirreturn they began forming what Sarvodayacalls the "social infrastructure"groupsfor mothers, farmers and so on. Repre-sentatives from each group made up theVillage Reawakening Council, which hasinitiated various productive activities,such as growing bananas and passionfruit as cash and food crops, and set upa cooperative store.

In the community center built dur-ing the Shramadana camp, one of theSarvodaya trainees has helped the mothersorganize a community kitchen and day-care center. Here young children aretaught about health and hygiene, andare vaccinated by a visiting governmenthealth worker (who received part of hertraining from Sarvodaya). The school-age children's group is responsible for agarden that helps to supply the communitykitchen, and for keeping the communitycenter clean. The local Buddhist monktook a four-month course on villagedevelopment at the special Sarvodayatraining school for monks.

As well as extending its coverage, theMovement is improving the follow up tothe initial Shramadana workcamp phase,to prevent backsliding. Although thelong-term effect of Sarvodaya's workremains to be properly evaluated, mostobservers have been strongly impressedby the way it has involved people indevelopment. It has attracted widespreadinternational support.

How much has all this cost? TheSarvodaya budget for 1979-80 was $2.3million, an average of less than $1,000per village assisted. Voluntary labor andother payments in kind contributed manytimes that amount. Of the cash budget,some 80 percent came from internationalassistance (both private and official), 10percent from Sri Lankan donations and10 percent from the sale of commoditiesproduced in Sarvodaya's training farmsand schools.

As people become more mobileand the cash economy more wide-spread, the strength of traditionalself-help efforts may wane. Butinstead of providing resources inkind, local communities can raisemoney (through local taxes orcharges) to support their efforts.Like other forms of self-help, thiscan be stimulated by matchinggrants from the central governmentin support of locally initiated andmanaged activities. In Kenya, forexample, the government assistshtrsmbee (self-help) projects thatmeet official guidelines. But slug-gish administration in centralagencies can suffocate local partici-pation and self-helpenthusiasmand initiative may wane if deci-sions take too long or promisedassistance does not arrive on time.

Self-help is not always the rightanswer. In education, for example,local financing can lead to such anuneven distribution of qualifiedteachers, books and equipmentas to intensify the inequities thecountry is trying to reduce. North-eastern Brazil and northern Nigeriaprovide two cases in point. In bothregions, low incomes partly explainwhy the wages and quality ofteachers fall below the nationalaverage; they also partly explainthe low enrollment rates in theseregions. If local economic andsocial progress lags well behindthe national average, financial andtechnical assistance from the cen-tral government will be crucial.

Developing administrativestrengths

Institutional constraints are in manycases at least as serious a barrierto human development as short-age of funds or lack of politicalsupport. Effective administrationusually requires more than theefficient working of official bureau-cracies; it depends on such factorsas the availability of middle-level

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manpower, the complementaryactivities of local governments andvoluntary agencies, the receptivityof intended beneficiaries to publicservices, and the persistenceof effort.

Unlike many aspects of agricul-tural, industrial and infrastructuraldevelopment, human develop-ment programs can rarely be putout to contract. Improvements can-not be effected by changes inpolicy or legislation alone. Funds,equipment and advanced technol-ogies can seldom substitute fortrained field personnel or admin-istrators.

Administration is a vital ingre-dient in primary health care: with-out adequate training, supervisionand supplies, locally recruitedparamedical staff cannot be effec-tive. This is one of the importantlessons of Brazil's early experiencewith rural primary health care inits poor northeast region, one con-firmed in countries as diverse asChina, Jamaica and Botswana.

In education, too, there areobvious administrative difficulties,because of the number and geo-graphic spread of primary schools.But most countries have wideexperience of operating an educa-tional system, although majorchanges in curricula or teachingmethods may be administrativelydemanding. For nutrition, generalfood subsidies are simpler to or-ganize than targeted programsbut subsidizing food consumedmainly by poor people (see pages62-63) is a form of targeting thateases administrative problems.

Improving administration at theperiphery is far more complex anddifficult than administrative reformat the center, a task that has itselfoften proved intractable. Many ofthe poor are hard to reach throughconventional public programs, andthe end-of-the-line workers maynot be motivated to break thesocial, linguistic and physical

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barriers that separate them fromthe poor. Supply lines for text-books or medicine may be con-tinually breaking down, and thenecessary technical support maybe lacking. But these and similardifficulties must be overcome toreach the poor; that usually meansimproving organization at thegrass roots.

Strengthening governmentmcchinery

No matter how resourceful indi-viduals or local communitiesmay be, sustained progress inhuman development inevitablyrequires national governmentsto mobilize and apply the muchgreater resources, both domesticand international, at their disposal.

Reviews of World Bank projectsreveal a number of common insti-tutional problemsamong them,weak planning agencies and aninability (or failure) to relateannual budgets to long-termdevelopment priorities. Some ofthe existing deficiencies are due toinappropriate administrative struc-tures and procedures, which stilltend to reflect the metropolitanmodels on which they werepatterned. They plate undueemphasis on central control andtake inadequate account ofprevailing cultural or socialattitudes.

Other weaknesses arise be-cause the administration is notproperly geared to identifyingthe people to be served, increasingtheir access to services, adaptingservices until they are appro-priate, delivering them efficientlyand observing (and reactingto) the public's response. Thissequence requires people who canlearn from the intended benefi-ciaries and gain their confidence(see box). This is critically impor-tant when the poor are cautious(or even hostile)as they often arein their reactions to preventive

medicine, family planning andnutrition education.

Most developing country gov-ernments are well aware of theneed to improve administrativeperformance, and have under-taken some form of public sectorreorganization. A common objec-tive is to decentralize; planningunits are being created at thestate or provincial level in thePhilippines and Sudan, for example,as a first step toward greaterdevolution of power (thoughpremature decentralization, as inTanzania, can complicate programimplementation).

With the help of multilateraland bilateral agencies, manycountries are trying to improvethe performance and skifis of publicsector employees through training;through better job classification,which facilitates recruitment, train-ing and evaluation; and throughchanges in civil service regulationsfor example, to specify promotionrequirements more clearly and totighten discipline. Thailand isintroducing special procurementprocedures to prevent slippage inproject implementation. Malaysiais implementing a more systematicapproach to the preparation andappraisal of agricultural projects.Several Asian and African coun-tries have begun to streamlinecumbersome budgetary practices.

These and other efforts to makegovernment machinery more effi-cient will take many years toproduce discernible results. Thecontinuous expansion of publicsector activities in most developingcountries has produced its ownset of constraints: many bureau-cracies have become large, powerfuland protective of their own interests.Frequent changes of politicalleadership have insulated somebureaucracies from pressures forreform; in other countries radicalattempts to restructure or purgepublic services have greatly

Rural poverty unperceivedPoor people are often the most difficultto reach. Many live on the edges ofvillages, far from main roads. They areilliterate, have no radios and know littleabout events beyond their neighborhood.They rarely go to public meetings andtravel little except in search of work.Those whose legal position is weak (suchas refugees or squatters) may even tryto hide, to be invisible to the officialeye. Out of sight, they hope to be outof mind.

As for the professionals who work inrural development programs, many ofthem are caught in an urban trap. Young,unmarried officials are sent to remoterural areas; but age, marriage and theircareers draw them back to the townsand cities. And those who do live in thecountryside often direct their attentiontoward people they have most in commonwiththe not-so-poor.

What can be done to correct this bias?Changing career patterns and incentivesto reward rural work is fundamental;training can also play a role.

Without the need for complicatedresearch, in-service training can helppeople to understand more about poverty.For example:

Family case studies: a day in the lifeof a landless household, or how a poorfamily survives the hungry season.

Getting poor people to talk aboutsignificant incidents in their life and work,particularly about those they see as beingresponsible for their poverty.

Exploring practices and attitudesthat affect, for instance, diets and fertility.

Seeking out those who do not useservices or adopt new practices, and tryingto understand the reasons for this.

Relatively simple but systematic surveyscan sometimes help those who carry themout. To take one example: in a denselypopulated part of western Kenya, junioragricultural extension staff and homeeconomics workers were each given arandom sample of 100 households tosurvey, in the area where they worked.After the survey, many at first thoughtthat the sample had been biased heavilyagainst the better educated households.One of the agricultural staff complainedthat only one of his 100 households hadan improved breed of cow: he wassurprised to learn that he had, withoutrecognizing it, been concentrating onbetter-off households; in fact the areaaverage was only one of these cows formore than 200 households. A homeeconomics worker was appalled at thepoverty she had found. "These peopledo not come to my meetings," she said.Perceiving reality is the first step tochanging it.

reduced the ability of governmentsto maintain essential humandevelopment programs.

Choosing appropriate administrativestrategies

To help make programs fullyeffective, administrators may needto use a variety of institutionsnational bureaucracies, publicenterprises, private businesses,voluntary agencies, local govern-ments and organizations of intendedbeneficiariesand strike the rightbalance between them.

In family planning, for example,traditional channels of privatemarketing, which reach even remotevillages, have proved effective inmany countries (including India,Indonesia, Jamaica and Sri Lanka).These private distributors supple-

ment rather than supplant theservices available through healthministries or other official familyplanning agencies. The cost to usershas been kept low by providingthe private distributors with freeor highly subsidized contraceptivesand controlling the retail price. Andin Singapore, contraceptive infor-mation was at one time distributedwith public utility bills.

Organizations of intendedbeneficiaries are not conven-tionally regarded as administrativeagencies, but they can play avaluable role. Farmers' organiza-tions, rotating credit associations,women's clubs, religious groupsand marketing cooperatives are inprinciple accountable to, and canreflect the interests of, their mem-bers. They can involve their

members, too, as no bureaucraticagency can. When local healthcenters in northern Senegal wereunable to reach the people directlyin a child-feeding program, thereligious leaders took over part ofthe food distribution: recent re-search indicates that this is aneffective way of getting food topoor families. Local groups canalso provide reliable feedback onproject experiments, and can in-fluence bureaucracies to improveservices in ways that unorganized,poor individuals could not.

Research in both developed anddeveloping countries shows thatwhen the beneficiaries are involvedthrough their own organizations,they respond more effectively toservices. That has happened, forexample, in 4,500 village coopera-tives organized by the IndianNational Dairy Development Board;in 200 local development associa-tions in the Yemen Arab Republic;in more than 9,000 Mothers' Clubsin South Korea, where familyplanning and other communityfunctions have been assumed bytraditional credit associations(called kaes); and in special radiolistening and discussion groups inwhich about 2 million ruralTanzanians participated duringthe "Man is Health" campaign inTanzania in 1973.

There is of course a danger thatpoor people's organizations maycome to be dominated by localelites, with an associated risk ofcorruption. One of the main prob-lems of agricultural cooperatives,for instance, has been to resistthis type of domination. Unlikesubsidized agricultural credit orfertilizer, however, primary educa-tion cannot be stolen, hoarded orresold. And though medicines canbe, even the richest person wouldnot want a hundred vaccinations.Another problem is infightingbetween rival local groups. Butthe suspicions that established

77

bureaucracies may have aboutorganized beneficiaries or localgovernments should not blindthem to their potential for effectiveaction.

When administrative abilitiesare weak, it is sensible to concen-trate on projects that do not needmuch organization. Food fortification(see page 63) involves minimaladministrative effort. And inCameroon a state corporation haseffectively distributed low-costpharmaceuticals through commer-cial channels. But this approachdoes not work for every kind ofservice, and it often fails to reachthe most deprived people.

Where countries have a relativelystrong administrative system butthe poor are badly organized (afairly common combination),governments can provide servicesthat do not require joint actionsuch as primary education, basichealth services, mass vaccinationcampaigns and subsidized food.Sri Lanka and the Indian state ofKerala, for example, have man-aged to achieve striking progresswithout relying much on localdevelopment groups. But eventhere, programs tend to be moreactive and effective if the intendedbeneficiaries are involved throughlocal organizations.

Demand: ensuring that servicesare used

As has been shown, the poorsometimes fail to take advantageof services even if they are avail-able (see page 52). The reasonsfor this "reluctant demand" varyacross countries and sectors; butthe more accurately they can beidentified in particular cases, thebetter they can be tackled. Some-times this can be done by changingthe way a service is provided orreducing the costs of using it Oftenit means changing the perceptionsof intended beneficiaries. This may

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be simply a matter of providinginformation; but it commonly re-quires changes in long-standingattitudes and habits.

Changing the way servicesare delivered

A school calendar may competeunnecessarily with the crop cycle,with important exams held attimes when students are mostneeded by their parents in thefields. The staff of a health centermay not keep a regular schedule,forcing people who have traveledfor several hours to return homewithout treatment. The local clinicmay be short of drugs or so incon-veniently located that a patientwith a minor complaint mayprefer to go straight to an urbanhospitalor to the traditionalhealer, who may live in the village.Often the changes required tomake a service more attractive topotential users are self-evident,such as providing them in alanguage that the beneficiariesunderstand. This does not meanthat they are necessarily easy toimplement.

Reducing costs to users

The benefits of services for health,education, nutrition and familyplanning often may be (or at leastappear to people to be) less thantheir direct and indirect costs (seebox). The latter can sometimes bereduced. For example, providingfree textbooks (and uniforms, ifrequired) and locating schoolswithin walking distance will reducethe direct costs of school attendance.Providing free transport to healthclinics is another possibility.

Providing information

The reason people do not take upa service may simply be that theylack information about it, or theymay not know what to do: peoplemay claim to be "aware" thatfamily planning services exist, but

have little idea what their useentails. They may assume that anewly established clinic will chargefees or require membership.Education and organization ofbeneficiaries can help. So candirect information campaigns,making use not only of mass medialike radio or billboards, but alsoentertainers. Research on thediffusion of new ideas suggests thatdirect contact between people isthe most effective form of com-munication. It has also been foundthat mass media are more influentialif they are heard (or read) in agroup. Radio forums, for example,in which a radio program isfollowed by a discussion, are apromising way of changing socialattitudes and behavior. Since it isdifficult to form such groups on anad hoc basis, religious and othersocial groups may be useful.

Overcoming sociocultural obstacles

Deciding to use a service mayrequire a more fundamental changein attitudes and practices. The ideamay be controversial; for example,women may have heard unfavorablerumors about modem medicine orfamily planning methods. Thepoor may not appreciate thebenefits, say, of different hygieneand sanitation arrangementsbecause they do not understandhow diseases are caused. Or thelack of demand may have rootsdeep in traditional taboos, beliefsor preferences. In many countries,men often refuse to allow womenand girls to go to male doctors orcommunity health workers. Thesame beliefs mean that girls arefrequently not sent to schoolandhence there are few female medicalworkers. In Africa and SoutheastAsia certain types of food rich invitamin A (such as dark green, leafyvegetables) are cheap and abundant.Yet many cases of blindness amongchildren are caused by vitamin Adeficiencybecause eating these

Private costs of using public services

Data on the private costs of using publichuman development services are scarce.A recent study of Peninsular Malaysia,however, estimated them for education,water and health care.

Education. Malaysian families hadto coverin addition to examination feesand purchases of texts and suppliesthecosts of shoes, uniforms, snacks, trans-port and special fees. In 1974 these aver-aged $47 a year for a student in primaryschool, $123 for a student in secondaryschool.

The table shows that families in thelowest income quintile spent about afifth of their incomes on out-of-pocketschool costs. Even allowing for somebending of the truth by respondents, thisis impressiveand it understates theburden. A fifth of the income of a poorfamily represents a far greater sacrificethan a fifth of the income of a wealthyfamily. And the cost of forgone earningswhat students could earn by working ifthey were not in schoolis excluded.

Water. Fewer than a third of the fami-lies in the lowest 40 percent of the income

Out-of-pocket costs, Peninsular Malaysia, 1974

Source: Jacob Meerman, Public Expenditure in Malaysia (Oxford, 1979).

distribution bought piped and treatedwater (nearly all of which is supplied ona metered basis in Peninsular Malaysia).Of these, 14 percent spent more than5 percent of their incomes on it. Theaverage burden for the poorest quintilewas 4.1 percent. There may again besome bending of the truth involved. Butthe burden of water charges was highenough to deter at least a third of thepoorest 40 percent who had ready accessto piped water from purchasing it.

Health care. The Malaysian studyshowed a strong relation betweenhousehold income and expenditure onprivate health carebut almost no relationbetween income and consumption ofpublic health care. Most patients paidno fees for public inpatient or outpatienttreatment. Nor were expenditures ontransport to the place of treatmentrelated to income, although there was aweak inverse association between traveltime and frequency of treatment. Thusthe need for medical care of the poorand most of the rest of the populationwas met through the public system atlittle private cost.

foods is regarded as a sign of lowsocial status.

Higher incomes and bettereducation will clearly help toovercome many of these obstacles.Traditional social and culturalstructures can sometimes also beadapted to new uses rather thanignored or swept aside. TheIndonesian family planningprogram has been notably suc-cessful in this respect, as well as indecentralizing responsibility forimplementation (see box overleaf).

The more that programs requirepeople to change their behavior

(the pattern of distributing foodwithin families), threaten estab-lished norms (family planning),challenge vested interests (profes-sional associations) or offer fewimmediately obvious benefits(sanitation), the more patientlythey must be introduced. Publiceducation and persuasion areneeded, and it will take a longtime to reap the economic andpolitical benefits.

Coercion

In attempting to spread humandevelopment, many countries have

gone beyond information andpersuasion to use various formsof coercion. Laws establishingcompulsory primary education areperhaps the most widespreadexample. Using laws is sometimesregarded as more unfairly coercivethan, say, manipulating costs, sinceit allows no parental choice at all.But because children usually suffermore than their parents, suchmeasures as compulsory schoolingshould be seen more as protectingthe rights of children than asrestricting those of parents.

Just how much coercion is con-sidered to be acceptable will varyaccording to a country's cultureand political values. In someplaces, traditional social struc-tures have been enlisted to exertpressure on their members. Thishas been a characteristic of theIndonesian family planning pro-gram. Among the Hausa in north-ern Nigeria, a program to eradicatesleeping sickness has been suc-cessfully sustained through strongleadership. Every year the villagersclear the undergrowth along thebanks of rivers and streams. Theydo not fully understand thereasons, but they are willing to dowhat their traditional leaders ask.Nevertheless, programs of educa-tion, health, nutrition and familyplanning have more chance ofsuccess if the beneficiaries cometo see the programs as servingtheir interests.

Affecting behavior within the family

Especially in poor households, theinterests of parents, children andold people can diverge, causingmaldistribution of food, educationand medical care within thefamily (see pages 61-62). Raisingfamily incomes can reduce oreliminate the economic reasonsfor unfair shares; more educationof parents, especially of mothers,can mitigate the cultural reasons(see box on page 50). in addition,

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Percentage Percentageof their income of households Percentage

Family Percentage spent on with piped of their incomeincome of households out-of-pocket and treated spent onquintile with students school costs water water

Lowest 73 18 20 4.1Second 67 10 37 2.6Third 71 10 43 2.0Fourth 66 8 62 1.5Highest 50 6 76 0.8

The banjars of Bali

Indonesia's family planning programcombines central direction with decen-tralized implementation. The programhas strong political support from thepresident, to whom its chairman reportsdirectly. Family planning is an integralpart of national and provincial develop-ment plansministers and provincialgovernors are responsible to the presidentfor their execution. And the programmaintains a central data system to monitorperformance and ensure that no regionor even village runs short of contracep-tives. But the task of implementing specificgoals rests largely with provincial andlocal staff, and political and communityleaders in the villages.

The program offers strong (but non-monetary) incentives for managers andstaff at all levels, because it was designedto give credit for success to local managers.Most of the contact with families is byvillage volunteers. The program rewardsthem, tooouter-island midwives canearn trips to Bali for training, whileBalinese chiefs whose villages havemade the most progress in family plan-fling are taken to see the successful EastJava program.

The approach is tailored to specificlocal needs; it fosters local initiative andexperiments with unconventional projects.People at provincial and village levels

submit ideas for new campaigns, andfunds are quickly provided for the onesapproved. The program has also madeuse of the private sectortraditionaltraveling herb vendors (called taken jemus)have been enlisted to supply contraceptivesto remote villages as well as urban areas.

In the province of Bali, the traditionalcommunity council (called benjer) hasbeen harnessed to promote family plan-ning. For centuries banjars have beenthe hub of village life. There are morethan 3,700 of them today; adult men inBali belong to their village banjar andattend monthly meetings. In 1974 thegovernment in Bali started to work throughbanjar leaders to create an awarenessof family planning, to identify peoplewho might be keen on planning theirfamilies, and to help them do so. Typically,the monthly banjar meeting now beginswith a roll call; each man responds bysaying whether he and his wife are usingcontraceptives. Replies are plotted on avillage mapprominently displayed.

The results have been striking. Anestimated 49 percent of eligible coupleshave adopted family planning in Bali,compared with 29 percent for the countryas a whole. The World Fertility Surveyshowed that the average number ofchildren a Balinese woman could expectto have had fallen from 5.8 in mid-1969to 3.8 in 1976.

improved earning opportunitiesfor educated women, lower infantmortality rates and a rising ageat marriage will help parents toprovide more for all their childrenand to have fewer of them.

Without these sorts of change,it is difficult to affect the way food,education and medical care areshared within families. But it isnot impossible. Door-to-door in-oculation campaigns can reach allchildren. This has been donerecently in Mozambique andSierra Leone. And the way workis organized will also affect inequal-ities within families. For example,the Anand Dairy Cooperative inIndia increased the income re-ceived directly by Indian womensince they have traditionally beenresponsible for looking after cows

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and goats, selling the milk andcontrolling the proceeds them-selves. By selling cooperatively, themembers get higher profits thanthey otherwise would. Families arefed better. More of the childrenare now attending school. And asthe younger educated women areseen to be taking a greater part inrunning the cooperative, educationfor girls is becoming more highlyvalued. In dairy developmentprojects in three other Indianstatesall based on this modelsimilar results are being obtained.

International assistance

International aid for human de-velopment programs has beenprovided for decades and hascontributed to several notable

successes. It has played a majorrole, for instance, in helping tospread education; in eradicatingsmallpox and sharply reducingseveral major diseases (includingyaws, malaria, leprosy and Africansleeping sickness); and, perhapsmost significantly, in increasingthe production of basic foods.

On the other hand, some aidprograms have failedor havesucceeded while indirectly con-tributing to inappropriate policies.Until the early 1970s, there wasan emphasis on showcase univer-sities, large urban hospitals andlarge-scale agricultureconsistentwith development thinking at thattime. Not surprisingly, such inter-national assistance involved trans-ferring some technologies orinstitutions from developed coun-tries without adequate recognitionof how the circumstances of de-veloping countries differed.

Since the benefits of human de-velopment are received partly bytoday's children but even more bytheir children and grandchildren,governments that are hard pressedfinancially may find it difficult tojustify spending as muth on humandevelopment as is desirable forlong-run economic growth, letalone for alleviating poverty. Thisdilemmawhich will be acuteduring the next few years of finan-cial stringencyis one for whichexternal assistance can be particu-larly helpful. Many other measuresfrom small-farmer programs topower generation and industrial-izationare also needed to reducepoverty and raise average incomes;these merit strong internationalsupport as well.

If donors providing assistanceto a country are unwilling tofinance human development pro-grams, these programs in mostcases will be smaller than theyotherwise would have been. Simi-larly, if donors are willing tofinance only "bricks and mortar"

but not teachers or health workers,the net effect will be excessive cap-ital intensityshowing up in overlyexpensive and underused build-ings and insufficient staff. Yet indeveloping countries a high pro-portion of spending on primaryeducation and health care, for ex-ample, isand should beforoperating (recurrent) costs. Inmany countries, such as Tanzaniaand Upper Volta, money for oper-ating costs is already very shortwith the result that schoolswithout books or even paper,health posts without medicines orsupervision (due to inadequatetravel budgets or gasoline short-ages) are increasingly common.These shortages will get worse asgrowth slows and countriesstruggle to keep up their physicalinvestment rates.

Most aid agencies have preferredto limit their funding to physicalinvestment, being reluctant tofinance operating costs partlybecause of concern that projectsin which a developing countrylacked a substantial financial stakemight not develop enduring roots,but also from fear of encouragingconsumption at the expense of in-vestment. As this Report stresses,however, human developmentincreases productivity, reducesfertility and thus promotes long-term growth in average incomes.A significant part of spendingoperating as well as capitalonhuman development therefore isinvestment. This is most evidentin primary education, which inmany countries has economic re-turns well above average: thesalaries of teachers should no morebe regarded as consumption thanthe wages of workers on irrigationprojects. There is a large elementof investment in family planningprograms as well (indeed the esti-mated returns often are even higher)and to a lesser extent in health andnutrition programs.

With increasing recognition ofthe importance of antipovertyprograms, and of the investmentcomponent of many of these pro-grams, practices have begun tochange. Several donors, includingthe World Bank, have been financ-ing the salaries of agriculturalextension workers, and in somecases the operating costs requiredto cany out education and trainingprojectsteachers' salaries andteaching materials, for example.In May 1979 the OECD's Devel-opment Assistance Committeeadopted new guidelines on thernfinancing of local and recurrentcosts, which recognized that basichuman development programs wereparticularly suitable for thesekinds of financing.

Donors should of course beconcerned to avoid waste in oper-ating costs, just as in constructioncosts. And they need to ensurethat programs develop adequatefinancial support for operating costsfrom national and local governmentslest they wither away wheninternational aid is withdrawn.Thus the share of operating costscovered by external assistanceshould be reduced gradually, whichwill encourage steady increasesrather than quantum jumps in theamounts to be financed from localfunds.

Donors should also considerproviding sectoral or subsectoral,as well as project, financing. Thisenables governments to focus onthe institutional, planning andpolicy issues that have a stronginfluence on the success of individualprojects; it also provides a usefulframework for striking the appro-priate balance between capitaland operating costs. In practice,subsectoral financinglimited byactivity or regionis often preferableto sectorwide financing. Throughsubsectoral financing, donors canassist a continuing series of activities,while ensuring that no one project

or program relies for long periodson outside aid and that implemen-tation difficulties in one projector region do not interfere withcontinued financing for others.

The importance of persistence

Programs that cost the least oftenrequire the most organization.Moreover, whether in state bureau-cracies at one extreme or amongthe intended poor beneficiaries atthe other, an organization's strengthgenerally depends on the educationand resourcefulness of its members.That cannot be developed overnight.

One key lesson from 30 yearsof development experience is thatit takes a long time to build upeffective institutions. Neithergovernments nor donors shouldexpect quick results, or give uptoo easily. For example, evaluationof family planning programs showsa close relation between theireffectiveness and the number ofyears they have been in existence.

As Chapter 5 explained, and asFigure 6.1 confirms with respect

Figure 6.1 Literacy rates, selecteddeveloping countries, 1950 & 1970°(p,rrrst)

Greece

Spamii:

Puerto Ri:o

El Salvador

NicaraguaGuatemalaHaiti

1950

a. The rates are or the 20-24 age group anddetermined by data availability. Dates are close to1950 and 1970.

81

1970100

90

80

70

60

50

40

30

20

10

to education, the level of humandevelopment at one time is stronglyinfluenced by its level decadesearlier. Thus, human developmentis not something that can bedeferred: what is done nowor notdonewill have an influence for along time to come. When austerity

82

programs are necessary (as willbe the case for a number of coun-tries over the next few years),attention should be given to theneed for investment in the humandevelopment of the next genera-tion. When economic difficultiesoriginating in the workings of the

world economy or economic mis-management cause cutbacks inhuman development programs,children pay heavilyin loss offuture income or health, and insome cases with their lives.

7 Priorities and progress in regional perspective

The past three chapters haveexamined the potential role ofhuman development in attackingabsolute poverty, and some of theproblems and policies in the mainhuman development areas. Thischapter addresses some broaderhuman development planningissuesincluding the tradeoffsbetween growth and povertyreduction, and the allocation ofresources between human develop-ment and other activities. After ageneral review, these and otherissues are examined in the contextof a regional typology of developingcountries. Since the needs and thedifficulties are greatest in the twopoorest regionsSub-SaharanAfrica and South Asiathey receivemost attention. The other threeregionsthe Middle East and NorthAfrica, Latin America, and EastAsiaare discussed collectively ina single section.

Issues for planners

Much absolute poverty, and someof the ways to attack it, are obvious.Yet lack of information about thenumbers and characteristics of thepoor, and the causes of their poverty,handicaps the design and imple-mentation of effective antipovertypolicies. Even in countries wheremuch work has been doneBrazil,India, Indonesiacontroversy per-sists about such basic facts as trendsin the incomes of the poor. Thisis partly for lack of relevant data

from household surveysthoughinformal study and patching to-gether evidence from other sourcescan help. It is also a matter ofanalysisexperience has shownhow important it is to distinguishhousehold income from incomeper household member, to find therelevant price index to calculatechanges in the real incomes of thepoor and to take account of seasonalvariations. For example, since thepoor spend the bulk of their incomeson the cheapest foods, a price indexbased on national average con-sumption patterns may seriouslydistort what has been happeningto absolute poverty.

To be effective, policies mustalso distinguish the causes of pov-ertywhich vary widely within aswell as between countries. Thereare common elements and impor-tant linkages. But different measureswill be needed to benefit, say,subsistence farmers on poor soils,landless laborers in fertile butcrowded areas, and female-headedhouseholds in large cities. Povertyprograms have sometimes focusedalmost exclusively on small famierseven when the majority in absolute.poverty were in fact landlesslaborers.

As important as differentiatingthe causes of poverty is differen-tiating its characteristics. Absolutepoverty is a bundle of thingslowincome, malnutrition, ill health,lack of education. Different groupsof poor people may initially suffer

from some more than others; poli-cies should correspondingly varyin their focus.

TrtdeofJs between different objectives

In the past the severity of thetradeoff between poverty reductionand growth has sometimes beenexaggeratedespecially from anarrowly economic point of view.As the past two World DevelopmentReports have emphasized, moresupport for agriculture, land reform,expansion of industrial employment,and a more even distribution ofpublic services can all help to reduceabsolute poverty and accelerategrowth. This Report similarlystresses not only what greaternational income can do for theeducation, health and nutrition ofthe poor, but also how humandevelopment policies for the poorcan contribute to raising nationalincome.

It would be wrong, however, tosuggest that there are no tradeoffs.Although it is highly desirable, forexample, to help the aged and theincurably sickamong the poorestof the poor in most societiesthiswill contribute little or nothing togrowth. Similarly, in expandingrural primary education, countrieswill have to choose between theplaces that are poorest, and those(the rapidly modernizing ones)where more education would havethe largest effect on farm output.The severity of tradeoffs, more-over, is (as Chapter 6 has shown)

83

in most cases amplified by political,fiscal, administrative and evencultural considerations. If, forpolitical reasons, more services forthe poor must be matched by moreservices for the rich, the cost ofproviding for the poor is multiplied.

But economic factors underliemany tradeoffs, especially sincemoney can sometimes ease evenpolitical and administrative prob-lems. A country that is alreadycomparatively wealthy, or whosegrowth prospects are excellent,generally has more latitude thanone that is poor, or whose growthprospects are grim. The severityof tradeoffs is thus also affectedby the international environment.Higher oil prices absorb resourcesthat could have been used eitherfor growth or for reducing poverty.So do cuts in aid, obstacles to com-mercial borrowing, and sluggishexports (and hence imports andproduction) caused by slow worldgrowth. Agricultural and industrialprotection in developed countriesundermine the efforts of developingcountries to foster agriculture andlabor-intensive industrialization.In the next few years, especially,the harshness of the choices thatpoor countries will have to makecan hardly be exaggerated. Norcan the degree to which these couldbe eased by enlightened policieson the part of other countries.

Btlance between humcrn development

nd other policies

The returns to human develop-ment programs can be high ineconomic termsboth directly(especially for education) and in-directly (especially through re-duced population growth). Theirimpact on the education, health,nutrition and fertility of the pooris also valuable in itself. But hu-man development programs alonecannot reduce poverty and pro-mote growth. A whole range ofother policiesfor infrastructural

84

investment, agriculture, foreigntrade, land reform, credit and re-searchmust do most of the job,even though many of them com-plement human development inimportant ways.

Even at the margin, the keyquestion is not whether the re-turns to human development arehigh, but whether they are higherthan returns to alternative uses ofthe resources concerned. Much willdepend on the circumstances ofthe country concerned, includingits past balance between humandevelopment and other policies.Some countries have devoted toolittle of their development budgetsto human resources, and too muchto physical investment; for them,a switch at the margin towardhuman development would bethe best use of scarce resources.Others, by contrast, may haveoverinvested in some aspects ofhuman developmentas suggested,for example, by the low rates ofreturn to higher education in cer-tain countries. In other cases,human development programs havehad low returns simply becausethey were hard to implement (seeChapters 5 and 6).

Overinvestment and underin-vestment, of course, cannot be de-fined without reference to the ob-jectives of governmentshowmuch weight they attach to growth,redistribution and human devel-opment, or to short- versus long-term goals. Much of the payofffrom better education and lowerfertility, for example, would accrueto this generation's children andgrandchildren. But peopleespe-cially poor peoplelegitimatelywant improvements during theirown lifetimes. This and othersources of economic or politicalpressure to concentrate on theshort or medium term are boundto reduce the attractiveness ofsomethough by no means allhuman development programs.

Balcince between different humandevelopment policies

As the analysis in Chapter 5 bearsout, there are also difficult choicesto be made within the general areaof human development. The diffi-culty is partly a technical onemore research is needed to quan-tify the returns to different sortsof programs in varying circum-stances. But it is again partly amatter of objectivesthe relativeweights attached to nutrition andeducation, for example. And it isagravated by economic con-straints: even with identical pref-erences, a poor country mightmake a different choice from aricher one when confronted withthe option of providing ruralprimary health care or expandingsome form of urban secondaryeducation with a higher economicrate of return. Choices are alsoaffected by the availability offinance (foreign and local, as wellas national) for different programs.

The difficulty of the choice iseased somewhat by the fact thatthe various aspects of human de-velopment are causally interrelated(see Chapter 5): an attack on anyone front is likely to produce re-sults also on others. Thesespillovers appear greatest in basiceducationwhich usually alsohas the biggest payoff in termsof increased income. There is thusa strong case for considering in-creasing (or in times of stringency,maintaining) expenditure on pri-mary schooling. This should notmean neglecting secondary andhigher education, nutrition, healthand family planning programswhich in all circumstances are im-portant, and in many may have abetter claim on marginal fundsthan primary education. Norshould governments overlook thepractical difficulties of translatinghigher enrollment targets intoadequate education and reduceddropout rates, or the length of

Figure 7.1 GNP per person,1.960, 1970 and 1980

(1977 dollurC

1960 1970 1980 Figure 7.2 Literacy, by region,

Excludes Afghanistan Israel and Turkey.Excludes Cuba.Excludes centrally planned economies

(China, Laos, Cambodia, North Korea and Virtnam(,Excludes South Africa and Nigeria.

time that must elapse before thefull benefits of even good primaryschooling are felt.

Country circumstunces

Appropriate policies in the field ofpoverty and human developmentwill vary widely according to thecircumstances of the country con-cerned. The rest of the chapterillustrates this point by comparingthe different regions of the devel-oping world. Regions, of course,are not decisionmaking units. Norare they homogeneous. But thereare important differences betweenthem (Figures 7.1, 7.2 and 7.3 con-trast their progress on incomes,

literacy and life expectancy); andregional analysis provides a moregeneral, if less concrete, perspec-tive than would a set of countrycase studies.

Sub-Saharan Africa

Most of the countries in the regionbecame independent in the 1960s.They inherited acute deficienciesin skills, institutions and generaleducation; overcoming these hasbeen a major concern of most oftheir governments. Progress hasbeen considerable, yet severeshortcomings remain. The region'sexperience illustrates that humanand institutional development arelong, slow processestheir neglecttoday is not easily overcome to-morrow. And while they arecostly, so is their neglect: as theanalysis of Chapters 4 and 5 wouldpredict, educational and institu-tional deficiencies coexist with lowlife expectancy, high fertility, in-

1945-75Adult literacy rule (percenl("

90

S. Asia

a. Trends before 1960 are approximate.

E. Asia-middle-income

E. Asia-lOW-income

Mid. East &N. Africa

Sub-SaharanAfrica-

middle-income

Sub-SaharanAfrica-

low- income

1940 45 50 55 60 65 70 75 80

Figure 7.3 Life expectancy,1960 and 1978a

Years70- ' e

65-

60-

55-

50-

45-

40-

1978

1960 h354.. 47' 4. .s.

a. Weighted by population. Excludes S. Africa,Cambodia and Israel.

efficient investment and slow agri-cultural progress.

Growth

The growth of incomes has beendisappointing, both in the middle-income and in the low-incomecountries (see Table 7.1). The twogroups are distinguished mainlyby differences in natural resourcesrather than in economic structure,institutional development or hu-man skills. GNP per person (which,in the absence of reliable infor-mation on the large subsistencesector, can be measured only ap-proximately) either fell or grew

Table 7.1 Sub-Saharan Africa:GNP per person

Note; Excludes South Africa.1977 prices.If oil-exporting Nigeria is excluded, this

figure falls to 1.5 percent.

85

Countries

Average annualpercentage growth Level,

1980'(dollarsi1980-70 1970-80 1980-80

Low-income 1.6 0.2 0.9 186

Middle-income 1 7 2.1' 1.9 493

less than 1 percent a year in 11countries during 1960-75; it rosemore than 3 percent a year in fourcountries. (Some of these meagergains have been wiped out bydeteriorating terms of trade.)Agriculture has been almost uni-formly sluggish; food output perperson appears to have declinedin 25 countries (mainly in theSahel) between 1969-71 and1976-78.

The constraints that hamperedgrowth in the past have not easedmuch. The discouraging prospectsfor growth in both low- and middle-income African countriesandthe resulting likelihood of an in-crease in the proportion of peoplein absolute povertywere de-scribed in Chapter 2 (page 11).

How the international economyaffects African countries will de-pend on aid levels and on primarycommodity prices, but importantlyon their own actions as well. Thepotential gains from processingprimary products for export remainlargely untapped. Primary productstypically account for 80-100 percentof merchandise exports (thoughnot all are suitable for processing;see page 23). In some countriesexports have stagnated because ofpoor domestic agricultural perform-ance; many more have had toincrease their food imports. Grainimports into Sub-Saharan Africarose from about 1.6 to 2.6 milliontonnes between 1965 and 1975 (andthe US Department of Agricultureprojects a rise to 4.5 million tonnesby 1985).

The importance of agriculturegoes far beyond its effect on trade.As the region most dependent onagriculturethe main activity ofmore than 70 percent of its 360million peopleaccelerating growthand reducing poverty and malnu-trition in Africa depend more thananywhere else on improved agri-cultural performance. Evidence thatfarmer literacy affects the adoption

86

of new farming methods (see page48) has obvious implications forthat improvement. But the prob-lem is clearly much wider. Modernagricultural "packages" (of seeds,fertilizers and cultivation tech-niques) have yet to be developedfor many African localities andsubsistence crops. Agriculturalprograms generally have not re-flected the considerable role thatAfrican women play in agriculture.And there are basic deficienciesin credit, infrastructure, agriculturalincentives, extension services andmarket integration (the WorldDevelopment Report, 1978 consid-ered in more detail the require-ments for faster growth in Africa).

In large measure these deficien-cies reflect institutional weak-nesses and the related scarcity ofexperienced, trained people. Norare their effects confined to agri-culture. In several countries a sig-nificant industrial sector is alreadyemerging, but the scarcity and highcost of suitably skilled labor andmanagement remain major im-pediments to African industriali-zation.

While administrative weaknesseswill take time to overcome, theeffectiveness of many programsis also hampered by difficulties infinancing operating costs, espe-cially for materials and supplies.Progress could be more rapid ifaid donors were to relax theirtraditional preference for fundingcapital rather than operating costs.

In addition, there is a seriousdanger that economic stringencyin the next few years will lead tocutbacks in human developmentprograms, despite the importanceof their contributionoften ex-ceeding that of additional physicalinvestmentto Africa's long-termdevelopment potential. it is essentialthat aid donors, especially in thefirst half of the 1980s, shouldsubstantially increase their effortsto help African governments

avoid such false economies (whilemaintaining the already very lowconsumption levels of most oftheir people).

Poverty

Given the trend in average incomes(particularly in agriculture), theproportion of the population livingin absolute poverty has probablyincreased in many countries sincethe early 1960s; in 1975 an esti-mated half of the people in theregion were absolutely poor. Mostare subsistence and small-scalefarmers, but in some countries(such as Somalia) a sizable pro-portion are nomads. As comparedwith the low-income countries ofAsia, poor agricultural conditionsand farming methods are a moreimportant cause of low agricul-tural incomes than unfavorableland-man ratios.

Humun development issues

Despite substantial gains since1960, life expectancy remains be-low 50 and adult literacy ratesbelow 25 percent in most coun-tries. Both are generally belowexpected values for countries attheir income levels. For example,the norm for life expectancy(Figure 7.4) is about 50 years forcountries with average incomes ofabout $350; but Senegal, with thatincome level, has a life expectancyof only 42 years. Africa is the onlyregion where fertility still showsno sign of declinewomen survivingto the end of their child-bearingyears average 6 to S children. Andit is the only region where nutritionhas steadily worsened.

FERTILITY. The contributionthat slower population growth canmake to raising incomes is par-ticularly marked in Africa. Theregion's high infant mortality andlow adult literacy are majorreasons that population growthremains high.

55

45

Figure 7.4 Sub-Saharan Africa: life expectancy in relation to incomeper person, 1978

Life expectancy (years)

60 -

Kenya Worldwide norm'Tanzania

LesothoLiberia50 - Sierra Leone

Ghana NigeriaMozambiqueZaire

ZambiaRwandaCAR Sudan

CongoTogo Cameroon- :

'Bfl1fl MadagascarBurundi

Chad .negalMa\ Guinea

\NigerS Angola

40 ,Somalia

Ethiopia Upper Volta

oL I

Malawi Mauritania

Ivory Coast

I I I

Studies in Nigeria and Tanzaniafound that education among wivesreduced fertility and infant mortalitythough some studies in Africahave suggested that the initial im-pact of schooling (by increasinghealth and fecundity sooner thanit reduces desired family size) maybe to increase fertility. The con-trast between Kenya and Lesothois also suggestive: among Africancountries, they both have better-than-average records of literacy,life expectancy and child deathratesyet Kenya has the highestfertility rate in Africa and Lesothothe lowest. Data from the early1960s show that in Kenya manymore men than women were lit-erate, while in Lesotho it was theother way round.

That is unlikely to be the wholeexplanation, of course; other pos-sible reasons include the migrationof men from Lesotho to SouthAfrica, and differences in culturalvalueswhich are strongly pronatal

in many parts of Africa, so that (incontrast to other regions) desiredfamily size often exceeds its actualsize.

Partly for this reason, and partlybecause of the virtual absence inmost countries of a primary healthcare network onto which familyplanning programs could be grafted,such programs in Africa have beenfew and feeble. Extending andstrengthening family planningefforts, however, would cause anearlier and faster dedine in fertility.

HEALTH. Primary health carecan be provided inexpensively(about $2-3 a person) in some ofthe low-income countries (andcould be financed to some degreeby a reallocation of governmentexpenditure away from urban hos-pitals); but since it is administra-tively demanding, progress is likelyto be slow.

A few countries such as Mali,Kenya and Tanzania have begun

to establish the necessary admin-istrative structure. Village healthworkers can be trained cheaply,as has been demonstrated inNiger; but a study of Mali's healthsystem noted that "at the villagelevel, the most serious manpowerconstraint is the near total lackof literate people who can betrained as village health workers."

EDUCATION, Typically, educa-tion accounts for 15-25 percent ofthe budget and 3-6 percent ofGNP; less than half the total is forprimary education. Recent growthin school enrollment has beenimpressive, particularly in Benin,Congo, Ivory Coast, Kenya, Lesotho,Somalia and Zambia. These coun-tries spend more than 5 percentof their GNP on education andare in the top 25 percent of alldeveloping countries on this count.For them, the key issue is notincreasing education's share of thebudget but (as in other Africancountries) using funds more ef-fectively, improving educationalquality and tackling serious prob-lems of dropout and wastage.

Costs are a major obstacle toraising enrollment and schoolquality in Africa: costs per pupilas a percentage of GNP per personare the highest of all regions. Com-pared with Asia, this ratio in WestAfrica is more than twice as highfor primary, five times for second-ary and seven times for tertiaryeducation. The high cost largelyreflects the fact that teacher salaries(which typically account for 75percent of educational costs) arehigh in relation to average incomes.In Upper Volta (which has thelowest literacy rate in AfricaSpercent) teachers' salaries are 24times larger than GNP per person,compared with less than fourtimes in Liberia. High salaries forall educated people are partly acolonial legacy; but the main causehas been a shortage of qualified

87

200 300 400 500 600 700 800 900GNP per person (current dollars)

a. Derived from cross-country equation relating life expectancy to GNP per person.

teachers, which is now starting toease. Salaries have fallen in realterms in several countries, includ-ing Benin, Tanzania and SierraLeone.

There are various other ways ofmaking education less expensivewithout making it worse, as dis-cussed in Chapters 5 and 6. Insome countries, such as Nigeriaand Sierra Leone, average classsizes are small enough (about 30pupils) to be raised without muchadverse effect on quality (see boxon page 52). In Togo local com-munities pay part of teachers'salaries; in Somalia and Tanzaniathey contribute to constructioncosts.

While school enrollments haverisen markedly, few countries havetried to deal with the large backlogof illiterate adults. Literacy cam-paigns that relied on students,volunteers and government ser-vants were mounted in Somaliaand Tanzania, with spectacularsuccess: literacy rates are estimatedto have risen from 2 percent and10 percent to 60 percent and 66percent, respectively, between1960 and 1975. Such programs,however, lack the socializingeffects of school attendance. Thereis also a risk that literacy skillsmay decay if they are acquired incircumstances that do not requiretheir frequent use. This argues forprograms that are not too briefand have an emphasis on suchpractical subjects as numeracy,hygiene, nutrition, family planningand agriculture.

There are politically difficultchoices to be made in higher edu-cation. Governments often givestipends as well as free educationto university (and sometimes evensecondary) students. Many govern-ments have also felt obliged toguarantee jobs to all universitygraduatesin activities whoseproductivity does not always matchtheir salaries. Secondary and higher

88

education is thus a doubly seriousdrain on budgets; and its socialreturns have been pushed wellbelow the private returns to indi-viduals and below what they mightbe with better economic policies,since Sub-Saharan Africa badlyneeds more people with professional,scientific and administrative skills.Their shortage has been one ofthe biggest brakes on developmentprojectsas reviews of WorldBank project experience amplytestify. But African countries alsoneed to train them more econom-ically (see page 50) in order bothto increase their supply and torelease resources for primary school-ing and other human developmentprograms.

Despite the conspicuous scarcities,there is concern about incipientunemployment among secondary-school graduates in some countries.This reflects the fact that job require-ments and expectations tend tochange more slowly than the supplyof qualified people (see box onpage 51). But as graduates findit harder to get jobs, they will belikelier to respond to the needs ofthe economy for more people towork in rural areas as extensionagents, teachers and administrators.

South Asia

South Asia has much in commonwith Sub-Saharan Africainparticular, pervasive poverty andlow average incomes. But it hasrelatively many more highly trainedpeople (there are almost as manyuniversity students in India as inthe European Community) andgreater administrative capacity.

Growth

Economic growth has been generallyslow: South Asia's GNP per persongrew at an annual rate of 1.6 percentin 1960-70 and 1.1 percent in1970-80stagnating in the early1970s and then accelerating after

1974. South Asia has substantiallybetter growth prospects than Sub-Saharan Africa; but it too will facedifficult choices in the adjustmentperiod. Growth will depend heavilyon domestic economic manage-ment, particularly in agriculture;but exports, migrants' remittancesand aid are important internationalinfluences (no country borrowsmuch commercial capital). Remit-tances, mainly from the MiddleEast, have grown dramatically inrecent years; in 1979 they amountedto about $1.4 billion in Pakistan(almost three-quarters the valueof its merchandise exports) androughly $1 billion in India. Theyare also substantial in Bangladesh.

The region has also had somesuccess in increasing exports tothe Middle Eastparticularly India,which has won major contracts forturnkey plants, construction andconsiltancy services. Nonetheless,no country has fully exploited itspotential for manufactured exports.The large industrial sectors of Indiaand Pakistan can respond stronglyto incentives for exports, as Pakistan'sdid in the 1960s and India's hasdone more recently. Sri Lanka islaunching a major drive for export-led industrialization, which shouldbe helped by its highly educatedlabor force.

Recent agricultural performancein India augurs well for the 1980s(and is the main reason faster GNPgrowth is projected). When anidentifiable package involvingwater, fertilizer, high-yieldingvarieties and credit is readilyavailable, as it is in much of SouthAsia, the economic returns tomore rapid and successful adop-tionfacilitated by the spread ofeducationcan be high. Given thepressure of population on land,future agricultural expansion willhave to rely almost exclusively onincreasing cropping-intensity andthe spread of high-yielding varietiesof crops.

Poverty

About half of the region's peoplelive in absolute poverty, accountingfor half of the world's poor. Land-lessness is a much more importantcause of poverty than in Africa.The landless and those with lessthan 0.5 hectares make up about53 percent of the rural householdsin Bangladesh, 40 percent in Indiaand 37 percent in Pakistan. Andthose with 0.5 to 1 hectare arestill very poor, and must earn muchof their income as wage-laborers.Although only about 20 percentof the population lives in cities,South Asia contains much of theworld's worst urban poverty.

Life expectancy in South Asiais above the norm for countrieswith similar average incomes (Fig-ure 7.5); but for literacy the pictureis more mixed, with Nepal andPakistan below the norm. Moregenerally, progress in humandevelopment varies widely, bothbetween and within countries. SriLanka and the Indian state of Keralahave achieved literacy and lifeexpectancy that are usually reachedat incomes per person near thetop of the middle-income range.(In 1971 the literacy rate in Keralawas 69 percent; Tamil Nadu andMaharashtra were next in Indiawith 45 percent and Rajasthan waslast with 21 percent.) At the otherextreme, Nepal's human develop-ment indicators are more like thoseof the typical African country.

Human development issues

The successes of Sri Lanka andKerala demonstrate the potentialas well as the difficulties of humandevelopment and poverty reductionin South Asia. They also confirmthe potency of an early start: SriLanka's literacy rate in 1900 exceed-ed that of Pakistan and Bangladeshin 1975.

In relation to its income, Sri Lankahas extraordinarily high lifeexpectancy and literacy (although

OL100 125 150 175 200 225 250

GNP per prros (ret dolor,)a. Drrived from cross-country equation relatinglife expectancy to GNP per person.

Figure 7.5 South Asia: lifeexpectancy in relation to incomeper person, 1978Lfr cop cc

estate laborers remain an under-privileged group), and extraordi-narily low population growth. Itachieved this primarily throughsubsidies to food and education,which accounted respectively for4.5 percent and 3 percent of GNPin the early 1970s (17 percent and12 percent of the central budget).These were combined with fairlybroad-based access to health careand a moderately effective familyplanning program. Relatively lowdefense spendingin 1977 Sri Lankadevoted just 0.7 percent of its GNPto defense, compared with the SouthAsian average of 3.4 percentmadeit easier to finance these programs.Good literacy and nutrition con-tributed to high life expectancyand low infant mortality, fertilityand population growth. (Theessential ingredients and resultswere similar in Kerala.) But SriLanka's experience also highlightsthe importance of concentratingspending on those who need itmost. The provision of coverageto all income groups and educationallevels resulted in a fiscal burdenwhich could not be sustained (page62). More generally, Sri Lanka'seconomic performance has not yetmatched its progress on humandevelopment (see box overleaf).

PERTILITY AND WOMEN. Whilepopulation growth in South Asia

is lower than in Africa, the densityof population makes it at leastas urgent an issue. The three mostpopulous countries of the regionall share the nexus of low femaleliteracy and high child mortalityand fertility (female literacy ratesare a third to a half of male rates),with Pakistan and Bangladesh thethe worst affected. In India higherliteracy, lower sex differences ineducation and a stronger familyplanning program have beenassociated with a dedine in fertility.As a result, by 2000, the primary-school age group is projected tohave increased by about 40 per-cent in Bangladesh, 60 percent inPakistan and a more manageable20 percent in India.

Outside Sri Lanka and Burma,the status of women is a major barto human development. Malnutri-tion is considerably higher amongfemales, and newborn girls havea significantly smaller chance ofsurviving to the age of five (seebox on page 91). The school enroll-ment rate among boys is nearlytwice as high as among girls; thegap has closed signicantly, how-ever, even in the Muslim countrieswhere the cultural reasons for lowfemale enrollment are strongest.The eventual impact this couldhave on population growth is con-siderable. A study in Bangladeshfound that, as in other countries,schooling reduced fertility even inthe absence of a strong familyplanning program. But without astrong program, a large and earlydecline in fertility is unlikely.

NUTRITION. Food productionhas roughly kept pace with popu-lation growth, but malnutritionremains widespread. It is due moreto people not being able to affordfood than to any overall shortage:bumper harvests in India in 1976-78resulted in a large increase in foodstocks, but malnutrition (whilereduced) remained widespread.

89

75

70 Sri Lweka

65

60

55 Burma Pakistan

-50 Bangladesh India

-45 Nepal

40 Worldwide norm

Tradeoffs in Sri Lanka

Sri Lanka's record on life expectancy,literacy and fertility (in relation to its lowincome level) is one of the best in theworld. But to achieve this the govern-ment has spent on average over the pasttwo decades nearly 10 percent of GNP oneducation, health and nutrition pro-grams. To what extent, then, were theseachievements in human development atthe expense of economic growth?

Growth of GDP in the 1960s was 0.7percentage points above the low-incomeaverage, in part reflecting one of the highestgrowth rates of rice production in theworld. In the 1970s, though, slower growthin agriculture and especially manufac-turing caused Sri Lanka's GDP growthrate to be somewhat below the low-incomeaverage. But because Sri Lanka's pop-ulation growth rate was well below thelow income average (it fell to 1 7 percenta year in the 1970s), the growth of GNPper person over the period 1960-77, at2 0 percent was above the low incomeaverage of 1.4 percent.

Sri Lanka has thus done no worse interms of growth than other countries atits income level, while greatly out-perform-ing them in human development. But itcould have done even betterrealizingmore of the economic potential of itshuman resourceshad better economicpolicies been pursued.

In the 1960s Sri Lanka's economicmanagement was better than in the 1970s.

But pricing policies discouraged newinvestment in tea and other export crops.And there was too much emphasis onindustrial import substitution and toolittle on export promotionin part becauseof an increasingly overvalued exchangerate. After 1970 the economy was hit bybad weather, which affected agriculturalproduction, and by a steeper fall in theworld price of its exports relative to itsimports. These problems were aggravateduntil 1977 by poor economic managementincluding an unresolved conflict withthe private sector (which depressed itsinvestment and expansion), excessive useof public investment for highly inefficientindustrial projects, and expansion of thepublic payroll in an expensive and unsuc-cessful attempt to curb unemployment.

The tradeoff between expenditures onhuman development and growth in SriLanka has thus not been so sharp as issometimes suggested. In the 1960s fairlyrapid growth permitted expansion of socialexpenditures. In the 1970s growth deteri-orated for reasons generally independentof the human development spendingand indeed caused a decline in realexpenditures per person on health andeducation, as well as in food distributionper person. The election of 1977 led toa change of government and to sub-stantial alterations in policies. From 1977to 1980 annual GDP growth is estimatedto have spurted to 6.5 percent, or about5 percent per person.

Calorie consumption per person inSri Ianka has not been higher thanin the rest of South Asia, but therehas been much less malnutritionsimply because food has beenrelatively evenly distributed.India, Pakistan and Bangladeshrespectively spent 0.6 percent, 1.9percent and 0.1 percent of theirGNPs on limited food subsidies inthe early 1970sbut with relativelylittle nutritional effect (outsideKerala), since rural areas and urbansquatters were largely bypassed.Greater attention to nutritionalconsiderations in food productionand subsidy programs could havea major impact; but sustained nu-tritional improvement will depend

90

ultimately on raising the incomesof the poor.

EDucATIoN AND HEALTH. Spend-ing on education has been relativelylowabout 1.5 percent of GNP inBangladesh, 2.5 to 3 percent inBurma, India and Sri Lankamainlybecause educational costs are thelowest in the world, which in turnreflects the large supply of educatedpeople. Except in Burma and SriLanka, however, policies havetended to favor higher education:most poor children still fail tocomplete primary school.

In health, future gains will de-pend more on improvements innutrition, health care and educa-

tion than on individual diseasecontrol programs. While theregion's ratio of physicians topopulation is high by the standardsof low-income countries, they tendto be clustered in urban areas.

The relative abundance of highlyeducated people in South Asia(especially India), and the improvedoutlook for economic growth,should allow the larger countriesin the region to tackle the challeng-ing tasks of (a) increasing the shareof spending on primary educationand expanding enrollment, espe-cially among girls and the poor;

improving the efficiency of theeducational systembetter quality,fewer dropouts and repeaters; and

expanding the network ofprimary health centers (India isalready devoting renewed attentionto this).

Primarily middle-income regions

With some injustice to theirconsiderable diversity, the threeprimarily middle-income regionscan be characterized as follows.

Middle East and North Africa:income growth has been extremelyrapid in recent years, reflectingthe direct and indirect effects ofoil revenues; but human develop-ment still lags behind.

Latin America and the Carib-bean: the most urbanized andindustrialized region, with highaverage levels of human develop-ment; economic and social progresshas been rapid, despite fast popula-tion growth; yet one in seven peoplestill live in absolute poverty.

East Asia and Pacific: best per-formance on growth of incomesand human development in relationto income; rapid growth has beenbased on efficient use of labor,capital and technology rather thanon natural resources.

Growth

The countries of the Middle East

and North Africa cover the spec-trum of average incomesfromKuwait, among the richest coun-tries in the world, to Afghanistan,one of the poorest. Growth hasbeen rapid even in the non-oilcountries, which benefited fromthe oil boom through migrants'remittances and inflows of officialand private capital. (About 10percent of the people in the regionare directly dependent on remit-tances, which are often largeanaverage of $4,000 a year perMoroccan migrant, for example.)In the 1970s GNP per person inthe region rose 4.9 percent a year;higher real oil prices meant thatgrowth in purchasing power washigher still (see box on page 4).The same factors that spurred

growth during the 1970s shouldensure fairly rapid expansion inthe 1980s.

Growth in East Asia and LatinAmerica has in general been excel-lent. Strong economic managementmeant that these were the onlyregions in which oil importers grewfaster in the 1970s than in the1960s. The adjustment period willsee a slowdown in their growth,but by the mid-1980s their pros-pects look quite goodso long asgood management and politicalstability are maintained, and solong as growth in world trade andcapital flows to developing coun-tries also pick up by then.

Growth in both Latin Americaand East Asia depends heavily oncommercial finance. The two

Sex, length of life and developmentIn developed countries, women live longerthan menon average by more than sixyears. This is not so in all developingcountries, especially the poorest ones(see table). In most of South Asia, womenon average die two to three years soonerthan men. In low-income Indonesia,though, women live longer than men.

In most middle-income countries,apart from those in the Middle East andNorth Africa (where incomes have risenconsiderably since the time of some ofthese estimates), women live substantiallylonger than men. In East Asia and LatinAmerica, moreover, this has been so foras long as statistics are available. Butthe female advantage has increasedforexample, in Argentina from around oneyear in 1900 to more than six years inthe 1970s.

In some countries there has been areversal. In Sri Lanka, for instance, womenon average in 1953 lived one year lessthan men; by 1962 they had pulled level;by the early 1970s they were ahead by amargin of about three years. A similarswitch occurred in Turkey between the1930s and the 1970s.

Economic development thus tends toraise women's life expectancy more thanmen's. But regional differences in the sizeand evolution of the gap, and the excep-tional cases of Sri Lanka and Turkey(see next page), suggest an association

with the extent of education, especiallyfor women.

Excess of female over male lifeexpectancy, selected countries, 1970s

a. Late 1960s.

regions account for the bulk ofcommercial borrowing by devel-oping countries, with Mexico,Argentina, Brazil, South Koreaand Venezuela alone accountingfor 44 percent of the total in 1979.Another crucial international in-fluence on their growth prospects,both directly and through its ef-fect on credit-worthiness, is worlddemand for their manufacturedexport.

The major East Asian exportersalone accounted for more than 40percent of developing-countrymanufactured exports in 1977;despite some protectionism inindustrial countries, they havesustained rapid export growth bydiversifying their product lines.This flexibility allowed them tomaintain growth in the 1970sdespite slower growth in the worldas a whole. It also means theyhave more freedom than othernon-oil developing countries tochoose whether to respond to higheroil prices by greater borrowing orby increasing their exports (andintensifying import substitution).

Human development: regional issues

Some countries in East Asia andLatin America have achieved levelsof literacy and life expectancycomparable to those in the indus-trialized countries. In all the threeregions absolute poverty has beenreduced significantly but remainssubstantial,

MIDDLE EAST AND NORTH AFRIcA.

The rapid economic growth ofrecent years has probably cutconsiderably the proportion ofabsolutely poor people in theregion. Nonetheless, there is stillserious poverty in the countriesnot rich in oil, and to a lesser de-gree also in Iran, Iraq and Algeria.

As in Sub-Saharan Africa,income differences between coun-tries are related more to theirnatural resources than to institu-

91

South Asia

Bangladesh -2.0India 2.5Sri Lanka 3.0

East AsiaIndonesia 2.0Peninsular Malaysia 4.5South Korea 6.0Thailand 6.0

Latin America

Argentina 6.0Brazil 3.0Costa Rica 4.0Mexico 4.0

Middle East andNorth AfricaAlgeriaa 1.0Iraq 0.5Iran 0.5Tunisia' 0.0

Industrialized countriesItaly 6.0Norway 6.0United States 8.0

Region Differenceand coun fry in years

tions, human skills or economicstructure. In most countries lifeexpectancy is well below whatwould be expected at their incomelevels (see Figure 7.6); the sameis true of literacy. Birth rates re-main very high; of the 11 countrieswith the highest fertility rates inthe world, eight are in the MiddleEast and North Africa. Death rateshave come down very sharply inthe recent past, but infant mor-tality rates remain highone infour in Afghanistan, for example.

Part of the reason is that thegap between male and femaleeducation is larger in this regionthan in any of the others. But itis closing rapidly: the primary-school enrollment rate for girlsrose from 40 percent around 1960to 60 percent in the mid-1970s;progress was particularly impres-sive in some countriesup from58 percent to 90 percent in Turkey,for example, and from 43 percentto 81 percent in Tunisia. It is sig-nificant that these two countrieshave the lowest fertility rates inthe region.

The challenge for many countriesis to use the rapid increases inincome from nonrenewable re-sources for productive investmentsand better health, education andnutrition. But this cannot happen

0 500 1000 1,500 2,000 6,000 10,000 14,000GNP par prrres (r,oxi d,liar)

a. Derived from cross-country equation relating lifeexpectancy to GNP per person.

92

Figure 7.6 Middle East and NorthAfrica: life expectancy in relationto income per person, 1978

Harm

-. Morocco AlgeriaIraq

\ lranEgypt

.Yemeo PDR

Yemen AR

Kuwait

Libya

Saudi Arabia

75

70

65

60

55

50

Figure 7.7 Latin America and theCaribbean: life expectancy inrelation to income per person, 1978b[aroprotoory (yoars)

cuba Argentina TrinidadUruguay and Tobago- amalca-_;.

'Costa RicaEl chile

Salvador Mexico..Paraguay

Ecuadoe.-eorColombia:.Brazit

/Ooruiniran Rep.-Guatemala

- ,,/ \ Nicaragua

Hondu

- \Venezuela

Worldwide norm

01_H

I

0 1,000 1,500 2,000 2,500 3,000

GNP pro porno (,arrrrl dollar,)

a. Derived from cross-country equation relating lifeexpectancy to GNP per person.

overnight. Tremendous amountsof money are indeed being chan-neled into physical investmentsand improving social conditions inthe oil-producing countries. Inmost cases, though, the manpowerneeded to complement this effortis not available domestically; andit takes time and organization tomake effective use even of trainedpeople from abroad.

Similarly, even when virtuallyall school-age children are enrolledat school (as they are in some ofthese countries), it will take morethan three decadeswithout adultliteracy campaignsto raise theoverall literacy rate above 90 per-cent. It may take even longerbefore life expectancy approachesthe levels of the industrializedcountries.

For the richer countries in theregion, then, money is not themain obstacle. But for the others,the financial constraint on humandevelopment programs is likely toremain serious, especially in Mo-rocco, Afghanistan, the twoYemens and to a lesser extent inEgypt, Syria, Turkey and Tunisia.Fairly rapid growth in most ofthese countries, however, shouldpermit the increases in humandevelopment expenditures thatare needed to bring social indica-tors gradually into a more normal

relation with income. There is alsoscope for reallocation of humandevelopment expenditures. Forexample, some of the heavy sub-sidies on urban food and universityeducation that are common in theregion could be diverted to ne-glected rural areas and other uses.

Lfr nperhoory (ye,rsI

LATIN AMERICA AND THE CARIB-

BEAN. The countries of the "south-ern cone"Argentina, Chile andUruguayas well as Cuba, Panama,Jamaica, Costa Rica and Trinidadand Tobago, have achieved lifeexpectancy (see Figure 7.7) andeducational levels approachingthose in the developed countries.The southern part of Brazil re-sembles these countries; but thenortheastern part lags behind andaccounts for the largest concen-tration of absolute poverty in theregion. The other countries fallinto two groups. The first consistsof the smaller, poorer countriesof Central America and the Carib-bean plus Bolivia, Ecuador andParaguay; more than half theirpeople live in rural areas wherehealth and education services areusually sparse. The second groupPeru, Mexico, Colombia andVenezuelaare larger and morethan 65 percent urbanized.

Throughout the region, there isno significant difference in primary-school attendance between boysand girls, but there is betweenurban and rural areas. Primary en-rollment rates tend to be high; butonly a small proportion (often lessthan 10 percent) of children inrural areas complete primaryschool. In many Latin Americancountries, higher education hasexpanded very fast, accounting forthe bulk of education budget in-creases. Spending on primaryeducation could be increaseddramatically if higher educationwere financed to a much largerextent from tuition fees, withassistance for those not able to pay.

70

65

60

55

50

45

40

The high level of urbanizationin the region means that watersupply and sanitation systemswould do more to improve healththan in other regionswater pollu-tion and poor sanitation are moreserious in congested cities than invillages. Experience in Brazil,Colombia and Mexico has shownthat there is considerable potentialfor rich users to subsidize thepoor in urban water and seweragesystems. But there must be com-plementary efforts to provide pri-mary health care in both ruralareas and urban slums. Somecountries, including Mexico,Jamaica and Panama, have begunto include family planning servicesin primary health care systems; forother countries to do so would bea major advance.

Though average food consump-tion is adequate in most countries,many poor people are malnour-ished. In the longer term, measuresto increase employment and theincomes of the poor will helpovercome this, as will measures tostimulate food production. Butrecent direct nutrition programs,including subsidies and nutritioneducation for the poorest groups,appear to have been effective inChile and Colombia.

Reaching some of the moreisolated and ethnically distinctrural poor is more expensive andadministratively more demandingthan serving urban dwellers. Morefundamentally, mustering thefinancial and administrative re-sources needed to reduce absolutepoverty faster will require a publiccommitmentthus far lacking inmany countriesto the goal ofmaking basic human developmentservices available to all.

EAST ASIA AND PAcIFIc. In mostcountries of the region, literacyand life expectancy (Figure 7.8)are well above the norm for theirincome level. With skilled and

well-educated populations, rela-tively equal income distributionsand rapid income growth, SouthKorea and the city states of HongKong and Singapore have madetremendous strides in human de-velopment and reducing poverty.They have combined extensivehuman development programswith excellent economic policies.Rapid economic growth has inturn allowed further human de-velopment. To a lesser extent thishas also been the case in Malaysia,Thailand and the Philippines; buttheir records on income distribu-tion and poverty are more mixed.

Though lack of informationlends a certain haziness to whatis known about China and NorthKorea, it seems that with a verydifferent development strategythey too have enjoyed consider-able success (though there is somecontroversy over what their growthwould be at international prices).North Korea seems to have ex-panded output rapidly, madeextensive improvements in healthand education, and as a resultlowered fertility. China has prob-ably done even better on humandevelopment in relation to its in-come levelthe gross primary-school enrollment rate has risenfrom about 25 percent in 1949 towell over 100 percent today (re-

70

65

60

55

50

45

Figure 7.8 East Asia andPacific: life expectancy in re-lation to income per person, 1978

40-

0

Ljo rap tony (yraro)75-

China-Malaysia

- Viet Nam S. Korea

-Thailand

Worldwide norm

N. Korea

Philippines

.Papua New GuineaIndonesia

Laos

Hong Kong.

Singapore

0 500 1,000 1,500 2,000 2,500 3,000 3,500GNP pro porno (OOreosl dollaoo)

a. Derived from cross_country equation relatinglife expectancy to GNP pee person.

flecting substantial numbers ofunderage and overage pupils, aswell as near-universal enrollmentof children in the primary school-age group).

The most serious poverty is inCambodia. Indonesia is a specialcase; in many respects it is similarto a South Asian countryJava isone of the most densely populatedregions of the world, and hasserious malnutrition and poverty.At the same time, oil and the (rel-atively untapped) agriculturalresources of the outer islandsdistinguish it from any of theSouth Asian economies. Recenteconomic growth has been rapid,but there has been controversyover the extent to which it hasled to less poverty.

One notable feature of EastAsia's success has been the will-ingness of most governments toset initially low standards in orderto achieve comprehensive cover-age. Another has been the varietyof approaches adopted, despite theactive involvement of all govern-ments in promoting economic andhuman development.

Education. Fee-paying schoolshave traditionally played a majorrole in this region, and still do inhigher educationfor example, inthe Philippines and South Korea(page 74). At the primary level,the emphasis has been on achiev-ing universal enrollment. To doso, South Korea has accepted classsizes that are large by internationalstandards (averaging about 60 butrising to more than 80 in manymetropolitan schools).

Health. The world's bestexamples of universal primaryhealth care at low cost are in China(see box on page 74) and the north-em provinces of Viet Nam. Othercountries have also emphasizedprimary health carethough thereare important exceptions to therule. For example, medical care inSouth Korea has depended mainly

93

on doctors in private practice.Partly as a result, maternal andchild health care is often inade-quate, and life expectancy is notas high, relative to income, asliteracy.

Nutrition. Substantial increasesin the incomes of the poor haveallowed them to buy more food;good agricultural performancehas ensured that supplies are ade-quate. In the centrally plannedeconomies, there has been greaterresort to rationing and subsidies.While average nutrition levels inthe region are satisfactory, seriousmalnutrition still exists in lower-income groups in Indonesia,Malaysia and the Philippines aswell as in Cambodia.

Lessons for planning

One familiar conclusion from thisreview of regional issues is thatthere are no simple lessons, noeasy prescriptions. There are alwaysenough desirable uses of money to

94

exhaust the national income twiceover. There are always acute thoicesbetween the well-being of thecurrent generation and of its heirs;and between the well-being of thepoor and of the less poor. It isvery hard to forecast the conse-quences of particular policies, orto choose the best mix of policiesto achieve particular objectives.The nature of the best strategyalso varies between (and within)countries, not simply because ofbroad differences in their economicand social structures and prospects,but also because of differences inthe feasibility and likely outcomeof specific policies and programs.

It would be a serious mistake,though, to suppose that there areno lessons at all. Effective planningis largely a matter of identifyingthe important issues and linkages,and of bringing the light of evidenceand experience to bear on them.This regional review and the chap-ters that preceded it have thusfocused on a particular set of ques-

tions of interest to planners, andon the principles and informationneeded to answer them.

From the point of view ofaccelerating growth and reducingabsolute poverty (in both its incomeand its nonincome aspects), is theright balance being struck betweenphysical investment and humandevelopment?

In human development, is theright balance being struck betweeneducation, health, nutrition andfamily planning?

Within each of these areas, isthe right balance being struckbetween basic and more advancedprograms? Would different pro-grams be more effective or moreeconomical?

In addressing all these ques-tions, it is necessary to rememberthat there are no laws, only circum-stancesbut also that applyinggeneral principles to specific cir-cumstances is the springboard ofsuccessful action.

Chapter 8 Summary and conclusions

Impaled on the trident of inflationand recession in the developedcountries and much more expen-sive oil, world growth prospectshave deteriorated in the past year.Higher oil prices have improvedthe outlook for the fifth of thedeveloping world's populationthat lives in oil-exporting coun-tries; their average GNP per per-son could grow at around 3.0 to3.5 percent a year in the first halfof the 1980s. But for the four-fifths that live in oil-importingcountries, the first half of thedecade will involve slower growth.For developing countries as a whole,growth will be substantially belowthat forecast in last year's Report.

Governments of oil-importingdeveloping countries must takesteps to reduce current accountdeficits and adapt to more expen-sive energyand at a time whendemand for their exports from in-dustrialized countries has slowed,not just because of the rise inenergy prices, but because ofcyclical and structural problemsas well. The GNP growth of oil-importing developing countriescould thus fall to about 1.8 per-cent per person a year (the Lowcase). Prospects for the low-incomeoil importers would be particu-larly bleak in this scenario: incomeper person in low-income Sub-Saharan Africa would decline; andthe number of people in absolutepoverty in the developing worldas a whole would increase.

This Low case (or an even worseoutcome) could come aboutbut

it need not. In the High case theoil-importing developing coun-tries would grow at about 2.4 per-cent per person a year in 1980-85,and by 1990 there would be 80million fewer people in absolutepoverty than in the Low case. Thiswould require that developingcountries adjust successfullycutting their external deficits byraising exports rather than lower-ing imports, while increasing bothinvestment and efficiency in re-source use. What the industrial-ized countries and capital-surplusoil exporters do is also vitalinstimulating demand for develop-ing-country exports, in recyclingoil surpluses and in providing aid.But even in the High case, thegrowth of income per person inthe developing countries will notmatch that in the industrializedcountries. Taking the steps needednot just to attain, but to exceed,the High case is thus the majordevelopment challenge of thenext five years.

The success of the adjustmentby developing and other countriesto the economic circumstances ofthe early 1980s will not onlylargely determine their growthduring that period but will alsoaffect the chances of an accelera-tion of growth in the second halfof the decade. With recovery inthe industrialized countries and inworld trade and with continuedsound domestic economic policies,the oil-importing countries couldgrow almost as rapidly (3.2 per-cent) as the oil exporters (3.4 per-

cent) and faster than in the 1970s.Without it, the growth of the oilexporters would be almost half apercentage point lower, and thatof the oil-importing countries afull percentage point lower. Muchof the first part of this Report hasbeen about the policy decisionsthat will determine the actual out-comes, in both the near term andthe longer term.

External factors

Trade. The ability of devel-oping countries to afford theimports they need for growth de-pends crucially on their exports tothe industrialized countries, whichcurrently constitute two-thirds oftheir market. The industrializedcountries, even those determinedto combat inflation by restraininggrowth, must minimize the effectstheir deceleration will have on thedeveloping world. This means ex-panding the volume of imports,maintaining the relatively freetrading opportunities that nowexist for most products, and start-ing to lower the barriers againstother goods of particular impor-tance to developing countries, suchas textiles, clothing, leather goods,electronics, steel and some agri-cultural commodities. To do sowould increase the localized painsof structural change in the devel-oped countries. But there areinternal remedies for these pains,and liberalization of trade will payoff in faster productivity growthand lower inflation. The oil-

95

exporting nations can also help byrapidly expanding their importsfrom developing countries.

Energy. The developing coun-tries that import oil have beenhard hit by the price explosion ofthe past 12 months and can expecttheir energy costs to rise furtherin real terms. At the same time,modernization of their economieswill spur demand for energy; sothey face a continuing need toadapt to the rising cost of importedoil. They will find this easier if oil-exporting countries can avoidsupply disruptions and sharp pricechanges. More generally, the worldeconomy will perform better if oilprices follow a smooth path; vio-lent fluctuations play havoc withinternal resource allocation andthe external payments system.Reliable supplies and smooth pricechanges will be more likely if de-veloped countries improve theirenergy conservation and developalternative sources.

Capital flows. Current ac-count imbalances will be large inthe next few years, again requir-ing special efforts to recyde financeto oil-importing countries, especi-ally in the developing world. Thereis a serious risk that reluctance orinability to finance large externaldeficits will lead to levels of trade,investment and economic effici-encyhence, of growthlowerthan anyone would wish. Even inthe later years of the 1980s, whenthe severity of payments imbal-ances is expected to diminish, thegrowth of developing countrieswill continue to depend on inflowsof foreign capital.

For the low-income countries,which can borrow little commer-cially, this means more aid. Thereis a real danger that the modestaid increases projected in thisReport will not be achieved. Intheir own long-term interests, aswell as those of the developingcountries, both OECD and OPEC

96

donors should make every effortto expand their aid relative toGNP, even in periods of domesticstringency. And they should con-centrate their aid even more onlow-income countries.

Commercial capital, mainly frombanks but also from the bondmarket, private direct investmentand official sources, will be avail-able to help the middle-incomecountries. But not all countrieswill be well placed to borrowmuch more from private commer-cial sources; without additionalfinancial assistance from othersources, their growth will slowdown. In particular, there is notenough long-term program (non-project) finance to support thestructural changes required inmany countries. Some will bene-fit from the structural adjustmentlending of the World Bank andassistance from the IMF; enlargedofficial flows of this sort, particu-larly from multilateral agencies,could and should play a larger role.

Internal factors

While powerfully influencedby the international environment,the progress of developing coun-tries depends even more on theirown policies and initiatives.

Trade, energy and capitalflows. In trade, the developingcountries can use pricing andother policies to stimulate pro-duction of internationally tradedgoodsboth exports and importsubstitutes; but they should avoidbias toward import substitution,since this reduces efficiency anddiscourages exports. With regardto energy, they, like the industri-alized countries, can minimize theloss of real income caused byhigher oil prices through conser-vation and greater domestic energyproduction. As to capital flows,they can take full advantage oftheir opportunities for prudent

borrowing from commercial andbilateral lenders and multilateralinstitutions.

Investment and productionefficiency. In attracting (especiallycommercial) finance, and in speed-ing development more generally,trade and energy strategies playan important role. So do otherpolicies that increase investment,improve administration, raise agri-cultural productivity and makebetter use of capital, labor, naturalresources and imports.

Human development. Theinternal factor on which thisReport has focused is the humanone: the role not only of educationand training, but also of healthand nutrition. In addition to theimportant direct benefits that pro-grams in these areas confer, theReport stresses another aspect,long-standing but often neglectedthe role of human developmentas investment, contributing togrowth. The importance of tech-nical, professional and managerialskills is well known. Less wellknown but firmly established byresearch is the importance ofprimary education, which affectsthe knowledge and attitudes offarmers and other workers.

Investment in human resources,like other kinds of investment,can be ineffectual unless comple-mented by other productive inputsand by policies to ensure thatresources are efficiently used.Human development programsmust also be carefully chosen andefficiently carried out. Despite thesequalifications, there is strong evi-dence to support the common-sense proposition that human de-velopment can make a valuablecontribution to growth.

Studies at the firm, farm andproject level have shown that bet-ter education, health and nutritioncan raise incomes and productiv-ity, and that the economic rate ofreturn to investment in schooling

is high, frequently well above thatof physical investment. For pri-mary schooling, the rates of returnin a large group of countries aver-age more than 20 percent. At theaggregate level, cross-countrycomparisons show that develop-ing nations with higher literacyrates have grown faster, evenwhen allowances are made forother influences on growth andfor reverse causationthe effectof growth on literacy. This findingis reinforced by case studies andhistorical evidence.

Population. One importantway in which human develop-ment contributes to raising aver-age incomes, as well as to othersocial goals, is by reducing popu-lation growth. Reducing fertilityis not an end in itself; but lowerpopulation growth in most devel-oping countries tends to result ingreater investment per person inphysical capital and human skillsand thus in faster growth. Betternutrition and health, by loweringinfant mortality, are essential in-gredients of fertility decline. So iseducation, especially of women,since it delays marriage, alters atti-tudes about family size and makesmodern contraception more ac-ceptable. Increases in incomethemselves are a cause, as well asa consequence, of reduced fertil-ity: people who are less poor havegood reasons for wanting fewerchildren (including less need fortheir labor and for support in oldage). And research has confirmedthat family planning programs alsoare important in bringing aboutslower population growth.

Human development and poverty

Human development can thusassist growth. But the Report hasstressed even more its potentialcontribution to reducing absolutepoverty.

Growth and poverty reduc-

tion. Growth is vital to reducing allaspects of absolute povertymal-nutrition, ill health and illiteracy,as well as low incomeespeciallyin the poorest countries. But growthunaccompanied by other mea-sures may neither boost the in-comes of the poor much, nor leadto much progress on nonincomeaspects of poverty. On both counts,human development programs havea part to play.

Raising the incomes of thepoor. The Report has discussed awide range of policies, many ofwhich positively reinforce growth,that can help raise the incomes ofthe poor. Support of agriculture,land and tenure reform, policies toraise the demand for labor andvarious kinds of research are fourimportant areas considered. Humandevelopment is an essential com-plement. It accelerates the spreadof new techniques to small farmsand increases the opportunities ofthe poor for employment in themodern sector. And because fertil-ity and family size are reduced,the earnings of adults do not haveto be spread so thinly among chil-dren and other dependents.

Nonincome aspects of pov-erty. The worst aspects of absolutepoverty include not only low in-come, but also malnutrition, fre-quent child death, disease andignorance. All can be helped byhuman development programs.Less obviously, there is a complexinterdependence between the dif-ferent facets of human develop-mentas there is between humandevelopment and increases inincome. Health, nutrition, educa-tion and fertility all affect eachother. Most striking, partly be-cause least expected, are thepowerful effects that education,especially female education, hason fertility, child health and nutri-tion. As this suggests, human de-velopment is a circular process,one that can be vicious or virtuous,

according to circumstances andpolicies. And it has its own mo-mentum: what is done (or notdone) today powerfully influenceswhat can be done a decade ormore ahead.

Practical aspects of humandevelopment. Human developmentis easier said than done. But muchhas been learned about the com-parative efficacy of different poli-cies and programs. In nutrition,for example, there is growingagreement that the central issue isnot improving the balance be-tween calories and protein butincreasing the amount of staplefoods the poor can afford; this in-volves raising their incomes, stim-ulating production of these foodsand, in some cases, targeted sub-sidies. In health the vital role ofprimary care, together with edu-cation and control of mass diseases,is now generally acknowledged. Infertility there is better under-standing both of how to imple-ment family planning programsand of how such programs inter-act with socioeconomic and culturalconditions. In education moreimportance is now attached to itsbehavioral effects; and in raisingeducational standards, the signif-icance of dass size has been shownto be much less, and that of teach-ing materials much more, thanwas formerly believed.

Hard experience has also shownthe difficulties of implementinghuman development and how totackle them. Political obstaclessuch as urban bias, competitionfor resources, and the weak posi-tion of the poor often have to beovercome; but efforts to improvebasic education, nutrition and healthhave a universal political appeal.The financial constraint on pro-grams often appears binding; butfrequently there are unexploitedways of cutting costs and harness-ing additional resources. Humandevelopment programs can also

97

encounter serious administrativeconstraints; here it is importantnot only to improve administra-tion but also to choose the mostmanageable mix of programs andto encourage local participation.More paradoxical, but equallyvexing, is the gap between needand demand that can sometimeslead to underused schools andclinics or the underrepresentationof girls and women in human de-velopment programs. Experiencesuggests ways in which this gapcan be narrowed, and in somecases bridged.

Tradeoffs and choices. Plan-ners have to choose at the marginbetween human development andother activities, and between dif-ferent human development activi-ties. The choices are not easy, norshould they be the same in allcountries.

98

The economic payoff to humandevelopment eases the tradeoffsbetween growth and poverty re-duction. But it does not eliminatethem, which means that policydecisions will be affected by therelative emphasis attached toincreasing growth, raising the in-comes of the poor and attackingthe nonincome aspects of poverty.And whatever the balance ofobjectives, the difficulty of quan-tifying costs and benefits oftencompounds the problems of de-ciding how large the humandevelopment budget should be,and how it should be dividedamong education, health, nutri-tion and family planning, as wellas within each of these areas.

The way in which these dilem-mas are resolved must vary accord-ing to the circumstances of eachcountry. Political and social prior-

ities are important. So are incomelevels and growth prospects, andpast progress in human develop-ment. In considering human de-velopment and other steps toreduce poverty, the low-incomecountries of Africa and Asia, forexample, must perforce put strongemphasis on economic returns.

Nothing can make widespreadabsolute poverty melt away over-night. And human developmentat best can do only part of the job.Without effective policies on otherfronts, and without active and en-lightened support from the rest ofthe world, progress will be agon-izingly slow. But these other poi-icies will not be sufficient. Themost valuable resource any coun-try has is its people, the meansand the end of economic advance.

Statistical appendix to Part I

Table SA.i Growth of population, GNP and GNP per person, 1960-90(average annual percentage growth rates)

Sources: World Bank estimates; High-case projections of World Development Report, 1980.1977 prices.Estimates for oil-exporting developing countries are based on analysis of 11 major oil exporters.

Table SA.2 Commercial primary energy pmduction and consumption, Table SA.3 Composition of world commercialby country group, 1977-90 primary energy supply, 1970-2020(million barrels of oil equivalent per day)

Sources: UN, World Energy Supplies 19 73-78 (Series I, no. 22); World Bank estimates;High-case projections of World Development Report, 1980.a. Includes nonenergy uses.

Sources: UN, World Energy Supplies 1973-78 (Series J, no. 22);World Bank projections.a. Million barrels per day of oil equivalent.

99

Population GNP' GNP per person'

Country group 1960-70 1970-80 1980-85 1985-90 1960-70 1970-80 1980-85 1985-90 1960-70 1970-80 1980-85 1985-90

Low-income countries 2.4 2.3 2.3 2.2 4.2 4.0 4.5 4.7 1.8 1.7 2.1 2.5Sub-Saharan Africa 2.5 2.8 3.0 2.7 4.2 3.0 3.1 3.8 1.7 0.2 0.1 1.1Asia 2.4 2.2 2.2 2.1 4.2 4.2 4.7 4.9 1.8 2.0 2.4 2.7

Middle-income countries 2.5 2.5 2.5 2.3 6.0 5.6 5.2 5.8 3.5 3.1 2.7 3.4East Asia and Pacific 2.8 2.3 2.1 2.0 7.7 8.0 7.0 7.3 4.9 5.7 4.8 5.2Latin America and Caribbean 2.8 2.6 2.6 2.4 5.7 5.8 5.5 6.3 2.9 3.2 2.9 3.8Middle East and North Africa 2.5 2.6 2.7 2.5 3.6 6.4 5.1 5.3 1.1 3.8 2.4 2.7Sub-Saharan Africa 2.5 2.9 3.2 2.8 4.8 4.5 4.9 4.3 2.3 1.6 1.7 1.4Southern Europe 1.4 1.4 1.3 1.2 7.0 4.6 3.8 3.7 5.6 3.2 2.5 3.4

Oil-importing developing countries 2.4 2.3 2.3 2.2 5.6 5.1 4.7 5.5 3.1 2.7 2.4 3.2Low-income countries 2.5 2.4 2.4 2.2 4.1 3.3 4.1 4.6 1.6 0.9 1.7 2.4

Sub-Saharan Africa 2.5 2.8 3.0 2.7 4.2 3.0 3.1 3.8 1.6 0.2 0.1 1.1Asia 2.4 2.3 2.3 2.1 4.1 3.4 4.3 4.8 1.6 1.1 2.0 2.6

Middle-income countries 2.4 2.3 2.3 2.1 6.1 5.5 4.9 5.7 3.6 3.1 2.6 3.5East Asia and Pacific 2.8 2.3 2.1 2.0 7.8 8.0 6.9 7.3 4.9 5.6 4.7 5.2Latin America and Caribbean 2.6 2.5 2.4 2.3 5.4 6.0 5.0 6.2 2.7 3.5 2.6 3.8Middle East and North Africa 2.4 2.6 3.1 3.1 2.3 3.0 3.7 3.9 -0.2 0.4 0.6 0.8Sub-Saharan Africa 2.5 2.9 3.0 2.7 4.9 3.9 4.6 4.2 2.4 0.9 1.6 1.4Southern Europe 1.5 1.3 1.3 1.2 7.0 4.6 3.8 4.7 5.4 3.2 2.5 3.4

Oil-exporting developing countries 2.6 2.5 2.7 2.5 5.5 6.1 6.3 5.9 2.8 3.5 3.5 3.4

All developing countries 2.5 2.4 2.4 2.2 5.6 5.3 5.1 5.6 3.1 2.8 2.6 3.3

Industrialized countries 1.0 0.7 0.5 0.4 5.0 3.1 3.3 4.0 3.9 2.4 2.9 3.5Capital-surplus oil exporters 3.0 3.1 2.8 3.0 10.5 8.4 5.3 5.8 7.3 5.0 2.8 2.8Centrally planned economies 1.7 1.3 1.2 1.1 5.2 4.6 4.5 3.8 3.4 3.3

Country group

1977 1980 1985 1990

Produc- Consump- Produc- Consump- Produc- Consump- Produc- Consump.hon hon hon hon hon hon hon hon

Industrializedcountries 47.5 70.6 50.1 70.1 60.0 80.7 72.5 92.5

Centrallyplannedeconomies 42.6 40.3 44.8 42.5 54.0 51.8 65.0 64.3

Capital-surplusoil exporters 25.2 1.6 21.4 1.9 23.2 2.7 26.1 3.9

Developingcountries 18.9 17.1 21.5 18.7 28.8 25.0 37.9 34.3Net oil

exporters 11.9 3.9 13.0 4.6 16.1 6.0 19.4 8.3Net oil

importers 7.0 13.2 8.5 14.1 12.7 19.0 18.5 26.0Bunkers and

other na. 4.6 n.a. 4.6 n.a. 5.8 n.a. 6.5

Total 134.2 134.2 137.8 137.8 166.0 166.0 201.5 201.5

(percent)

Energy source 1970 1980 1990 2000 2020

Petroleum 47.6 45.8 38 30 17

(OPEC) (23.0) (20.4) ( 16) ( 12) (6)

Coal 32.3 30.0 31 31 32Nuclear 0.1 1.0 2 7 16Hydro 2.0 2.7 4 5 5

Gas and other 18.0 20.5 25 27 30Total 100.0 100.0 100 100 100

Memo item

Total worldprimarycommercialenergysupply' 100.9 137.8 201.5 270 390

100

Sources: World Bank; UN, Yearbook of Internstional Trade Statistics, various issues; UNCTAD, Handbook of International Tradeand Development Statistics, various issues.

High-case projections.Excludes gold.

Table SA.5 Direction of merchandise trade, 1970 and 1977

Sources: UN, International Statistical Yearbook, various issues; UNCTAD, Handbook of International Trade and Development Statistics, 1979; GATT, trade system datafile; World Bank.a. Totals may not reconcile because of rounding.

Origin

Destination

Oil_exportingdevelopingcountries

Oil-importingdeveloping countries All

developingcountries

Indus-trial izedcountries

Capital-surplus oil

exporters

Centrallyplanned

economiesUnallo-

cated World

World(millionsof current

dollars)TotalLow-

incomeMiddle-

income

Percentage composition, 1970'Oil-exporting

developing countries 3.9 21.8 1.0 20.8 25.7 66.6 0.5 6.1 1.1 100.0 12,961

Oil-importingdeveloping countries 3.5 17.4 2.5 14.9 20.9 69.0 1.5 7.5 1.1 100.0 39,122

Low-income 4.6 21.7 8.2 13.5 26.3 53.7 4.3 14.6 1.1 100.0 5,779Middle-income 3.4 16.6 1.5 15.1 20.0 71.7 1.0 6.2 1.1 100.0 33,343

All developingcountries 3.6 18.5 2.1 16.3 22.1 68.4 1.2 7.1 1.1 100.0 52,083

Industrializedcountries 4.7 18.2 2.1 16.1 22.9 71.0 1.5 3.5 1.1 100.0 215,896

Capital-surplusoil exporters 1.7 20.2 2.9 17.4 21.9 744 0.8 1.5 1.5 100.0 11,151

Centrallyplanned economies 1.7 14.5 1.7 12.9 16.2 21.3 1.0 60.4 1.1 100.0 32,940

World 4.1 18.0 2.1 15.8 22.0 65.4 1.3 10.1 1.1 100.0 312,070World (millions

of current dollars) 12,710 56,019 6,604 49,415 68,729 204,160 4,211 31,400 3,570 312,070 312,070

Percentage composition, 1977'Oil-exporting

developing countries 2.2 21.5 1.1 20.4 23.7 72.6 0.8 2.8 0.1 100.0 58,391

Oil-importingdeveloping countries 8.4 20.5 2.5 18.1 28.9 61.8 3.1 6.1 0.1 100.0 149,854

Low-income 5.4 21.9 9.4 12.4 27.3 53.6 7.7 11.5 (.) 100.0 13,495Middle-income 8.7 20.4 1.8 18.6 29.1 62.6 2.7 5.6 0.1 100.0 136,359

All developingcountries 6.6 20.8 2.1 18.7 27.4 64.8 2.5 5.2 0.1 100.0 208,245

Industrializedcountries 6.7 16.4 1.4 15.0 23.1 65.7 5.6 5.2 0.5 100.0 697,568

Capital-surplusoil exporters 4.3 20.6 1.5 19.1 24.9 69.6 1.2 2.9 1.5 100.0 110,289

Centrallyplanned economies 2.9 8.8 1.0 7.8 11.7 27.2 3.2 54.5 3.4 100.0 107,523

World 6.1 16.9 1.5 15.4 23.0 62.2 4.3 9.7 0.8 100.0 1,123,625World (millions

of current dollars) 68,149 189,918 16,578 173,340 258,067 699,036 48,665 108,930 8,927 1,123,625 1,123,625

Table SA. 4 Growth of merchandise exports, by product category and country group,1960-77 and 1977-90(average annual percentage growth rates, 1977 prices)

Product categonj

1960-77 1977-90'

WorldIndustrialized

countriesDeveloping

countries WorldIndustrialized

countriesDevelopingcountries

Fuels and energy 6.4 4.4 6.6 1.8 3.3 3.0Other primary products 4.5 5.6 3.3 3.8 4.0 3.6

Food and beverages 4.6 6.3 2.8 4.1 4.3 3.9Nonfood agricultural

products 4.7 6.0 3.2 2.8 2.9 2.2Minerals and nonferrous

metals 4,1 3.6 5.2 4.1 4.0 3.8Manufactures 8.9 8.8 12.3 6.8 6.5 9.7

Machinery and transportequipment 9.6 9.6 16.8 7.2 6.8 14.2

Other manufactures 8.3 8.0 11.3 6.5 6.2 7.7Total merchandise" 7.2 7.7 6.0 5.4 5.9 6.0

Table SA.6 Capital flows and debt of the developing countries: oil importers and oil exporters, 1975-90(billions of current dollars)

Table SA.7 Capital flows and debt of the oil-importing developing countries:low-income and middle-income, 1975-90

Oil importers Oil exporters

Item 1975 1977 1980 1985 1990 1975 1977 1980 1985 1990

Current account deficit before interest payments 32.9 16.8 42.7 43.4 42.2 6.8 7.8 -11.1 4.0 30.2Interest payments 6.7 &1 18.3 35.0 62.0 2.0 4.1 8.8 11.8 17.5Changes in reserves and short-term debt -9.1 9.9 -4.4 6.8 23.5 6.2 5.8 20.2 8.4 2.6Total to be financed 30.6 34.8 56.6 85.2 127.7 15.0 17.7 18.0 24.2 50.2

Financed by medium- and long-term capital

From public sources 12.5 13.2 21.7 41.1 66.6 5.4 6.0 7.3 11.2 16.6From private sources 18.1 21.7 34.9 44.0 61.2 9.6 11.7 10.7 13.0 33.6

Private direct investment 4.2 3.9 6.5 9.6 16.4 2.7 2.1 3.5 5.8 8.2Private loans 13.9 17.7 28.4 34.4 44.7 6.9 9.6 7.2 7.2 25.4

Total net capital flows

Current dollars 30.6 34.8 56.6 85.2 127.7 15.0 17.7 18.0 24.2 50.2Constant 1977 dollars 34.2 34.8 40.0 42.1 47.2 16.8 17.7 12.7 12.0 18.5

Outstanding medium- and long-term debt

Public sources 57.7 77.5 100.4 212.9 397.1 16.2 24.3 48.8 79.6 130.0Private sources 72.6 108.9 187.1 343.4 558.5 24.7 43.9 66.5 97.5 175.4

Total debt

Current dollars 130.3 186.4 257.5 556.3 955.6 40.9 68.2 115.3 177.1 305.4Constant 1977 dollars 146.4 186.4 203.5 275.0 352.9 46.0 65.2 81.6 87.5 112.8

Debt service

Interest payments 6.7 8.1 18.3 35.0 62.0 2.0 4.1 8.8 11.8 17.5Debt amortization 12.7 18.9 28.6 65.0 114.2 3.6 6.5 12.2 23.6 40.1Interest payments as percentage of GNP 0.9 0.8 1.2 1.2 1.3 1.0 1.6 2.7 1.3 1.1

Price deflator 89.3 100.0 141.3 202.3 270.8 89.3 100.0 141.3 202.3 270.8

Source: High-case projections of World Development Report.a. Excludes official transfers.

(billions of current dollars)

Low-income Middle-income

Item 1975 1977 1980 1985 1990 1975 1977 1980 1985 1990

Current account deficit before interest payments 4.8 1.4 8.8 16.0 26.8 28.1 15.3 33.9 27.4 25.5Interest payments 0.6 0.7 1.2 2.6 5.3 6.1 7.4 17.1 32.3 56.7Changes in reserves and short-term debt 0.4 3.0 -0.9 0.7 1.0 -9.5 7.0 -3.5 6.1 22.5Total to be financed 5.9 5.1 9.1 19.4 33.0 24.7 29.7 47.4 65.8 94.7

Financed by medium- and long-term capital

From public sources 5.4 4.7 8.3 18.5 31.4 7.1 8.5 13.4 22.6 35.2From private sources 0.5 0.4 0.8 0.9 1.7 17.6 21.2 34.0 43.2 59.5

Private direct investment 0.2 0.2 0.3 0.6 1.0 4.0 3.7 6.2 9.0 15.4Private loans 0.3 0.3 0.5 0.2 0.7 13.6 17.5 27.9 34.2 44.1

Total net capital flows

Current dollars 5.9 5.1 9.1 19.4 33.0 24.7 29.7 47.4 65.8 94.7Constant 1977 dollars 6.6 5.1 6.5 9.6 12.2 27.7 29.7 33.6 32.5 35.0

Outstanding medium- and long-term debt

Public sources 24.4 32.0 44.5 89.4 172.2 33.3 45.5 55.6 123.5 224.9Private sources 3.1 3.3 0.8 3.6 9.3 69.5 105.6 186.3 339.8 549.2

Total debt

Current dollars 27.5 35.3 45.6 93.0 181.5 102.8 151.1 241.9 463.3 774.1Constant 1977 dollars 30.9 35.3 32.3 46.0 67.0 115.5 151.1 171.2 229.0 285.9

Debt service

Interest payments 0.6 0.7 1.2 2.6 5.3 6.1 7.4 17.1 32.3 56.7Debt amortization 1.2 1.3 2.2 3.7 6.0 11.5 17.6 26.4 61.3 108.3Interest payments as percentage of GNP 0.4 0.4 0.4 0.5 0.6 1.0 0.9 1.3 1.3 1.4Price deflator 89.3 100.0 141.3 202.3 270.8 89.3 100.0 141.3 202.3 270.8

Source: High-case projections of World Development Report, 1980.a. Excludes official transfers.

101

Bibliographical note

This Report has drawn on a widerange of World Bank work, as wellas on external research. Selectedsources used in each chapter arebriefly annotated below, and thenlisted alphabetically. The WorldBank sources include sector policypapers, ongoing economic analysisand research, and project, sectorand economic work on individualcountries. In addition, a set ofbackground papers is commis-sioned for each Report; their pri-mary purpose is to synthesize therelevant literature and Bank work.(Thus the sources cited in thesepapers are not listed separately.)Many of the background papersare issued as World Bank StaffWorking Papers, which are avail-able at no charge from the Bank'sPublications Unit. The views theyexpress are not, however, neces-sarily those of the World Bank orof this Report.

Selected sources, by chapter

Chapters 2 and 3. The global modelused in the projections is describedin Cheetham, Gupta and Schwartz.The data base for the global modeland for country projections is con-tinually updated, by drawing onpublished sources and other datacollected by the World Bank; someof these data are presented in theWorld Development Indicators(and in the World Bank Atlas, pub-lished annually, as well as the WorldTables, published occasionally).Energy prospects of developingcountries are reviewed in Hughart,

102

and their energy policy issues arereviewed in Fallen-Bailey andByer. In the area of internationaltrade, Keesing considers a widerange of trade issues for develop-ing countries; Balassa analyzestrends in trade in manufacturedgoods; Morawetz provides acountry case study of the effectsof developing-country policies ongrowth in manufactured exports;Wolf analyzes the adjustment byindustrialized countries to importsfrom developing countries; Sapirand Lutz survey trends and issuesrelating to trade in nonfactor ser-vices; Kemper assesses the likelyimpact of the "Tokyo Round"; andFrank analyzes the "graduation"issues in trade policy. On exportcredit finance, see Cizauskas. Themethod for deriving estimates ofthe number of people in absolutepoverty is presented in Ahiuwalia,Carter and Chenery.

Chapter 4. On absolute povertyand policies to overcome it, seeChenery and others, Sen, andAhluwalia, Carter and Chenery.On urban poverty and rural-urbanmigration, see Nelson. The litera-ture on the contribution of humanresources to growth is surveyed inBowman, and its main condusionsare summarized in Schultz. Therecent cross-country analyses re-ferred to in the box on humanresources and growth (page 38) arepresented in Wheeler and in Hicks.Parts of this chapter (and Chapter5) also draw on the World Bank'swork on basic needs, which issummarized in Haq and Burki.

Chapter 5. The evidence on edu-cation and farmer productivity issurveyed in Lockheed, Jamison andLau; that on the rates of return toschooling in Psacharopoulos.(Psacharopoulos, along with Berryand with Bowman, also discussesthe debate on methodologicalissues in applying rate-of-returnanalysis.) The connections betweeneducation, poverty and income dis-tribution are further analyzed inBerry and in Fields. On practicalissues of educational reform, seeHaddad and others; on cross-country comparisons of educationalquality, see Inkeles. The evidenceon the effects of education onhealth and nutrition is surveyedin Cochrane, O'Hara and Leslie.Health problems and policies indeveloping countries are reviewedin Golladay and Liese and in Gol-laday; nutrition issues in Berg andin Reutlinger; fertility and otherpopulation issues in Birdsall. Fora quantitative analysis of the de-terminants of fertility and its effectson income growth, see Wheeler.The connection between educationand fertility is discussed in Cochrane,O'Hara and Leslie. Kanagaratnamand Pierce examine trends inpopulation policy and in the im-plementation of family planningprograms.

Chapter 6. Factors affecting politicalsupport for and obstades to humandevelopment programs are dis-cussed in Uphoff. Sources offinancing and means of reducingcosts for these programs are dis-cussed in Meerman. Esman and

Montgomery survey administra-tive aspects of implementing theprograms. A range of factors thatresult in misperception of theproblems of poverty is consideredin Chambers. Social and culturalaspects of human development aresurveyed in Rogers, Coletta andMbindyo. And the role of the family,including the particular problemsfaced by women and youngchildren, is considered in Safilios-Rothschild and in the World Bank's

Selected sources, by author

publication, Recognizing the "Invisible"Woman in Development.

Chapter 7. This chapter drawsheavily on the World Bank's countryeconomic work, as well as on manyof the sources listed for precedingchapters. In addition, variousaspects of human developmentand its role in poverty reductionfor different regions are discussedin Bussink (East Asia), Davies (Sub-Saharan Africa), Grawe (South Asia),Kavaisky (Middle East and North

Africa) and Pfeffermann (LatinAmerica). For a wide-ranging dis-cussion of development issues inSub-Saharan Africa, see Acharyaand Johnston. See Selowsky onantipoverty policies in LatinAmerica, and Singh on assistingsmall farmers and the landless inSouth Asia. Detailed country casestudies of human developmentissues include Knight (Brazil) andIsenman (Sri Lanka).

Acharya, Shankar, and Bruce Johnston. "Two Studies of Development in Sub-Saharan Africa." World Bank StaffWorking Paper, no. 300. October 1978.

Ahiuwalia, Montek, Nicholas Carter and Hollis Chenery. "Growth and Poverty in Developing Countries." Journal ofDevelopment Economics, 6:3 (September 1979), 299-341.

Balassa, Bela. "The Changing International Division of Labor in Manufactured Goods." World Bank Staff WorkingPaper, no. 329. May 1979.

Berg, Alan D. Nutrition. Poverty and Basic Needs Series. Washington, D.C.: World Bank, forthcoming.Berry, S. Albert. "Education, Income, Productivity and Urban Poverty." In King, ed.*Birdsall, Nancy. "Population and Poverty in the Developing World." World Bank Staff Working Paper, no. 404.

July 1980.*

Bowman, Mary Jean. "Education and Economic Growth: An Overview." In King, ed.*

Bussink, Willem, and others. "Poverty and the Development of Human Resources: Regional Perspectives." WorldBank Staff Working Paper, no. 406. July 1980.*

Bussink, Willem. "Reflections on Socioeconomic Development and Poverty in Southeast Asia." In Bussink and others.*Chambers, Robert. "Rural Poverty Unperceived: Problems and Remedies." World Bank Staff Working Paper, no. 400.

July 1980.*

Cheetham, R. I., S. Gupta and A. Schwartz. "The Global Framework." World Bank Staff Working Paper, no. 355.September 1979.

Chenery, Hollis, Montek S. Ahiuwalia, C. L. G. Bell, John H. Duloy and Richard Jolly. Redistribution with Growth. NewYork: Oxford University Press, 1974.

Cizauskas, Albert C. "The Changing Nature of Export Credit Finance and Its Implications for Developing Countries."World Bank Staff Working Paper, no. 409. July 1980.*

Cochrane, Susan H., Donald O'Hara and Joanne Leslie, "The Effects of Education on Health." World Bank StaffWorking Paper, no. 405. July 1980.*

Davies, David. "Human Development in South Asia." In Bussink and others.*Esman, Milton, and John Montgomery. "The Administration of Human Development." In Knight, ed.*

Fallen-Bailey, Darrel, and T. Byer. "Energy Options and Policy Issues in Developing Countries." World Bank StaffWorking Paper, no. 350. August 1979.

Fields, Gary S. "Education and Income Distribution in Developing Countries: A Review of the Literature." In King, ed.*Frank, Isaiah. "The 'Graduation' Issue in Trade Policy toward LDCs." World Bank Staff Working Paper, no. 334.

June 1979.

Golladay, Fredrick. Health Sector Policy Paper. Washington, D.C.: World Bank, 1980.

Golladay, Fredrick, and Bernhard Liese. "Health Problems and Conditions in the Developing Countries." World BankStaff Working Paper, no. 412. August 1980.*

Grawe, Roger. "Human Development in South Asia." In Bussink and others.*

103

Haddad, Wadi D., and others. Education Sector Policy Paper. Washington, D.C.: World Bank, 1980.

Haq, Mahbub ul, and Shahid Javed Burki. Meeting Basic Needs: An Overview. Poverty and Basic Needs Series.Washington, D.C.: World Bank, forthcoming.

Hicks, Norman. "Economic Growth and Human Resources." World Bank Staff Working Paper, no. 408. July 1980.*

Hughart, David. "Prospects for Traditional and Non-Conventional Energy Sources in Developing Countries." WorldBank Staff Working Paper, no. 346. July 1979.

Independent Commission on International Development Issues (Under the Chairmanship of Willy Brandt). North-South:A Program for Survival. Cambridge, Mass.: MIT Press, 1980.

Inkeles, Alex. Review of the International Evaluation of Educational Achievement, Proceedings of the National Academy ofEducation, 4 (1977), 139-200.

Isenman, Paul. "Basic Needs: The Case of Sri Lanka," World Development, 8:3 (March 1980) 237-58.

Kanagaratnam, Kandiah, and Catherine S. Pierce. "Population Policy and Family Planning Programs: Trends in Policyand Administration." World Bank Staff Working Paper, no. 411. August 1980.*

Kavalsky, Basil G. "Poverty and Human Development in the Middle East and North Africa." In Bussink and others.*Keesing, Donald B. "Trade Policy for Developing Countries." World Bank Staff Working Paper, no, 353. August 1979.Kemper, R. "The Tokyo Round: Results and Implications for Developing Countries." World Bank Staff Working Paper,

no. 372. February 1980.

King, Timothy, ed. "Education and Income." World Bank Staff Working Paper, no. 402. July 1980.*

Knight, Peter T., and others. "Brazil: Human Resources Special Report." A World Bank Country Study. 1979.Knight, Peter T., ed. "Implementing Programs of Human Development." World Bank Staff Working Paper, no. 403.

July 1980.*

Lockheed, Marlaine E., Dean T. Jamison and Laurence J. Lau. "Farmer Education and Farm Efficiency: A Survey." InKing, ed.

Meerman, Jacob. "Paying for Human Development." In Knight, ed.*Morawetz, David. "Why the Emperor's New Clothes are not Made in Colombia: A Case Study in Latin American and

East Asian Manufactured Exports." World Bank Staff Working Paper, no. 368. January 1980.Nelson, Joan. Access to Power, Princeton: at the University Press, 1980.

OECD, Interfutures. Facing the Future: Mastering the probable and managing the unpredictable. Paris: OECD, 1979.

Pfeffermann, Guy P. "Some Economic Aspects of Human Development in Latin America (with Special Emphasis onEducation)." In Bussink and others.*

Psacharopoulos, George. "Returns to Education: An Updated International Comparison." In King, ed.*Reutlinger, Shlomo, and Harold Alderman. "The Prevalence of Calorie Deficient Diets in Developing Countries." World

Bank Staff Working Paper, no. 374. March 1980.*

Rogers, Everett M., Nat J. Colletta and Joseph Mbindyo. "Social and Cultural Influences on Human DevelopmentPolicies and Programs." In Knight, ed.*

Safilios-Rothschild, Constantina. "The Role of the Family: A Neglected Aspect of Poverty." In Knight, ed.*Sapir, Andre, and Ernst Lutz. "Trade in Non-Factor Services: Past Trends and Current Issues." World Bank Staff

Working Paper, no. 410. August 1980.*

Schultz, Theodore W. "Nobel Lecture: The Economics of Being Poor," Journal of Political Economy, 88:4 (August 1980)639-52.

Selowsky, Marcelo. "Balancing Trickle Down and Basic Needs Strategies: Income Distribution Issues in Large Middle-Income Countries with Special Reference to Latin America." World Bank Staff Working Paper, no. 335. June 1979.

Sen, Amartya. "Levels of Poverty: Policy and Change." World Bank Staff Working Paper, no. 401. July 1979.*

Singh, Inderjit. "Small Farmers and the Landless in South Asia." World Bank Staff Working Paper, no. 320.February 1979.

Uphoff, Norman. "Political Considerations in Human Development." In Knight, ed,*Wheeler, David. "Human Resource Development and Economic Growth in Developing Countries: A Simultaneous

Model." World Bank Staff Working Paper, no. 407. July 1980.*

Wolf, Martin. "Adjustment Policies and Problems in Developed Countries." World Bank Staff Working Paper, no. 349.August 1979.

World Bank. Recognizing the 'Invisible' Woman in Development: The World Bank's Experience. Washington, D.C., 1979.

An asterisk (*) after a citation indicates papers prepared as part of the background work for this report.

104

Annex

orldDevelopment

Indicators

Contents

Key 108

Introduction 109

Table 1. Basic Indicators 110

Population E Area GNP per capita Inflation fl Adult literacy0 Life expectancy 0 Food production per capita

Table 2. Growth of Production 112

GDP o Agriculture 0 Industry 0 Manufacturing 0 Services

Table 3. Structure of Production 114

Agriculture 0 Industry 0 Manufacturing 0 Services

Table 4. Growth of Consumption and Investment 116

Public consumption 0 Private consumption 0 Gross domestic investment

Table 5. Structure of Demand 118

106

Public consumption 0 Private consumption D Gross domestic investment0 Gross domestic saving 0 Exports of goods and nonfactor services0 Resource balance

Table 6. Industrialization 120

Share of value added in food and agriculture 0 in textiles and clothing0 in machinery and transport equipment 0 in chemicals Li in othermanufacturing 0 Value added in manufacturing0 Gross manufacturing output per capita

Table 7. Energy 122

Growth of energy production Growth of energy consumption0 Energy consumption per capita 0 Energy consumption per dollar of GDPn Energy imports as percentage of merchandise exports

Table 8. Growth of Merchandise Trade 124

Export values 0 Import values u Growth of exports0 Growth of imports 0 Terms of trade

Table 9. Structure of Merchandise Exports 126

Fuels, minerals and metals U Other primary commoditiesU Textiles and clothing Li Machinery and transport equipmentU Other manufactures

Table 10. Structure of Merchandise Imports 128

Food 0 Fuels U Other primary commodities U Machinery andtransport equipment U Other manufactures

Table 11. Destination of Merchandise Exports 130

Industrialized countries U Developing countries U Centrally plannedeconomies U Capital-surplus oil exporters

Table 12. Trade in Manufactured Goods 132

To industrialized countries U To developing countries U To centrallyplanned economies U To capital-surplus oil exportersU Value of manufactured exports

Table 13. Balance of Payments and Debt Service Ratios 134

Current account balance before interest payments on external public debtD Interest payments on external public debt D Debt service as percentageof GNP E as percentage of exports of goods and services

Table 14. Flow of External Capital 136

Gross inflow of public and publicly guaranteed medium- and long-term loansRepayment of principal n Net inflow of public and publicly guaranteed

medium- and long-term loans 0 Net direct private investment

Table 15. External Public Debt and International Reserves 135

Amount in dollars 0 as percentage of donor GNP E in national currenciesD Net bilateral flow to low-income countries

Table 17. Population Growth, Past and Projected,and Hypothetical Stationary Population 142

Past growth of population E Projected population 0 Hypothetical size ofstationary population o Assumed year of reaching net reproduction rate of 1E Year of reaching stationary population

Table 18. Demographic and Fertility-related Indicators 144

Crude birth rate 0 Crude death rate 0 Total fertility rate U Percentageof women in reproductive age group 0 Percentage of marriedwomen using contraceptives

Table 19. Labor Force 146

Population of working age U Labor force in agriculture U in industry0 in services 0 Growth of labor force, past and projected

Table 20. Urbanization 148

Urban population as percentage of total population 0 Growth ofurban population 0 Percentage in largest city U in cities of over500,000 persons U Number of cities of over 500,000 persons

Table 21. Indicators Related to Life Expectancy 150

Life expectancy U Infant mortality rate U Child death rate

Table 22. Health-related Indicators 152

Population per physician U per nursing person 0 Percentage ofpopulation with access to safe water U Daily calorie supply per capita

Table 23. Education 154

Number enrolled in primary school as percentage of age groupU in secondary school U in higher education U Adult literacy

Table 24. Income Distribution 156

Percentage share of household income, by percentilegroups of households

Technical Notes 158

Bibliography of Data Sources 166

107

External public debt outstanding and disbursed E as percentage of GNP0 Gross international reserves n in months of import coverage

Table 16. Official Development Assistancefrom OECD and OPEC Members 140

Key

In each table, countries are listed in theirgroup in ascending order of income percapita. The reference numbers indicatingthat order are shown in the alphabeticallist of countries below.

Figures in the colored bands are summarymeasures for groups of countries. Theletter w after a summary measure indicatesthat it is a weighted average; the letter m,that it is a median value; the letter f, thatit is a total.

. Not available.(.)Less than half the unit shown.

All growth rates are in real terms.

Figures in italics are for years or periodsother than those specified.

1. The references to Taiwan in these tables should not be interpreted as having any significance as to its legal status.

108

Afghanistan 26 Hong Kong 86 Peru 56Albania 116 Hungary 121 Philippines 49Algeria 72 India 15 Poland 122Angola 33 Indonesia 38 Portugal 82Argentina 81 Iran 110 Romania 119

Australia 98 Iraq 109 Rwanda 17Austria 96 Ireland 91 Saudi Arabia 112Bangladesh 2 Israel 90 Senegal 37Belgium 101 Italy 92 Sierra Leone 20Benin 23 Ivory Coast 57 Singapore 88

Bhutan 4 Jamaica 68 Somalia 8Bolivia 48 Japan 97 South Africa 77Brazil 79 Jordan 66 Spain 89Bulgaria 120 Kampuchea, Democratic 1 Sri Lanka 18Burma 12 Kenya 36 Sudan 34

Burundi 9 Korea, Republic of 70 Sweden 107Cameroon 42 Korea, Democratic Republic of 115 Switzerland 108Canada 102 Kuwait 113 Syrian Arab Republic 64Central African Republic 27 Lao People's Democratic Republic 3 Taiwan' 75Chad 10 Lebanon 69 Tanzania 25

Chile 76 Lesotho 31 Thailand 47China 114 Liberia 43 Togo 35Colombia 59 Libya 111 Trinidad and Tobago 84Congo, People's Republic of 51 Madagascar 28 Tunisia 65Costa Rica 78 Malawi 16 Turkey 71

Cuba 117 Malaysia 67 Uganda 32Czechoslovakia 124 Mali 6 United Kingdom 94Denmark 106 Mauritania 30 United States 105Dominican Republic 62 Mexico 73 Upper Volta 13Ecuador 61 Mongolia 118 Uruguay 80

Egypt, Arab Republic of 39 Morocco 55 Union of Soviet SocialistEl Salvador 54 Mozambique 11 Republics 123Ethiopia 5 Nepal 7 Venezuela 85Finland 95 Netherlands 100 Viet Nam, SocialistFrance 99 New Zealand 93 Republic of 14

German Democratic Republic 125 Nicaragua 58 Yemen Arab Republic 50Germany, Federal Republic of 104 Niger 22 Yemen, People's DemocraticGhana 40 Nigeria 52 Republic of 41Greece 87 Norway 103 Yugoslavia 83Guatemala 63 Pakistan 24 Zaire 21

Guinea 19 Panama 74 Zambia 45Haiti 29 Papua New Guinea 53 Zimbabwe 46Honduras 44 Paraguay 60

Introduction

The World Development Indicatorsare designed to provide informationabout the main features of socialand economic development. Theformat this year generally followsthat of previous years. The indica-tors in Table 1 give a summaryprofile of countries. The data inother tables fall into the followingbroad areas: national accounts,industrialization, energy, externalaccounts, aid flows, demography,labor force, urbanization, socialindicators and income distribu-tion. Most of the information wasdrawn from the data files and publi-cations of the World Bank, theInternational Monetary Fund andthe United Nations and the spe-cialized agencies.

For ease of reference, ratios andrates of growth are shown; abso-lute values are reported only in afew instances. Most growth rateswere calculated for two periods:1960-70 and 1970-78, or 1970-77if data for 1978 were not available.All growth rates are in real termsand were computed, unless notedotherwise, by using the least-squares method. Because thismethod takes all observationswithin a period into account, theresulting growth rates reflectgeneral trends that are not undulyinfluenced by exceptional valuesfor a particular year. Table entriesin italics indicate that they are foryears or periods other than thosespecified. All dollar figures are USdollars.

Some of the differences betweenfigures shown this year and lastyear reflect revisions to historicalseries by the reporting countries.

They also reflect revisions to theestimates of population on thebasis of new information fromsurveys and censuses.

The country groups used in thetables are: 38 low-income develop-ing countries with a per capitaincome of $360 or less in 1978; 52middle-income developing coun-tries with a per capita income ofmore than $360; 18 industrializedcountries; 5 capital-surplus oil-exporting countries; and 12 cen-trally planned economies. As inprevious years, Democratic Kam-puchea, Lao People's DemocraticRepublic, Socialist Republic ofViet Nam, and Yugoslavia aregrouped with developing countries.Iran and Iraq are now groupedwith capital-surplus oil-exportingcountries.

Within each group, countriesare listed in ascending order ofincome per capita, and that orderis used in all tables. The alpha-betical list on the opposite pageshows the reference number ofeach country. Countries withpopulations of less than a millionare not reported in the tables,largely for lack of comprehensivedata. The technical notes for Table1 show some basic indicators for29 small countries that are mem-bers of the United Nations, theWorld Bank, or both.

Summary measures - weightedaverages, median values, or totalswere calculated for the countrygroups only if data were adequateand meaningful statistics could beobtained. The weights used in com-puting the measures are describedin the technical notes relating to

an indicator. The letter w aftera summary measure indicates thatit is a weighted average; the letterm, that it is a median value; theletter t, that it is a total. The medianis the middle value of a set ar-ranged in order of magnitude.Because the coverage of countriesis not uniform for all indicatorsand because the variation aroundcentral tendencies can be large,readers should exercise caution incomparing the summary measuresfor different indicators, countrygroups and years or periods.

Readers should also exercisecaution in comparing indicatorsacross countries. Although thestatistics presented are drawnfrom sources generally consideredthe most authoritative and reliable,some of them, particularly thosedescribing social features and in-come distribution, are subject toconsiderable margins of error. Inaddition, variations in nationalpractices mean that the data incertain instances are not strictlycomparable. The data should thusbe construed only as indicatingtrends and characterizing majordifferences between countries.

The technical notes should bereferred to in any use of the data.These notes outline the concepts,definitions, methods and datasources. The bibliography givesdetails of the data sources, whichcontain comprehensive definitionsand descriptions of concepts used.

The World Development In-dicators are prepared under thedirection of Ramesh Chander.

109

Table 1. Basic Indicators

110

GNP per capita Average indexAverage of food

Popula-Area

(thousandsannualgrowth Average annual

inflationrate of

Adultliteracy

Life ex-pectancy

productionper capita

tion of square (per- rate at birth (1969-71(millions) kilo- Dollars cent) (percent) (percent) (years) 100)

1960_bc 1970_78dMid_1978a meters) 1978a 1960_78b 1975° 1978 1976-78

Low-income countries 1293.9 t 26,313 t 200w 1.6 w 3.0 m 10.6 rn 38 w SOw 97 w

1 Kampuchea, Dem. 8.4 181 .. .. 3.8 .. .. .. 57

2 Bangladesh 84.7 144 90 -0.4 3.7 17.9 26 47 903 Lao PDR 3.3 237 90 .. .. 42 964 Bhutan 1.2 47 100 -0.3 .. .. .. 41 1005 Ethiopia 31.0 1,222 120 1.5 2.1 4.0 10 39 84

6 Mali 6.3 1,240 120 1.0 5.0 7.8 10 42 907 Nepal 13.6 141 120 0.8 7.7 9.1 19 43 92

8 Somalia 3.7 638 130 -0.5 4.5 10.7 60 43 87

9 Burundi 4.5 28 140 2.2 2.8 10.1 25 45 107

10 Chad 4.3 1,284 140 -1.0 4.6 7.4 15 43 89

11 Mozambique 9.9 783 140 0.4 2.8 10.9 .. 46 81

12 Burma 32.2 677 150 1.0 2.7 13.7 67 53 9613 Upper Volta 5.6 274 160 1.3 1.3 9.6 5 42 9514 Viet Nam 51.7 330 170 .. .. .. 87 62 102

15 India 643.9 3288 180 1.4 7.1 8.2 36 51 100

16 Malawi 5.7 118 180 2.9 2.4 9.1 25 46 9917 Rwanda 4.5 26 180 1.4 13.1 14.7 23 46 10318 Sri Lanka 14.3 66 190 2.0 1.8 11.8 78 69 11419 Guinea 5.1 246 210 0.6 1.7 6.4 .. 43 8620 Sierra Leone 3.3 72 210 0.5 2.9 10.8 15 46 93

21 Zaire 26.8 2,345 210 1.1 29.9 26.2 15 46 9422 Niger 5.0 1,267 220 -1.4 2.1 10.7 8 42 87

23 Benin 3.3 113 230 0.4 1.9 7.4 11 46 92

24 Pakistan 77.3 804 230 2.8 3.3 14.6 21 52 101

25 Tanzania 16.9 945 230 2.7 1.8 12.3 66 51 93

26 Afghanistan 14.6 647 240 0.4 11.9 4.4 12 42 10027 Central African Rep. 1.9 623 250 0.7 4.1 9.0 .. 46 10228 Madagascar 8.3 587 250 -0.3 3.2 9.6 50 46 9529 Haiti 4.8 28 260 0.2 4.1 12.2 23 51 91

30 Mauritania 1.5 1,031 270 3.6 1.6 10.4 17 42 71

31 Lesotho 1.3 30 280 5.9 2.5 11.2 55 50 9032 Uganda 12.4 236 280 0.7 3.0 27.3 53 90

33 Angola 6.7 1,247 300 1.2 3.3 22.0 .. 41 8834 Sudan 17.4 2,506 320 0.1 3.7 7.4 20 46 108

35 Togo 2.4 56 320 5.0 1.7 7.4 18 46 80

36 Kenya 14.7 583 330 2.2 1.5 - 12.0 40 53 91

33 Senegal 5.4 196 340 -0.4 1.7 8.0 10 42 9638 Indonesia 136.0 2,027 360 4.1 20.0 62 47 100

Middle-income countries 872.8 32,998 1,250w 3.7 w 3.1 ni 13.1 tn 71 w 61 w lO6w

39 Egypt 39.9 1,001 390 3.3 2.7 7.0 44 54 9340 Ghana 11.0 239 390 -0.5 7.6 35.9 30 48 79

41 Yemen, PDR 1.8 333 420 .. .. .. 27 44 10842 Cameroon 8.1 475 460 2.9 3.7 9.8 .. 46 11243 Liberia 1.7 111 460 2.0 1.9 9.7 30 48 96

44 Honduras 3.4 112 480 1.1 3.0 8.0 57 57 8445 Zambia 5.3 753 480 1.2 7.6 5.7 39 48 10946 Zimbabwe 6.9 391 480 1.2 1.3 7.6 .. 54 10247 Thailand 44.5 514 490 4.6 1.9 9.1 84 61 12248 Bolivia 5.3 1,099 510 2.2 3.5 22.7 63 52 111

49 Philippines 45.6 300 510 2.6 5.8 13.4 87 60 11550 Yemen Arab Rep. 5.6 195 520 .. -, . - 13 39 9851 Congo, People's Rep. 1.5 342 540 1.0 5.4 10.6 50 46 8252 Nigeria 80.6 924 560 3.6 2.6 18.2 .. 48 8953 Papua New Guinea 2.9 462 560 3.6 3.6 8.8 32 50 106

54 El Salvador 4.3 21 660 1.8 0.5 10.3 62 63 111

55 Morocco 18.9 447 670 2.5 2.0 7.1 28 55 80

56 Peru 16.8 1,285 740 2.0 9.9 22.2 72 56 9057 Ivory Coast 7.8 322 840 2.5 2.8 13.9 20 46 104

58 Nicaragua 2.5 130 840 2.3 1.9 11.0 57 55 102

59 Colombia 25.6 1,139 850 3.0 11.9 21.7 81 62 114

60 Paraguay 2.9 407 850 2.6 3.0 12.3 81 63 103

61 Ecuador 3.8 284 880 4.3 .. 14.8 74 60 10362 Dominican Rep. 5.1 49 910 3.5 2.1 8.6 67 60 93

63 Guatemala 6.6 109 910 2.9 0.1 10.8 47 57 108

64 Syrian Arab Rep. 8.1 185 930 3.8 1.9 12.7 53 57 150

65 Tunisia 6.0 164 950 4.8 3.7 7.1 55 57 128

66 Jordan 3.0 98 1,050 ,. 70 56 77

F9ures in italics are for 1977, not 1978.Figures in italics are for 1960-77, not 1960-78.Figures in italics are for 1961 -70, not 1960-70.

Figures in italics are for 1970-77, not 1970-78.Figures in italics are for years other than 1975. See the technical notes.Preliminary estimate based on partial official information. See the technical notes.

111

GNP per capitaAverage index

of foodAverage

Popula-Area

(thousandsannualgrowth Average annual

inflationrate ofAdult

literacyLife ex-

pectancyproductionper capita

tion(millions)

of squarekilo- Dollars

(per-cent) (percent) rate

(percent)at birth(years)

(1969-71100)

1960_bc 1970_78dMid_1978a meters) 1978a 1960-78b 1975e 1978 1976-78

67 Malaysia 13.3 330 1,090 3.9 -0.3 7.2 60 67 11068 Jamaica 2.1 11 1110 2.0 3.8 16.9 86 70 9869 Lebanon 3.0 10 .. .. 1.4 .. .. 65 8570 Korea, Rep. of 36.6 99 1,160 6.9 17.5 19.3 93 63 11631 Turkey 43.1 781 1,200 4.0 5.6 21.5 60 61 11072 Algeria 17.6 2,382 1,260 2.3 2.3 13.4 37 56 8273 Mexico 65.4 1,973 1,290 2.7 3.5 17.5 76 65 9974 Panama 1.8 76 1,290 2.9 1.6 7,5 78 70 10375 Taiwan 17.1 36 1,400 6.6 4.1 10.3 82 72 10576 Chile 10.7 757 1,410 1.0 32.9 242.6 88 67 9477 South Africa 27.7 1,221 1,480 2.5 3.0 11.7 .. 60 10078 Costa Rica 2.1 51 1,540 3.3 1.9 15.7 90 70 11439 Brazil 119.5 8,512 1,570 4.9 46.1 30.3 76 62 11780 Uruguay 2.9 176 1,610 0.7 51.1 65.6 94 71 10581 Argentina 26.4 2,767 1,910 2.6 21.8 120.4 94 71 11482 Portugal 9.8 92 1,990 5.9 3.0 15.2 70 69 8283 Yugoslavia 22.0 256 2,380 5.4 12.6 17.3 85 69 11784 Trinidad and Tobago 1.1 5 2,910 2.2 3.2 21,3 95 70 9485 Venezuela 14.0 912 2,910 2.7 1.3 11.1 82 66 9786 Hong Kong 4.6 1 3,040 6.5 2.3 7.7 90 72 3087 Greece 9.4 132 3,250 6.0 3.2 13.8 .. 73 12088 Singapore 2.3 1 3,290 7.4 1.1 6.1 75 70 11289 Spain 37.1 505 3,470 5.0 6.3 15.0 .. 73 12290 Israel 3.7 21 3,500 4.2 6.2 31.0 88 72 113

Industrialized countries 667.8 t 30,429 8,070 3.7 ' 4.2 ni 9.4 rn. ..

99 w 74 tv 108

91 Ireland 3.2 70 3,470 3.3 5.2 14.7 98 73 12892 Italy 56.] 301 3,850 3.6 4.4 14.0 98 73 10093 New Zealand 3.2 269 4,790 1.7 3.3 11.0 99 73 10794 United Kingdom 55.8 244 5,030 2.1 4.1 14.1 99 73 11195 Finland 4.8 337 6820 4.1 5.6 13.2 100 72 10796 Austria 7.5 84 7,030 4.2 3.6 7.6 99 72 10997 Japan 114.9 372 7,280 7.6 4.8 9.6 99 76 9798 Australia 14.2 7,687 7,990 2.9 3.1 12.8 100 73 12199 France 53.3 547 8,260 4.0 4.1 9.3 99 73 106

100 Netherlands 13.9 41 8,410 3.4 5.3 8.8 99 74 118101 Belgium 9.8 31 9,090 4.1 3.6 8.6 99 32 105102 Canada 23.5 9,976 9,180 3.5 3.1 9.4 98 74 112103 Norway 4.1 324 9,510 4.0 4.2 8.6 99 75 108104 Germany, Fed. Rep. 61.3 249 9,580 3.3 3.2 5.9 99 72 104105 United States 221.9 9,363 9,590 2.4 2.8 6.8 99 33 114106 Denmark 5.1 43 9,920 3.2 6.0 9.8 99 74 102107 Sweden 8.3 450 10,210 2.5 4.3 9.3 99 75 113108 Switzerland 6.3 41 12,100 2.2 4.6 6.6 99 34 113

Capital-surplusoil exporters 60.1 6,011 3,340 to 7.1 U) 1.2 to 22.2 to 50 to 53w 111 w 7

109 Iraq 12.2 435 1,860 4.1 1.7 55 84110 Iran 35.8 1,648 2,160 7.9 -0.5 23.7 52 113111 Libya 2.7 1,760 6,910 6.2 5.2 20.7 50 55 123112 Saudi Arabia 8.2 2,150 7,690 9.7 28.4 53 135113 Kuwait 1.2 18 14,890 -2.3 0: 19.8 60 69

Centrally plannedeconomies 1,352.4t 34,826 t 1,190w 4.Ow 70 w 112 w

114 China 952.2 9,59] 230 3.] 70 111115 Korea, Dem. Rep. 17.1 121 330 4.5 63 130116 Albania 2.6 29 740 4.1 69 10]117 Cuba 9.7 115 810 -1.2 96 72 96118 Mongolia 1.6 1,565 940 1.5 63 94119 Romania 21.9 238 1,750 8.6 98 70 148120 Bulgaria 8.8 111 3,230 5.7 .. .. .. 72 113121 Hungary 10.7 93 3,450 5.0 98 70 122122 Poland 35.0 313 3,670 5.9 .. 98 71 104123 USSR 261.0 22,402 3,700 4.3 99 70 111124 Czechoslovakia 15.1 128 4,720 4.3 70 118125 German Dem. Rep. 16.7 108 5,710 4.8 72 127

Table 2. Growth of Production

112

Average annual growth rate (percent)

GDP Agriculture Industry Manufacturing Services1960_70a 1970-78b 1960_70a1970_78b 1960_70a 1970-78b 1960-70 1970-78b 1960_lOa 197o-78b

Low-income countries 3.9 w 3.6 w 2.5 in 2.0 in 6.1 in 4.5 m 6.6m 4.2in 4.4in 4.3m

1 Kampuchea, Dem. 3.1 .. .. .. .. .. ..2 Bangladesh 3.6 2.9 2.7 1.6 7.9 5.9 6.6 5.3 3,8 4.73LaoPDR4 Bhutan .. .. .. .. .. .. ..5 Ethiopia 4.4 1.8 2.2 0.5 7.4 0.4 8.0 1.3 7.8 4.5

6 Mali 3.3 4.6 2.0 9.2 5.27 Nepal 2.5 2.78 Somalia 1.0 3.1 -1.5 2.] 3.3 -2.6 14.3 2.5 6.89 Burundi 4.4 2.9 1.7 7.6 5.3 4.0

10 Chad 0.5 1.7 -0.1 8.5 5.7 2.611 Mozambique 4.6 -3.2 2.1 -1.8 9.5 -5.1 6.6 -6.1 6.4 -3,]12 Burma 2.6 4.0 4.1 3.6 2.8 4.5 3.3 4.2 1.5 4.213 Upper Volta 3.0 -0.2 -3.6 1.4 1.6 2.714 Viet Nam15 India 3.6 3.7 1.9 2.6 5.5 4.5 4.8 4.6 5.2 4.616 Malawi 4.9 6.5 4.2 6.8 6.7 9.617 Rwanda 2.7 4.8 .. .. .. .. ..18 Sri Lanka 4.6 3.4 3.0 2.3 6.6 3.0 6.3 1.2 4.6 4.319 Guinea 3.2 5.4 2.1 3.0 2.3 14.1 .. 9.4 7.2 0.720 Sierra Leone 4.2 1.3 2.8 -3.5 4.6 3.6

21 Zaire 3.6 1.3 .. 1.9 .. 0.7 -0.6 .. 1.622 Niger 2.9 2.4 3.3 -0.2 13.9 8.6 .. (.) 4.223 Benin 2.6 3.8 .. .. .. .. ..24 Pakistan 6.7 4.4 4.9 1.9 10.0 4.8 9.4 3.5 7.0 6.225 Tanzania 6.0 5.0 4.5 2.3 4.5 6.4

26 Afghanistan 2.0 4.6 .. 3.5 .. 5.3 4.0 .. 6.127 Central African Rep. 1.9 3.2 0.8 2.3 5.4 5.2 .. .. 1.8 3.128 Madagascar 2.9 -0.7 .. -0.3 .. (.) .. -0.4 .. -1.429 Haiti 0.1 3.9 -0.6 2.6 0.4 8.0 -0.1 6.6 0.9 3.330 Mauritania 8.1 2.3 2.4 -2.3 12.8 2.1 18.0 2.9 17.0 7.6

31 Lesotho 4.6 6.5 0.3 3.8 .. 8.7 15.732 Uganda 5.9 -0.2 .. 1.1 .. -7.8 .. -5.0 .. 0.233 Angola 4.8 -10.0 4.0 -11.0 11.0 -4.1 7.2 -12.8 4.2 -11.834 Sudan 1.3 2.735 Togo 8.5 4.2 1.7 7.4 .. 4.636 Kenya 6.0 6.7 .. 5.5 .. 10.4 .. 11.7 .. 6.03] Senegal 2.5 2.2 2.9 3.3 4.4 3.9 6.2 4.1 1.7 1.038 Indonesia 3.5 7.8 2.5 4.0 5.0 11.2 3.3 12.4 8.0 8.]

Middle-income countries 6.0 w 5.7 w 3.4 rn 3.1 n 7.8 ni 7.1 7.6 in 6.8 in 5.7 m 5.8 m

39 Egypt 4.5 7.8 2.9 3.1 5.4 7.2 4.7 7.6 5.1 12.040 Ghana 2.1 0.4 -1.2 -2.3 -6.0 3.541 Yemen, PDR42 Cameroon 4.7 5.1 3.. 6.2 5.2 6.043 Liberia 5.1 1.5 5.3 -1.2 8.7 1.5

44 Honduras 5.1 3.3 5.7 0.8 5.2 5.9 4.0 5.8 4.5 3.945 Zambia 5.0 2.3 3.1 4.3 0.6 1.446 Zimbabwe 4.2 3.447 Thailand 8.2 7.6 5.5 5.6 11.6 11_.o 90 7.448 Bolivia 5.2 5.6 3.0 3.6 6.2 5.1 5.4 6.8 5.5 6.549 Philippines 5.1 6.3 4.3 4.9 6.0 8.6 6.7 6.8 5.2 5.450 Yemen Arab Rep.51 Congo, People's Rep.

.,2.7

7.93.5

..1.0

5.1

(.) 7.011.711.4

. -

6.812.22.3 2.1

9.80.7

52 Nigeria 3.1 6.2 -0.4 -1.5 16.0 10.3 9.3 13.4 0.2 8.653 Papua New Guinea 6.5 2.654 El Salvador 5.9 5.2 3.0 2.7 8.5 7.0 8.8 6.1 6.5 5.555 Morocco 4.2 6.4 4.] 0.1 4.0 7.9 3.8 6.6 4.0 7.656 Peru 5.4 3.1 1.9 0.7 5.5 4.3 7.2 4.3 6.8 3.257 Ivory Coast 8.0 6.8 4.2 3.9 11.5 10.0 11.6 7.5 9.7 7.258 Nicaragua 7.2 5.8 6.7 5.4 11.0 7.3 11.1 6.3 5,7 5.0

59 Colombia 5.1 6.0 3.5 4.9 6.0 5.1 5.7 6.] 5.7 7.060 Paraguay 4.3 7.5 6.2 9.5 .. 6.8 .. 7.461 Ecuador .. 9.1 ,. 4.6 .. 14.4 .. 10.0 ,, 7.862 Dominican Rep. 4.5 7.4 2.1 3.3 6.0 10.1 5.0 7.4 5.0 7.563 Guatemala 5.6 6.0 4.3 5.3 7.8 7.6 8.2 6.1 5.5 5.8

64 Syrian Arab Rep. 5.7 9.6 4.4 7.2 6.3 11.6 5.6 13.6 6.2 9.565 Tunisia 4.6 7.9 2.0 5.6 8.7 8.1 7.6 11.0 4.2 8.]66 Jordan 7.0

a. Figures in italics are for 1961-70, not 1960-70. b. Figures in italics are for 1970-77, not 1970-78.

113

Average annual growth rate (percent)

GDP Agriculture Industry Manufacturing Services

1 960_lOa 1 glo-78b 1 960_70a 1 970-78b 1 96O70 1 970-78b 1 960_702 1 970-78b 1 960_lOa 1 970-78b

67 Malaysia 6.5 7.8 .. 5.0 .. 9.6 .. 12.3 .. 8.468 Jamaica 4.6 -0.8 1.5 1.4 5.6 -2.7 5.6 -0.9 4.3 0.369 Lebanon 4.9 .. 6.3 .. 4.5 .. 5,0 .. 4.870 Korea, Rep. of 8.5 9.7 4.5 4.0 17.2 16.5 17.2 18.3 8.4 8.771 Turkey 6.0 7.1 2.5 3.9 9.6 8.8 10.9 8.7 6.9 7.9

72 Algeria 4.6 5.3 0.4 0.2 12.9 5,9 7.7 6.9 -3.0 5.573 Mexico 7.2 5.0 3.8 2.1 9.1 6.2 9.4 6.2 7.0 4,874 Panama 7.8 3.4 5.7 2.4 10.1 0.7 10.5 -0.5 7.6 4.875 Taiwan 9.2 8.0 3.4 1.6 16.4 12.9 17.3 13.2 7.8 4.176 Chile 4.5 0.8 2.6 2.7 5.0 -0.8 5.5 -2.4 4.5 1.7

77 South Africa 6.4 3.6 .. .. . . .. .. .

78 Costa Rica 6.5 6.0 5.] 2.5 9.4 9.1 10.6 8.8 5.7 5.779 Brazil 5.3 9.2 . . 5.3 .. 10.1 . . 9.5 .. 9.280 Uruguay 1.2 1.9 1.9 0.1 1.1 3.5 1.5 3.2 1.0 1.581 Argentina 4.2 2.3 2.3 2.3 6.0 2.2 5.7 2.0 3.3 2.5

82 Portugal 6.2 4.8 1.3 -1.9 8.8 4.6 8.9 4.6 5.9 7.183 Yugoslavia 5.8 5.6 3.3 3.3 6.3 8.0 5.7 9.3 6.9 4.084 Trinidad and Tobago 3.9 3.4 .. -0.1 .. 2.8 .. -1.1 .. 4.085 Venezuela 5.9 5.6 5.7 3.5 4.5 2.7 6.2 6.4 7.2 7.986 Hong Kong 10.0 8.2 .. -0.2 .. 6.2 .. 5.6 .. 10.1

87 Greece 6.9 5.0 3.5 1.9 9.4 5.3 10.2 6.6 7.1 5.788 Singapore 8.8 8.5 5.0 1.5 12.5 8.5 13.0 9.2 7.7 8.689 Spain 7.3 4.4 2.5 1.9 9.4 4.9 9.] 7.8 7.2 4.690 Israel 8.1 4.5 6.6 5.3 6.1 .. 5.4

Industrialized countries 5.1 w 3.2 w 1.2 m 1.0 rn 6.1 m 3.4 m 6.2 m 3.3 in 4.8 iii 3.7 m

91 Ireland 4.2 3.4 0.9 .. 6.1 .. .. .. 4.392 Italy 5.3 2.8 2.8 0.5 6.2 2.7 7.2 3.3 5.1 3.393 New Zealand 3.9 2.2 .. .. .. .. ..94 United Kingdom 2.9 2.1 2.3 0.8 3.1 1.3 3.4 0.6 2.7 2.495 Finland 4.6 2.8 0.6 -1.9 6.3 3.2 6.2 2.8 5.3 3.996 Austria 4,5 3.8 1.2 2.1 4.9 3.4 4.8 3.6 4.5 4.397 Japan 10.5 5.0 4.0 1.1 10.9 6.0 11.0 6.2 11.7 5.198 Australia 4.1 3.8 2.7 1.7 4.6 3.9 5.6 3.9 4.0 3.999 France 5,7 3.7 1.8 -0.4 6.4 3.5 6.6 3.9 5.7 4.3

100 Netherlands 5.5 3.2 2.9 3.6 6.8 3.3 6.6 3.6 5.1 3.3

101 Belgium 4.8 3.3 -0.5 -1.1 6.0 3.4 6.2 3.3 4.6 3.3102 Canada 5.6 4.4 2.5 2.7 6.8 3,7 6.7 3.8 5.5 4.8103 Norway 4.9 4.7 0.1 2.3 5.5 5.2 5.3 1.9 5.0 4.7104 Germany, Fed. Rep. 4.4 2.4 1.5 1.6 5.2 2.1 5.4 2.0 4.2 1.]105 United States 4.3 3.0 0.3 0.9 5.2 2.7 5.3 2.9 4.3 3.4

106 Denmark 4.7 2.7 0.2 .. 5.5 .. 5.4 .. 4.9107 Sweden 4.4 1.6 0.6 -1.6 6.2 1.0 6.2 0.8 3.9 2.3108 Switzerland 4.3 0.1

Capital-surplusoil exporters 13.0 w 6.0 w 5.2m 4Mm 16.1 ni 16.1 m

109 Iraq 6.2 .. 5.7 .. 4.7 .. 5.9 .. 8.3110 Iran 11.3 7.4 4.4 5.2 13.4 4.0 12.0 16.1 10.0 16.1111 Libya 24.4 0.9 12.7 .. -2.7 18.4 16.7112 Saudi Arabia .. 11.5 4.0 12.0 5.4 11.6113 Kuwait 5.7 0.7 .. ..

Centrally plannedeconomies 4.9 w 5.6 w

114 China 5.0 6.0115 Korea, Dem. Rep. 7.8 7.2116 Albania 7.3 6.7117 Cuba 1.1 0.4118 Mongolia 2.8 4.5

119 Romania 9.0 10.6120 Bulgaria 5.9 6.3121 Hungary 3.8 5.4122 Poland 4.3 7.0123 USSR 5.2 5,3124 Czechoslovakia 3.1 4.9125 German Dem. Rep. 3.1 4.7

Table 3. Structure of Production

114

Low-income countries

Distribution of gross domestic product (percent)Agriculture Industry (Manufacturinga) Services

1960b

50w

1978c

38w

1960b 1978c (1960b 1978c) 1960b

33w

1978c

38w17w 24w 11 ZL) 13w

1 Kampuchea, Dem.2 Bangladesh 8 6 8 31 303 Lao PDR 60 14 4 264 Bhutan5 Ethiopia 2 3 6 9 23 336 Mali 55 37 10 18 5 12 35 457 Nepal 62 .. 12 10 268 Somalia 67 60 13 11 3 7 20 299 Burundi 56 15 9 29

10 Chad 55 52 12 13 5 8 33 3511 Mozambique 55 45 9 16 8 9 36 3912 Burma 33 46 12 13 8 10 55 4113 Upper Volta 62 38 14 20 8 13 24 4214 Viet Nam15 India 50 40 20 26 14 17 30 3416 Malawi 58 43 11 19 6 12 31 3817 Rwanda 81 46 7 22 1 15 12 3218 Sri Lanka 34 35 22 31 17 23 44 3419 Guinea 56 32 36 41 4 8 2720 Sierra Leone 39 22 6 .. 3921 Zaire 30 27 27 20 13 7 43 5322 Niger 69 43 9 27 4 10 22 3023 Benin 55 31 8 13 3 9 37 5624 Pakistan 46 32 16 24 12 16 38 4425 Tanzania 57 51 11 13 5 9 32 3626 Afghanistan .. .. .. .. ..27 Central African Rep. 51 36 10 18 4 9 39 4628 Madagascar 37 38 10 19 4 14 53 4329 Haiti .. .. . .. ..30 Mauritania 59 26 24 37 3 11 17 3731 Lesotho .. 36 . 15 .. 2 .. 4932 Uganda 52 57 13 7 9 6 35 3633 Angola 50 50 8 21 4 3 42 2934 Sudan 58 43 15 12 5 6 27 4535 Togo 55 26 16 20 8 9 29 5436 Kenya 38 41 18 19 9 12 44 4037 Senegal 24 26 17 25 12 19 59 4938 Indonesia 54 31 14 33 8 9 32 36

Middle-income countries 22w l6w 31w 34w 22w 25w 4]w 5Ow

39 Egypt 30 29 24 30 20 25 46 4140 Ghana 41 38 19 18 10 9 40 4441 Yemen, PDR .. .. ..42 Cameroon .. 32 .. 16 9 .. 5243 Liberia 40 35 37 28 6 23 3744 Honduras 37 32 19 26 13 17 44 4245 Zambia 11 17 63 39 4 17 26 4446 Zimbabwe 18 20 35 35 17 20 47 4547 Thailand 40 27 19 27 13 18 41 4648 Bolivia 26 17 25 28 15 13 49 5549 Philippines 26 27 28 35 20 25 46 3850 Yemen Arab Rep. .. 35 .. 14 .. 6 .. 5151 Congo, People's Rep. 23 13 17 33 10 16 60 5452 Nigeria 63 34 11 43 5 9 26 2353 Papua New Guinea 49 33 13 26 3 8 38 4154 El Salvador 32 29 19 21 15 15 49 5055 Morocco 23 18 27 32 16 17 50 5056 Peru 26 14 29 36 17 45 5057 Ivory Coast 43 21 14 23 7 13 43 5658 Nicaragua 24 23 21 26 16 20 55 5159 Colombia 34 31 26 27 17 20 40 4260 Paraguay 36 32 20 24 17 17 44 4461 Ecuador 33 21 19 35 14 17 48 4462 Dominican Rep,63 Guatemala

27 21 23 29 17 19 50 50

64 Syrian Arab Rep. 20 28 21 5265 Tunisia 24 18 18 30 8 12 58 5266 Jordan .. 11 29 16 60

Centrally plannedeconomies

115

Distribution of gross domestic product (percent)

Agriculture Industry (Manufacturi flga) Services

1960b 1978c 1960b 1978c (1960b 1978c) 1960b 1978c

67 Malaysia 37 25 18 32 9 17 45 4368 Jamaica 10 9 36 39 15 17 54 5269 Lebanon 12 .. 20 .. 13 .. 6870 Korea, Rep. of 40 24 19 36 12 24 41 4071 Turkey 41 27 21 28 13 18 38 45

72 Algeria 21 8 33 56 10 12 46 3673 Mexico 16 11 29 37 23 28 55 5274 Panama 23 .. 21 .. 13 .. 5675 Taiwan 28 10 29 48 22 38 43 4236 Chile 11 10 38 29 23 20 51 61

77 South Africa 12 8 40 45 21 22 48 4378 Costa Rica 26 22 20 27 14 20 54 5179 Brazil 16 11 35 37 26 28 49 5280 Uruguay 19 14 28 32 21 26 53 5481 Argentina 17 13 38 45 31 37 45 42

82 Portugal 25 13 36 46 29 36 39 41

83 Yugoslavia 24 16 45 45 36 .. 31 3984 Trinidad and Tobago 8 3 46 62 24 14 46 3585 Venezuela 6 6 22 46 .. 16 72 4886 Hong Kong 4 2 34 31 25 25 62 67

87 Greece 23 17 26 31 16 19 51 5288 Singapore 4 2 18 35 12 26 78 6389 Spain 21 9 39 38 27 30 40 5390 Israel 11 7 32 37 23 26 57 56

Industrialized countries 6w 4w 4Ow 37w 3Ow 27w 54w 59w

91 Ireland 22 .. 26 .. .. 5292 Italy 13 7 41 42 31 . 46 51

93 New Zealand .. 10 .. 31 .. 21 .. 5994 United Kingdom 4 2 43 36 32 25 53 6295 Finland 18 8 35 35 24 25 47 57

96 Austria 11 5 49 42 38 29 40 5397 Japan 13 5 45 40 34 29 42 5598 Australia 12 5 37 32 26 19 51 6399 France 10 5 38 37 29 27 52 58

100 Netherlands 9 4 46 34 34 .. 45 62

101 Belgium 6 2 41 37 30 26 53 61

102 Canada 6 4 34 31 23 19 60 65103 Norway 9 5 33 36 21 17 58 59104 Germany, Fed. Rep. 6 3 53 48 40 38 41 49105 United States 4 3 38 34 29 24 58 63

106 Denmark 11 .. 32 .. 22 .. 53107 Sweden 7 4 40 33 27 24 53 63108 Switzerland S

Capital-surplusoil exporters 5w 65w .. 8w 30w

109 Iraq 17 .. 52 .. 10 .. 31

110 Iran 29 9 33 54 11 12 38 37111 Libya 2 .. 71 3 27112 Saudi Arabia 1 76 5 23113 Kuwait (.) 72 .. 3 28

114 China115 Korea, Oem. Rep.116 Albania117 Cuba118 Mongolia119 Romania120 Bulgaria121 Hungary 24 15 69 59 59 7 26122 Poland 26 16 57 64 47 17 20123 USSR 21 17 62 62 52 17 21

124 Czechoslovakia 16 9 73 72 63 11 19125 German Oem. Rep. 10 .. 69 21

a. Manufacturing isa part of the industrial sector, but its share in GDP is shown separately b. Figures in italics are for 1961, not 1960.because it typically is the most dynamic part of the industrial sector. c, Figures in italics are for 1977, not 1978.

Table 4. Growth of Consumption and Investment

116

Average annual growth rate (percent)Public

consumptionPrivate

consumptionGross

domestic investment

1 960_70a 1 970-78b 1 960-ba 1 970-78b 1 960-ba 1 970_78b

Low-income countries 4.5m 3.7m 3.9 in 3.1 in 4.6 in 3.6 m

1 Kampuchea, Gem. 2.6 3.2 .. 0.32 Bangladesh C 3.4 3.1 11.1 -1.43LaoPDR4 Bhutan ,. .. ..5 Ethiopia 4.7 3.7 4.7 3.7 5.7 -1.66 Mali 6.2 3.6 2.8 6.0 3.5 1.87 Nepal .. ..8 Somalia 3.7 11.7 -0.5 2.7 4.3 89 Burundi 19.2 5.1 3.2 3.1 4.3 16.9

10 Chad 4.4 0.1 -0.7 1.8 2.3 3.1

11 Mozambique 6.8 -4.6 4.4 -2.7 8.3 -9.612 Burma C 2.8 3.7 3.6 4.213 Upper Volta .. 3.8 0.8 1.814 Viet Nam .. .. ..15 India -1.7 4.2 4.2 3.0 5.6 6.1

16 Malawi 4.6 1.5 4.1 6.4 15.4 1.1

17 Rwanda 1.1 2.8 4.2 3.9 3.5 17.118 Sri Lanka C C 1.9 2.5 6.6 3.619 Guinea 1.7 2.9 2.020 Sierra Leone 13.4 0.5 5.6

21 Zaire 8.5 -0.2 3.9 -0.7 9.6 0.622 Niger 2.0 4.2 3.9 1.6 3.0 5.223 Benin 1.7 0.6 4.9 3.9 4.2 8.424 Pakistan 7.3 3.9 7.1 3.8 6.9 4.825 Tanzania 5.2 5.8 9.8 1.9

26 Afghanistan C 9.8 2.5 3.8 -1.0 12.427 Central African Rep. 2.2 0.7 3.0 4.3 1.3 0.728 Madagascar -1.4 .. -2.2 .. -2.529 Haiti -0.1 1.0 4.5 1.7 11.930 Mauritania 1.0 17.7 17.2 4.4 -2.1 5.1

31 Lesotho 0.3 13.9 6.0 12.7 18.5 29.332 Uganda 5.9 1.6 5.6 1.6 9.8 -13.833 Angola 9.1 2.9 4.0 -8.8 9.7 -10.934 Sudan 12.1 -1.2 4.3 -1.3 9.835 Togo 6.7 14.6 7.6 1.9 11.1 16.0

36 Kenya 10.0 8.7 4.6 6.2 7.0 2.337 Senegal -0.2 2.3 3.2 2.1 1.1 2.538 Indonesia 1.0 10.9 3.4 7.6 4.8 15.3

Middle-income countries 6.4 m 7.4 m 5.3 in 4.9 in 7.6 in 7.2 in

39 Egypt 10.3 5.0 5.4 6.1 3.1 23.340 Ghana 6.1 -0.3 2.0 1.7 -3.2 -8.341 Yemen, PDR .. .. .. ..42 Cameroon 8.9 5.8 3.4 4.8 8.4 7.043 Liberia 5.6 8.3 1.8 3.3 -4.6 6.1

44 Honduras 4.6 8.1 4.6 4.2 11.0 4.945 Zambia 11.0 2.3 6.9 -2.7 10.6 -2.946 Zimbabwe .. 2.9 .. 3,5 ,, -0.847 Thailand 9.6 8.3 7.0 6.7 15.4 7.848 Bolivia 8.9 8.5 4.1 7.4 9.6 6.4

49 Philippines 5.0 9.4 4.7 4.3 8.2 11.150 Yemen Arab Rep. .. .. .. ..51 Congo, People's Rep. 5.4 7.0 -0.3 4.3 2.9 -0.152 Nigeria 10.0 26.9 (.) 4.0 7.4 23.353 Papua New Guinea 6.5 -1.1 6.9 2.0 21,2 -10.454 El Salvador 6.4 6.9 6.1 5.7 3.5 11.155 Morocco 4.5 13.8 4.0 4.4 8.0 17.456 Peru 8.8 5.8 6.7 4.1 2.4 4.257 Ivory Coast 11.8 7.5 8.0 8.2 12.7 14.058 Nicaragua 3.6 12.7 6.8 4.9 10.7 8.6

59 Colombia 5.5 4.8 5.5 5.9 4.5 6.360 Paraguay 6.9 3.8 4.5 6.9 5.8 20.661 Ecuador . , 12.4 . . 8.4 .. 10.262 Dominican Rep. 1.9 -0.9 6.3 7.6 11.4 13.263 Guatemala 4.7 5.2 4,7 5.4 7.9 11.3

64 Syrian Arab Rep. 13.0 .. 10.4 .. 18.265 Tunisia 5.5 8,8 3.0 8.8 4.5 11.966 Jordan

114 China115 Korea, Dem, Rep.116 Albania117 Cuba118 Mongolia119 Romania120 Bulgaria121 Hungary122 Poland123 USSR124 Czechoslovakia125 German Dem. Rep.

Figures in italics are for 1961 -70, not 1960-70. c. Separate figures are not available for public consumption,Figures in italics are for 1970-77, not 1970-78. which is therefore included in private consumption.

Centrally plannedeconomies

117

Average annual growth rate (percent)

1

Publicconsumption

Privateconsumption

Grossdomestic investment

960_70a 1 970_78b 1 96O.7Oa 1 970-78b 1 960_70a 1 970_78b

67 Malaysia 7.4 9.6 4.2 6.4 7.2 10.268 Jamaica 8.6 6.0 3.2 0,5 7.8 -10.469 Lebanon 5.9 . 4.4 .. 6.270 Korea, Rep. of 5.5 8.7 7.0 7.5 23.6 13.771 Turkey 6.7 8.8 5.1 6.6 8.8 10.272 Algeria 1.7 8.2 4.6 11.3 1.9 11.773 Mexico 9.4 10.2 6.6 3.8 9.6 7.174 Panama 7.8 6.9 6.7 1.4 12.4 0.975 Taiwan 4.5 5.4 8.3 6.8 16.2 8.276 Chile 4,7 2.9 4.8 -0.4 3.7 -2.777 South Africa 7.1 . . 6.2 . . 9.578 Costa Rica 8.0 7.4 6.0 4.9 7.1 9.379 Brazil 3.5 8.6 5.1 9.0 7.0 10.780 Uruguay 4.4 3.2 0.7 -1.2 -1.8 4.881 Argentina 1.0 -3.1 4.1 2.4 4.1 1.282 Portugal 7.7 9.0 5.5 4.8 7.7 0.783 Yugoslavia 0.6 4.5 9,5 6.1 4.7 7.284 Trinidad and Tobago 6.2 10.4 4.3 -0.3 -2.8 5.385 Venezuela 6.3 9.1 4.9 7.1 7.3 11.886 Hong Kong 8.7 9.2 8.9 8.8 7.4 10.287 Greece 6.6 7.7 7.1 4.6 10.4 1.988 Singapore 12.6 6.4 5.4 7.1 20.5 5.589 Spain 5.5 6.2 7.0 4.2 10.5 3.090 Israel 13.8 5.3 7.4 5.7 5.7 0.7

Industrialized countries 4.8 rn 3.8 r 4.3 'U 3.5 fl 5.6 ii 1.5

91 Ireland 3.9 6.3 3.7 2.7 8.8 1.792 Italy 3.9 6.1 2.7 3.8 -0.493 New Zealand .. .. .. ..94 United Kingdom 2.2 2.9 2.3 1.3 5.0 1.595 Finland 5.7 5.9 4.3 2.9 4.3 -1.596 Austria 2.9 4.0 4.4 4.2 5.6 4.197 Japan 6.4 5.0 9.0 5.3 14.0 2.598 Australia 6.8 5.8 2.7 3.8 6.2 0.799 France 3.4 3.4 5,5 4.5 7.3 1.7

100 Netherlands 3.1 2.7 6.1 3.8 6.8 -0.1101 Belgium 5.7 4.7 3.8 4.0 6.0 1.9102 Canada 6.2 3.3 4.9 5.6 5.8 4.7103 Norway 6.4 5.6 4.1 4.0 5.1 4.1104 Germany, Fed. Rep. 4.1 3.9 4.6 2.9 4.1 -0.2105 United States 4.1 1.7 4.4 3.5 4.8 1.6106 Denmark 6.0 3.6 4.3 3.0 6.7 0.2107 Sweden 5,4 3.1 3.8 2.0 5.0 -1.3108 Switzerland 4.8 2.0 4.3 1.4 4.1 -4.6

Capital-surplusoil exporters

109 Iraq 8.1 .. 4.9 .. 3.0110 Iran 16.0 20.4 10.0 10.0 12.2 22.0111 Libya 22.6 21.2 .. 10.9112 Saudi Arabia C 16.5 51.0113 Kuwait

Table 5. Structure of Demand

118

Distribution of gross domestic product (percent)

Exports ofGross Gross goods and

Public Private domestic domestic nonfactor Resourceconsumption consumption investment saving services balance

1960a 1978b 1960a 1978b 1960a 1978b 1960a 1978b 1960a 1978b 1960a 1978b

Low-income countries 9w 12w 80w 73w l4.w 21w liw l5w lOw l2w 3w Gw1 Kampuchea, Dem. 19 .. 69 .. 20 .. 12 .. 14 .. 82 Bangladesh 6 C 86 100 7 12 8 (.) 10 8 1 123 Lao PDR .. 21 .. 58 .. 40 .. 21 2 .. 194 Bhutan5 Ethiopia 8 13 81 81 12 9 11 6 9 12 1 36 Mali 12 19 79 76 14 17 9 5 12 21 5 127 Nepal C .. 98 .. 9 .. 2 5 .. 78 Somalia 8 19 89 79 10 16 3 2 11 12 7 149 Burundi 3 14 92 81 6 14 5 5 13 11 1 9

10 Chad 13 18 82 89 11 17 5 7 23 27 6 2411 Mozambique 11 15 81 86 10 10 8 1 14 13 2 1112 Burma C C 89 87 12 20 11 13 20 7 1 713 Upper Volta 10 13 94 90 10 25 4 3 9 15 14 2814 Viet Nam15 India 7 10 79 70 17 24 14 20 5 .. 3 416 Malawi 16 13 88 71 10 32 4 16 21 21 14 1617 Rwanda 10 9 82 87 6 10 8 4 12 20 2 618 Sri Lanka 13 10 76 73 15 22 11 17 46 38 4 519 Guinea 14 16 80 68 5 15 6 16 23 28 1 1

20 Sierra Leone .. 19 .. 72 .. 17 .. 9 .. 22 821 Zaire 18 21 61 67 12 19 21 12 55 26 9 722 Niger 9 11 79 77 13 19 12 12 9 23 1 723 Benin 16 14 75 91 15 22 9 5 12 22 6 2724 Pakistan 11 11 84 82 12 18 5 7 8 10 7 1125 Tanzania 9 14 72 79 14 20 19 7 31 15 5 1326 Afghanistan 87 90 16 13 13 10 4 10 3 327 Central African Rep. 19 20 72 72 20 20 9 8 23 18 1228 Madagascar 20 16 75 63 11 16 5 21 12 .. 6 529 Haiti ° 8 93 83 9 18 7 9 20 22 2 930 Mauritania 24 38 79 55 37 52 3 7 18 41 40 4531 Lesotho 17 17 108 154 2 30 25 71 12 22 27 10132 Uganda 9 c 75 98 11 4 16 2 26 4 5 233 Angola 9 26 77 56 12 9 14 18 20 41 2 934 Sudan 6 14 85 84 9 16 9 2 12 15 (.) 1435 Togo 8 13 88 73 11 37 4 14 19 34 7 2336 Kenya 11 19 72 63 20 28 17 18 31 27 3 1037 Senegal 17 17 68 72 16 23 15 11 40 32 1 1238 Indonesia 12 11 80 67 8 20 8 22 13 21 (.) 2

Middle-income countries 11 w 13 w 69 w 65 w 2lw 25w 20w 22w l5w2lw lw 3w39 Egypt 17 21 71 65 13 28 12 14 20 21 1 1440 Ghana 10 13 73 81 24 5 1] 6 28 10 7 1

41 Yemen, PDR .. 29 .. 80 .. 47 .. 9 .. 5642 Cameroon 14 10 72 69 11 24 14 21 29 26 3 343 Liberia 7 15 58 67 28 22 35 18 39 55 3 444 Honduras 11 13 77 67 14 27 12 20 22 38 2 745 Zambia 11 25 48 44 25 31 41 31 56 32 16 (.)46 Zimbabwe 11 13 67 63 23 19 22 24 1 547 Thailand 10 11 76 67 16 27 14 22 17 21 2 548 Bolivia 7 13 86 74 14 21 7 13 13 1] 7 849 Philippines 8 10 76 66 16 30 16 24 11 19 (.) 650 Yemen Arab Rep. .. 12 .. 96 .. 35 .. 8 .. 3 .. 4351 Congo, People's Rep. 23 31 98 61 45 20 21 8 21 .. 66 1252 Nigeria 6 15 87 57 13 30 7 28 15 31 6 253 Papua New Guinea 28 28 70 56 13 19 2 16 17 45 354 l Salvador 10 13 79 75 16 20 11 12 20 30 5 855 Morocco 12 21 77 68 10 24 11 11 24 18 1 1356 Peru 8 13 68 70 22 15 24 17 24 22 2 257 Ivory Coast 10 14 73 56 15 31 17 30 33 38 2 158 Nicaragua 9 8 79 73 15 25 12 19 24 33 3 659 Colombia 6 7 73 68 21 24 21 25 16 16 (.) 1

60 Paraguay 8 7 76 73 17 27 16 20 18 13 1 761 Ecuador 10 14 74 60 14 26 16 26 17 24 2 (.)62 Dominican Rep. 13 5 68 77 12 23 19 18 24 21 7 563 Guatemala 8 7 84 76 10 22 8 17 13 22 2 564 Syrian Arab Rep. 21 .. 65 .. 32 14 18 . . 1865 Tunisia 17 16 76 64 17 30 7 20 20 31 10 1066 Jordan 32 .. 8] .. 40 19 47 59

GrossPublic Private domestic

consumption consumption investment

Distribution of gross domestic product (percent)

Figures in italics are for 1961, not 1960. c. Separate figures are not available for public consumptionFigures in italics are for 1977, not 1978. which is therefore included in private consumtion.

Exports ofGross goods and

domestic nonfactor Resourcesaving services balance

119

91 Ireland 12 19 7] 64 16 27 11 17 31 54 5 1092 Italy 12 16 64 63 24 20 24 21 15 25 (.) 1

93 New Zealand 13 16 65 61 24 22 22 23 23 27 2 1

94 United Kingdom 17 20 66 59 19 19 17 21 21 30 2 295 Finland 13 19 58 56 30 21 29 25 23 31 1 496 Austria 13 18 59 55 28 28 28 27 24 35 (.) 197 Japan 9 10 57 58 34 31 34 32 11 11 (.) 1

98 Australia 10 16 65 60 29 23 25 24 15 16 4 1

99 France 13 15 61 61 24 23 26 24 15 21 2 1

100 Netherlands 14 18 57 59 27 22 29 23 50 47 2 1

101 Belgium 13 18 69 62 19 21 18 20 33 51 1 1102 Canada 14 20 65 57 23 23 21 23 18 26 2 (.)103 Norway 14 18 58 54 30 29 28 28 41 42 2 1104 Germany, Fed. Rep. 14 20 57 55 27 22 29 25 19 25 2 3105 United States 17 18 64 64 18 19 19 18 5 8 1 1106 Denmark 12 24 66 55 23 23 22 21 34 28 1 210] Sweden 16 29 60 53 25 18 24 18 23 29 1 (.)108 Switzerland 9 13 62 63 29 22 29 24 29 35 (.) 2

Capital-surplusoil exporters 21w .. 32w 3lw 48w .. l6w

109 Iraq 18 .. 48 .. 20 .. 34 .. 42 .. 14110 Iran 10 20 69 41 13 33 21 39 19 34 4 6111 Libya .. 27 .. 28 .. 25 -. 45 .. 56 .. 20112 Saudi Arabia .. 21 .. 23 .. 30 .. 56 .. 62 .. 26113 Kuwait .. 21 .. 24 18 .. 55 .. 71 .. 3]

Centrally plannedeconomies

114 China115 Korea, Dem. Rep.116 Albania117 Cuba118 Mongolia119 Romania . -

120 Bulgaria121 Hungary 7 8 72 64 24 37 21 28 3 9122 Poland 8 12 68 59 24 32 24 29 . - (.) 3123 USSR 2 C 70 73 26 26 28 27 2 1

124 Czechoslovakia 6 7 35 68 17 25 19 25 .. 2 (.)125 German Dem. Rep.

1960a 1978b 1960a 1978b 1960a 1978b 1960a 1978b 1960a 1978b 1960a 1978b

67 Malaysia 11 16 62 53 14 25 27 31 54 51 13 668 Jamaica 7 20 67 64 30 15 26 16 34 40 4 1

69 Lebanon 10 .. 85 .. 16 .. 5 .. 27 .. 1170 Korea, Rep. of 15 12 84 60 11 32 1 28 3 34 10 471 Turkey 11 13 76 70 16 21 13 17 3 6 3 472 Algeria 16 15 50 48 42 51 34 37 28 27 8 1473 Mexico 6 11 76 64 20 25 18 25 10 11 2 (.)74 Panama 11 18 78 60 16 28 11 22 31 40 5 675 Taiwan 19 17 68 50 20 26 13 33 11 59 7 776 Chile 11 12 75 81 17 11 14 7 14 21 3 477 South Africa 9 14 64 56 22 24 27 30 30 33 5 678 Costa Rica 10 77 85 18 25 13 15 21 29 5 1079 Brazil 12 10 67 69 22 23 21 21 5 7 1 280 Uruguay 9 3 79 73 18 14 12 14 14 20 6 (.)81 Argentina 9 29 71 41 22 25 20 30 10 14 2 582 Portugal 11 14 77 74 19 23 12 12 17 20 7 1183 Yugoslavia 19 17 49 55 37 33 32 28 14 17 5 584 Trinidad and Tobago 9 14 61 53 28 26 30 33 37 47 2 785 Venezuela 14 15 53 51 21 40 33 34 32 29 12 686 Hong Kong 7 7 92 78 19 26 1 15 79 98 18 1187 Greece 12 16 77 64 19 2] 11 20 9 17 8 788 Singapore 8 11 89 62 11 36 3 27 163 164 8 989 Spain 7 11 70 68 21 20 23 21 10 16 2 1

90 Israel 18 36 68 58 2] 24 14 6 14 44 13 18Industrialized countries 15 w 18 w 63 w 60 w 21w 22w 22w 22w l2w l8w I w (.) w

Table 6. Industrialization

120

GrossValue added manufacturingMachinery

Textiles and in manufacturing outputFood and and transport Other (millions of per capita

agriculture clothing equipment Chemicals manufacturing 1970 dollars) (1970 dollars)

1970 1976

Distribution of value added (percent)

ii 13

e

28

51 62

29 504

27

::40 44

5128

55 116.. 98

28 40

14658

.. 13010714213494 134

108

6017 42

.. 155

177 198.. 140

127 172..

119 176133 192..

117 10090 163

1976a 1976a 1976a 1976a 1976a 1970 1976a

Low-income countries

1 Kampuchea, Oem.2 Bangladesh 324 32Ô3 Lao PDR4 Bhutan5 Ethiopia i46Mali .. 267 Nepal8 Somalia .. 11 1]9 Burundi .. 19 24

10 Chad .. .. 18 2711 Mozambique 68 13 4 15 104 8212 Burma 40 20 .. .. 40 225 27113 Upper Volta .. .. .. 31 3714 Viet Nam ..15 India 15 29 13 12 31 7,093 8,97316 Malawi 77 7 .. 16 38 53l7Rwanda .. .. .. 6 318 Sri Lanka 17 23 9 51 321 34619 Guinea .. .. .. .. 12 1820 Sierra Leone 22 27

21 Zaire 59 10 5 4 22 155 17022 Niger .. .. .. .. .. 4023 Benin 44 38 .. 18 19 4524 Pakistan 46 35 9 10 1462 1,75725 Tanzania .. .. 116 15626 Afghanistan27 Central African Rep. 31 i28 Madagascar 95 5 118 11229 Haiti 65 15 1 1930 Mauritania .. .. 18 22831 Lesotho .. . 2 232 Uganda 53 .. .. .. 47 109 8633 Angola 67 .. .. .. 33 80 3834 Sudan 41 36 3 11 9 252 36835 Togo .. .. .. 24 ..36 Kenya 18 13 19 8 42 174 35737 Senegal 58 15 .. 13 14 141 19038 Indonesia 41 16 .. 43 854 1,671

Middle-income countries

39 Egypt 17 34 11 13 25 1326 1,88240 Ghana 75 .. .. .. 25 253 18641 Yemen, PDR .. ..42 Cameroon 65 35 119 17043 Liberia 15 2744 Honduras 51 16 1 3 29 91 12645 Zambia 55 9 6 5 25 181 21346 Zimbabwe 26 14 11 11 38 297 ..47 Thailand 45 17 8 15 15 1048 2,10148 Bolivia 35 22 5 4 34 151 22249 Philippines 44 13 6 13 24 1,579 2,33450 Yemen Arab Rep. .. .. 12 2351 Congo, Peoples Rep. 68 32 32 4052 Nigeria 92 .. 8 529 1,12253 Papua New Guinea54 El Salvador 45 31 .. 10 14 194 28055 Morocco 41 14 6 7 32 599 87956 Peru 31 10 12 16 31 982 1,44857 Ivory Coast .. .. .. .. .. 200 29258 Nicaragua 61 29 .. .. 10 159 22659 Colombia 33 18 10 12 27 1143 1,74660 Paraguay 48 16 4 4 28 99 13661 Ecuador 33 16 9 4 38 271 45262 Dominican Rep. 68 5 (.) 4 23 275 45563 Guatemala 50 37 4 9 .. ..64 Syrian Arab Rep. 50 33 3 14 238 45865 Tunisia 65 10 22 3 115 23466 Jordan

Food andagriculture

Distribution of value added (percent) GrossValue added manufacturingMachinery

Textiles and in manufacturing outputand transport Other (millions of per capita

clothing equipment Chemicals manufacturing 1970 dollars) (1970 dollars)

Centrally plannedeconomies

a. Figures in italics are for 1975, not 1976.

121

1 976a 1976a 1976a 1976° 1976a 1970 1976° 1970 1976a

67 Malaysia 35 8 11 12 34 543 1,103 17868 Jamaica 87 13 221 239 34869 Lebanon 20270 Korea, Rep, of 15 25 24 8 28 1,431 3,934 111 32071 Turkey 55 23 22 1,930 3,294 106 21772 Algeria 29 18 11 6 36 735 1,11773 Mexico 21 13 19 14 33 8636 12,17474 Panama 44 7 3 3 43 166 186 276 38675 Taiwan .. .. .. .. 1,873 4,27876 Chile 18 8 7 4 63 2,175 1,828 388 29377 South Africa 17 13 16 12 42 3,959 .. 43278 Costa Rica 42 12 6 10 30 180 29279 Brazil 15 10 30 12 33 9,972 19,147 22980 Uruguay 42 19 4 9 26 515 578 .. 48981 Argentina 17 13 24 13 33 6,777 8,24882 Portugal 17 19 23 9 32 1,847 2,481 .. 72183 Yugoslavia 9 14 24 10 43 3,235 5,423 411 84684 Trinidad and Tobago 54 . .. 3 43 184 169 .. 21885 Venezuela 29 12 11 6 42 1,827 2,719 .. 42386 Hong Kong .. 98 .. .. 2 899 1,314 .. 84487 Greece 16 29 10 7 38 1,642 2,601 498 83288 Singapore 7 5 49 7 32 388 707 764 1,24789 Spain 27 10 20 11 32 9,339 15,739 868 1,52390 Israel 11 17 26 7 39 1,101 833

Industrialized countries

91 Ireland 31 16 12 11 30 1,18692 Italy 13 14 27 11 35 29,059 35,586 1,251 1,57893 New Zealand 26 15 12 5 42 ..94 United Kingdom 14 9 30 12 35 34,317 35,381 1,493 1,64095 Finland 13 10 25 6 46 2,788 3,467 1,731 2,03996 Austria 15 12 22 8 43 4,873 6,188 1,706 2,33997 Japan 8 7 36 11 38 73,167 103,478 1,816 2,56198 Australia 17 8 24 9 42 8,498 .. 1,71299 France 13 6 35 8 38 40,510 53,113 .. 2,429

100 Netherlands 20 6 22 19 33 9,192 11,708 2,137 2,391101 Belgium 18 10 29 9 34 8,226 10,636102 Canada 14 8 26 8 44 16,802 21,341 1,947 2,496103 Norway 14 5 25 6 50 2,442 2,882 1,606 2,312104 Germany, Fed. Rep. 9 7 33 11 40 75,765 85,792 2,184 2,636105 United States 12 8 31 12 37 252,100 292,900 2,586 3,126106 Denmark 23 8 26 7 36 3,100 .. 1,485 2,149107 Sweden 9 5 33 6 4] 8,516 9,530 2,319 2,538108 Switzerland 11 8 38 15 28

Capital-surplusoil exporters

109 Iraq 37 23 .. 2 38 325 652 77 144110 Iran 14 34 34 5 13 1,501 3,720 140111 Libya .. .. .. .. 82 198 88 142112 Saudi Arabia 372 486113 Kuwait 106 .. 199

114 China115 Korea, Dem. Rep.116 Albania ..117 Cuba 72 28118 Mongolia119 Romania 15 18 32 9 26120 Bulgaria 25 15 27 5 28121 Hungary 12 11 32 5 40122 Poland 17 15 27 10 31123 USSR 10 6 7 77124 Czechoslovakia 7 11 3] 7 38125 German Dem. Rep. 11 12 36 11 30

Table 7. Energy

122

Average annualgrowth rate (percent)

Energyconsumption

per capita(kilograms

of coalequivalent)

Energyconsumption

per dollarof GDP

(kilogramsof coal

equivalent)

Energy importsas

percentage ofmerchandise

exportsEnergy

productionEnergy

consumption

1960_74a 1974-78 1960-74 1974-78 1960 1978 1960 1978b 1960C1977d

Low-income countries 6.8 w 8.2 w 5.7 w 6.8 w 98 w 161 w 0.8w lOw 9wl6w1 Kampuchea, Dem. - -0.1 5.9 31 4 .. 9 -

2 Bangladesh - - 12.8 -. 16.5 . - 43 - - 0.3 . - 483 Lao PDR -. -0.6 13.4 1.5 18 604 Bhutan5 Ethiopia 14.1 1.8 14.7 -i.8 8 20 0.1 0.2 11 276 Mali .. 10.8 5.5 5.9 15 30 0.2 0.3 13 257 Nepal 27.2 4.6 12.3 0.9 5 11 (.) 0.18 Somalia .. 7.4 27.4 19 55 0.2 0.6 4 139 Burundi 23.4 .. 3.1 . 12 . . 0,1 . . 7

10 Chad .. 7.2 5.0 10 22 0.1 0.2 23 27

11 Mozambique 3,2 29.9 5.7 4.4 114 151 0.4 0.5 11 2812 Burma 4.8 11.2 3.6 4.9 55 64 0.5 0.5 4 1213 Upper Volta .. 6.5 10.9 5 25 0.1 0.3 38 1914 Viet Nam .. 12.3 .. -9.0 .. 125 ..15 India 4.4 5.5 4.9 5.1 108 176 1.0 1.2 11 2616 Malawi .. 9.4 2.8 52 .. 0.3 .. 1517 Rwanda .. 2.8 . - 11.2 . . 17 .. 0.1 . . 11

18 Sri Lanka 10.4 3.5 6.2 0.8 107 109 0.7 0.5 8 2219 Guinea 16.1 (.) 3.2 1.8 65 91 0.3 0.4 720 Sierra Leone .. .. 10.3 -0.6 31 100 0.3 0.5 11 10

21 Zaire 3.0 53.5 4.3 2.0 87 69 0.9 1.0 3 1622 Niger .. 14.3 7.5 5 38 (.) 0.2 623 Benin .. .. 8.8 -4.5 39 56 0.2 0.3 16 4324 Pakistan 10.0 2.4 5.9 1.0 61 172 1.3 1.0 17 3325 Tanzania 10.6 13.4 10.4 0.5 41 65 0.3 0,4 .. 22

26 Afghanistan 39.7 -4.2 9.4 1.3 15 47 0.2 0.4 12 1227 Central African Rep. 14.2 4.7 7.4 8.7 37 44 0.1 0.2 12 1

28 Madagascar 6.8 3.5 8.9 2.3 38 78 0.2 0.4 9 2229 Haiti ,. 17.4 2.8 11.1 36 5] 0.2 0.3 .. 1730 Mauritania ,. 16.8 4.3 18 203 0.1 0.7 39 631 Lesotho . - .. .. .. .. .. .. . - -. - -

32 Uganda 5.2 -4.1 9.5 -0.3 30 48 0.1 0.2 5 433 Angola 35.8 0.2 8.8 1.9 86 192 0.2 0.5 6 234 Sudan .. 16.8 13.2 1.4 52 172 0.2 0.7 8 2635 Togo -. - . 12.5 12.3 23 96 0.1 0.3 10 1

36 Kenya 9.3 10.5 4.2 -0.6 143 139 0.8 0.5 18 2437 Senegal . - .. 4.6 4.] 121 181 0.3 0.5 8 1538 Indonesia 8.5 11.3 4.2 21.4 129 278 0.8 1.1 3 7

Middle-income countries 6.0 w 1.7 w 7.9 u 6.2 395 w 903 w 0.7w 1.1 w 11 w 20w

39 Egypt 9.8 31.6 2.7 11.] 298 463 1.7 1.4 12 640 Ghana .. 2.7 6.6 0.6 106 165 0.2 0.4 7 1841 Yemen, PDR -. .. -13.6 11.2 299 523 . - 2.6 . - . -

42 Cameroon 1.1 3.1 4.0 10.2 55 119 0.2 0.3 7 1043 Liberia 31.8 -1.3 19.3 -0.6 86 395 0.2 0.9 3 12

44 Honduras 29.5 5.6 8.9 8.9 155 284 0.5 0.7 10 1445 Zambia -. 4.4 1.8 474 - - 1.2 .. 546 Zimbabwe 1.9 39 -. (-) - 579 . - t247 Thailand 28.0 11.4 16.9 7.6 64 327 0.3 0.8 12 2948 Bolivia 17.2 -2.0 7.0 11.3 147 368 0.5 0.8 4 1

49 Philippines 5.6 12.4 9.6 6.3 147 339 0.6 0.8 9 3350 Yemen Arab Rep. - - . - 12.7 20.1 7 53 -. 0.3 . - - -

51 Congo, People's Rep. 15.] -9.3 5.2 -0.7 119 175 0.3 0.3 25 252 Nigeria 37.4 -2.9 10.2 8.1 34 106 0.1 0.2 7 2

53 Papua New Guinea - - 16.2 3.0 51 292 0.2 0.6 7 13

54 El Salvador 5.1 20.9 7.7 6.3 127 265 0.4 0.6 6 1055 Morocco 1.9 4.4 7.7 6.6 148 285 0.4 0.5 9 2856 Peru 3.5 13.4 6.2 2.4 445 649 0.8 0.8 4 2357 Ivory Coast 9.7 -3.8 15.5 7.3 76 357 0.2 0.4 5 958 Nicaragua 26.6 -9.5 10.0 8.5 174 517 0.4 0.7 12 17

59 Colombia 3,4 -1.8 6.3 4.3 491 700 1.3 1.2 3 660 Paraguay .. 7.0 8.5 8.8 87 200 0.2 0.3 - 3061 Ecuador 19.0 3.1 8.3 10.2 201 505 .. 0.8 2 1

62 Dominican Rep. 4.4 8.4 14.6 -7.0 157 464 0.3 0.6 - 2263 Guatemala 9.9 20.9 6.1 4,9 174 260 0.4 0.4 12 15

64 Syrian Arab Rep. 86.2 11.8 9.0 18.3 321 968 0.7 1.2 16 4265 Tunisia 73.4 0.1 9.5 8.7 190 543 - - 0.6 15 2266 Jordan .. ,. 6.5 15.2 197 535 0.7 1.3 79 53

Figures in italics are for 1961-74, not 1960-74. c. Figures in italics are for 1961, not 1960.Figures in italics are for 1977, not 1978. d. Figures in italics are for 1976, not 1977.

123

Average annualgrowth rate (percent)

Energyconsumption

per capita(kilograms

of coalequivalent)

Energyconsumption

per dollarof GDP

(kilogramsof coal

equivalent)

Energy importsas

percentage ofmerchandise

exportsEnergy

productionEnergy

consumption1 960_74a 1974-78 1960-74 1974-78 1960 1978 1960 1978b 1960c 1977d

67 Malaysia 37.4 27.1 11.1 4.7 242 716 0.6 0.8 2 1068 Jamaica -0.7 -2.8 11.2 0.3 426 1823 0.2 1.5 11 3269 Lebanon 12.7 -0.6 6.3 -3.4 548 936 .. .. 68 430 Korea, Rep. of 6.3 3.2 13.2 9.6 258 1,359 1.2 1,8 70 2271 Turkey 7.6 -0.8 9.9 9.4 245 793 0.5 0.8 16 79

72 Algeria 11.7 6.7 12.2 13.7 252 687 0.3 0.7 14 273 Mexico 6.0 12.6 7.7 6.7 770 1,384 0.9 1.0 3 474 Panama 14.8 4.4 10.5 7.1 448 991 0.7 0.975 Taiwan 2.3 1.4 8.6 14.5 583 2,202 1.5 1.9 . . 1576 Chile 4.0 -1.5 6.1 -0.8 845 997 1.2 1.1 10 2577 South Africa 3.8 8.1 . . . .. . . . 1

78 Costa Rica 9.5 4.7 10.4 5.6 233 564 0.4 0.5 7 1379 Brazil 8.1 5.6 8.6 7.0 332 794 0.6 0.6 21 3780 Uruguay 3.7 7.3 3.1 1.9 825 1,054 0.] 0.8 35 2781 Argentina 6.5 2.2 5.7 2.2 1,129 1,873 0.9 1.4 14 12

82 Portugal 4.4 -5.9 8.3 2.3 382 1,030 0.5 0.6 17 3683 Yugoslavia 4.7 3.2 7.1 4.8 872 2,035 1.3 1,2 8 2384 Trinidad and Tobago 2.8 5.9 4.8 5,5 1,775 4,965 1.0 1.9 35 3985 Venezuela 1.2 -6.3 6.6 5.3 1694 2,989 1.1 1.2 1

86 Hong Kong .. .. 6.8 12.2 468 1,657 0.7 0.7 5 7

87 Greece 14.3 10.8 13.2 4.1 460 1,925 0.5 0.7 26 3888 Singapore .. .. 16.8 9.3 372 2,461 0.4 0.8 17 3289 Spain 2.5 4.3 8.5 3.9 756 2,405 0.6 0.8 22 4990 Israel 41.9 -71.2 9.6 2.8 1270 2,362 0.7 0.6 17 25

Industrialized countries 3.2 zz' 0.8 w 4.9 w 1.5 w 4,462 w 7,060 tO 1,2 w 1.1 w 11 w 23 w

91 Ireland 0.1 3.8 4.7 2.6 1,838 3,292 1.2 1.1 17 1592 Italy 2.2 -1.6 8.3 1.8 1,086 3,230 0.6 0.9 18 2793 New Zealand 5.2 11.4 5.7 3.8 2,277 3,790 0.7 0,9 7 1694 United Kingdom -1.2 13.5 1.7 0.3 4861 5,212 1.6 1.2 14 1695 Finland 3.3 9.0 9.1 2.7 1,529 5,205 0.5 0.9 11 23

96 Austria 1.5 -1.5 5.1 1.1 2,129 4,048 0.8 0.] 12 1597 Japan -1.7 -0.8 10.7 1.5 1,171 3,825 0.8 0.7 18 3998 Australia 11.1 5.3 5.6 3.6 3,857 6,622 0.8 0.7 12 999 France -1.3 0.6 5.8 1.6 2,474 4,368 0.7 0.6 16 24

100 Netherlands 16.2 -1.6 8.7 -1.5 2504 5,327 0.7 0.8 15 19

101 Belgium -7.2 (.) 4.9 0.2 3,851 6,078 1.1 0.9 11 15102 Canada 8.9 -1.3 6.0 1.7 5,750 9,930 1.3 1.3 9 9103 Norway 6.8 37.5 5.9 4.0 2,702 5,571 0.7 0.7 15 16104 Germany, Fed. Rep. -0.7 -0.7 4.5 1.5 3,695 6,015 0.9 0.8 7 15105 United States 3.5 -0.5 4.1 1.6 8,172 11,374 1.6 1.4 8 37

106 Denmark -20,1 49.9 5.5 3.7 2,830 5,423 0.6 0.7 15 22107 Sweden 3.6 4.6 4.9 2.5 3572 5,954 0.] 0.7 16 19108 Switzerland 4.2 4.0 5.9 1.4 1,873 3,690 0.3 0.4 10 10

Capital-surplusoil exporters 11.5 w 1.4 w 9.2 w 11.7 w 404 w 1,620 w 0.4 0.5w .. (.) tO

109 Iraq 4.9 6.9 5.9 1.0 48] 633 0.7 0.5 (.) (.)110 Iran 14.5 -1.5 15.6 11.9 270 1,808 0.4 0.9 1 (.)111 Libya 29.1 8.9 17.9 21.8 251 1,889 0.1 0.3 83 (.)112 Saudi Arabia 14.1 2.3 14.4 16.1 267 1,306 . 0.2 .. ()113 Kuwait 4.6 -4.2 6.7 12.2 10,396 6,771 0.4 0.6 .. (.)

Centrally plannedeconomies 4.8 iv 6.5w 4.8w 5.4w l,347w 2,ll7w 1.9 w 2.1 w

114 China 4.5 9.1 3.6 9.0 637 805 .. 4.2115 Korea, Dem. Rep. 9.1 4.3 9.1 4.3 989 2,702 3.8 4.4116 Albania 10.1 6.3 12.5 12.8 302 998 1.1 1.7117 Cuba 20.6 -19.4 4.4 2.] 912 1,168 1.0 1.8 39118 Mongolia 10.4 9.3 7.3 8.1 540 1,240 0.8 1.6119 Romania 5.8 1.6 8.0 4.5 1,342 4,042 3.8 2.7120 Bulgaria 3.3 0.8 9.8 3.8 1,303 5,020 1.2 1.9 7121 Hungary 1.8 2.0 3.9 3.0 2,072 3,451 1.5 1.2 13 14122 Poland 3.9 4.2 4.1 5.8 3,10] 5,596 2.1 1.8 ..123 USSR 5.6 5.5 5.3 4.2 2,839 5,500 1.9 1.8 4 4

124 Czechoslovakia 1.3 2.6 3.1 4.0 4,741 7,531 1.9 1.9 15125 German Dem. Rep, 0.5 1.2 2.1 2.1 4,950 7,121 1.8 1.5

Table 8. Growth of Merchandise Trade

124

Merchandise trade(millions of dollars)

Average annual growth ratea(percent) Terms of trade

(1970 = 100)Exports ImportsExports Imports1960-70 1970-78 1960-70 1970-78 1960 19781978b 1978b

Low-income countries 28,749 t 32,073 5.0 m -0.8 ni 5.0 n 3.2 n! 98nz 98m

1 Kampuchea, Dem. -3.3 . . -3.0 . . 102 1362 Bangladesh 576 1,294 6.6 -4.7 7.0 -2.9 155 743 Lao PDR 9 644 Bhutan .. .. .. .. ..5 Ethiopia 310 522 3.7 -5.4 6.2 -0.2 75 126

6 Mali 107 219 3.1 7.7 -0,4 5,0 91 937 Nepal 87 227 . . . . . . . .

8 Somalia 107 241 2.3 7.8 2.6 13.7 107 729 Burundi 67 98 .. .. ..

10 Chad 102 192 5.9 -3.0 5.0 1.7 106 122

11 Mozambique 129 278 6.0 -15.9 7.8 -13.4 103 9612 Burma 243 309 -11.6 0.5 -5.7 -4.6 101 8313 Upper Volta 57 210 14.4 8.5 7.8 9.4 75 8914 Viet Nam15 India

..6,614

..7,954

..3.1

.,6.0

..-0.9 3.2 104 80

16 Malawi 187 339 11.6 2.4 7.7 4.2 116 11217 Rwanda 70 179 15.7 3.6 8.0 11.7 89 12318 Sri Lanka 846 939 4.6 -3.8 -0.3 -2.7 175 12419 Guinea 314 273 .. .. . .

20 Sierra Leone 161 278 0.3 -3.1 1.9 -4.0 89 77

21 Zaire 925 589 -1.8 -4.1 5.5 -10.4 61 61

22 Niger 158 346 6.0 13.2 11.9 5.5 90 7823 Benin 26 267 5.0 -13.6 7.5 6.8 89 7924 Pakistan 1,471 3,275 8.2 -1.3 4.2 5.9 93 8225 Tanzania 457 1,117 3.5 -6.0 6.0 -1.0 96 104

26 Afghanistan 322 681 2.4 2.4 0.8 8.1 99 13327 Central African Rep. 72 57 8.1 1.8 4.5 -0.9 93 10328 Madagascar 387 443 5.4 -0.9 4.0 -4.0 118 8729 Haiti 152 140 .. .. ..30 Mauritania 119 181 55.2 -0.8 4.6 6.3 112 68

31 Lesotho32 Uganda

. ,

350. .

255..

5.0..

-5.3. .

6.2.

-7.6 95 10633 Angola 500 340 9.0 -8.9 11.6 -4.7 89 14534 Sudan 533 1,198 2.1 -3.2 1.1 6.4 100 9235 Togo 235 381 10.5 0.3 8.4 12.4 95 105

36 Kenya 1,022 1,709 7.2 0.8 6.3 (.) 112 10437 Senegal 391 788 1.2 4.4 2.7 4.7 91 10038 Indonesia 11,643 6,690 3.5 7.2 1.9 15.8 138 225

Middle-income countries 179,935 231,663 t 5.5 in 5.2 in 6.8 in 5.8 in 93 in 90 in

39 Egypt - - 1,901 6,480 3.2 -2.3 -0.9 16.6 104 9240 Ghana 1,304 1,266 0.1 -0.1 -1.6 2.7 92 8041 Yemen, PDR 105 590 .. .. .. ..42 Cameroon 803 1,057 6.9 2.4 9.3 6.7 90 9743 Liberia 486 481 18.3 1.5 2.8 2.0 194 85

44 Honduras 596 693 11.1 2.9 11.7 2.6 91 7745 Zambia 832 611 2.2 -4.7 9.8 -6.9 50 5646 Zimbabwe ..47 Thailand 4,085 5,256 5.2 12.2 11.2 5.6 118 8248 Bolivia 627 768 9.7 1.7 8.1 12.2 69 130

49 Philippines 3,425 5,143 2.2 5.4 7.2 4.7 73 6950 Yemen Arab Rep. 34 1,043 .. .. .. .. 051 Congo, People's Rep. 138 334 4.9 14.7 --1.0 6.7 98 11452 Nigeria 9,483 12,857 6.1 0.5 1.7 25.0 97 29053 Papua New Guinea 780 676 .. ..54 El Salvador 629 1,025 5.6 0.6 6.4 8.4 94 10655 Morocco 1,511 2,970 2.5 2.6 3.3 13.7 103 8656 Peru 1,949 1,960 1.9 -3.8 3.6 3.1 63 7757 Ivory Coast 2322 2,325 8.8 8.5 9.7 10.6 89 9458 Nicaragua 594 645 9.7 5.6 10.3 4.2 88 9059 Colombia 3,018 3,060 2.2 1.2 2.4 -0.7 90 10760 Paraguay 257 319 5.4 7.6 7.5 8.0 92 10761 Ecuador 1,494 1,627 3.7 9.5 11.6 12.7 110 12962 Dominican Rep. 604 860 -2.3 6.7 10.0 4.5 77 6263 Guatemala 1,090 1,286 9.0 3,4 7.1 7.1 97 100

64 Syrian Arab Rep. 1,053 2,437 3.2 7.1 4.2 15.5 94 13965 Tunisia 1,126 2,162 4.1 21.1 2.2 30.3 104 13366 Jordan 297 1,499 10.1 21.5 3.6 16.3 99 84

See the technical notes.Figures in italics are for 1977, not 1978.

125

Merchandise trade(millions of dollars)

Average annual growth ratea(percent) Terms of trade

(1970 = 100)Exports ImportsExports Imports1960-70 1970-78 1960-70 1970-78 1960 19781978b 1978b

67 Malaysia 1,413 5,929 6.1 5.2 2.7 6.8 139 11968 Jamaica 710 872 4.7 -2.7 8,2 -5.9 100 9069 Lebanon 625 1,696 14,1 5.7 5.1 (.) 78 8770 Korea, Rep. of 12,711 14,972 35,2 28.8 20.1 13.5 78 8171 Turkey 2,288 4,597 1.6 2.5 5.5 8.1 71

72 Algeria 5,866 8,531 4.1 -0.8 -1.0 16.6 115 28113 Mexico 5,739 7,744 3,3 5.2 6.4 4.0 87 10874 Panama 244 942 10,4 2.2 10.4 -3.4 89 6175 Taiwan 12,682 11,033 23.7 9.3 17.9 9.1 79 7516 Chile 2,481 2,595 0.6 6.5 4.7 -0.9 53 5077 South Africa 7,182 7,193 5.5 6.7 8.2 -1.8 100 7578 Costa Rica 816 1,184 9.4 5.9 10.0 4.7 103 8179 Brazil 12,527 14,538 5.0 6.0 4.9 6.6 88 9080 Uruguay 686 774 2.1 -5.0 -2.8 2.3 99 8281 Argentina 6,400 3,834 3,5 6.8 0.3 -0.1 101 9582 Portugal 2,393 4,791 9.6 -5.9 14.1 4.7 83 8683 Yugoslavia 5,659 9,987 7.8 4.8 9.0 4.9 96 9884 Trinidad and Tobago 2,039 1,967 5.0 -1.3 3.2 -4.4 115 10985 Venezuela 9,126 10,614 2.0 -10.1 4.3 14.9 112 29286 Hong Kong 11,499 13452 12.7 4.8 9.2 3.2 9787 Greece 3,341 7,648 10.7 13.1 10.9 5.9 92 9388 Singapore 10,134 13,049 4,2 9.8 5.9 8.189 Spain 13,115 18,708 11.6 11.0 18.4 3.3 93 6890 Israel 3,716 5,582 10.9 10.6 8.7 4.5 91 83

Industrialized countries 837,596 t 862,455 t 8.7 m 5.7 m 9.4m 5.1 m 99?n 95m

91 Ireland 5,678 7097 7.2 8.4 8.2 6.3 94 10892 Italy 56,047 56,446 13.5 7.2 9.7 2.7 104 8093 New Zealand 3,752 3,500 4.6 2.4 3.0 3.3 115 9494 United Kingdom 71,691 78,557 4.8 5.5 5.0 4.6 95 9495 Finland 8,618 7,864 6.7 3.0 7.1 1.6 98 9796 Austria 12,205 16,013 9.6 6.8 9.7 7.2 100 9797 Japan 97,501 78,731 17,5 9.7 13.7 5.0 102 e898 Australia 14,127 13,885 6.5 4.0 7.2 5,1 116 9899 France 76,609 81,805 8.3 7.3 10.9 6.7 93 96

100 Netherlands 50,188 53,082 9.9 5.7 9.4 4.4 100 92101 Belgium 44,853 48,376 10.8 5.7 10.3 6.0 110 92102 Canada 46,065 43,434 9.9 4.3 9,3 7.1 98 102103 Norway 10,011 11,473 9.1 6.3 9.5 5.1 91 102104 Germany, Fed. Rep. 142,090 120,668 10.2 6.9 10.0 6.3 90 104105 United States 141,154 182,787 6.0 6.5 9.8 5.4 93 77106 Denmark 11,886 14,810 7.1 4.2 8.1 3.4 108 94107 Sweden 21,560 20,123 7.] 2.3 7.3 2.3 109 94108 Switzerland 23,561 23,804 9.0 5.1 8.5 2.3 91 112

Capital-surplusoil exporters 94,107 t 49,866 t 9.5 m -1.2 tn 11.1 n-i 21.1 in 101in 393rn

109 Iraq 11,008 4,213 7.3 0.6 1.3 21.1 112 403110 Iran 22,430 16,019 12,7 -1.2 11.3 22.9 108 373111 Libya 9,503 4,603 61.0 -7.0 15.4 18.7 98 280112 Saudi Arabia 40,716 20,424 9.5 6.2 11.1 41.5 107 396113 Kuwait 10,450 4,607 6.9 -9.7 10.4 19.2 105 393

Centrally plannedeconomies 128,821 t 136,420

114 China 10,680 11,950115 Korea, Dem. Rep. 950116 Albania .. .. .. .. .. ..117 Cuba 4,456 4,687 3.9 13.5 5.5 4.5 112 66118 Mongolia 281 41] ..119 Romania 8,237 9,087 9.9 .. 10.5120 Bulgaria 7,478 7,651 14.5 10.7 12.8 10.8121 Hungary 6,345 7,902 9.7 13.0 9.1 12.2 83122 Poland 14,114 16,089 10.0 9.3 8.9 11.4 103123 USSR 52,216 50,550 .. 7.8 . . 10.2124 Czechoslovakia 11,747 12,565 6.6 6.0 6.9 6.5 .

125 German Dem. Rep. 13,267 14,572 8.3 7.9 8.6 8.0

Table 9. Structure of Merchandise Exports

126

Percentage share of merchandise exports

MachineryFuels, Other and

minerals primary Textiles transportand metals commodities and clothing equipment

Othermanufactures

1960a 1977 1960a 1977 1960a 1977 1960a 1977 1960a 1977

Low-income countries 13 w 37 w 70w 44w 12w 7w (.)w 2i 5w lOw1 Kampuchea, Dem. 0 0 100 80 0 6 0 (.) 0 142 Bangladesh 2 42 45 1 103LaoPDR 20 65 1 0 144 Bhutan .. .. ..5 Ethiopia 0 0 100 97 0 (.) 1 1 0 2

6 Mali 0 () 96 98 1 (.) 1 1 2 1

7 Nepal .. (.) 82 1 1 168 Somalia 0 0 88 97 0 0 8 3 4 09 Burundi 8 91 0 0 1

10 Chad 65 0 32 96 0 1 0 0 3 3

11 Mozambique 0 11 100 86 0 2 0 0 0 1

12 Burma 4 6 95 88 0 0 0 1 1 513 Upper Volta 0 (.) 100 95 0 (.) 0 1 (.) 414 Viet Nam .. 12 32 33 (.) 2315 India 10 9 45 35 35 20 1 6 9 30

16 Malawi () 96 2 (.) 217 Rwanda 10 90 0 0 (.)18 Sri Lanka (.) 6 99 82 0 2 0 (.) 1 1019 Guinea .. 65 15 .. 0 (.) 2020 Sierra Leone 15 8 20 48 0 0 0 0 65 44

21 Zaire 42 71 57 21 0 0 0 1 1 722 Niger 31 100 35 0 1 0 0 0 3323 Benin 0 6 100 85 0 2 (.) 0 0 7

24 Pakistan 0 5 73 36 23 44 1 2 3 1325 Tanzania (.) 4 87 90 0 1 0 (.) 13 5

26 Afghanistan (.) 13 82 74 14 12 3 0 1 1

27 Central African Rep. 12 (.) 86 76 (.) (.) 1 (.) 1 2428 Madagascar 4 14 90 78 1 4 1 0 4 429 Haiti 0 12 100 53 0 7 0 3 0 2530 Mauritania 4 87 69 9 1 (.) 20 (.) 6 431 Lesotho .. .. 0

32 Uganda 8 1 92 99 0 (.) 0 (.) (.) (.)33 Angola 64 28 0 1 7

34 Sudan 0 5 100 95 0 (.) 0 (.) 0 (.)35 Togo 0 49 96 45 0 3 0 2 4 1

36 Kenya 1 18 87 72 0 (.) 0 1 12 937 Senegal 3 13 94 80 1 1 1 (.) 1 638 Indonesia 33 71 67 27 0 (.) (.) 1 (.) 1

Middle-income countries 25 w 33 w 61 w 30 w 4 w 10 w 2 w 9 w 8 w 18 w

39 Egypt 4 26 84 49 9 18 (.) (.) 3 740 Ghana 7 16 83 80 0 0 0 0 10 441 Yemen, PDR 82 17 (.) () 1

42 Cameroon 19 5 77 91 0 1 2 1 2 243 Liberia 45 64 55 34 0 (.) 0 (.) 0 2

44 Honduras 5 6 93 84 0 2 0 0 2 845 Zambia 94 2 0 (.) 446 Zimbabwe 71 25 1 .. (.) 347 Thailand 7 9 91 72 0 8 0 2 2 948 Bolivia 79 17 1 .. (.) 3

49 Philippines 10 17 86 58 1 5 0 2 3 1850 Yemen Arab Rep. .. (.) 90 3 1 .. 651 Congo, People's Rep. 7 60 84 24 (.) 0 5 2 4 1452 Nigeria 8 93 89 6 0 0 0 (.) 3 1

53 Papua New Guinea 0 35 92 63 0 0 0 0 8 2

54 El Salvador 0 2 94 78 3 7 (.) 2 3 11

55 Morocco 38 46 54 33 1 10 101 6 10

56 Peru 49 47 50 45 0 2 0 1 1 557 Ivory Coast 1 4 98 89 0 2 (.) 2 1 358 Nicaragua 3 1 95 82 0 3 0 1 2 13

59 Colombia 19 4 79 77 0 5 (.) 3 2 11

60 Paraguay 0 0 100 91 0 0 0 0 0 961 Ecuador 0 50 99 48 0 1 0 (.) 1 1

62 Dominican Rep. 6 3 92 79 0 (.) 0 1 2 1763 Guatemala 2 1 95 82 1 4 0 1 2 12

64 Syrian Arab Rep. 0 62 81 28 2 4 0 3 17 365 Tunisia 24 49 66 17 1 19 1 1 8 1466 Jordan 0 31 96 38 0 4 0 1 4 26

a. Figures in italics are for 1961, not 1960.

127

Percentage share of merchandise exports

Fuels,minerals

and metals

Otherprimary

commoditiesTextiles

and clothing

Machineryand

transportequipment

Othermanufactures

1960a 1977 1960a 1977 1960a 1977 1960a 1977 1960a 1977

67 Malaysia 20 27 74 56 (.) 2 (.) 7 6 868 Jamaica 50 24 45 21 2 1 0 0 3 5469 Lebanon 3 .. 27 .. 11 .. 26 . . 3370 Korea, Rep. of 30 2 56 13 8 32 (.) 17 6 3671 Turkey 8 8 89 67 0 18 0 1 3 6

72 Algeria 12 97 81 2 0 (.) 1 (.) 6 1

73 Mexico 24 32 64 39 4 4 1 6 7 1974 Panama 28 63 3 .. 1 .. 575 Taiwan 14 37 23 .. 3 .. 2376 Chile 92 83 4 10 0 (.) 0 (.) 4 7

77 South Africa 29 29 42 29 2 1 4 6 23 3578 Costa Rica 0 (.) 95 76 0 3 0 3 5 1879 Brazil 8 10 89 64 0 4 (.) 11 3 11

80 Uruguay .. 1 60 .. 18 .. 2 .. 1981 Argentina 1 1 95 75 0 2 (.) 9 4 13

82 Portugal 8 4 37 26 18 26 3 15 34 2983 Yugoslavia 18 11 45 20 4 8 15 32 18 2984 Trinidad and Tobago 82 92 14 3 0 (.) 0 1 4 485 Venezuela 74 97 26 1 0 (.) 0 (.) (.) 286 Hong Kong 5 1 15 3 45 46 4 16 31 3487 Greece 9 14 81 36 1 18 1 5 8 2788 Singapore 1 32 73 24 5 5. 7 24 14 1589 Spain 21 6 57 23 7 6 2 26 13 3990 Israel 4 1 35 19 8 7 2 10 51 63

Industrialized countries 11 w 9 w 23 w 15 w 7 w 5 w 30w 39 w 29 w $2 w

91 Ireland 5 3 67 42 6 9 4 15 18 3192 Italy 8 7 19 10 17 11 29 34 27 3893 New Zealand (.) 6 97 77 0 3 (.) 3 3 1194 United Kingdom 7 10 9 9 8 5 44 37 32 3995 Finland 3 6 50 20 1 6 13 26 33 4296 Austria 26 5 22 11 10 10 16 28 26 4697 Japan 11 1 10 2 28 5 23 56 28 3698 Australia 13 34 79 45 (.) (.) 3 4 5 1799 France 9 6 18 17 10 6 25 38 38 33

100 Netherlands 15 22 34 25 8 5 18 19 25 29101 Belgium 15 11 9 12 12 8 13 24 51 45102 Canada 33 26 37 23 1 1 8 33 21 17103 Norway 22 32 34 15 2 1 10 29 32 23104 Germany, Fed. Rep, 9 5 4 6 4 5 44 48 39 36105 United States 10 6 27 24 3 2 35 43 25 25

106 Denmark 2 5 63 39 3 5 19 27 13 24107 Sweden 10 6 29 14 1 2 31 44 29 34108 Switzerland 2 3 8 5 12 7 30 33 48 52

Capital-surplusoil exporters 95w 99w 4w (.)w Ow (.)w U w (.) w 1 w I w109 Iraq 97 99 3 1 0 (.) 0 (.) 0 (.)110 Iran 88 99 9 1 0 (.) 0 (.) 3 (.)111 Libya 100 100 0 (.) 0 (.) 0 (.) 0 (.)112 Saudi Arabia 6 100 84 0 0 0 0 0 10 0113 Kuwait 88 .. 1 .. 1 3 7

Centrally plannedeconomies 24 w 16 w 4 w 31 w .. 25 w

114 China115 Korea, Dem. Rep.116 Albania ..

145133

3731

26

.. 2366

.. 31

4 ..

2311

31

117 Cuba 7 80 . . 8 (.) . 5118 Mongolia 2 7 93 93 1 0 (.) (.) 4 (.)119 Romania .. 12 .. 20 .. 9 .. 24 .. 35120 Bulgaria 3 2 75 34 12 5 6 39 4 20121 Hungary 6 7 28 25 7 8 38 33 21 27122 Poland 24 43 28 11 1 (.) 21 19 26 27123 USSR .. 21 . . 11 .. 7 39 .. 22

124 Czechoslovakia 20 7 11 6 (.) 6 45 51 24 30125 German Dem. Rep. .. 3 3 5 57 32

Table 10. Structure of Merchandise Imports

128

Percentage share of merchandise imports

Food Fuels

Otherprimary

commodities

Machineryand

transportequipment

Othermanufactures

1960a j977b 1960a 1977b 1960a 1977b 1960a 1977b 1960a 1977b

Low-income countries 22w 16w 7w l9w 16w 9w 25w 26w 3Ow 30w

1 Kampuchea, Oem.2 Bangladesh 18 24 6 13 393 Lao PDR4 Bhutan5 Ethiopia 6 15 3 12

6 Mali 20 19 5 14 4 2 18 30 53 357 Nepal ..8 Somalia 27 4 0 18 519 Burundi 23 11 8 27 31

10 Chad 19 12 4 19 46

11 Mozambique12 Burma 14 4 9 17 5613 Upper Volta 21 4 1 24 5014 Viet Nam15 India 21 16 6 26 28 15 30 19 15 24

16 Malawi 8 .. 13 2 30 .. 4717 Rwanda18 Sri Lanka 39 40 7 24 5 3 15 12 34 21

19 Guinea20 Sierra Leone 23 23 12 7 5 1 15 19 45 50

21 Zaire22Niger 24 5 4 18 4923 Benin 17 17 10 8 1 0 18 30 54 4524 Pakistan 22 17 10 16 2 7 27 28 39 3225 Tanzania 10 18 5 35 32

26 Afghanistan 14 14 7 8 4 0 14 7 61 71

27 Central African Rep. 15 16 9 1 2 2 26 36 48 4528 Madagascar 17 6 3 23 51

29 Haiti 28 11 4 20 3730 Mauritania 5 3 3 39 50

31 Lesotho32 Uganda 6 11 8 1 8 3 25 44 53 41

33 Angola ..34 Sudan 17 .. 8 .. 3 14 5835 Togo 16 19 6 7 3 1 32 31 43 42

36 Kenya 12 6 11 22 8 4 27 34 42 3437 Senegal 30 5 2 19 4438 Indonesia 23 16 5 12 10 5 17 37 45 30

Middle-income countries 15 w 12 w 9 w 17 w 14 w 8 w 29 w 32 to 33 w 31 w

39 Egypt 23 23 11 2 16 10 25 35 25 3040 Ghana 19 14 5 15 4 4 26 27 46 4041 Yemen, FOR ..42 Cameroon 20 12 8 9 3 1 17 38 52 4043 Liberia 16 4 7 34 39

44 Honduras 13 9 9 12 3 2 24 31 51 4645 Zambia46 Zimbabwe ..47 Thailand 10 5 11 22 11 10 25 30 43 3348 Bolivia49 Philippines 15 10 10 24 5 7 36 26 34 3350 Yemen Arab Rep. .. 41 3 1 26 2951 Congo, People's Rep. 18 21 6 5 1 1 31 35 44 3852 Nigeria 14 13 5 2 6 2 24 47 51 3653 Papua New Guinea 30 23 5 14 4 1 23 32 38 30

54 El Salvador 17 6 6 26 4555 Morocco 27 17 8 12 7 7 19 38 39 2656 Peru 16 14 5 19 5 4 37 35 37 2857 Ivory Coast 18 14 6 11 2 2 27 38 47 3558 Nicaragua 9 8 10 14 5 2 22 31 54 45

59 Colombia 8 12 3 7 15 7 43 38 31 3660 Paraguay 15 .. 25 1 34 256t Ecuador 13 7 3 1 9 3 33 50 42 3962 Dominican Rep. 17 .. 21 .. 4 25 3363 Guatemala 12 10 7 26 45

64 Syrian Arab Rep. 24 12 8 17 5 5 15 34 48 3265 Tunisia 20 13 9 11 4 7 23 34 44 3566Jordan 18 9 3 35

a. Figures in italics are for 1961, not 1960. b. Figures in italics are for 1976, not 1977.

Centrally plannedeconomies

129

Percentage share of merchandise imports

Food Fuels

Otherprimary

commodities

Machineryand

transportequipment

Othermanufactures

1960a 1977b 1960a 1977b 1960a 1977b 1960a 1977b 1960a 1977b

67 Malaysia 29 17 16 13 13 7 14 33 28 3068 Jamaica 22 20 8 29 9 6 24 12 37 3369 Lebanon .. .. .. .. .. -

70 Korea, Rep. of 10 8 7 20 25 19 12 27 46 2671 Turkey 7 1 11 26 16 6 42 34 24 3372 Algeria 26 1] 4 1 2 4 14 46 54 3273 Mexico 4 13 2 3 10 8 52 45 32 3174 Panama 15 10 10 33 1 1 22 19 52 3775 Taiwan 11 19 14 2] 2976 Chile77 South Africa 6 6 7 1 9 7 37 52 41 3478 Costa Rica 13 8 6 10 6 3 26 30 49 4979 Brazil 14 7 19 34 13 7 36 26 18 2680 Uruguay .. 7 .. 25 11 .. 29 .. 2881 Argentina 3 5 13 16 11 10 44 36 29 33

82 Portugal 15 18 10 15 28 13 26 26 21 2883 Yugoslavia 11 9 5 13 25 12 37 35 22 3184 Trinidad and Tobago 16 10 34 48 7 2 18 18 25 2285 Venezuela 18 12 1 1 10 4 36 50 35 3386 Hong Kong 27 17 3 6 16 8 10 19 44 5087 Greece 11 8 8 15 16 8 44 46 21 2388 Singapore 21 12 15 26 38 9 7 26 19 2789 Spain 16 15 22 29 25 13 22 20 15 2390 Israel 20 13 7 15 18 6 28 21 27 45

Industrialized countries 22 w 13 w 11w 22w 24w lOw 16w 24w 27w 31w

91 Ireland 18 13 12 13 11 5 21 27 38 4292 Italy 20 17 14 26 31 14 13 19 22 2493 New Zealand 8 7 8 15 16 6 29 32 39 4094 United Kingdom 36 18 11 14 27 11 8 23 18 3495 Finland 13 9 10 24 20 7 33 30 24 3096 Austria 16 8 10 10 20 9 29 34 25 3997 Japan 17 17 17 44 49 20 9 6 8 1398 Australia 6 6 10 10 16 5 31 38 37 41

99 France 25 14 17 21 25 10 14 23 19 32100 Netherlands 18 16 13 19 14 7 22 23 33 35101 Belgium 15 13 10 14 26 10 21 26 28 37102 Canada 12 8 9 10 12 5 36 50 31 27103 Norway 12 7 9 11 13 6 36 42 30 34104 Germany, Fed. Rep. 26 16 8 17 28 11 10 19 28 37105 United States 24 10 10 30 25 8 10 25 31 27

106 Denmark 18 13 12 17 11 6 23 27 36 37107 Sweden 13 9 14 18 13 6 26 31 34 36108 Switzerland 18 11 8 10 13 7 21 24 40 48

CapitaIsurplusoil exporters 13 w 1w 2w 43w 41w

109 Iraq 15 .. (.) .. 3 .. 54 .. 28110 Iran 14 11 1 (.) 1 3 23 45 61 41111 Libya 13 19 5 1 10 3 40 37 32 40112 Saudi Arabia .. 11 . 1 .. 2 .. 41 . . 46113 Kuwait 12 1 2 45 40

114 China115 Korea, Oem. Rep.116 Albania117 Cuba118 Mongolia119 Romania120 Bulgaria121 Hungary122 Poland123 USSR

..8

..12

..11

..

..12..4

..13

..

..

..28..18

..12

..

..

..28..

30

..31

..

..24

36

33

124 Czechoslovakia125 German Dem. Rep.

12 14 15 36 .. 23

Table 11. Destination of Merchandise Exports

130

Destination of merchandise exports (percentage of total)

Industrializedcountries

Developingcountries

Centrallyplanned

economies

Capital-surplus

oil exporters

Origin 1960 1978a 1960 1978a 1960 1978a 1960 1978a

Low-income countries 65w 66w 27 to 23 zo 7w 1w

1 Kampuchea, Dem. 00

2 Bangladesh 0

3 Lao PDR 20 77 0 () 34 Bhutan5 Ethiopia 64 26 4 6

6 Mali 93 50 7 20 0 30 (.) ()7 Nepal8 Somalia

..85

3422

..15

6614 0

013 ()

(.)51

9 Burundi .. 84 6 .. 10 ü10 Chad 73 34 27 63 0 0 0 3

11 Mozambique 29 71 71 29 (.) (.) (.) (.)12 Burma 23 37 71 62 6 (,) () 1

13 Upper Volta 4 50 96 48 0 2 0 014 Viet Nam15 India

..66

..55

.,23 20 8 13 3 12

16 Malawi 75 25 (0) 017 Rwanda 90 10 (.) (.)18 Sri Lanka 75 42 14 30 11 10 0 1819 Guinea 63 .. 19 . 18 ()20 Sierra Leone 99 96 1 4 0 0 0 (.)21 Zaire 89 65 11 34 (.) 1 (.) (.)22 Niger 74 84 26 15 0 0 0 1

23 Benin 52 . . 17 31 . (.)24 Pakistan 56 41 33 30 8 5 3 2425 Tanzania 74 65 25 28 1 6 0 1

26 Afghanistan 48 34 24 23 28 43 0 (.)27 Central African Rep. 83 79 17 21 0 (.) 0 (.)28 Madagascar 79 75 20 21 1 4 (.) (.)29 Haiti 98 98 2 2 (.) (.) 0 (.)30 Mauritania 89 85 11 15 0 0 0 (.)31 Lesotho .. .. .. ..32 Uganda 62 70 34 26 4 2 0 233 Angola 64 38 34 62 2 0 0 034 Sudan 59 50 23 27 14 18 4 535 Togo 74 77 26 14 0 9 0 036 Kenya 77 62 22 35 1 2 (.) 1

37 Senegal 89 69 11 31 0 0 0 (.)38 Indonesia 54 79 38 21 8 (.) (.) (.)

Middle-income countries 70 w 67 w 24w 25w 5w 5w 1w 3w39 Egypt 26 54 29 12 43 30 2 440 Ghana 88 69 5 11 7 20 (.) (.)41 Yemen, PDR 42 35 56 51 (.) 10 2 442 Cameroon 93 85 6 13 1 2 (.) 043 Liberia 100 89 (.) 10 0 1 0 044 Honduras 77 86 23 14 0 0 0 045 Zambia 82 .. 13 5 046 Zimbabwe .. .. .. . ..47 Thailand 47 61 48 32 2 2 3 548 Bolivia 88 54 12 37 0 9 0 0

49 Philippines 94 81 5 14 1 4 (.) 1

50 Yemen Arab Rep. 46 65 36 13 18 18 (.) 451 Congo, Peoples Rep, 93 66 7 33 0 1 0 052 Nigeria 95 78 4 22 1 (.) 0 053 Papua New Guinea 87 .. 12 1 0

54 El Salvador 88 74 12 26 0 0 0 (.)55 Morocco 74 61 22 27 4 11 (.) 1

56 Peru 84 71 16 18 (.) 11 0 (.)57 Ivory Coast 84 83 16 15 0 2 0 (.)58 Nicaragua 91 69 9 31 (.) 0 0 0

59 Colombia 94 79 5 16 1 5 0 (.)60 Paraguay 61 66 39 34 0 0 0 061 Ecuador 91 69 8 28 1 3 0 (.)62 Dominican Rep. 92 84 7 14 0 2 1 063 Guatemala 94 71 6 27 0 1 0 1

64 Syrian Arab Rep. 34 57 28 18 24 19 14 665 Tunisia 76 68 19 23 3 3 2 666 Jordan 1 8 62 39 11 9 26 44

a. Fiçjures in italics are for 1977, not 1978.

131

Destination of merchandise exports (percentage of total)

Industrializedcountries

Developingcountries

Centrallyplanned

economies

Capital-surplus

oil exportersOrigin 1960 1978a 1960 1978a 1960 1978a 1960 1978a

67 Malaysia 58 62 35 32 7 5 0 1

68 Jamaica 96 84 4 15 0 1 0 (.)69 Lebanon 24 8 28 26 6 10 42 5670 Korea, Rep. of 89 73 11 17 0 (.) 0 1071 Turkey 71 64 16 12 12 15 1 9

72 Algeria 93 94 6 4 1 2 (.) U

73 Mexico 93 81 7 18 (.) 1 0 (.)74 Panama 99 71 1 28 0 (.) 0 1

75 Taiwan 56 70 33 26 0 0 11 476 Chile 91 67 9 30 (.) 1 (.) 2

77 South Africa 71 82 27 18 2 (.) (.) 078 Costa Rica 93 68 7 28 (.) 3 (.) 1

79 Brazil 81 64 13 26 6 7 (.) 380 Uruguay 82 54 8 38 10 7 0 1

81 Argentina 75 52 19 38 6 9 (.) 1

82 Portugal 56 80 42 17 2 3 (.) (.)83 Yugoslavia 48 35 18 16 33 43 1 684 Trinidad and Tobago 80 80 20 20 0 (.) (.) (.)85 Venezuela 62 58 38 42 0 (.) U (.)86 Hong Kong 54 70 42 26 3 1 1 387 Greece 65 60 12 16 22 12 1 1288 Singapore 38 45 54 47 7 3 1 589 Spain 80 64 17 27 3 3 (.) 690 Israel 76 75 22 21 2 1 0 3

Industrialized countries 67 w 67 w 28 iv 23 iv 3 w 4 w 2 tV 6 iv

91 Ireland 96 90 4 7 (.) 1 (.) 392 Italy 65 66 27 20 6 5 2 993 New Zealand 95 73 4 19 1 5 (.) 394 United Kingdom 57 65 37 24 3 3 3 895 Finland 69 67 11 10 20 21 (.) 2

96 Austria 69 69 15 14 15 14 1 397 Japan 45 45 51 38 2 7 2 1098 Australia 75 64 18 25 5 7 2 499 France 53 67 42 25 4 4 1 4

100 Netherlands 78 83 19 12 2 2 1 3

101 Belgium 79 83 16 12 4 2 1 3102 Canada 90 87 9 9 1 3 (.) 1

103 Norway 80 82 15 13 5 4 (.) 1

104 Germany, Fed. Rep. 70 71 23 17 5 6 2 6105 United States 61 56 36 34 1 3 2 7

106 Denmark 83 82 12 12 4 3 1 3107 Sweden 79 77 15 14 5 5 1 4108 Switzerland 72 67 23 22 4 5 1 6

Capital-surplusoil exporters 78w 70w 21 w 29w 1 w (.) w (.) w 1 w

109 Iraq 85 61 14 37 1 2 (.) (.)110 Iran 62 71 34 28 3 1 1 (.)111 Libya 67 82 26 17 7 1 0 0112 Saudi Arabia 74 72 26 28 0 0 0 (.)113 Kuwait 91 60 9 33 0 (.) 0 7

Centrally plannedeconomies 21w 70w 1w

114 China 14 24 62 (.)115 Korea, Dem. Rep. ..116 Albania 1 1 98 .. 0117 Cuba 72 9 19 (.)118 Mongolia119 Romania 20 27 9 15 71 50 (.) 8120 Bulgaria 13 4 83 .. C.)121 Hungary 22 8 .. 69 1

122 Poland 29 10 60 1

123 USSR 18 10 71 1

124 Czechoslovakia 16 6 78 0125 German Dem. Rep. 19 7 74 (.)

Table 12. Trade in Manufactured Goods

132

Origin

Destination of manufactured exports (percentage of total) Value ofmanufactured

exports(millions

of dollars)Industrialized

countriesDeveloping

CO U ntri es

Centrallyplanned

economies

Capital-surplus

oil exporters1963 1977a 1963 1977a 1963 1977a 1963 1977a 1963 1977a

Low-income countries 51 w i2w lOw

1 Kampuchea, Dem 58 15 42 85 0 0 0 0 1 22 Bangladesh 47 41 6 6 .. 251

3 Lao PDR 83 17 0 0 (.) 24 Bhutan5 Ethiopia 28 68 2 .. 2 (.) 12

6 Mali 14 29 66 71 20 0 0 0 (.) 27 Nepal 60 40 0 0 .. 148 Somalia 20 67 13 . 0 2 29 Burundi 100 0 0 .. 0 .. 1

10 Chad 12 31 77 69 11 0 (.) 0 1 3

11 Mozambique 67 27 0 6 .. 312 Burma 79 21 0 .. 0 1 1513 Upper Volta 12 50 88 50 0 0 0 0 1 314 Viet Nam 2 2 95 .. 1 .. 21615 India 56 52 35 24 7 12 2 12 677 335616 Malawi 34 66 0 0 .. 7

17 Rwanda 0 100 0 .. 0 (.) (.)18 Sri Lanka 70 65 28 24 2 1 (.) 10 4 9619 Guinea 27 73 0 .. 0 .. 5320 Sierra Leone 100 100 (.) 0 0 0 0 0 23 59

21 Zaire 88 11 1 .. 0 1 7522 Niger 23 89 77 11 0 0 0 0 1 5623 Benin 18 28 82 72 0 0 0 0 1 324 Pakistan 49 45 48 26 1 8 2 21 109 68125 Tanzania 85 15 0 .. 0 16 35

26 Afghanistan 98 88 2 1 0 1 0 10 7 4227 Central African Rep 50 83 50 17 0 0 0 0 11 1928 Madagascar 82 83 18 17 0 0 0 0 4 2629 Haiti 93 7 0 0 .. 51

30 Mauritania 95 84 5 16 0 0 0 0 3 6

31 Lesotho ..32 Uganda 100 0 0 .. 0 (.) 233 Angola 80 18 0 .. 2 5534 Sudan 35 90 54 10 0 0 11 0 (.) 535 Togo 45 42 55 58 0 (.) 0 0 1 9

36 Kenya . - 11 86 1 . . 2 12 11637 Senegal 74 50 26 50 (.) 0 0 0 9 3638 Indonesia .. 44 56 .. (.) .. (.) 2 191

Middle-income countries .. 58 w 30 w 6 w 6 w

39 Egypt .. 13 .. 11 .. 65 .. 11 88 42940 Ghana 82 56 17 44 0 0 1 0 3 4-4

41 Yemen, PDR .. 48 .. 52 .. 0 .. 0 .. 1

42 Cameroon 23 69 77 31 0 0 0 0 4 3043 Liberia 100 78 0 22 0 0 0 0 3 9

44 Honduras 3 22 97 78 0 0 0 0 2 4945 Zambia .. 66 .. 34 .. 0 .. 0 3746 Zimbabwe47 Thailand 41 65 59 32 0 (.) 0 3 16 64748 Bolivia 91 93 9 7 0 0 0 0 6 22

49 Philippines 92 82 8 16 0 (.) (.) 2 34 76450 Yemen Arab Rep. 10 .. 25 . 0 .. 65 .. 1

51 Congo, People's Rep. 93 62 7 38 0 0 0 (.) 22 2952 Nigeria 81 85 17 15 1 (.) 1 0 16 7253 Papua New Guinea .. 100 .. 0 .. 0 .. 0 2 15

54 El Salvador 1 27 99 73 0 0 0 0 18 20955 Morocco . 0 74 .. 19 . 2 . . 5 .. 27256 Peru 45 43 55 37 (.) 14 (.) 6 6 11557 Ivory Coast 40 35 60 65 0 0 0 0 7 16158 Nicaragua . 8 .. 92 .. 0 .. 0 3 105

59 Colombia 45 42 55 57 0 1 0 (.) 17 46660 Paraguay 85 52 15 48 0 0 0 0 4 2561 Ecuador 52 16 48 84 0 0 0 0 3 3062 Dominican Rep. 97 .. 3 0 0 1 12863 Guatemala 9 91 0 0 15 21864 Syrian Arab Rep. 11 if; 42 . 31 21 10065 Tunisia 42 86 2 5 2 12 31166 Jordan C.) 26 0 .. 74 1 57

a. Figures in italics are for 1976, not 1977.

133

Origin

Destination of manufactured exports (percentage of total) Value ofmanufactu red

exports(millions

of dollars)Industrialized

countriesDevelopingcountries

Centrallyplanned

economies

Capital-surplus

oil exporters1963 1977a 1963 1977a 1963 1977a 1963 1977a 1963 1977a

67 Malaysia 64 35 (0) 63 1,12168 Jamaica 83 68 17 29 0 3 0 13 34569 Lebanon 19 35 00 3 43 8 45270 Korea, Rep, of 57 74 43 14 0 (.) 0 12 39 8,48071 Turkey 73 74 14 9 13 5 ( .) 12 6 43132 Algeria 76 19 3 2 3873 Mexico 69 61 31 39 (. ) (0) (0) 0 1,18274 Panama 5 10 95 90 0 0 0 0 () 2375 Taiwan 30 52 13 5 129 7,92576 Chile 38 57 62 43 (0) 0 () (.) 22 14577 South Africa 67 29 0 4 318 2,57678 Costa Rica 12 88 (.) 0 5 20379 Brazil 59 53 40 43 1 2 (.) 2 45 3,14180 Uruguay 56 41 3 (0) 31 23581 Argentina 52 31 46 63 2 6 () (.) 79 1,34982 Portugal 53 79 46 16 () 4 1 1 246 1,42083 Yugoslavia 37 29 29 17 33 45 1 9 468 3,41584 Trinidad and Tobago 40 86 60 14 0 (.) 0 (.) 10 10585 Venezuela 79 52 21 48 (0) 0 (.) 0 43 15386 Hong Kong 71 83 28 14 0 (.) 1 3 617 7,26787 Greece 60 58 34 18 2 6 4 18 27 1,37388 Singapore 5 54 95 43 (0) (0) (.) 3 352 3,62689 Spain 62 60 35 32 2 3 1 5 227 7,21490 Israel 72 75 26 21 2 1 0 3 203 2,453

Industrialized countries 65 w 65w 31 w 25 w 3w 4w lw 6w91 Ireland 94 92 6 6 (.) 1 (.) 1 133 2,42092 Italy 64 64 29 21 5 6 2 9 3842 37,63093 New Zealand 85 14 (.) 40 52094 United Kingdom 57 65 39 25 3 3 1 7 9,412 46,88495 Finland 59 63 13 8 28 27 (.) 2 634 5,68696 Austria 66 66 17 15 17 16 0 3 985 8,24197 Japan 44 47 50 40 5 4 9 4,812 77,51498 Australia 59 68 40 28 1 1 (0) 3 332 2,80899 France 58 63 39 28 2 5 4 5,744 48,585

100 Netherlands 79 79 18 15 2 3 3 2,693 23,123101 Belgium 85 83 13 12 1 2 1 3 3,572 28,991102 Canada 87 91 13 8 (.) (0) (.) 1 2,165 21,046103 Norway 78 69 19 26 3 4 (.) 1 529 4,654104 Germany, Fed. Rep. 75 69 22 19 2 6 1 6 12,812 104,361105 United States 56 58 42 33 (.) 1 2 8 12,453 82,521106 Denmark 73 78 19 15 8 4 0 3 752 5,580107 Sweden 78 76 19 15 3 5 (0) 4 2,143 15,284108 Switzerland 72 66 25 23 2 6 5 2,163 15,821

Capital-surplusoil exporters 31 w 24 w 3w 42w

109 Iraq () 9 21 79 (.) 0 79 12 5 18110 Iran 64 39 28 13 1 31 7 17 33 158111 Libya 22 45 0 (0)112 Saudi Arabia 22 70 7 0 121113 Kuwait 31 19 (.) 50 1,059

Centrally plannedeconomies 14w l8w 64w 4w

114 China 31 50 14 5 3,684115 Korea, Oem. Rep. 5 13 73 9 197116 Albania 35 37 28 0 42117 Cuba 72 4 24 0 10118 Mongolia 2 0 98 0 32119 Romania 26 17 52 5 4,763120 Bulgaria 6 11 81 2 4,025121 Hungary 20 14 62 4 3,939122 Poland 19 9 70 2 8,351123 USSR 10 25 59 6 21,020124 Czechoslovakia 14 11 73 2 9,045125 German Dem. Rep. 10 10 79 10,242

Table 13. Balance of Payments and Debt Service Ratios

134

Current accountbalance before

interest paymentson external public

debt(millions of dollars)

Interestpayments on

external publicdebt

(millions of dollars)

Debt service as percentage of:

GNP

Exports ofgoods andservices

1970 1978a 1970 1978 1970 1978a 1970 1978a

Low-income countries 1.2 w 1.7 l2.3w 11.7 u.'

1 Kampuchea, Dem.2 Bangladesh -302 1.3 II3 Lao PDR4 Bhutan5 Ethiopia -26 -98 1 0. 11.zi 7.5

6 Mali -2 -72 (.) 3 0.2 1.1 1.2 7.1

7 Nepal .. -25 (.) 1 0.3 0.2 10.9 1,48 Somalia -5 -63 (.) 2 0.5 1.2 2.1 3.79 Burundi -. -22 (.) 1 0.3 0.4 2.5 3.2

10 Chad 2 -188 (.) 3 1.0 2.3 3.7 13.0

11 Mozambique .. .. . . . . . . . . .

12 Burma -62 -137 3 17 1.0 1.2 16.1 18.013 Upper Volta 9 -79 (.) 3 0.6 0.9 4.0 3.814 Viet Nam .. .. .. .. ..15 India -205 915 189 342 0.9 0.8 20.9 9.4

16 Malawi -32 -116 3 9 1.8 2.0 7.0 8.717 Rwanda 6 -46 (.) 1 0.2 0.2 1.4 1.418 Sri Lanka -45 -33 12 25 2.1 3.6 10.3 9.219 Guinea - - -16 4 17 3.4 5.7 21.3 17.420 Sierra Leone -14 -96 2 7 2.9 4.5 9.8 16.0

21 Zaire -55 88 9 160 2.0 6.5 4.4 31.322 Niger 1 -81 1 4 0.6 0.8 3.8 2.923 Benin -1 -70 (.) 3 0.7 1.5 2.2 6.424 Pakistan -591 -550 76 179 1.9 2.1 21.6 12.225 Tanzania -29 -442 6 18 2.1 1.1 8.2 7.4

26 Afghanistan .. 38 9 15 2.5 1.3 25.6 13.727 Central African Rep. -11 -23 (.) 1 1.1 0.7 3.2 2.528 Madagascar 12 -51 2 6 0.8 0.6 3.5 3.229 Haiti 2 -39 (.) 3 1.0 1.0 7.7 5.830 Mauritania -5 -65 (.) 10 2.0 6.6 3.2 17.0

31 Lesotho .. -110 (.) (.) 0.5 0.3 8.8 1.932 Uganda 24 -129 4 1 0.8 0.1 3.4 2.233 Angola - - - - - - - - . - - - - -

34 Sudan -29 -54 13 36 1.3 1.4 10.7 9.435 Togo 4 -234 1 13 0.9 5.9 2.9 15.2

36 Kenya -38 -474 11 45 2.6 2.4 7.9 8.337 Senegal -14 - -114 2 31 0.8 5.4 2.8 14.938 Indonesia -286 -773 24 492 0.9 3.1 6.9 13.0

Middle-income countries 1.5w 2.9w 9.3w 13.8w

39 Egypt -116 -540 38 386 4.1 8.7 28.7 22.240 Ghana -56 32 12 23 1.1 0.3 5.0 4.441 Yemen, PDR -9 -20 - - 1 .. 0.2 - - 1.742 Cameroon -26 -112 4 46 0.9 2.0 3.1 7.743 Liberia - - -122 6 13 5.5 3.5 - - 5.4

44 Honduras -61 -126 3 31 0.8 3,5 2.8 8.445 Zambia 131 -191 23 46 3.2 7.1 5.5 20.846 Zimbabwe . - - - - - -. - - - - . - -.47 Thailand -234 -1,098 16 96 0.6 0.9 3.3 3.748 Bolivia -16 -301 6 83 2.2 8.5 10.9 48.7

49 Philippines -23 -991 25 167 1.4 2.8 7.5 13.450 Yemen Arab Rep. 80 (.) 3 0.2 0.5 1.1

51 Congo, People's Rep. . - -156 3 11 3.2 3.3 .. 7.252 Nigeria -348 -3,696 20 75 0.7 0.3 4.1 1.253 Papua New Guinea -12 1 23 0.1 1.8 .. 4.0

54 El Salvador 12 -230 4 13 0.9 0.8 3.6 2.655 Morocco -101 -1,040 23 252 1.5 4.3 7.7 18.756 Peru 245 119 43 317 2.4 7.4 11.6 31.157 Ivory Coast -26 -533 11 199 2.8 5.9 6.7 14.158 Nicaragua -32 23 7 48 3.2 4.6 11.0 12.5

59 Colombia -249 305 44 172 1.7 1.7 11.6 9.860 Paraguay -13 -109 3 15 1.7 1.4 11.1 7.361 Ecuador -106 -54 7 96 1.5 2.8 9.1 11.762 Dominican Rep. -98 -334 4 39 0.8 1.7 4.5 9.463 Guatemala -2 -192 6 15 1.4 0.4 7.4 1.7

64 Syrian Arab Rep. -64 -406 6 58 2.1 2.9 10.8 15.165 Tunisia -35 -411 18 95 4.5 3,5 17.5 12.366 Jordan -15 -256 2 24 0.7 2.5 3.6 4.0

Centrally plannedeconomiesb

114 China115 Korea, Dem. Rep.116 Albania117 Cuba118 Mongolia119 Romania120 Bulgaria121 Hungary122 Poland123 USSR124 Czechoslovakia125 German Dem. Rep.

Figures in italics are for 1977, rot 1978.See the technical notes.

135

Current accountbalance before

interest paymentson external public

debt(millions of dollars)

Interestpayments on

external publicdebt

(millions of dollars)

Debt service as percentage of:

GNP

Exports ofgoods and

services1970 1978a 1970 1978 1970 1978 1970 1978a

67 Malaysia 29 284 21 146 1.7 4.6 3.6 8.868 Jamaica -145 -72 8 30 1.1 7.0 2.5 17.969 Lebanon -. -494 1 4 0.2 .. .. 0.870 Korea, Rep, of -553 -455 70 653 3.1 3.9 19.4 10.571 Turkey -28 -1121 42 182 1.3 0.9 16.3 11.072 Algeria -116 -2977 10 561 0.8 5.9 3.2 20.973 Mexico -850 -896 218 1,823 2.1 6.9 23.6 59.674 Panama -57 -91 7 130 3.0 25.2 7.3 39.275 Taiwan 27 1979 23 239 1.4 2.6 4.5 4.476 Chile -13 -659 78 290 3.1 7.3 18.9 38.277 South Africa -1,156 2010 59 366 1.2 4.2 5.1 11.778 Costa Rica -67 -309 7 63 2.9 7.2 9.7 23.079 Brazil -701 -5310 136 1,725 0.9 2.2 13.5 28.480 Uruguay -29 -66 16 60 2.6 8.7 21.5 45.781 Argentina -36 2,512 121 513 1.9 3.5 21.5 26.882 Portugal - - -337 28 105 1.3 1.1 4.4 3,783 Yugoslavia -276 -834 72 183 1.7 0.7 8.2 3.284 Trinidad and Tobago -74 61 6 22 1.9 0.9 2.6 1.185 Venezuela -64 -4,973 40 394 0.8 1.9 2.9 6.986 Hong Kong . - 317 . - 15 (.) 0.7 - . . -

87 Greece -364 -1,056 41 206 1.0 1.7 7.2 8.588 Singapore -565 -669 6 38 0.6 4.0 0.6 2.389 Spain 151 321 72 600 0.5 1.8 3.6 11.090 Israel -572 -732 41 248 3.1 3.8 12.3 8.1

Industrialized countriesb

91 Ireland -189 -17892 Italy 902 6,35593 New Zealand -29 -38794 United Kingdom 1,865 1,93295 Finland -239 60696 Austria -23 -1,41097 Japan 1,980 17,52898 Australia -832 -3,84599 France 67 3,766

100 Netherlands -487 -1,449101 Belgium 533 -556102 Canada 1,078 -4,617103 Norway -242 -2,145104 Germany, Fed. Rep. 850 8,852105 United States 6,200 -4,432106 Denmark -544 -1,469107 Sweden -266 -954108 Switzerland 70 4,403

Capital-surplusoil exporters

109 Iraq 110 1,209 9 37 0.9 1.1 2.2 1.1110 Iran -422 5,370 85 391 3.0 1.2 12.2 3.2111 Libya 645 1,024 - - . .

112 Saudi Arabia 71 12,793 . - . - . . . . ..113 Kuwait - - 6,166 . . . . . . . -

Table 14. Flow of External Capital

136

Low-income countries

Public and publicly guaranteed medium- and long-term loans(millions of dollars)

Net directprivate

investment(millions

of dollars)Gross inflowRepaymentof principal Net inflow

1970 1978 1970 1978 1970 1978 1970 1978a

1 Kampuchea, Dem.2 Bangladesh 488 51 4373LaoPDR ..4 Bhutan5 Ethiopia 2] 97 15 1] 12 806 Mali 21 68 (.) 6 21 62 57 Nepal 1 2] 2 2 1 258 Somalia 4 114 (.) 3 4 111 5 (5)9 Burundi 1 23 (.) 2 1 21

10 Chad 6 43 2 12 4 31 21

11 Mozambique S S

12 Burma 16 315 18 38 2 2]]13 Upper Volta 2 44 2 5 (.) 39 (.)14 Viet Nam ..15 India 890 1150 307 595 583 555 6

16 Malawi 38 90 3 12 35 78 9 1017 Rwanda (.) 19 (.) 1 (.) 18 (.) 518 Sri Lanka 61 239 27 64 34 175 (.) 219 Guinea 90 112 10 4] 80 65 1020 Sierra Leone 8 83 10 28 2 55 8 19

21 Zaire 31 348 28 342 3 6 42 1522 Niger 12 69 1 6 11 63 1

23 Benin 2 38 1 9 1 29 724 Pakistan 484 748 114 204 370 544 23 3625 Tanzania 50 171 10 20 40 151

26 Afghanistan 34 171 15 3] 19 13427 Central African Rep. 2 22 2 3 (.) 19 1 828 Madagascar 11 50 5 9 6 41 10 1

29 Haiti 4 43 4 8 (.) 35 3 1030 Mauritania 4 111 3 18 1 93 1 1]31 Lesotho (.) 5 (.) 1 (.) 432 Uganda 26 25 4 3 22 2233 Angola34 Sudan 54 290 22 40 32 25035 Togo 5 200 2 32 3 168

36 Kenya 30 234 15 69 15 165 14 6]3] Senegal 18 196 5 75 13 121 5 S

38 Indonesia 441 1,616 59 9]] 382 639 83 272

Middle-income countries

39 Egypt 302 2464 247 822 55 1,642 .. 29740 Ghana 40 82 12 24 28 58 68 1241 Yemen, PDR 1 89 .. 1 1 8842 Cameroon 28 28] 4 58 24 229 16 743 Liberia 7 74 12 14 5 60

44 Honduras 29 163 3 28 26 135 8 1345 Zambia 351 104 32 145 319 41 29] 1946 Zimbabwe4] Thailand 55 740 23 91 32 649 43 5348 Bolivia 54 531 17 266 37 265 76 12

49 Philippines 132 1,416 73 484 59 932 29 16350 Yemen Arab Rep. 2 101 (.) 12 2 8951 Congo, People's Rep. 35 222 6 1] 29 205 7

52 Nigeria 62 1,305 36 53 26 1,252 205 18953 Papua New Guinea 25 29 (.) 10 25 19 34

54 El Salvador 8 80 6 12 2 68 4 2355 Morocco 163 1,191 36 296 12] 895 20 4656 Peru 148 842 100 431 48 411 70 2557 Ivory Coast 7] 948 2] 223 50 725 31 1058 Nicaragua 44 142 17 49 2] 93 15 7

59 Colombia 235 341 75 231 160 110 39 6060 Paraguay 15 139 7 20 8 119 4 2261 Ecuador 42 503 16 108 26 395 89 4062 Dominican Rep. 36 164 7 39 29 125 72 4063 Guatemala 3] 107 20 9 1] 98 29 118

64 Syrian Arab Rep. 59 683 30 169 29 51465 Tunisia 89 576 45 106 44 470 16 8966 Jordan 14 221 3 34 11 187 22

Centrally plannedeconomie&'

114 China115 Korea, Dem. Rep.116 Albania117 Cuba118 Mongolia119 Romania120 Bulgaria121 Hungary122 Poland123 USSR124 Czechoslovakia125 German Dem. Rep.

a. Figures in italics are for 1977, not 197a. b. See the technical notes for Table 13.

137

Public and publicly guaranteed medium- and long-term loans(millions of dollars)

Net directprivate

investment(millions

of dollars)Repayment

Gross inflow of principal Net inflow1970 1978 1970 1978 1970 1978 1970 1978a

67 Malaysia 43 1,044 45 558 -2 486 94 59668 Jamaica 15 221 6 114 9 10] 161 -1169 Lebanon 12 91 2 6 10 85] 1770 Korea, Rep. of 440 3,919 198 1,142 242 2,777 66 6171 Turkey 328 798 128 262 200 536 58 95

72 Algeria 292 5,103 33 927 259 4,176 45 13573 Mexico 797 8,606 476 4,416 321 4,190 323 53074 Panama 67 986 24 442 43 544 33 975 Taiwan 154 621 54 394 100 227 62 11076 Chile 397 1,491 163 926 234 565 -79 17877 South Africa 519 1,173 146 1,422 373 -249 318 -18978 Costa Rica 30 396 21 174 9 222 26 6679 Brazil 1,063 10,055 333 2,406 730 7,649 407 1,88680 Uruguay 37 416 47 366 -10 50 12981 Argentina 489 3,203 342 1,578 147 1,625 11 29882 Portugal 20 1,157 62 98 -42 1,059 5083 Yugoslavia 180 445 168 196 12 24984 Trinidad and Tobago 8 161 10 10 -2 151 83 14085 Venezuela 224 2,70] 42 356 182 2,351 -23 6886 Hong Kong (.) 117 (.) 79 (.) 388] Greece 164 754 61 354 103 400 50 1888 Singapore 58 266 6 226 52 40 93 42289 Spain 268 2,003 122 1,822 146 211 179 42890 Israel 663 1,365 131 290 532 1,075 40 129

Industrialized countriesb

91 Ireland 32 25092 Italy 496 34293 New Zealand 22 994 United Kingdom -440 -1,51595 Finland -34 -2996 Austria 85 7497 Japan -261 -2,34198 Australia 787 1,26699 France 248 660

100 Netherlands -14 -1,231101 Belgium 162 776102 Canada 566 -1,721103 Norway 32 407104 Germany, Fed. Rep. -280 -1,953105 United States -6,120 -10,404106 Denmark 75 101107 Sweden -105 -334108 Switzerland

Capital-surplusoil exporters

109 Iraq 63 308 18 195 45 113 24110 Iran 940 2,901 235 960 705 1,941 25 802111 Libya

S .. 139 -950112 Saudi Arabia .. .. .. .. 20 822113 Kuwait .. .. .. .. .. -131

Table 15. External Public Debt and International Reserves

138

External public debtoutstanding and disbursed

Gross international reserves

Millionsof dollars

In monthsof importcoverage

1978a

Millionsof dollars

As percentageof GNP

1970 1978 1970 1978a 1970 1978a

Low-income countries 18.1 w 21.7 w 3.5 w

1 Kampuchea, Dem.2 Bangladesh 2,798 38.2 322 2.33 Lao PDR4 Bhutan5 Ethiopia 169 551 9.5 15.4 218 4.4

6 Mali 238 539 88.1 65.3 1 11 0.57 Nepal 3 88 0.3 5.4 95 181 7.88 Somalia 77 496 41,1 101.7 21 131 4.99 Burundi 7 64 3.1 10.6 15 83 12.8

10 Chad 32 156 11.8 23.4 2 14 0.9

11 Mozambique .. .. . . . . . .

12 Burma 102 818 4.] 18.1 98 151 3.713 Upper Volta 21 191 6.4 21.6 36 39 2.1

14 Viet Nam .. .. . .. ..15 India 7,936 15,326 14.8 13.1 1,023 8,316 10.2

16 Malawi 121 390 38.7 36.8 29 77 2.217 Rwanda 2 95 0.9 11.1 8 87 3.7

18 Sri Lanka 317 1,013 17.1 41.0 43 406 4,4

19 Guinea 314 916 72.5 81.] .

20 Sierra Leone 59 275 14.3 36.1 39 35 1.3

21 Zaire 311 2,566 17.1 33.4 189 196 1.3

22 Niger 32 194 8.7 16.2 19 131 3.423 Benin 41 146 16.0 19.5 16 18 0.924 Pakistan 3,059 7,568 30.5 40.8 194 795 2.325 Tanzania 248 1,095 19.4 25.1 65 96 0.9

26 Afghanistan 54] 1216 58.1 30.8 50 606 10.427 Central African Rep. 19 138 11.2 26.5 1 27 1.528 Madagascar 94 259 10.9 11.7 37 59 1.229 Haiti 40 163 10.3 13.8 4 41 1.630 Mauritania 27 574 16.8 138.1 3 82 2.5

31 Lesotho 8 28 9.2 7.532 Uganda 128 252 9.8 3.0 5733 Angola .. .. .. ..34 Sudan 309 2,076 11.6 38.6 22 29 0.435 Togo 40 494 15.4 65.4 35 73 1.5

36 Kenya 313 953 20.3 17.9 220 369 2.1

37 Senegal 103 58] 12.2 29.8 22 23 0.538 Indonesia 2,443 13,089 27.1 27.6 160 2,676 2.6

Middle-income countries 10.8w 17.Sw 2.5w

39 Egypt 1,639 9,879 23.] 71.5 165 1,049 1.940 Ghana 489 843 22.6 5,3 58 330 3.641 Yemen, PDR 1 349 0.3 47.5 60 194 5.642 Cameroon 131 1,167 13.0 30.2 81 57 0.543 Liberia 158 334 49.6 42.3 18 0.5

44 Honduras 90 591 12.9 34.9 20 18] 2.645 Zambia 596 1,396 34.5 51.6 515 96 1.046 Zimbabwe .. .. .. ..47 Thailand 322 1,777 4.9 8.2 911 2,559 4.948 Bolivia 47] 1,666 46.4 40.] 46 314 3.3

49 Philippines 633 4,188 9.2 18.0 255 2,104 4.050 Yemen Arab Rep. 147 464 49.9 14.3 .. 1,461 15.351 Congo, People's Rep. 129 726 49.4 85.5 9 11 0.252 Nigeria 478 2,180 6.4 4.5 223 2,037 1.753 Papua New Guinea 36 370 6.2 21.2 .. 431 5.1

54 El Salvador 88 333 8.6 11.0 63 381 3.555 Morocco 711 5,139 18.6 40.1 141 773 2.256 Peru 848 5,36] 14.0 53.1 338 738 3.357 Ivory Coast 256 2,818 18.3 39.5 119 455 1.558 Nicaragua 155 964 20.6 45.8 50 58 0.9

59 Colombia 1,249 2,833 18.1 12.2 20] 2810 8.360 Paraguay 98 447 16.] 17.4 18 46] 9.261 Ecuador 213 1,563 13.3 21.5 85 762 4.762 Dominican Rep. 212 724 14.6 16.1 32 176 1.7

63 Guatemala 106 374 5.7 6.0 80 857 6.0

64 Syrian Arab Rep. 232 2,091 13.6 26.6 5] 622 2.665 Tunisia 545 2,359 38.8 40.5 60 479 2.466 Jordan 118 840 19.0 36.1 258 1,069 6.2

114 China115 Korea, Dem. Rep.116 Albania117 Cuba118 Mongolia119 Romania120 Bulgaria121 Hungary122 Poland123 USSR124 Czechoslovakia125 German Dem. Rep.

a, Figures in italics are for 1977, not 1978. b. See the technical notes for Table 13.

Centrally plannedeconomiesb

139

External public debtoutstanding and disbursed

Gross international reserves

Millionsof dollars

In monthsof importcoverage

1978a

Millionsof dollars

As percentageof GNP

1970 1978 1970 1978a 1970 1978a

67 Malaysia 390 2671 10.0 17.6 667 3,670 5.568 Jamaica 154 1,036 11.5 39.4 139 53 0.569 Lebanon 64 125 4.2 .. 405 3,918 25,470 Korea, Rep, of 1,797 11,992 20.9 26.1 610 2,828 1.871 Turkey 1,854 6,188 14.4 12.2 440 1,662 3.672 Algeria 93] 13,168 18.5 52,6 352 3,230 3.673 Mexico 3,238 25,775 9.8 28.7 756 2,269 2.074 Panama 194 1,910 19.0 84.1 16 151 1.175 Taiwan 601 2,903 10.6 12.1 627 1,950 1.876 Chile 2,066 4,359 26.2 26.2 392 1,405 4.077 South Africa 1,089 5,704 6.3 13.3 1,057 2,636 2.378 Costa Rica 134 963 13.8 29.3 16 212 1.879 Brazil 3,589 28,821 8.0 15.6 1,190 12,191 6.780 Uruguay 267 766 11.0 15.7 186 1,111 12.581 Argentina 1,880 6801 7.6 11.4 682 5,934 12.2

82 Portugal 473 2,642 7.0 14.0 1,565 5,873 11.783 Yugoslavia 1,198 3,454 8.5 6.4 144 2,756 2.684 Trinidad and Tobago 101 417 12.5 12.2 43 1,813 8.085 Venezuela 728 6,921 6.7 17.1 1,047 8,571 6.686 Hong Kong 2 223 0.1 1.6

87 Greece 905 3,123 8.9 9.7 318 1,851 2.888 Singapore 152 1,134 7.9 14.8 1,012 5,302 4.689 Spain 1,209 7,631 3.3 5.5 1,851 13,394 7.290 Israel 2,274 9,209 41.3 65.7 451 2,890 3.5

Industrialized countriesb 4.2 w

91 Ireland 698 2,770 4.492 Italy 5,547 29,831 5.493 New Zealand 258 46] 1.294 United Kingdom 2,918 21,184 2.795 Finland 458 1,438 1.8

96 Austria 1,806 9,804 5.697 Japan 4,876 37,824 4.798 Australia 1,709 3,823 2.299 France 5,199 32,328 3.8

100 Netherlands 3,362 17,469 3.4

101 Belgium 2,947 13,591 2.9102 Canada 4,732 8,562 1.7103 Norway 813 3,116 2.0104 Germany, Fed. Rep. 13,879 75,287 5.8105 United States 15,237 69,448 3.8

106 Denmark 488 3,5]] 2.3107 Sweden 775 5,479 2.5108 Switzerland 5,317 36,584 15.1

Capital-surplusoil exporters 7.9 w

109 Iraq 274 878 8.8 4.0 472 7,237 9.2110 Iran 2,193 8,251 20.8 8.2 217 12,840 6.4111 Libya 1,596 4,659 6.0112 Saudi Arabia .. .. 670 20,227 12.1113 Kuwait .. .. 209 3,072 5.7

Table 16. Official Development Assistancefrom OECD and OPEC Members

140

OECD As percentage of donor GNP

92 Italy .22 .10 .16 .11 .13 .10 .14 .09 .0993 New Zealand .. . .23 .52 .41 .39 .34 .30 .3094 United Kingdom .56 .47 .41 .39 .40 .46 .48 .52 .5295 Finland .. .02 .06 .18 .17 .16 .17 .21 .2296 Austria .11 .07 .21 .12 .22 .29 .19 .23

97 Japan .24 .27 .23 .23 .20 .21 .23 .26 .2798 Australia .37 .53 .59 .59 .41 .42 .54 .52 .5199 France 1.35 .76 .66 .62 .62 .60 .57 .59 .59

100 Netherlands .31 .36 .61 .75 .83 .86 .82 .93 .94101 Belgium .88 .60 .46 .59 .51 .46 .55 .56 .59

102 Canada .19 .19 .41 .52 .39 .48 .52 .47 .46103 Norway .11 .16 .32 .66 .70 .83 .90 .93 .95104 Germany, Fed. Rep. .31 .40 .32 .40 .36 .33 .37 .44 .44105 United States .53 .58 .32 .2] .26 .25 .27 .19 .18106 Denmark .09 .13 .38 .58 .56 .60 .75 .75 .67

107 Sweden .05 .19 .38 .82 .82 .99 .90 .94 .95108 Switzerland .04 .09 .15 .19 .19 .19 .20 .21 .22

OECD National currencies

92 Italy (billions of lire) 48 38 92 119 188 148 318 233 26293 New Zealand (millions of dollars) . . . 13 55 53 54 53 61 6494 United Kingdom (millions of pounds) 145 168 208 411 490 642 759 974 1,09695 Finland (millions of markkaa) .. 6 29 177 195 196 226 335 40096 Austria (millions of schillings) .. 260 286 1,376 861 1,785 2,411 1,698 2,327

97 Japan (billions of yen) 38 88 165 341 328 383 466 578 66998 Australia (millions of dollars) 53 106 189 422 308 361 514 555 61199 France (millions of francs) 4,063 3,713 5,393 8,975 10,255 11,762 12,207 14,287 16,334

100 Netherlands (millions of guilders) 133 253 710 1,538 1,925 2,229 2,323 2,817 3,106101 Belgium (millions of francs) 5,050 5,100 6,000 13,903 13,129 13,234 16,836 18,500 20,913102 Canada (millions of dollars) 73 104 353 863 752 1,005 1,209 1,221 1,347103 Norway (millions of kroner) 36 78 264 962 1,190 1,570 1,861 2,167 2,470104 Germany, Fed. Rep.

(millions of deutsche marks) 93] 1,824 2,192 4,156 4,009 3,987 4,715 6,140 6,550105 United States (millions of dollars) 2,702 4,023 3,153 4,161 4,360 4,682 5,664 4,567 4,567106 Denmark (millions of kroner) 35 90 443 1,178 1,294 1,549 2,140 2,357 2,573107 Sweden (millions of kroner) 36 196 605 2,350 2,647 3,504 3,538 4,098 4,743108 Switzerland (millions of francs) 1] 52 131 260 281 284 309 341 361

Amount1960 1965 1970 1975 1976 1977 1978 1979 1980a

OECD Millions of US dollars

92 Italy 77 60 147 182 226 186 375 279 32093 New Zealand 14 66 53 52 55 62 6594 United Kingdom 407 472 500 910 885 1120 1456 2067 2,45395 Finland 2 7 48 51 49 55 86 10496 Austria 10 11 79 48 108 166 127 174

97 Japan 105 244 458 1,148 1,105 1,424 2,215 2638 307198 Australia 59 119 212 552 377 400 588 620 69099 France 823 752 971 2,093 2,146 2,267 2,705 3,358 3,836

100 Netherlands 35 70 196 608 728 908 1,074 1,404 1,54]101 Belgium 101 102 120 378 340 371 536 631 714

102 Canada 75 96 337 848 763 945 1,060 1,042 1,151103 Norway 5 11 37 184 218 295 355 428 491104 Germany, Fed, Rep. 223 456 599 1,689 1,592 1,717 2347 3,350 3,581105 United States 2,702 4,023 3,153 4,161 4,360 4,682 5.664 4,567 4,567106 Denmark 5 13 59 205 214 258 388 448 488

107 Sweden 7 38 117 566 608 779 783 956 1,124108 Switzerland 4 12 30 104 112 119 173 205 218

Total 4,628 6,478 6,967 13,820 13,829 15,680 19,994 22,267 24,594

OECD Summary

ODA (billions of US dollars,nominal prices) 4.6 6.5 7.0 13.8 13.8 15.7 20.0 22.3 24.6

ODA as percentage of GNP .51 .49 .34 .36 .33 .33 .35 .34 .34ODA (billions of US dollars,

constant 1978 prices) 13.1 16.7 14.9 17.9 17.3 18.0 20.0 20.1 20.2GNP (trillions of US dollars,

nominal prices) .9 1.3 2.0 3.8 4.2 4.7 5.6 6.5 7.2ODA deflatore .35 .39 .47 .77 .80 .87 1.00 1.11 1.22

Estimated.Provisional.See the technical notes.Organization of Arab Petroleum Exporting Countries.

141

1960 1965 1970 1975 1976 1977 1978

OECD As percentage of donor GNP31572

37780

45389

49598

547106

1,150 1,195 1,235 1,297 1,359 92 Italy .03 .04 .06 .01 .01 .02 .01465 542 631 734 857 93 New Zealand ,. .. .. .14 .06 .04 .03

2,835 3,423 3,931 4,493 5,134 94 United Kingdom .22 .23 .15 .11 .14 .11 .15770 885 1,018 1,170 1,346 95 Finland .. .. .06 .07 .06 .04681 757 836 941 1,039 96 Austria .. .06 .05 .02 .02 .01 .01

18,233 20379 22,861 25,258 27,873 9] Japan .12 .13 .11 .08 .08 .06 .073,512 3,968 4,444 4,934 5,512 98 Australia .. .08 .09 .10 .07 .07 .08

23,842 27,181 30,960 35,294 40,244 99 France .01 .12 .10 .12 .12 .10 .101,49] 1,662 1,816 1,991 2,180 100 Netherlands .19 .08 .24 .24 .26 .33 .34

2,807 3,174 3,556 3,974 4437 101 Belgium .27 .56 .30 .31 .26 .24 .23102 Canada .11 .10 .22 .24 .14 .13 .17

7,369 8291 9,328 10,494 11,589 103 Norway .02 .04 .12 .25 .22 .30 .396,250 6,966 7,662 8,416 9,241 104 Germany, Fed. Rep. .13 .14 .10 .12 .09 .07 .103,010 3,363 3,727 4,117 4,539 105 United States .22 .26 .14 .08 .05 .03 .045,313 5,908 6,520 7,182 7,899 106 Denmark .. .02 .10 .20 .21 .24 .21

457 526 579 662 753 107 Sweden .01 .07 .12 .41 .40 .44 .37108 Switzerland .. .02 .05 .10 .07 .05 .08

Total .18 .20 .13 .11 .09 .07 .09

Amount19818 19828 19838 19848 19858 1975 1976 1977 1978b 197gb

OPEC Millions of US dollars

385 461 554 605 668 52 Nigeria 14 83 64 38 2873 81 90 99 108 72 Algeria 41 54 48 44 45

2,573 2674 2,765 2,903 3041 85 Venezuela 31 103 52 109 83121 141 164 191 223 109 Iraq 218 232 61 172 861212 256 294 336 384 110 Iran 593 753 224 278 21

3,532 4,061 4,671 5,371 6,177 111 Libya 261 94 115 169 146768 854 943 1,062 1,172 112 Saudi Arabia 1,997 2,407 2,410 1,470 1,970

4,282 4,786 5,369 5,932 6,546 113 Kuwait 976 615 1,518 1,268 1,0991,749 1,976 2,213 2,457 2,745 Qatar 339 195 197 106 251

814 928 1,057 1,205 1,374 United Arab1,279 1,420 1,552 1,701 1,863 Emirates 1,046 1,060 1,177 690 20]

558 631 707 790 882 Total OAPECd 4,879 4,656 5,526 3,919 4,5794,029 4,533 5,100 5,73] 6,336 Total OPEC 5,516 5,596 5,866 4,344 4,7116,250 6,966 7,662 8,416 9,421

571 638 707 781 861 OPEC As percentage of donor GNP1,259 1,400 1,545 1,702 1,872

52 Nigeria .05 .25 .16 .08 .05276 318 350 400 45528,731 32,124 35,743 39,688 44,128 Vezuela .

109 Iraq 1.65 1.44 .32 .76 2.94110 Iran 1.13 1.13 .27 .33 .03

.10 ;o .11 .11 .11 111 Libya 2.31 .63 .65 .93 .58

.30 .30 .30 .30 .30 112 Saudi Arabia 5.40 5,73 4.32 2.76 3.15

.49 .45 .42 .40 .38 113 Kuwait 8.12 4.36 10.61 6.35 5.14

.23 .24 .26 .27 .28 Qatar 15.62 7.95 7.93 3.65 5.60.25 .27 .28 .29 .30 United Arab

Emirates 14.12 11.02 10.22 5.60 1.58.27 .28 .28 .29 .30Total OAPECd 4.99 4.03 3.95 2.55 2.43.50 .50 .50 .51 .51

.59 .59 .60 .60 .60 Total OPEC 2.71 2.27 1.96 1.35 1.28

.94 .96 .97 .98 .99

.60 .61 .63 .65 .67

.45 .45 .45 .44 .44

.96 .97 .98 .99 1.00

.44 .44 .45 .46 .46

.22 .22 .22 .22 .22

.70 .70 .70 .70 .70

.95 .95 .95 .95 .95

.25 .26 .26 .27 .28 Net bilateral flow to low-income countries

28.7 32.1 35,7 39.7 44.1.36 .36 .36 .36 .36

21.6 22.3 23.2 24.1 25.2

8.0 9.0 9.9 11.0 12.11.33 1.44 1.54 1.65 1.75

Table 17. Population Growth, Past and Projected,and Hypothetical Stationary Populationa

142

Average annualgrowth of

population(percent)

Projectedpopulation(millions)

Hypotheticalsize of

stationarypopulation

Assumed yearof reaching net

reproduction

Year ofreachingstationary

1960-70 1970-78 1980 2000 (millions) rate of 1 population

Low-income countries 2.5 w 2.2 w 1,348 2050 4,034

1 Kampuchea, Dem. .. .. .. ..2 Bangladesh 2.5 2.7 89 143 314 2035 21603 Lao PDR 2.2 1.3 3 5 11 2035 21754 Bhutan 2.0 2.1 1 2 4 2035 21655 Ethiopia 2.4 2.5 33 52 139 2045 2175

6 Mali 2.4 2.5 3 11 28 2040 21707 Nepal 2.0 2.2 14 21 46 2035 21608 Somalia 2,4 2.3 4 6 17 2045 21709 Burundi 2.4 2.0 5 8 21 2045 2160

10 Chad 1.8 2.2 5 7 18 2045 2165

11 Mozambique 2.2 2.5 10 17 44 2040 213512 Burma 2.2 2.2 34 51 92 2020 214513 Upper Volta 1.6 1.6 6 9 24 2040 217014 Viet Nam 3.1 2.9 55 87 149 2015 210515 India 2.5 2.0 672 974 1,645 2020 2150

16 Malawi 2.8 2.9 6 11 32 2045 216517 Rwanda 2.6 2.9 5 8 24 2045 216018 Sri Lanka 2.4 1.7 15 21 31 2010 207019 Guinea 2.8 2.9 5 9 23 2045 217020 Sierra Leone 2.2 2.5 3 6 14 2035 2160

21 Zaire 2.0 2.7 28 47 125 2045 216022 Niger 3.3 2.8 5 9 24 2040 217023 Benin 2.6 2.8 4 6 15 2035 216024 Pakistan 2.8 3.1 82 139 332 2035 215025 Tanzania 2.7 3.0 18 32 92 2045 2145

26 Afghanistan 2.2 2.2 15 25 65 2045 217527 Central African Rep. 2.2 2.2 2 3 8 2045 216528 Madagascar 2.2 2.5 9 14 38 2045 216029 Haiti 1.5 1.7 5 8 17 2030 214530 Mauritania 2.5 2.7 2 3 7 2040 2150

31 Lesotho 2.0 2.3 1 2 5 2045 215532 Uganda 3.7 2.9 13 23 58 2035 213033 Angola 1.5 2.3 7 11 29 2040 215534 Sudan 2.2 2.6 18 31 88 2045 213535 Togo 2.7 2.7 3 4 12 2040 2135

36 Kenya 3.4 3.3 16 32 109 2045 214037 Senegal 2.4 2.6 6 9 24 2040 215038 Indonesia 2.2 1.8 142 204 350 2020 2155

Middle-income countries 2.5 w 2.4 w 916 t 1,409 t 2,599

39 Egypt 2.5 2.2 42 62 101 2015 210540 Ghana 2.4 3.0 12 21 56 2040 213041 Yemen, PDR 1.9 1.9 2 3 6 2030 212542 Cameroon 1.8 2.2 8 13 31 2040 213543 Liberia 3.1 3.3 2 3 9 2040 2130

44 Honduras 3.1 3.3 4 7 15 2030 209045 Zambia 2.8 3.0 6 10 28 2040 213046 Zimbabwe 3.9 3.3 7 13 37 2040 210547 Thailand 3.0 2.7 46 68 103 2005 209548 Bolivia 2.5 2.6 6 9 20 2030 2120

49 Philippines 3.0 2.7 48 75 126 2015 207550 Yemen Arab Rep. 1.8 1.9 6 9 19 2030 217051 Congo, People's Rep. 2.1 2.5 2 3 7 2045 211552 Nigeria 2.5 2.5 85 153 425 2040 213553 Papua New Guinea 2.3 2.4 3 5 9 2025 2120

54 El Salvador 2.9 2.9 5 8 14 2015 207555 Morocco 2.5 2.9 20 34 70 2025 209056 Peru 2.8 2.7 18 29 57 2025 209057 Ivory Coast 3.7 5.6 8 14 37 2040 213058 Nicaragua 2.9 3.3 3 5 9 2020 2090

59 Colombia 3.0 2.3 27 39 57 2005 207060 Paraguay 2.6 2.8 3 5 9 2015 207561 Ecuador 3.1 3.3 8 14 26 2020 208062 Dominican Rep. 2.9 2.9 5 9 16 2015 207563 Guatemala 2.8 2.9 7 12 23 2025 2085

64 Syrian Arab Rep. 3.2 3.2 9 15 33 2025 208565 Tunisia 1.9 2.0 6 9 14 2010 207566 Jordan 3.0 3.3 3 5 12 2025 2090

a. For the assumptions used in the projections, see the technical notes. b. Excludes countries with populations of less than one million.

143

Average annualgrowth ofpopulation(percent)

Projectedpopulation(millions)

Hypotheticalsize of

stationarypopulation

Assumed yearof reaching net

reproduction

Year ofreachingstationary

1960-70 1970-78 1980 2000 (millions) rate of 1 population

6] Malaysia 2.9 2.7 14 20 30 2005 201068 Jamaica 1.4 1.7 2 3 5 2005 206569 Lebanon 2.8 2.5 3 5 8 2010 207070 Korea, Rep. of 2.4 1.9 38 50 66 2005 207071 Turkey 2.5 2.5 45 65 100 2010 207572 Algeria 2.4 3.2 19 34 94 2040 210073 Mexico 3.3 3.3 70 116 205 2015 207574 Panama 2.9 2.6 2 3 4 2005 206575 Taiwan 2.6 2.0 18 24 30 2005 206576 Chile 2.1 1.7 11 15 19 2005 207077 South Africa 2.6 2.7 29 49 10] 2030 209078 Costa Rica 3.4 2.5 2 3 5 2005 206579 Brazil 2.9 2.8 126 201 345 2015 207580 Uruguay 1.1 0.3 3 4 4 2005 207081 Argentina 1.4 1.3 27 33 41 2005 206582 Portugal 0.0 1.0 10 12 14 2005 210083 Yugoslavia 1.0 0.9 22 26 29 2005 209584 Trinidad and Tobago 2.0 1.2 1 2 2 2005 206585 Venezuela 3.4 3.3 15 24 40 2010 207086 Hong Kong 2.5 1.9 5 6 8 2005 20658] Greece 0,5 0.7 9 10 11 2005 206588 Singapore 2.4 1.5 2 3 4 2005 206589 Spain 1.1 1.2 38 44 51 2005 206590 Israel 3.4 2.7 4 5 8 2020 2080

Industrialized countries 1.00) O.7w 673 736t 774t91 Ireland 0.4 1.2 3 4 5 2005 206592 Italy 0.] 0.7 57 61 63 2005 203593 New Zealand 1.] 1.6 3 4 5 2005 207594 United Kingdom 0.5 0.1 56 58 59 2005 202595 Finland 0.4 0.4 5 5 5 2005 202096 Austria 0.5 0.2 7 8 8 2005 20259] Japan 1.0 1.2 117 131 134 2005 201598 Australia 2.0 1.6 14 17 19 2005 207599 France 1.0 0.6 54 58 61 2005 2030

100 Netherlands 1.3 0.8 14 15 16 2005 2025101 Belgium 0.5 0.3 10 10 10 2005 2025102 Canada 1.8 1.2 24 28 30 2005 2030103 Norway 0.8 0.6 4 4 5 2005 2030104 Germany, Fed, Rep, 0.9 0.1 61 61 61 2005 2005105 United States 1.3 0.8 225 252 273 2005 2030106 Denmark 0.] 0,4 5 5 5 2005 2020107 Sweden 0.7 0.4 8 8 8 2005 2005108 Switzerland 1.6 0.1 6 7 7 2005 2005

Capital-surplusoil exporters 2.9 w 3.2 w 64 t 104 203

109 Iraq 3.1 3.3 13 23 48 2025 2085110 Iran 2.7 2.9 38 59 102 2015 2105111 Libya 3.8 4.1 3 5 12 2030 2090112 Saudi Arabia 2.6 3.5 9 15 35 2030 2090113 Kuwait 9.8 6.1 1 2 6 2030 2085

Centrally plannedeconomies 1.7 w 1.4 w 1,386 t 1,730 2,121

114 China 2.1 1.6 977 1,251 1,555 2005 2065115 Korea, Dem. Rep. 2.8 2.6 18 27 43 2010 2070116 Albania 2.8 2.5 3 4 6 2005 2060117 Cuba 2.0 1.6 10 13 1] 2005 2070118 Mongolia 2.9 2.9 2 3 4 2005 2090119 Romania 1.0 0.9 22 26 30 2005 2090120 Bulgaria 0.8 0.5 9 10 10 2005 2080121 Hungary 0.4 0.4 11 11 12 2005 2085122 Poland 1.0 0.9 36 41 47 2005 2090123 USSR 1.2 0.9 266 310 360 2005 2095124 Czechoslovakia 0.5 0,] 15 1] 19 2005 2090125 German Dem. Rep. -0.1 -0.2 1] 17 18 2005 2015

Totaib 4387 6,029 9,771

Table 18. Demographic and Fertility-related Indicators

144

Crudebirth

rate perthousandpopulation

Crudedeath

rate perthousandpopulation

Percentagechange in:

Totalfertility

rate

Percentageof women inreproductiveage group

(aged 15-44)

Percentageof married

womenusing

contra-ceptivesa

Crudebirthrate

Crudedeathrate

1960 1978 1960 1978 1970 19771960-78 1960-78 1978 1978

Low-income countries 48 w 39 w 24 w 15 w -14.4 w -31.5 w 5.4 w 44 w

1 Kampuchea, Dem.2 Bangladesh 51 46 25 18 -9.8 -28.03 Lao POR 44 45 23 22 2.3 -4.3 6.4 404 Bhutan 46 44 28 23 -4.3 -17.9 6.2 435 Ethiopia 51 49 28 25 -3.9 -10.7 6.7 426 Mali 50 49 27 22 -2.0 -18.5 6.7 417 Nepal 46 45 29 21 -2.2 -27.6 6.5 428 Somalia 57 48 29 20 -15.8 -31.0 6.1 449 Burundi 48 47 27 20 -2.1 -25.9 6.3 42

10 Chad 46 44 29 21 -4.3 -27.6 5.9 4211 Mozambique 46 46 26 19 0.0 -26.9 6.1 4112 Burma 43 39 22 14 -9.3 -36.4 5.5 4213 Upper Volta 49 48 27 22 -2.0 -18.5 6.5 4214 Viet Nam 47 37 21 9 -21.3 -57.1 5.5 4115 India 43 35 21 14 -18.6 -33.3 5.0 4416 Malawi 53 52 27 20 -1.9 -25.9 7.0 3917 Rwanda 51 51 27 19 0.0 -29.6 6.9 4018 Sri Lanka 36 26 9 6 -27.8 -33.3 3.6 4619 Guinea 47 46 30 21 -2.1 -30.0 6.2 4220 Sierra Leone 47 46 27 19 -2.1 -29.6 6.1 41

21 Zaire 48 46 24 19 -4.2 -20.8 6.1 42 .. (.)22 Niger 52 51 2] 22 -1.9 -18.5 7.1 4123 Benin 51 49 27 19 -3.9 -29.6 6.7 41 . -

24 Pakistan 48 45 23 15 -6.3 -34.8 6.7 40 4 625 Tanzania 47 48 22 16 2.1 -27.3 6.5 4026 Afghanistan 48 48 30 22 0.0 -26.7 6.9 41 1

27 Central African Rep. 42 42 26 19 0.0 -26.9 5.5 4228 Madagascar 47 45 2] 19 -4.3 -29.6 6.1 41 - -

29 Haiti 45 43 23 17 -4.4 -26.1 5.9 42 530 Mauritania 51 50 27 22 -2.0 -18.5 6.9 41

31 Lesotho 40 40 23 16 0.0 -30.4 5.4 4232 Uganda 45 45 21 14 0.0 -33.3 6.1 4133 Angola 50 48 31 23 -4.0 -25.8 6.4 4234 Sudan 47 45 25 18 -4.3 -28.0 6.6 4235 Togo 51 50 27 19 -2.0 -29.6 6.7 41

36 Kenya 51 51 19 14 0.0 -26.3 7.8 39 2 437 Senegal 48 49 27 22 2.1 -18.5 6.5 4138 Indonesia 47 37 23 1] -21.3 -26.1 4.9 44 (.) 1_

Middle-income countries 40 w 35 w 14 w 11 w -17.4 w -29.9 w 4.9 w 43 w

39 Egypt 45 37 19 13 -17.8 -31.6 5.0 44 9 2140 Ghana 49 48 24 17 -2.0 -29.2 6.] 41 2 441 Yemen, PDR 54 48 30 21 -11.1 -30.0 7.0 4142 Cameroon 43 42 27 19 -2.3 -29.6 5.7 4143 Liberia 51 51 25 18 0.0 -28.0 6.9 40 -.44 Honduras 51 47 19 12 -7.8 -36.8 6.9 39 945 Zambia 51 49 24 17 -3.9 -29.2 6.9 40 .. . -

46 Zimbabwe 47 48 19 14 2.1 -26.3 6.6 40 .. 547 Thailand 46 32 17 8 -30.4 -52.9 4.5 42 27 4048 Bolivia 48 44 23 15 -8.3 -34.8 6.5 41 - - -.49 Philippines 45 35 15 9 -22.2 -40.0 5.0 42 2 2250 Yemen Arab Rep. 49 48 29 25 -2.0 -13.8 6.8 4151 Congo, People's Rep. 46 45 2] 19 -2.2 -29.6 6.0 4252 Nigeria 52 50 25 18 -3.8 -28.0 6.9 4153 Papua New Guinea 44 41 23 16 -6.8 -30.4 6.0 42 354 El Salvador 48 39 17 9 -18.8 -47.1 5.5 41 -. 2255 Morocco 52 45 23 13 -13.5 -43.5 6.5 41 1 556 Peru 47 39 19 12 -17.0 -36.8 5.6 43 . . 1

57 Ivory Coast 50 50 27 19 0.0 -29.6 6.7 4258 Nicaragua 51 45 19 13 -11.8 -31.6 6.2 41 - - 19

59 Colombia 46 31 14 8 -32.6 -42.9 4.0 45 - - 3660 Paraguay 43 39 13 9 -9.3 -30.8 5.8 41 -. 1661 Ecuador 47 44 14 10 -6.4 -28.6 6.5 41 662 Dominican Rep. 50 37 16 9 -26.0 -43.8 5.3 42 . - 3163 Guatemala 48 41 18 12 -14.6 -33.3 5.7 43 .. 364 Syrian Arab Rep.65 Tunisia

4749

4532

2621

1312

-4.3-34.7

-50.0-42.9

7.44.6

3842 a

(.)18

66 Jordan 48 46 20 13 -4.2 -35.0 7.0 41

a. Fipures in italics are for years other than those specified. See the technical notes.

145

Crudebirth

rate perthousandpopulation

Crudedeath

rate perthousandpopulation

Percentagechange in:

Totalfertility

rate1978

Percentageof women inreproductiveage group

(aged 15-44)1978

Percentageof married

womenusing

contra-ceptivesa

Crudebirthrate

1960-78

Crudedeathrate

1960-781960 1978 1960 1978 1970 1977

67 Malaysia 39 29 9 6 -25.6 -33.3 3.9 44 7 3668 Jamaica69 Lebanon

3943

2933

914

68

-25.6-23.3

-33.3-42.9

4,24.7

3942

.,14

40

70 Korea, Rep. of 41 21 13 8 -48.8 -38.5 2.8 47 32 4471 Turkey 44 32 17 10 -27.3 -41.2 4.4 43 8 3872 Algeria 50 48 23 14 -4.0 -39.1 7.3 3973 Mexico 45 38 12 8 -15.6 -33.3 5.7 41 ,. 2174 Panama 41 31 10 6 -24.4 -40.0 4.1 43 ,, 4475 Taiwan 39 21 7 5 -46.2 -28.6 2.5 49 44 6576 Chile 37 22 12 7 -40.5 -41.7 2.7 4677 South Africa 39 38 15 10 -2.6 -33.3 5.1 4278 Costa Rica 47 28 10 5 -40.4 -50.0 3.6 46 6779 Brazil 40 36 11 9 -10.0 -18.2 4.9 43 280 Uruguay 22 20 9 9 -9.1 0.0 2.9 4181 Argentina 24 21 9 8 -12.5 -11.1 2.9 4382 Portugal 24 18 8 10 -25.0 25.0 2.5 4283 Yugoslavia 23 18 10 8 -21.7 -20.0 2.2 45 5984 Trinidad and Tobago 37 22 7 6 -40.5 -14.3 2.6 46 4485 Venezuela 45 36 10 7 -20.0 -30.0 4.9 4386 Hong Kong 35 19 7 6 -45.7 -14.3 2.6 45 51 778] Greece 19 15 8 9 -21.1 12.5 2.3 4088 Singapore 38 17 8 6 -55.3 -25.0 2.1 51 45 7189 Spain 21 18 9 8 -14.3 -11.1 2.6 4190 Israel 26 26 8 7 0.0 -12.5 3.5 42

Industrialized countries 20 w 14 w 10 w 9 w -31.3 w -6.0 w 1.8 w 43 w

91 Ireland 21 21 12 11 0.0 -8.3 3.5 3992 Italy 18 13 10 9 -27,8 -10.0 1.9 4193 New Zealand 26 17 9 8 -34.6 -11.1 2.2 4494 United Kingdom 17 12 12 12 -29.4 0.0 1.7 39 7295 Finland 19 14 9 9 -26.3 0.0 1.7 44 7796 Austria 18 11 13 12 -38.9 -7.7 1.7 3997 Japan 18 15 8 6 -16.7 -25.0 1.8 46 .. 6198 Australia 22 16 9 8 -27.3 -11.1 2.1 44 6699 France 18 14 12 10 -22.2 -16.7 1.9 41 64

100 Netherlands 21 13 8 8 -38.1 0.0 1.6 44 59 71101 Belgium 17 12 12 11 -29.4 -8.3 1.8 41 87102 Canada 27 16 8 8 -40.7 0.0 1.9 47103 Norway 18 13 9 10 -27.8 11.1 1.8 39104 Germany, Fed. Rep. 17 9 11 12 -47.1 9.1 1.4 40105 United States 24 15 9 9 -37.5 0.0 1.8 44 65106 Denmark 17 12 9 10 -29.4 11.1 1.7 41 67107 Sweden 15 12 10 11 -20.0 10.0 1.7 40108 Switzerland 18 11 10 9 -38.9 -10.0 1.5 43

Capital-surplusoil exporters 48 w 43 w 21 w 14 w -10.5 w -35.0 w 6.5 w 41 w

109 Iraq 51 47 19 13 -7.8 -31.6 7.0 41 .. 23110 Iran 47 40 21 14 -14.9 -33.3 5.9 41 3 24111 Libya 49 47 19 13 -4.1 -31.6 7.4 40112 Saudi Arabia 51 51 28 15 0.0 -46.4 8.0 39113 Kuwait 44 47 10 5 6.8 -50.0 7.0 42

Centrally plannedeconomies 32 w 18 w 13w 7 w -41.5 w -40.1 w 2.4 w 45 w

114 China 36 18 15 6 -50.0 -60.0 2.3 46115 Korea, Dem. Rep. 41 33 13 8 -19.5 -38.5 4.5 44116 Albania 41 30 11 6 -26.8 -45.5 4.2 44117 Cuba 32 19 9 6 -40.6 -33.3 2.5 44118 Mongolia 41 37 15 8 -9.8 -46.7 5.4 42119 Romania 20 19 9 9 -5.0 0.0 2.6 42120 Bulgaria 18 16 9 11 -11.1 22.2 2.3 42121 Hungary 16 16 10 12 0.0 20.0 2.2 41122 Poland 24 19 8 9 -20.8 12.5 2.3 45123 USSR 24 18 7 10 -25.0 42.9 2.4 43124 Czechoslovakia 17 18 10 11 5.9 10.0 2.4 41 66125 German Dem. Rep. 17 13 13 13 -23.5 0.0 1.8 40

Table 19. Labor Force

146

Percentage ofpopulation ofworking age(15-64 years)

Percentage of labor force in: Average annual growthof labor force

(percent)Agriculture Industry Services

1960 1978 1960 1978 1960 1978 1960 1978 1960-70 1970-80 1980-2000

Low-income countries 56w 55w 77w72w 9wllw l4wl7w l.7w 1.9w 2.2w

1 Kampuchea, Dem.2 Bangladesh 53 54 87 74 3 ii 10 15 2.5 2.4 2.53 Lao PDR 56 51 83 75 4 7 13 18 1.4 0.3 2.04 Bhutan 56 55 95 93 2 2 3 5 1.7 2.0 1.95 Ethiopia 54 52 88 81 5 7 7 12 2.2 1.8 2.2

6 Mali 54 52 94 88 3 6 3 6 2.0 2.2 2.57 Nepal 57 55 95 93 2 2 3 5 1.5 2.0 2.1

8 Somalia 54 54 88 82 4 7 8 11 1.7 2.3 2.49 Burundi 55 53 90 85 3 5 7 10 1.9 1.6 2.3

10 Chad 57 54 95 86 2 6 3 8 1.5 2.0 2.3

11 Mozambique 56 53 81 67 8 18 11 15 1.9 1.7 2.212 Burma 59 55 68 53 11 20 21 27 1.1 1.5 2.013 Upper Volta 54 53 92 83 5 12 3 5 1.2 1.4 2.314 Viet Nam .. 52 81 73 5 8 14 19 1.0 1,9 2.615 India 57 56 74 74 11 11 15 15 1.5 1.7 2.0

16 Malawi 52 50 92 86 3 5 5 9 2.3 2.4 2.817 Rwanda 53 51 95 91 1 2 4 7 2.2 2.5 2.818 Sri Lanka 54 58 56 54 14 15 30 31 2.1 2.1 2.1

19 Guinea 55 54 88 82 6 11 6 7 2.4 2.2 2.1

20 Sierra Leone 55 53 78 67 12 18 10 15 1.5 1.8 2.3

21 Zaire 53 53 83 76 9 13 8 11 1.4 2.1 2.422 Niger 53 51 95 91 1 3 4 6 3.0 2.6 2.923 Beriin 53 51 54 46 9 15 37 39 2.0 2.2 2.1

24 Pakistan 52 51 61 58 18 19 21 23 1.8 2.5 2.925 Tanzania 54 51 89 83 4 6 7 11 2.1 2.3 2.7

26 Afghanistan 55 53 85 79 6 9 9 12 1.9 1.8 2.527 Central African Rep. 58 56 94 89 2 3 4 8 1.7 1.6 2.328 Madagascar 55 53 93 86 2 4 5 10 1.8 2.0 2.329 Haiti 55 53 80 70 6 8 14 22 0.7 1.4 2.4

30 Mauritania 53 52 91 85 3 5 6 10 2.2 2.3 2.7

31 Lesotho 57 55 93 87 2 4 5 9 1.6 1.9 2,1

32 Uganda 54 52 89 83 4 6 7 11 3.2 2.5 2.533 Angola 55 53 69 60 12 16 19 24 1.0 1.9 2.434 Sudan 53 53 86 79 6 9 8 12 2.1 2.3 2.735 Togo 53 51 80 69 8 14 12 17 2.2 2.1 2.6

36 Kenya 50 48 86 79 5 8 9 13 2.9 2.8 3.337 Senegal 54 53 84 77 5 8 11 15 1.8 1.9 2.238 Indonesia 56 56 75 60 8 11 17 29 1.8 2.1 1.8

Middle-income countries 55 w 55 w 58w45w llw23w 25 w 32 w 2.0 w 2.4 w 2.5 w

39 Egypt 55 56 58 51 12 26 30 23 2.2 2.2 2.340 Ghana 53 51 6454 14 19 22 27 1.6 2.4 2.941 Yemen, PDR 52 51 70 60 15 21 15 19 1.4 1.3 2.842 Cameroon 57 55 87 82 5 7 8 11 1.3 1.3 1.7

43 Liberia 52 50 80 71 10 13 10 16 2.3 2.6 2.9

44 Honduras 52 49 70 64 11 14 19 22 2.5 3.0 3.345 Zambia 53 51 79 68 7 11 14 21 2.4 2.4 2.8

46 Zimbabwe 52 50 69 60 11 15 20 25 3.1 2.6 3.0

47 Thailand 53 53 84 77 4 8 12 15 2.1 2.9 2.348 Bolivia 55 53 61 51 18 24 21 25 1.9 2.4 2.9

49 Philippines 52 52 61 48 15 16 24 36 2.1 2.4 2.750 Yemen Arab Rep. 54 51 83 36 7 11 10 13 1.5 1.4 2.351 Congo, Peoples Rep. 56 54 52 35 17 26 31 39 1.5 2.0 2.7

52 Nigeria 52 54 71 56 10 17 19 27 1.8 2.0 2.953 Papua New Guinea 57 55 89 82 4 7 3 11 1.8 1.9 2.0

54 El Salvador 52 51 62 52 17 22 21 26 2.5 2.8 3.355 Morocco 53 50 62 53 14 20 24 27 1.6 2.9 3.3

56 Peru 52 53 53 39 19 21 28 40 2.0 3.0 3.1

57 Ivory Coast 54 54 89 81 2 3 9 16 3.6 4.5 2.4

58 Nicaragua 50 49 62 44 16 15 22 41 2.6 3.3 3.6

59 Colombia 50 56 52 30 19 23 29 47 3.0 3.2 2.660 Paraguay 51 52 56 50 19 19 25 31 2,3 3.1 3.461 Ecuador 52 52 58 46 19 25 23 29 2.9 3.2 3.262 Dominican Rep. 49 51 67 57 12 16 21 27 2.3 3,4 3,363 Guatemala 51 54 67 57 14 20 19 23 2.5 3.0 2.8

64 Syrian Arab Rep. 52 48 54 49 19 22 27 29 2.1 2.9 3.565 Tunisia 53 54 56 45 18 24 26 31 0.7 2.9 2.6

66 Jordan 52 51 44 27 26 39 30 34 2.8 2.9 3.2

147

Percentage ofpopulation ofworking age(15-64 years)

Percentage of labor force in: Average annual growthof labor force

(percent)Agriculture Industry Services

1960 1978 1960 1978 1960 1978 1960 1978 1960-70 1970-SO 1980-2000

67 Malaysia 51 54 63 50 12 16 25 34 2.8 3.0 2.868 Jamaica 54 51 39 28 25 17 36 55 0.4 2.4 3.369 Lebanon 53 55 38 12 23 27 39 61 2.1 3.0 2.870 Korea, Rep, of 54 60 66 41 9 37 25 22 2.9 2.8 2.071 Turkey 55 56 78 60 11 14 11 26 1.4 2.2 2.1

72 Algeria 52 49 6] 30 12 25 21 45 0.2 3.5 3.573 Mexico 51 51 55 39 20 26 25 35 2.8 3.3 3.574 Panama 52 55 51 35 14 18 35 47 3.3 2.8 2.675 Taiwan 52 63 56 3] 11 37 33 26 2.4 1.9 1.676 Chile 57 61 30 20 30 26 40 54 1.4 2.6 2.1

77 South Africa 55 54 32 30 30 29 38 41 3.2 2.6 3.078 Costa Rica 50 57 51 29 19 23 30 48 3.4 3.6 2.779 Brazil 54 55 52 41 15 22 33 3] 2.7 2.8 2.980 Uruguay 64 63 21 12 29 33 50 55 0.9 0.2 1.1

81 Argentina 64 63 20 14 36 29 44 57 1.3 1.2 1.2

82 Portugal 63 63 44 27 29 37 27 36 0.2 0.8 0.983 Yugoslavia 63 66 63 33 18 32 19 35 1.0 1.1 0.784 Trinidad and Tobago 53 60 22 16 34 36 44 48 2.4 2.6 2.285 Venezuela 51 54 35 20 22 27 43 53 2.7 3.9 3.286 Hong Kong 56 65 8 3 52 57 40 40 3.1 3.0 1.3

8] Greece 65 64 56 39 20 28 24 33 (.) 0.6 0.588 Singapore 55 65 8 2 23 38 69 60 2.7 2.7 1.489 Spain 64 63 42 18 31 43 27 39 0.2 1.2 0.990 Israel 59 59 14 7 35 36 51 57 3.5 2.4 2.1

Industrialized countries 63w 65w l?w 6w 38w 39 w '45w 55 w 1.2 w 1.1 w - O.6w

91 Ireland 58 58 36 20 25 3] 39 43 (.) 1.0 1.692 Italy 66 64 31 13 40 48 29 39 -0.1 0.7 0.493 New Zealand 59 63 15 10 37 35 48 55 2.2 2.1 1.294 United Kingdom 65 64 4 2 48 43 48 55 0.6 0.3 0.495 Finland 62 68 36 14 31 37 33 49 0.5 1.0 0.4

96 Austria 66 63 24 10 46 40 30 50 -0.7 0.8 0.497 Japan 64 68 33 13 30 39 37 48 1.8 1.3 0.798 Australia 61 64 11 6 40 34 49 60 2.6 1.8 0.999 France 62 63 22 9 39 40 39 51 0.6 1.1 0.6

100 Netherlands 61 65 11 6 42 45 47 49 1.6 1.3 0.5

101 Belgium 65 65 8 3 48 43 44 54 0.3 0.7 0.3102 Canada 59 66 13 6 35 30 52 64 2.5 2.0 0.9103 Norway 63 63 20 8 3] 38 43 54 0.5 0.7 0.6104 Germany, Fed. Rep. 68 65 14 4 48 48 38 48 0.2 0.7 (.)105 United States 60 65 7 2 36 33 57 65 1.7 1.5 0.9

106 Denmark 64 64 18 8 3] 3] 45 55 1.1 0.6 0.4107 Sweden 66 64 14 5 45 37 41 58 1.0 0.3 0.2108 Switzerland 66 66 12 6 50 47 38 47 1.9 0.4 0.2

Capital-surplusoil exporters 51 w 51 zo 5lw 42w 2Ow 29w 23 w 29 w 2.6 w 2.8 w 2.9 w

109 Iraq 51 51 53 42 18 25 29 33 2.8 2.9 3.2110 Iran 51 51 54 40 23 33 23 27 2.5 2.6 2.9111 Libya 53 51 53 21 17 27 30 52 5.2 3.5 3.0112 Saudi Arabia 54 52 71 62 10 13 19 25 2.3 3.5 2.7113 Kuwait 63 53 1 2 34 35 65 63 7.3 4.1 3.1

Centrally plannedeconomies 58 w 62 w 64 w 49 w 20 w 31 w 16 w 20 w 1.4 w 1.7 w 1.2 w

114 China 56 61 75 62 15 25 10 13 1.7 1.9 1.4115 Korea, Dem. Rep. 53 56 62 49 23 32 15 19 2.3 2.9 2.7116 Albania 54 57 71 62 18 24 11 14 2.3 2.7 2.4117 Cuba 61 59 39 25 22 31 39 44 0.8 2.0 2.0118 Mongolia 54 53 70 56 13 21 17 23 2.1 2.4 2.7

119 Romania 65 64 64 50 21 31 15 19 0.8 0.6 0.7120 Bulgaria 66 66 56 40 25 38 19 22 0.7 0.3 0.3121 Hungary 66 66 38 18 35 55 27 27 0.5 0.4 0.2122 Poland 61 66 48 33 29 39 23 28 1.8 1.4 0.8123 USSR 63 65 42 17 29 47 29 36 0.7 1.2 0.]124 Czechoslovakia 64 64 26 12 46 50 28 38 0.9 0.8 0.7125 German Dem. Rep. 65 63 18 10 48 51 34 39 -0.2 0.5 0.3

Table 20. Urbanization

148

Urban populationPercentage of urban population Number of

citiesof over500,000persons

In citiesIn of over

largest 500,000city persons

As percentageof total

population

Average annualgrowth rate

(percent)

1960 1980 1960-70 1970-80 1960 1980 1960 1980 1960 1980

Low-income countries 17 w 21 zv 3.'?w 4.Ow l4w l6w 24w 45w 20t 76t

1 Kampuchea, Dem. . .. .. .. .. .. .. . -

2 Bangladesh 5 11 6.5 6.6 20 30 20 51 1 33 Lao PDR 8 13 4.1 4.8 69 48 0 0 0 04 Bhutan 3 4 4.2 4.5 .. 0 0 0 05 Ethiopia 6 15 6.1 6.9 30 37 0 37 0 1

6 Mali 11 20 5.4 5.5 32 34 0 0 0 07 Nepal 3 5 4.3 4.7 41 27 0 0 0 08 Somalia 17 30 5.3 5.1 34 0 0 0 09 Burundi 2 2 2.4 2.6 0 0 0 0

10 Chad 7 18 6.8 6.7 .. 39 0 0 0 0

11 Mozambique 4 9 6.6 6.8 75 83 0 83 0 1

12 Burma 19 2] 3.9 4.0 23 23 23 29 1 1

13 Upper Volta 5 9 5.3 4.1 .. 41 0 0 0 014 Viet Nam 15 23 5.3 5.1 32 21 32 50 1 4

15 India 18 22 3.3 3.3 7 6 26 47 11 36

16 Malawi 4 9 6.6 6.2 19 0 0 0 017 Rwanda 2 4 5.3 5,9 .. .. 0 0 0 018 Sri Lanka 18 27 4.3 3.7 28 16 0 16 0 1

19 Guinea 10 19 6.1 6.1 37 80 0 80 0 1

20 Sierra Leone 13 25 5.5 5.6 37 47 0 0 0 0

21 Zaire 16 34 5.2 7.2 14 28 14 38 1 2

22 Niger 6 13 7.0 6.8 31 0 0 0 023 Benin 10 14 5.3 3.9 .. 63 0 63 0 1

24 Pakistan 22 28 4.0 4.3 20 21 33 52 2 7

25 Tanzania 5 12 6.3 8.3 34 50 0 50 0 1

26 Afghanistan 8 15 5.4 5.6 33 17 0 17 0 1

27 Central African Rep. 23 41 5.3 4.9 40 36 0 0 0 028 Madagascar 11 18 5.1 5.2 44 36 0 36 0 1

29 Haiti 16 35 3.9 4.2 42 56 0 56 0 1

30 Mauritania 3 23 15.8 8.6 39 0 0 0 0

31 Lesotho 2 5 7.5 7.8 .. .. 0 0 0 032 Uganda 5 12 6.3 7.0 38 52 0 52 0 1

33 Angola 10 21 5.1 5.8 44 64 0 64 0 1

34 Sudan 10 25 6.9 6.8 30 31 0 31 0 1

35 Togo 10 17 5.6 5.6 .. 60 0 0 0 0

36 Kenya 7 14 6.6 6.8 40 57 0 57 0 1

3] Senegal 23 25 2.9 3.3 53 65 0 65 0 1

38 Indonesia 15 20 3.8 3.6 20 23 34 49 3 9

Middle-income countries 37 w 51 w 4.2 w 3.8 w 29 w 30 w 36w 49w 52t liSt39 Egypt 38 45 3.6 3.0 38 39 53 53 2 2

40 Ghana 23 36 4.6 5.2 25 35 0 48 0 2

41 Yemen, PDR 28 37 3.2 3.5 61 50 0 0 0 0

42 Cameroon 14 35 5.6 7.5 26 21 0 21 0 1

43 Liberia 21 33 5.6 5.6 .. .. 0 0 0 0

44 Honduras 23 36 5.5 5.5 31 33 0 0 0 0

45 Zambia 23 38 5.4 5.4 ,, 35 0 35 0 1

46 Zimbabwe 13 23 6.8 6.4 40 50 0 50 0 1

47 Thailand 13 14 3.7 3.5 65 69 65 68 1 1

48 Bolivia 24 33 4.1 4.3 47 44 0 44 0 1

49 Philippines 30 36 3.9 3.6 2] 30 2] 36 1 3

50 Yemen Arab Rep. 3 10 7.5 7.3 25 0 0 0 0

51 Congo, People's Rep. 33 37 2.6 3.2 77 56 0 0 0 0

52 Nigeria 13 20 4.7 4.9 13 17 22 57 2 9

53 Papua New Guinea 3 17 15.3 8.5 25 0 0 0 0

54 El Salvador 38 41 3.2 3.4 26 22 0 0 0 0

55 Morocco 29 41 4.2 4.5 16 13 16 29 1 5

56 Peru 46 67 5.0 4.4 38 39 38 44 1 2

57 Ivory Coast 19 38 7.3 8.2 27 33 0 33 0 1

58 Nicaragua 41 53 4.2 4.5 41 47 0 47 0 1

59 Colombia 48 70 5.2 3.9 17 26 28 53 3 5

60 Paraguay 36 39 3.0 3.5 44 44 0 44 0 1

61 Ecuador 34 45 4.5 4.5 31 29 0 52 0 2

62 Dominican Rep. 30 51 5.8 5.3 50 54 0 70 0 2

63 Guatemala 33 39 3.6 3.7 41 36 41 36 1 1

64 Syrian Arab Rep. 33 50 4.8 4.] 35 33 35 55 1 2

65 Tunisia 36 52 3.8 3.8 40 31 40 31 1

66 Jordan 43 56 4,5 4.5 31 37 0 37 0 1

149

1960 1980 1960-70 1970-80 1960 1980 1960 1980 1960 1980

67 Malaysia 25 29 3.6 3.5 19 27 0 27 0 1

68 Jamaica 34 50 3.5 3.6 77 65 0 65 0 1

69 Lebanon 44 76 6.2 4.5 64 79 64 79 1 1

70 Korea, Rep. of 28 55 6.2 4.8 35 41 61 77 3 7

71 Turkey 30 47 5.1 4.6 18 24 32 42 3 4

72 Algeria 30 61 6.1 6.4 27 12 27 12 1 1

73 Mexico 51 67 4.8 4.5 28 32 36 48 3 7

74 Panama 41 54 4.4 3.9 30 33 0 33 0 1

75 Taiwan 58 77 3.3 4.1 .. .. .. S

76 Chile 68 81 3.1 2.4 38 44 38 44 1 1

77 South Africa 47 50 2.8 3.1 16 13 44 53 4 7

78 Costa Rica 37 43 4.2 3.4 67 64 0 64 0 1

79 Brazil 46 65 4.8 4.3 14 16 35 52 6 1480 Uruguay 80 84 1.3 0.] 56 52 56 52 1 1

81 Argentina 74 82 2.0 1.8 46 45 54 60 3 5

82 Portugal 23 31 1.5 2.5 47 42 47 42 1 1

83 Yugoslavia 28 42 3.2 2.9 11 10 11 23 1 3

84 Trinidad and Tobago 22 22 1.7 1.4 . . .. 0 0 0 0

85 Venezuela 67 83 4.8 4.2 26 26 26 39 1 3

86 Hong Kong 89 90 2.6 1.9 100 100 100 100 1 1

87 Greece 43 62 2.6 2.4 51 57 51 70 1 2

88 Singapore 100 100 2.4 1.5 100 100 100 100 1 1

89 Spain 57 74 2.6 2.3 13 16 37 44 5 6

90 Israel 77 89 4,3 3.1 46 35 46 35 1 1

Industrialized countries 67 w 77 w 1.8 w 1.2 w 19 w 18 w 48w SSw 99t 152f

91 Ireland 46 58 1.6 2.2 51 48 51 48 1 1

92 Italy 59 69 1.5 1.3 13 17 46 55 7 993 New Zealand 76 85 2.4 1.9 25 30 0 30 0 1

94 United Kingdom 86 91 0.8 0.3 24 20 61 52 15 1895 Finland 38 62 3.2 2.5 28 27 0 27 0 1

96 Austria 50 54 0.9 0.5 51 39 51 39 1 1

97 Japan 62 78 2.4 2.0 18 22 35 41 5 998 Australia 81 89 2.5 1.8 26 24 62 68 4 5

99 France 62 78 2.4 1.4 25 23 34 35 4 7

100 Netherlands 80 76 1.0 0.5 9 9 27 24 3 3

101 Belgium 66 72 1.2 0.5 17 14 28 24 2 2

102 Canada 69 80 2.7 1.7 14 17 31 66 2 10103 Norway 32 53 3.5 2.7 50 32 50 32 1 1

104 Germany, Fed. Rep. 77 85 1.4 0.5 20 18 48 45 11 12105 United States 67 73 1.7 1.2 13 12 61 77 40 67

106 Denmark 74 84 1.5 0.9 40 32 40 32 1 1

107 Sweden 73 87 1.8 1.0 15 15 15 15 1 3

108 Switzerland 51 58 2.2 0.7 19 22 19 22 1 1

Capital-surplusoil exporters 35 w 58 w 5.8 w 5.5 w 28 w 36 w 23w 51w 2 13t

109 Iraq 43 72 6.2 5.4 35 55 35 70 1 3110 Iran 34 50 4.7 4.9 26 28 26 47 1 6111 Libya 23 52 8.0 8.2 57 64 0 64 0 1

112 Saudi Arabia 30 67 7.8 6.5 15 18 0 41 0 3113 Kuwait 72 88 10.4 7.2 75 32 0 0 0 0

Centrally plannedeconomies 29 w 36 w 3.0 w 2.6 w 9 w 7 w 31 w 37 w 76 133

114 China 19 25 3.6 3.1 6 6 42 44 38 65115 Korea, Dem. Rep. 40 60 5.0 4,3 15 12 15 19 1 2

116 Albania 31 37 3.8 3.4 27 25 0 0 0 0117 Cuba 55 65 2.9 2.4 38 31 38 31 1 1

118 Mongolia 36 50 5.2 4.1 53 52 0 0 0 0

119 Romania 34 48 2.8 2.5 22 17 22 17 1 1

120 Bulgaria 39 64 3.8 2.5 23 18 23 18 1 1

121 Hungary 40 54 1.7 2.2 45 38 45 38 1 1

122 Poland 48 57 1.8 1.7 17 15 41 43 5 8123 USSR 49 65 2.7 2.2 6 4 21 33 25 50

124 Czechoslovakia 47 63 2.1 2.0 17 12 17 12 1 1

125 German Oem, Rep. 72 77 0.1 0.2 9 9 . 14 17 2 3

Percentage of urban population Number ofUrban population In cities citiesAs percentage Average annual In of over of over

of total growth rate largest 500,000 500,000population (percent) city persons persons

Table 21. Indicators Related to Life Expectancy

150

Lifeexpectancy

at birth(years)

Infantmortality

rate(aged 0_1)a

Childdeathrate

(aged 1_4)a

1960 1978 1960 1978 1960 1978

Low-income countries '12w 50w 3Ow 20w

1 Kampuchea, Dem,2 Bangladesh

..40

..47

..

.. 139 29 233 Lao PDR 40 42 .. .. 29 274 Bhutan 36 41 .. 41 285 Ethiopia 36 39 126 43 37

6 Mali 37 42 210 41 327 Nepal 36 43 .. .. 35 238 Somalia 36 43 .. 43 319 Burundi 37 45 .. .. 41 28

10 Chad 35 43 45 30

11 Mozambique 37 46 .. 41 2712 Burma 44 53 25 1513 Upper Volta 37 42 263 41 3214 Viet Nam 41 62 . .. 28 615 India 43 51 28 18

16 Malawi 37 46 41 2717 Rwanda 37 46 ikz 41 2718 Sri Lanka 62 69 7 219 Guinea 35 43 45 3020 Sierra Leone 37 46 41 27

21 Zaire 40 46 37 2722 Niger 37 42 212 .. 41 3223 Benin 37 46 206 .. 41 2724 Pakistan 44 52 .. .. 27 1725 Tanzania 42 51 185 32 20

26 Afghanistan 34 42 237 42 2]27 Central African Rep. 3] 46 40 2728 Madagascar 37 46 41 2]29 Haiti 42 51 39 2330 Mauritania 37 42 41 32

31 Lesotho32 Uganda

4244

5053 thb

3430

21

1733 Angola 33 41 49 3434 Sudan 39 46 46 31

35 logo 37 46 41 27

36 Kenya 47 53 126 25 1437 Senegal 37 42 93 41 3238 Indonesia 41 47 125 .. 31 20

Middle-income countries 54w 61w 18w lOw

39 Egypt 46 54 108 31 1840 Ghana 40 48 36 2341 Yemen, PDR 36 44 54 3642 Cameroon 37 46 40 2743 Liberia 40 48 36 23

44 Honduras 46 57 130 118 30 1445 Zambia 40 48 36 2346 Zimbabwe 45 54 .. .. 28 1647 Thailand 51 61 68 15 648 Bolivia 43 52 158 36 22

49 Philippines 51 60 98 65 16 750 Yemen Arab. Rep. 36 39 55 31

51 Congo, People's Rep. 37 46 180 .. 40 2752 Nigeria 39 48 .. 38 2453 Papua New Guinea 41 50 159 32 19

54 El Salvador 50 63 60 24 855 Morocco 47 55 30 1]56 Peru 48 56 28 1657 Ivory Coast 37 46 41 2758 Nicaragua 47 55 37 30 17

59 Colombia 53 62 98 17 960 Paraguay 56 63 .. 16 861 Ecuador 51 60 140 66 23 1062 Dominican Rep. 51 60 37 23 1063 Guatemala 47 57 77 31 15

64 Syrian Arab Rep. 48 57 29 1465 Tunisia 48 5] 148 123 29 1566 Jordan 47 56 30 16

a. Figures in italics are for years other than those specified. See the technical notes.

151

Lifeexpectancy

at birth(years)

Infantmortality

rate(aged 0-1)a

Childdeathrate

(aged 1-4)a

1960 1978 1960 1978 1960 1978

67 Malaysia 57 67 31 9 368 Jamaica 64 70 63 20 7 369 Lebanon 58 65 .. 14 670 Korea, Rep. of 54 63 62 37 13 571 Turkey 51 61 118 24 10

72 Algeria 47 56 30 1673 Mexico 58 65 78 60 14 674 Panama 62 70 90 47 10 375 Taiwan 64 72 56 25 8 1

76 Chile 57 67 108 55 14 5

77 South Africa 53 60 .. 17 1078 Costa Rica 62 70 80 28 10 379 Brazil 57 62 128 92 13 980 Uruguay 68 71 .. 46 4 381 Argentina 65 71 55 6 3

82 Portugal 63 69 78 39 7 283 Yugoslavia 62 69 88 34 4 284 Trinidad and Tobago 63 70 45 29 8 385 Venezuela 59 66 72 40 12 586 Hong Kong 65 72 42 12 3 1

87 Greece 68 73 40 19 2 1

88 Singapore 64 70 31 12 4 1

89 Spain 68 73 44 16 2 1

90 Israel 69 72 31 15 2 1

Industrialized countries 69w ]4w 29w l3w iw 1w

91 Ireland 69 73 29 16 1 1

92 Italy 69 73 44 18 2 1

93 New Zealand 71 73 21 14 1 1

94 United Kingdom 70 73 22 14 1 1

95 Finland 68 72 21 9 1 1

96 Austria 68 72 38 15 1 1

97 Japan 68 76 31 10 3 1

98 Australia 70 73 20 13 1 1

99 France 70 73 27 11 1 1

100 Netherlands 73 74 18 10 1 1

101 Belgium 70 72 31 12 1 1

102 Canada 71 74 27 12 1 1

103 Norway 73 75 19 9 1 1

104 Germany, Fed. Rep. 69 72 34 15 1 1

105 United States 70 73 26 14 1 1

106 Denmark 72 74 22 9 1 1

107 Sweden 72 75 17 8 1 1

108 Switzerland 71 74 21 10 1 1

Capital-surplusoil exporters 45 w 53 w 94w 29w lSw

109 Iraq 46 55 92 31 17110 Iran 46 52 .. 24 14111 Libya 47 55 .. 53 30 17112 Saudi Arabia 38 53 118 48 28113 Kuwait 60 69 39 12 2

Centrally plannedeconomies 58 w 70 w 10 w 1 w

114 China 53 70 14 1

115 Korea, Dem. Rep. 54 63 .. 13 5116 Albania 62 69 .. .. 6 2

117 Cuba 64 72 35 25 8 1

118 Mongolia 52 63 . S 14 5

119 Romania 66 70 76 31 3 1

120 Bulgaria 67 72 45 22 3 1

121 Hungary 67 70 48 24 2 1

122 Poland 66 71 57 22 2 1

123 USSR 68 70 41 1 1

124 Czechoslovakia 69 70 24 19 1 1

125 German Dem. Rep. 68 72 39 13 2 1

Table 22. Health-related Indicators

152

Population per:Percentage

of populationwith accessto safe water

1975

Daily calorie supplyper capita

As percentageTotal of requirement1977 1977

Physiciana Nursing persona

1960 1977 1960 1977

Low.income countries 18,020 w 9,900 w 9,050 w 8,790 w 28 w 2,052 w 91 w

1 Kampuchea, Dem. 1,926 782 Bangladesh 9260 42,080 53 1,812 783 Lao PDR 38,000 21600 2,440 2,082 944 Bhutan 2,028 885 Ethiopia 89,360 76,320 20,310 6 1,754 75

6 Mali 38,640 24,100 4,980 3,080 9 2,117 907 Nepal 72,000 35,210 51,220 9 2,002 918 Somalia 36,570 6,220 .. 33 2,033 889 Burundi 77,160 50,840 6,850 6,980 2,254 97

10 Chad 70,930 42,150 8,040 4,220 26 1,762 7411 Mozambique 20,000 4,660 1,906 8112 Burma 9,900 5,120 5,190 17 2,286 10613 Upper Volta 59,850 55,770 1,280 10 1,875 7914 Viet Nam 5,620 .. .. 1,801 8315 India 5,800 3,620 9,630 5,680 33 2,021 91

16 Malawi 42,400 48,200 12,920 3,890 33 2,066 9017 Rwanda 138,100 36,440 11,200 9,830 35 2,264 9818 Sri Lanka 4,500 6,270 4,150 2,260 20 2,126 9619 Guinea 48,000 16,630 3,890 2,450 10 1,943 8420 Sierra Leone 19,960 5,900 .. 2,150 9321 Zaire 36,850 15,540 3,440 1,940 16 2,271 10422 Niger 74,050 42,610 8,450 5,160 27 2,139 9123 Benin 47,000 26,910 3,010 20 2,249 9824 Pakistan 11,000 3,780 10,040 29 2,281 9925 Tanzania 21,020 15,450 10,440 2,760 39 2,063 89

26 Afghanistan 22,460 19,890 23,210 25,100 6 2,695 11027 Central African Rep. 35,600 17,610 2,760 1,560 16 2,242 9928 Madagascar 9,620 10,300 3,110 3,540 26 2,486 11529 Haiti 10,600 5,940 11,880 3,510 14 2,100 9330 Mauritania 39,150 15,160 7,320 3,430 .. 1,976 86

31 Lesotho 22,530 18,640 4,340 17 2,245 9932 Uganda 12,960 27,600 9,420 4,300 35 2,110 91

33 Angola 14,000 2,133 91

34 Sudan 27,880 8,700 3,040 1,340 46 2,184 9335 Togo 35,130 18,360 5,340 2,040 16 2,069 90

36 Kenya 10,560 11,950 2,230 1,120 17 2,032 8837 Senegal 22,380 15,700 1,610 37 2,261 9538 Indonesia 41,000 14,580 .. 2,820 12 2,272 105

Middle-income countries 8,960 w 4,310 w l,86Ow 60w 2,59Ow 108w

39 Egypt 2,600 1,070 2,730 1,150 66 2,760 10940 Ghana 12,160 9,930 5,430 840 35 1,983 8641 Yemen, PDR 7,510 1,570 24 1,945 81

42 Cameroon 40,190 16,510 6,150 2,230 26 2,069 8943 Liberia 12,270 9,260 5,810 2,900 20 2,404 104

44 Honduras 12,610 3,420 1,240 46 2,015 8945 Zambia 11,990 10,190 9,920 1,930 42 2,002 8746 Zimbabwe .. 7,110 1,390 2,576 10847 Thailand 7,800 8,170 4,900 3,540 22 1,929 10548 Bolivia 3,660 1,850 3,070 34 1,974 8349 Philippines 2,760 3,060 39 2,189 9750 Yemen Arab Rep. 13,830 4,930 4 2,192 9151 Congo, People's Rep. 16,260 6,350 1,510 660 38 2,284 10352 Nigeria 56,900 15,800 6,020 4,030 1,951 8353 Papua New Guinea 11,800 1,930 20 2,268 85

54 El Salvador 5,660 3,600 900 53 2,051 9055 Morocco 9,400 10,140 1,830 55 2,534 10556 Peru 2,250 1,560 2,210 750 47 2,274 9757 Ivory Coast 23,280 15,220 2,920 2,370 19 2,517 10558 Nicaragua 2,740 1,670 70 2,446 109

59 Colombia 2,400 1,970 3,740 1,250 64 2,364 10260 Paraguay 2,300 2,160 2,260 13 2,824 12261 Ecuador 2,600 1,570 2,280 .. 42 2,104 9262 Dominican Rep. 55 2,094 9363 Guatemala 4,410 2,490 9,040 40 2,156 9864 Syrian Arab Rep. 4,600 2,510 6,660 3,810 75 2,684 10865 Tunisia 10,000 4,800 1,070 70 2,674 11266 Jordan 5,900 1,940 1,650 950 56 2,107 62

a. Figures in italics are for years other than those specified. See the technical notes.

153

Population per:Percentage

of populationwith accessto safe water

Daily calorie supplyper capita

TotalAs percentageof requirementPhysiciana Nursing persona

1960 1977 1960 1977 1975 1977 1977

67 Malaysia 6,940 4,350 1,780 1,080 62 2,610 11]68 Jamaica 2,600 3,520 550 86 2,660 11969 Lebanon70 Korea, Rep. of

,,3,000 1,960 510

.,62

2,4952,785

101119

71 Turkey 3,000 1,770 1,400 75 2,907 115

72 Algeria 5,360 1,490 77 2,372 9973 Mexico 1,700 1,820 1,400 62 2,654 11474 Panama 2,700 1,260 1,450 79 2,341 10175 Taiwan 2,330 1,570 7,550 1,760 2,805 12076 Chile 1,810 1,620 650 450 84 2,656 109

77 South Africa 2,090 540 .. 2,831 11678 Costa Rica 2,600 1,390 1,700 450 77 2,550 11479 Brazil 3,600 1,700 77 2,562 10780 Uruguay 960 710 98 3,036 11481 Argentina 660 530 66 3,347 126

82 Portugal 1,200 710 1,430 500 65 3,076 12683 Yugoslavia 1,620 760 1,350 410 3,445 13684 Trinidad and Tobago 2,570 1,970 .. 580 2,694 11185 Venezuela 1,430 930 1,890 380 2,435 9986 Hong Kong 2,990 1,280 2,950 970 2,883 126

87 Greece 790 450 2,080 600 3,400 13688 Singapore 2,400 1,260 650 340 iôô 3,074 13489 Spain 820 560 900 3,149 12890 Israel 410 360 3,141 122

Industrialized countries 820w 630w 22Ow 3,377 w 131 w

91 Ireland 950 830 180 200 3,541 14192 Italy 640 490 920 330 3,428 13693 New Zealand 690 740 .. 200 3,345 12794 United Kingdom 1,100 750 420 300 3,336 13295 Finland 1,570 620 220 110 3,100 114

96 Austria 550 430 400 260 3,535 13497 Japan 920 850 460 290 2,949 12698 Australia 860 650 .. 120 3,428 12999 France 930 610 530 170 3,434 136

100 Netherlands 900 580 270 .. 3,338 124

101 Belgium 780 470 .. 250 3,583 136102 Canada 910 560 300 130 3,374 127103 Norway 850 540 330 100 3,175 118104 Germany, Fed, Rep. 670 490 450 260 .. 3,381 127105 United States 760 580 340 150 3,576 135

106 Denmark 810 510 270 170 .. 3,418 127107 Sweden 1,150 560 .. 130 3,221 120108 Switzerland 740 500 390 220 .. 3,485 130

Capital-surplusoil exporters 5,470 w 1,830 w l,?7Ow 2,963w ll5w

109 Iraq 5,600 2,230 6,680 2,860 62 2,134 89110 Iran 3,800 .. 51 3,138 130111 Libya 5,800 900 2,390 290 100 2,985 126112 Saudi Arabia 13,000 1,690 .. 860 64 2,624 88113 Kuwait 760 790 190 270 89

Centrally plannedeconomies 64Ow 390w 4lOw 240w 2,752w ll4w

114 China 2,467 105115 Korea, Dem. Rep.116 Albania

.,2,860

,,960

..540 370

2,8372,730

121113

117 Cuba 1,200 1,100 910 .. ,. 2,720 118118 Mongolia 1,010 480 290 250 2,523 104

119 Romania 780 730 620 640 3,444 130120 Bulgaria 640 440 550 220 3,611 144121 Hungary 640 430 440 200 3,521 134122 Poland 940 610 490 260 .. 3,656 140123 USSR 520 300 340 210 .. 3,460 135

124 Czechoslovakia 590 390 280 160 .. 3,340 139125 German Dem. Rep. 950 520 3,641 139

154

1960 1977 1960 1977 1960 1977 1960 1977 1960 1976 1960 1975

Low-income countries 54w 77w l2w 90w 37w 64w 14w 24w 2w 4W 29w 38w1 Kampuchea, Dem. R4 82 .. 46 3 .. (.) .. 362 Bangladesh 47 81 66 103 26 58 8 23 1 2 22 263 Lao PDR 25 92 34 99 16 84 1 14 (.) (.) 284 Bhutan 3 11 5 16 (.) 7 1

5 Ethiopia 7 26 11 3 .. (.) 8 (.) (.) .. 106 Mali 10 28 14 36 6 20 1 7 .. 1 3 107 Nepal 10 71 19 108 1 32 6 14 1 2 9 198 Somalia 9 44 13 57 5 32 1 4 (.) 1 2 609 Burundi 18 23 27 28 9 18 1 3 (.) (.) 14 25

10 Chad 16 41 29 61 4 21 (.) 3 .. (.) .. 1511 Mozambique 48 .. 60 36 2 .. .. (.) 812 Burma 56 80 61 83 52 78 10 22 1 2 60 6713 Upper Volta 8 16 12 20 5 12 (.) 2 .. (.) 2 514 Viet Nam .. 141 .. 140 .. 142 .. 51 .. 3 .. 8715 India 61 80 80 95 40 64 20 28 3 6 28 3616 Malawi 63 62 81 75 45 50 1 4 .. (.) .. 2517 Rwanda 49 61 68 66 30 57 2 2 .. (.) 16 2318 Sri Lanka .. 86 .. 89 .. 82 27 47 1 1 75 7819 Guinea 30 .. 44 .. 16 .. 2 .. .. .. 720 Sierra Leone 23 37 30 45 15 29 2 11 (.) 1 .. 1521 Zaire 60 93 88 109 32 78 3 19 (.) 1 31 1522 Niger 5 23 7 29 3 16 (.) 3 .. (.) 1 823 Berdn 26 58 38 80 15 37 2 11 .. 1 8 1124 Pakistan 30 51 46 69 13 32 11 17 1 2 15 2125 Tanzania 25 70 33 79 18 60 2 3 . (.) 10 6626 Afghanistan 9 20 15 33 2 6 1 7 (.) 1 8 1227 Central African Rep. 32 81 53 106 12 57 1 9 .. 1 728 Madagascar 52 92 58 98 45 86 4 12 (.) 2 5029 Haiti 46 71 50 .. 42 .. 4 .. (.) 1 15 2330 Mauritania 8 31 14 40 3 21 (.) 4 .. (.) 5 1731 Lesotho 83 119 63 98 102 139 3 15 (.) 1 .. 5532 Uganda 49 53 65 63 32 44 3 7 (.) 1 3533 Angola 21 .. 28 .. 13 .. 2 .. (.) .. 534 Sudan 25 41 35 47 14 34 3 13 (.) 1 13 2035 Togo 44 106 63 135 24 78 2 27 .. 1 10 1836 Kenya 47 104 64 110 30 98 2 17 (.) 1 20 4037 Senegal 27 47 36 57 17 37 3 11 1 2 6 1038 Indonesia 71 86 86 91 58 81 6 21 1 2 39 62

Middle-income countries 8lw 97w 87 w 100 w 74w 93w l7w 40w 4w llw 54w 7lw39 Egypt 66 72 80 87 52 56 16 46 5 14 26 4440 Ghana 38 74 52 84 25 64 5 29 (.) 1 27 3041 Yemen, PDR 13 77 20 99 5 54 5 26 1 .. 2742 Cameroon 65 119 87 132 43 106 2 17 .. 1 1943 Liberia 31 57 45 74 18 40 2 14 (.) 2 9 3044 Honduras 67 89 68 90 67 88 8 13 1 6 45 5745 Zambia 42 95 51 104 34 87 2 16 .. 2 .. 3946 Zimbabwe 96 98 107 106 86 90 6 9 (.) .. 3947 Thailand 83 83 88 86 79 79 13 27 2 5 68 8448 Bolivia 64 80 78 88 50 72 12 26 4 10 39 6349 Philippines 95 105 98 103 93 108 26 56 13 24 72 8750 Yemen Arab Rep. 8 25 14 43 (.) 6 (.) 3 .. 1 3 1351 Congo, People's Rep. 78 155 103 166 53 143 4 52 1 3 16 5052 Nigeria 36 .. 46 .. 27 .. 4 .. (.) 1 1553 Papua New Guinea 32 60 59 70 7 49 1 12 .. 3 29 3254 El Salvador 80 77 82 79 77 75 13 22 1 8 49 6255 Morocco 47 68 67 86 27 50 5 17 1 4 14 2856 Peru 83 110 95 115 71 106 15 52 4 16 61 7257 Ivory Coast 46 92 68 115 24 69 2 17 (.) 2 5 2058 Nicaragua 66 92 65 66 . 7 29 1 10 .. 5759 Colombia 77 103 77 100 77 105 12 39 2 9 63 8160 Paraguay 98 102 105 106 90 98 11 25 2 6 75 8161 Ecuador 83 101 87 101 79 100 12 44 3 28 68 7462 Dominican Rep. 98 102 99 101 98 103 7 27 1 9 65 6763 Guatemala 45 65 50 71 39 60 7 16 2 5 32 4764 Syrian Arab Rep. 65 103 89 120 39 85 16 51 4 12 30 5365 Tunis 66 100 88 118 43 81 12 22 1 5 16 5566 Jordan 77 83 94 87 59 79 25 53 1 7 32 70

Table 23. Educationa

Numberenrolled in

Numberenrolled in

Number enrolled in primary schoolas percentage of age group

secondaryschool as

percentage of

higher educationas percentageof population

Adultliteracy

rateTotal Male Female age group aged 20-24 (percent)

a. Figures in itahcs are for years other than those specified. See the technical notes.

155

Number enrolled in primary schoolas percentage of age group

Number Numberenrolled in enrolled insecondary higher educationschool as as percentage

percentage of of populationage group aged 20-24

Adultliteracy

rate(percent)Total Male Female

1960 1977 1960 1977 1960 1977 1960 1977 1960 1976 1960 1975

67 Malaysia 96 93 108 94 83 91 19 43 1 3 53 6068 Jamaica 92 97 92 96 93 98 45 58 2 7 82 8669 Lebanon 102 105 99 19 670 Korea, Rep. of 94 111 99 111 89 111 27 88 5 11 71 9371 Turkey 75 98 90 106 58 90 14 43 3 8 38 60

72 Algeria 46 90 55 105 37 75 8 25 (.) 4 10 3773 Mexico 80 116 82 120 77 114 11 39 3 10 65 7674 Panama 96 86 98 88 94 84 29 115 5 22 73 7875 Taiwan 95 100 33 76 4 12 54 8276 Chile 109 117 111 119 107 116 24 50 4 13 84 88

77 South Africa 89 94 85 .. 15 3 5778 Costa Rica 96 111 97 111 95 110 21 44 5 18 9079 Brazil 95 90 97 89 93 90 11 24 2 12 61 7680 Uruguay 111 95 111 95 111 94 37 60 8 13 .. 9481 Argentina 98 110 98 110 99 111 23 41 11 29 91 9482 Portugal .. 130 134 127 59 4 14 62 7083 Yugoslavia 111 100 113 101 108 99 58 79 9 21 77 8584 Trinidad and Tobago 88 81 89 81 87 81 24 38 1 5 93 9585 Venezuela 100 104 100 105 100 103 21 38 4 21 63 8286 Hong Kong 87 119 93 121 79 117 20 59 4 10 70 9087 Greece 102 105 104 107 101 103 37 82 4 18 8188Singapore 111 110 121 114 101 107 32 55 6 9 .. 7589 Spain 110 114 106 114 116 115 23 76 4 22 8790 Israel 98 9] 99 97 97 98 48 68 10 24 84 88

Industrialized countries 114 to 98 w 109 w 102 w 108 to 102 w 68 w 87 to 17 w 36 to 99 w

91 Ireland 110 109 107 110 112 109 35 92 9 18 .. 9892 Italy 111 105 112 106 109 105 34 73 7 27 91 9893 New Zealand 108 111 110 112 106 110 73 85 13 28 .. 9994 United Kingdom 92 105 92 105 92 105 66 82 9 19 9995 Finland 97 88 100 89 95 88 74 95 7 20 99 100

96 Austria 105 100 106 100 104 100 50 73 8 21 .. 9997 Japan 103 100 103 100 102 99 74 93 10 29 98 9998 Australia 103 92 103 92 103 92 51 73 13 24 .. 10099 France 144 108 144 105 143 110 46 83 10 24 .. 99

100 Netherlands 105 102 105 101 104 102 58 94 13 29 99101 Belgium 109 105 111 105 108 104 69 88 9 23 99102 Canada 107 102 108 102 105 102 46 91 16 37 98103 Norway 100 101 100 101 101 101 57 91 7 24 99104 Germany, Fed. Rep. 133 90 84 6 25 .. 99105 United States 118 94 .. .. 86 93 32 56 98 99106 Denmark 103 103 103 103 103 103 65 77 10 30 99107 Sweden 96 96 95 96 96 97 55 69 9 30 99108 Switzerland 118 85 118 85 118 86 26 55 7 16 99

Capital-surplusoil exporters 43 to 94 w 61 to 113 w 26 w 74 12 o 45 w 1 w 6 w 15 to 50 w

109 Iraq 65 100 94 123 36 76 19 44 2 9 18110 Iran 41 98 56 119 27 77 12 48 1 5 16 50111 Libya 59 148 92 156 24 140 9 70 1 7 .. 50112 Saudi Arabia 12 47 22 59 2 35 2 19 (.) 4 3113 Kuwait 117 93 131 99 102 87 37 68 .. 13 47 60

Centrally plannedeconomies 101 w 119 to 101 to 118 to 101 w 120 w 45 to 72 w 11 to 20 to

114 China .. 127 .. 125 129115 Korea, Dem. Rep. .. 113 .. 115 112116 Albania 94 102 .. 86 20 .. 5117 Cuba 109 122 109 125 109 119 14 50 3 11 96118 Mongolia 79 108 79 111 78 105 51 81 8 8

119 Romania 98 102 101 102 95 101 24 77 5 10 .. 98120 Bulgaria 93 96 94 97 92 96 55 88 11 21121 Hungary 101 98 103 98 100 98 46 68 7 12 97 98122 Poland 109 101 110 102 107 99 50 67 9 18 95 98123 USSR 100 97 100 98 100 97 49 73 11 22 98 99

124 Czechoslovakia 93 96 93 96 93 97 25 38 11 15 95125 German Dem. Rep. 112 94 111 92 113 95 39 93 16 29 ..

Table 24. Income Distribution

Low-income countries

1 Kampuchea, Dem.2 Bangladesh3 Lao PDR4 Bhutan5 Ethiopia6 Mali7 Nepal8 Somalia9 Burundi

156

Percentage share of household income, by percentile groups of householdsaLowest Second Third Fourth Highest Highest

Year 20 percent quintile quintile quintile 20 percent 10 percent

10 Chad11 Mozambique12 Burma13 Upper Volta14 Viet Nam15 India 1964-65 6.7 10.5 14.3 19.6 4&9 35.216 Malawi17 Rwanda18 Sri Lanka19 Guinea20 Sierra Leone

1969-70..

7.5..

11.7..

15.7 21.7 43.4

0

28.2

21 Zaire22 Niger23 Benin24 Pakistan25 Tanzania26 Afghanistan27 Central African Rep.28 Madagascar29 Haiti30 Mauritania31 Lesotho32 Uganda33 Angola34 Sudan35 Togo36 Kenya37 Senegal38 Indonesia

Middle-income countries

39 Egypt40 Ghana41 Yemen, PDR42 Cameroon43 Liberia44 Honduras45 Zambia46 Zimbabwe47 Thailand48 Bolivia

1967 2.3 5.0 8.0 16.9 67.8 50.0

49 Philippines50 Yemen Arab Rep.51 Congo, Peoples Rep.52 Nigeria53 Papua New Guinea

1970-71 3.7 8.2 13.2 21.0 53.9

54 El Salvador55 Morocco56 Peru57 Ivory Coast58 Nicaragua

1972 11.5 21.0 61.0 42.9

59 Colombia60 Paraguay61 Ecuador62 Dominican Rep.63 Guatemala64 Syrian Arab Rep.65 Tunisia66 Jordan

109 Iraq110 Iran111 Libya112 Saudi Arabia113 Kuwait

114 China115 Korea, Dem. Rep.116 Albania117 Cuba118 Mongolia119 Romania120 Bulgaria121 Hungary122 Poland123 USSR124 Czechoslovakia125 German Dem. Rep.

a. These estimates should be treated with caution. See the technical notes.

Percentage share of household income, by percentile groups of househoidsa

Capital-surplusoil exporters

Centrally plannedeconomies

157

YearLowest

20 percentSecondquintile

Thirdquintile

Fourthquintile

Highest20 percent

Highest10 percent

67 Malaysia 1970 3.3 7.3 12.2 20.7 56.6 39.668 Jamaica69 Lebanon70 Korea, Rep. of 1976 5.7 11.2 15.4 22.4 45.3 27.571 Turkey 1973 3.4 8.0 12.5 19.5 56.5 40.7

72 Algeria73 Mexico 1977 2.9 7.0 12.0 20.4 57.7 4a674 Panama75 Taiwan 1971 8.7 13.2 16.6 22.3 39.2 24.776 Chile 1968 4.4 9.0 13.8 21.4 51.4 34.8

77 South Africa78 Costa Rica 1971 3.3 8.7 13.3 19.9 54.8 39.579 Brazil 1972 2.0 5.0 9.4 17.0 66.6 50.680 Uruguay81 Argentina 1970 4.4 9.7 14.1 21.5 50.3 35.2

82 Portugal83 Yugoslavia 1973 6.5 11.9 17.6 24.0 40.0 22.584 Trinidad and Tobago85 Venezuela 1970 3.0 7.3 12.9 22.8 54.0 35.786 Hong Kong87 Greece88 Singapore89 Spain 1974 6.0 11.8 16.9 23.1 42.2 26.790 Israel

Industrialized countries

91 Ireland .. .. ..92 Italy 1969 5.1 10.5 16.2 21.7 46.5 30.993 New Zealand . .. ..94 United Kingdom 1973 6.3 12.6 18.4 23.9 38.8 23.595 Finland96 Austria97 Japan 1969 7.9 131 16.8 21.2 41.0 27.298 Australia 1966-67 6.6 13.5 17.8 23.4 38.8 23.799 France 1970 4,3 9.8 16.3 22.7 46.9 30.4

100 Netherlands 1967 6.5 11.6 16.4 22.7 42.9 27.7

101 Belgium102 Canada 1969 5.o 17 24.3 41.0 25.1103 Norway 1970 6.3 12.9 18.8 24.7 37.3 22.2104 Germany, Fed. Rep. 1973 6.5 10.3 15.0 22.0 46.2 30.3105 United States 1972 4.5 10.7 17.3 24.7 42.8 26.6

106 Denmark .. .. .. ..107 Sweden 1972 6.6 13.1 18.5 24.8 37.0 21.3108 Switzerland .. .. ..

Technical Notes

Table 1. Basic Indicators

The estimates of population formid-1978 are primarily from theUN Population Division. In somecases the UN population data wereadjusted by using more recent datafrom the World Bank and the USBureau of the Census.

The data on area are from theUN Demographic Yearbook, 1977.

Gross national product (GNP)measures the total domestic andforeign output claimed by resi-dents of a country.' It comprisesgross domestic product (see thetechnical notes for Table 2) andfactor incomes (such as investmentreceipts and workers' remittances)accruing to residents from abroad,less the income earned in thedomestic economy accruing topersons abroad. It is calculatedwithout making deductions fordepreciation.

The GNP per capita figures werecalculated according to the WorldBank Atlas method: GNP in nationalcurrency units was expressed firstin weighted-average prices for thebase period 1976-78, convertedinto dollars at the GNP-weightedaverage exchange rate for thisperiod, and adjusted for US infla-tion. The resulting estimate of GNPwas then divided by the populationin mid-1978. This method reducesthe effect of temporary underval-uations or overvaluations of a

1. GNP figures generally are for 1978.Exceptions are Iran, for which 1977 estimatesare the most recent, and Democratic Kam-puchea and Lebanon, for which 1974 esti-mates are the most recent.

158

particular currency and generallyassures greater comparability ofthe estimates of GNP per capitaamong countries.

The GNP per capita figure of$230 reported for China is basedon the official estimate of "netmaterial product" released by theGovernment, plus an allowance fordepreciation and for services notcovered by that concept. Thesedata were received only recently,and analysis to assure that the dataare reasonably comparable to thoseof other countries has not yet beenpossible.

The average annual rate of inflationwas calculated from the "implicitgross domestic product (GDP)deflator," which is calculated bydividing, for each year of the period,the value of GDP in current marketprices by the value of GDP inconstant market prices, both innational currency. This measureof inflation has limitations,especially for the oil-producingcountries in the light of the sharpincrease in oil prices in late 1973.

The adult literacy rate is the per-centage of persons aged 15 andover who can read and write. Theserates are based primarily on infor-mation from the UN Educational,Scientific and Cultural Organiza-tion (UNESCO), supplementedby World Bank data. For somecountries the estimates are foryears other than, but generally notmore than two years distant from,those specified. Thus the series arenot strictly comparable for allcountries.

Life expectancy at birth indicates

the number of years newbornchildren would live if subject tothe mortality risks prevailing forthe cross-section of population atthe time of their birth. Data arefrom the UN Population Division,supplemented by World Bankestimates.

The index of food production percapita shows the average annualquantity of food produced percapita in 1976-78 in relation tothat in 1969-71. The estimateswere derived from those of theFood and Agriculture Organiza-tion (FAO), which are calculatedby dividing indices of the quantityof food production by indices oftotal population. Food is consideredto comprise cereals, starchy roots,sugar cane, sugar beet, pulses,edible oils, nuts, fruits, vegetables,livestock and livestock products.Quantities of food production aremeasured net of animal feed,seeds for use in agriculture, andfood lost in processing and dis-tribution.

The country-group averages inthis table are weighted by countrypopulation.

The accompanying table showsbasic indicators for 29 countriesthat have a population of less thana million and are members of theUnited Nations, the World Bank,or both.

Tables 2 and 3. Growth andStructure of Production

Most of the definitions used are thoseof the UN System of National Accounts.

Gross domestic product (GDP)

measures the total final output ofgoods and services produced byan economy-that is, within acountry's territory by residentsand nonresidents, regardless of itsallocation to domestic and foreignclaims. It is calculated withoutmaking deductions for deprecia-tion. For most countries, GDP byindustrial origin is measured atfactor cost, but for some countrieswithout complete national accountsseries at factor cost, market priceseries were used. GDP at factorcost is equal to GDP at marketprices, less indirect taxes net ofsubsidies.

The agriculture! sector comprisesagriculture, forestry, hunting and

Note: Recent data on the adult literacy rate were available for only five of these countries:The Gambia, 10 percent in 1976; Botswana, 35 percent in 1978; Swaziland, 65 percent in1978; Mauritius, 80 percent in 1972; and Barbados, 99 percent in 1976.

fishing. The industrial sector com-prises mining, manufacturing, con-struction, and electricity, waterand gas. All other branches ofeconomic activity are categorizedas services.

National accounts series innational currency units were usedto compute the indicators in thesetables. The growth rates in Table 2were calculated from constant priceseries, the shares of GDP in Table3 from current price series.

The average growth rates forthe country groups in Table 2 areweighted by country GDP in 1970in dollars. The average sectoralshares in Table 3 are weightedby country GDP in current dollars.

Tables 4 and 5. Growth ofConsumption and Investment;Structure of Demand

GDP is defined in the technicalnotes for Table 2.

Public consumption (or general gov-ernment consumption) includes allcurrent expenditure for purchasesof goods and services by all levelsof government. In addition, capitalexpenditure on national defenseand security is regarded as con-sumption expenditure.

Private consumption is the marketvalue of all goods and servicespurchased or received as incomein kind by households and non-profit institutions. It includesimputed rent for owner-occupieddwellings.

Gross domestic investment consistsof the outlays for additions to thefixed assets of the economy, plusthe net value of inventory changes.

Gross domestic saving shows theamount of gross domestic invest-ment financed from domestic out-put. Comprising public and privatesaving, it is the difference betweengross domestic investment and thedeficit on the current account ofgoods and nonfactor services,excluding net current transfers.

Exports of goods and nonfactor ser-vices represent the value of allgoods and nonfactor services soldto the rest of the world; theyinclude merchandise, freight, in-surance, travel and other nonfactorservices. The value of factor services,such as investment receipts andworkers' remittances from abroad,is excluded.

The resource balance is the differ-ence between exports and importsof goods and nonfactor services.

National accounts series innational currency units were usedto compute the indicators in thesetables. The growth rates in Table 4were calculated from constantprice series, the shares of GDP inTable 5 from current price series.

159

UN/World Bank memberswith a populationof less than I million

Population(millions)

Mid-1978

Area(thousandsof square

kilometers)

GNP percapita

(dollars)1978

Life ex-pectancyat birth(years)1978

Average indexof food

productionper capita

(1969-71 = 100)1976-78

Maldives Ri (. ) 150 47Cape Verde 0.3 4 160 60Comoros 0.4 2 180 46Gambia, The 0.6 11 230 41 82Guinea-Bissau 0.6 36 290 41 105

Equatorial Guinea 0.3 28 46Western Samoa 0.2 3 68Solomon Islands 0.2 28 430 112Djibouti 0.3 22 450 45Sao Tome and Principe 0.1 1 490

Grenada 0.1 (. ) 530 69Guyana 0.8 215 560 67 95Swaziland 0.5 17 590 46 109Botswana 0.8 600 620 48 100Mauritius 0.9 2 830 67 103

Seychelles 0.1 (. ) 1,130Fiji 0.6 18 1,420 71 90Barbados 0.3 (. ) 1,960 71 76Suriname 0.4 163 2,110 68 108Cyprus 0.7 9 2,120 72 98

Malta 0.3 (. ) 2,170 71 121Bahamas 0.2 14 2,520 69Oman 0.8 212 2,570 47Gabon 0.5 268 3,580 44 88Bahrain 0.4 1 4,100 65

Iceland 0.2 103 8,390 75 114Luxembourg 0.4 3 10,540 72 105Qatar 0.2 11 12,740 48United Arab Emirates 0.8 84 14,230 48

The country-group averages inTable 5 are weighted by countryGDP in current dollars.

Table 6. Industrialization

The percentage distribution of valueadded among manufacturing in-dustries was calculated from dataobtained from the UN Indus-trial Development Organization(UNIDO), with the base valuesexpressed in 1970 dollars.

The classification of manufac-turing industries is in accord withthe UN International StandardIndustrial Classification of AllEconomic Activities (ISIC). Foodand agriculture comprise ISICMajor Groups 311, 313 and 314;Textiles and clothing 321-24; Ma-chinery and transport equipment 382-84;

and Chemicals 351 and 352. Othermanufacturing comprises ISIC MajorDivision 3, less all of the above.

The figures for value added inmanufacturing are from the WorldBank's national accounts series innational currencies, converted in-to 1970 dollars.

To calculate gross manufacturingoutput per capita, ratios of grossoutput to value added in manu-facturing, derived from variousissues of the UN Yearbook of Indus-trial Statistics, were applied to theWorld Bank's data on value addedin manufacturing. Per capitavalues were then calculated by us-ing mid-year estimates of countrypopulation.

Table 7. Energy

All data on energy are from UNsources. They refer to commercialforms of primary energy: coal andlignite, petroleum, natural gas andnatural gas liquids, and hydro-electricity and nuclear powerallconverted into coal equivalents.The use of firewood and othertraditional fuels, though substantialin some developing countries, is

160

not taken into account becausereliable and comprehensive dataare not available.

The country-group averages ofgrowth rates of energy productionare weighted by volumes of coun-try production in 1974; those ofgrowth rates of energy consumption,by volumes of country consump-tion in 1974; those of energy con-sumption per capita, by countrypopulation.

Energy consumption per dollar ofGDP refers to the ratio of totalenergy consumption to GDP in1975 dollars. This indicator showsthe intensity of energy use in aneconomy. The country-group aver-ages are weighted by country GDPin 1975 dollars.

Energy imports refer to the dollarvalue of energy importsStandardInternational Trade Classification(SITC) Revised Section 3and areexpressed as a percentage of earn-ings from merchandise exports.The country-group averages areweighted by country merchandiseexports in current dollars.

Because data on energy importsdo not permit a distinction betweenpetroleum imports for fuel and foruse in the petrochemicals industry,these percentages may be over-estimates of the dependence onimported energy.

Table 8. Growth ofMerchandise Trade

The statistics on merchandise tradeare from UN publications and theUN trade data system, supplementedby statistics from the UN Confer-ence on Trade and Development(UNCTAD) and from InternationalMonetary Fund (IMF), Direction ofTrade and International FinancialStatistics.

Merchandise exports and importscover, with some exceptions, allinternational changes in ownershipof merchandise passing across thecustoms borders of the reporting

countries. Exports are valued f.o.b.(free on board), imports c.i.f. (cost,insurance and freight). Thesevalues are in current dollars.

The growth rates of merchandiseexports and imports are in real termsand calculated from quantum(volume) indices of exports andimports. For the majority of devel-oping countries these indices arefrom the UNCTAD Handbook ofInternational Trade and DevelopmentStatistics and supplementary datathat show revisions. For industrial-ized countries the indices are fromthe UN Yearbook of InternationalTrade Statistics and UN MonthlyBulletin of Statistics.

The terms of trade, or the "netbarter terms of trade," are calcu-lated as the ratio of a country'sindex of export unit values to thatof import unit values. The terms-of-trade index numbers shown for1960 and 1978, with 1970 = 100,thus indicate changes in exportprices in relation to import prices.The unit value indices are fromthe same sources cited above forthe growth rates of exports andimports.

Tables 9 and 10. Structure ofMerchandise Trade

The shares in these tables are derivedfrom trade values in current dollarsreported in UN trade tapes and theUN Yearbookof International TradeStatistics.

Merchandise exports and importsare defined in the technical notesfor Table 8.

In the categorization of exportsin Table 9, fuels, minerals and metalsare the commodities in SITCRevised Section 3, Divisions 27and 28, and the nonferrous metalsof Division 68. Other primarycommodities comprise SITC Sec-tions 0, 1, 2 and 4 (food and liveanimals, beverages and tobacco,inedible crude materials, oils, fatsand waxes) less Divisions 27 and

28 (minerals, crude fertilizers andmetalliferous ores). Textiles andclothing represent SITC Divisions 65and 84 (textiles, yarns, fabrics andclothing). Machinery and transportequipment are the commodities inSITC Section 7. Other manufactures,calculated as the residual from thetotal value of manufactured ex-ports, represent SITC Sections 5 to9 less Section 7 and Divisions 65,68 and 84.

In the categorization of importsin Table 10, food commodities arethose in SITC Revised Sections 0,1 and 4 and in Division 22 (foodand live animals, beverages andtobacco, oils and fats). Fuels are thecommodities in SITC Section 3.Other primary commodities compriseSITC Section 2 (crude materials,less Division 22 (oilseeds andnuts) plus Division 68 (nonferrousmetals). Machinery and transportequipment are the commodities inSITC Section 7. Other manufactures,calculated as the residual from thetotal value of manufactured im-ports, represent SITC Sections 5to 9 less Section 7 and Division 68.

The country-group averages inTable 9 are weighted by countrymerchandise exports in currentdollars; those in Table 10, bycountry merchandise imports incurrent dollars.

Table 11. Destination ofMerchandise Exports

Merchandise exports are definedin the technical notes for Table 8.All trade shares in this table arebased on statistics on the value oftrade in current dollars in IMF,Direction of Trade. Unallocatedexports are distributed among thecountry groups in proportion totheir respective shares of allocabletrade. The country groups in thistable follow those in the datasource and differ somewhat fromthose used elsewhere in the volume:industrialized countries also include

Gibraltar, Iceland and Luxembourg;developing countries also includeCuba, which in other tables isgrouped with centrally plannedeconomies; capital-surplus oil exportersalso include Oman, Qatar andUnited Arab Emirates.

The country-group averages areweighted by country merchandiseexports in current dollars.

Table 12. Trade inManufactured Goods

The data in this table are fromthe United Nations and are amongthose used to compute SpecialTable B in the UN Yearbook ofInternational Trade Statistics. Manu-factured goods are the commoditiesin SITC Revised Sections 5 through9 (chemicals and related productsfrmanufactured articles, machineryand transport equipment) exclud-ing Division 68 (nonferrous metals).

The country groups are the sameas those in Table 11. The country-group averages are weighted bycountry manufactured exports incurrent dollars.

Table 13. Balance of Paymentsand Debt Service Ratios

The current account balance is thedifference between (i) exports ofgoods and services plus inflows ofunrequited official and privatetransfers and (ii) imports of goodsand services plus unrequitedtransfers to the rest of the world.Excluded from this figure are allinterest payments on external publicand publicly guaranteed debt, whichare shown separately. These in-terest payments represent thoseon the disbursed portion of out-standing public and publiclyguaranteed debt plus commitmentcharges on undisbursed debt. Thecurrent account estimates arefrom IMF data files; estimates ofinterest payments are from theWorld Bank Debt Reporting System.

Debt service is the sum of interestpayments and repayments ofprincipal on external public andpublicly guaranteed debt. Debt-service data are from the WorldBank Debt Reporting System. Theratio of debt service to exportsof goods and services is one ofseveral rules of thumb commonlyused to assess the ability to ser-vice debt. The debt-service ratiosin the table do not cover unguar-anteed private debt, which for somecountries is substantial; the debtcontracted for purchases of militaryequipment usually is not reported.The average ratios of debt serviceto GNP for the country groups areweighted by country GNP in cur-rent dollars. The average ratios ofdebt service to exports of goodsand services are weighted bycountry exports of goods andservices in current dollars.

The World Bank Debt Report-ing System is concerned solelywith developing countries anddoes not collect data on externaldebt for other groups of countries.Nor are comparable data for thosecountries available from othersources.

Table 14. Flow of ExternalCapital

Data on the gross inflow and repay-ment of principal (amortization) ofpublic and publicly guaranteedmedium- and long-term loans arefrom the World Bank DebtReporting System. The net inflowis the gross inflow less the repay-ment of principal.

Net direct private investment is thenet amount invested or reinvestedby nonresidents of the country inenterprises in which they or othernonresidents exercise significantmanagerial control; these net fig-ures also take into account thevalue of direct investment abroadby residents. IMF data files wereused in compiling these estimates.

161

Table 15. External PublicDebt and International Reserves

External public debt outstanding rep-resents the amount of public andpublicly guaranteed loans that hasbeen disbursed, net of canceledloan comritments and repay-ments of principal. The data referto the end of the year indicatedand are from the World BankDebt Reporting System. In esti-mating external public debt as apercentage of GNP, GNP was con-verted from national currencies todollars at the average official ex-change rate for the year in question.The country-group averages areweighted by country GNP in cur-rent dollars.

Gross interncitional reservescomprise the sum of a country'sholdings of gold, special drawingrights (SDRs), the reserve positionof IMF members in the Fund, andholdings of foreign exchange underthe control of monetary authorities.The gold component of these re-serves is valued throughout atyear-end London prices: that is,$37.37 an ounce in 1970 and $226.00an ounce in 1978. The data forholdings of international reservesare from IMF data files. The reservelevels for 1970 and 1978 refer tothe end of the year indicated andare in current dollars. The reserveholdings at the end of 1978 arealso expressed in the number ofmonths of imports of goods andservices they could pay for, withimports at the average level for1977 or 1978. The country-groupaverages are weighted by couhtryimports of goods and services incurrent dollars.

Table 16. Official DevelopmentAssistance from OECD andOPEC Members

Official development assistance(ODA) consists of net disburse-ments of loans and grants made162

at concessional financial terms byofficial agencies of the membersof the Development AssistanceCommittee (DAC) of the Organ-isation for Economic Co-operationand Development (OECD) andmembers of the Organization ofPetroleum Exporting Countries(OPEC) with the objective of pro-moting economic development andwelfare. It includes the value oftechnical cooperation and assistance.

Amounts shown are net disburse-ments to developing countries andmultilateral institutions. The dis-bursements to multilateral insti-tutions are now reported for allDAC members on the basis of thedate of issue of notes; some DACmembers previously reported onthe basis of the date of encash-ment. Net bilateral flows to low-incomecountries exclude unallocated bilateralflows and all disbursements tomultilateral institutions.

Figures for 1978 and earlier yearsare actual figures published by theOECD; those for 1979 are pre-liminary estimates. All others areprojections by World Bank staff,based on OECD and World Bankestimates of GNP growth, infor-mation on budget appropriationsfor aid, and statements on aid policyby governments. They are projec-tions based on present plans ratherthan predictions of what will occur.

The nominal values shown inthe summary for ODA from OECDcountries were converted into1978 prices using the dollar GNPdeflator. This deflator is based onprice increases in OECD countries(excluding Greece, Portugal, Spainand Turkey) measured in dollars.It takes into account the paritychanges between the dollar andnational currencies. For example,when the dollar depreciates, priceincreases measured in nationalcurrencies have to be adjustedupward by the amount of thedepreciation to obtain price in-creases in dollars.

The table this year, in additionto showing totals for OPEC, showstotals for the Organization of ArabPetroleum Exporting Countries(OAPEC). The donor members ofOAPEC are Algeria, Iraq, Kuwait,Libya, Qatar, Saudi Arabia andUnited Arab Emirates.

Table 17. Population Growth,Past and Projected, andHypothetical StationaryPopulation

The growth rates of population areperiod averages calculated frommid-year country populations.The country-group averages areweighted by country populationin 1970.

The projections of population for1980 and 2000, and to the year inwhich it will eventually becomestationary, were made for eachcountry separately. Starting withinformation on total population,fertility rates, and mortality ratesin the base year 1978, these param-eters were projected to 1980 andthereafter for five-year intervalson the basis of generalized assump-tions until the population becamestationary. The base-year esti-mates are from UN, World Popula-tion Trends and Prospects by Country,1950-2000, and from the WorldBank, the Population Council andthe US Bureau of the Census.

The net reproduction rate (NRR)indicates the number of daughtersthat a newborn girl will bear dur-ing her lifetime, assuming fixedage-specific fertility rates and afixed set of mortality rates.

The NRR thus measures theextent to which a cohort of new-born girls will reproduce themselvesunder given schedules of fertility andmortality. An NRR of 1 indicatesthat fertility is at replacement level:at this rate child-bearing women,on the average, bear only enoughdaughters to replace themselvesin the population. A population

continues to grow after replacement-level fertility has been reachedbecause its past higher birth rateswill have produced an age dis-tribution with a relatively highproportion of women in, or still toenter, the reproductive ages. Thetime taken for a country's popu-lation to become stationary afterreaching replacement-level fertilitythus depends on its age structureand previous fertility patterns.

A stationary population is one inwhich age- and sex-specific mor-tality rates have not changed overa long period, while age-specificfertility rates have simultaneouslyremained at replacement level(NRR = 1). In such a population,the birth rate is constant and equalto the death rate, the age structurealso is constant, and the growthrate is zero.

For all of the projections, it wasassumed that international migra-tion would have no effect.

The estimates of the hypotheticalsize of the stationary population,the assumed year of reaching re-placement-level fertility and theyear of reaching a stationary popu-lation are speculative. They shouldnot be regarded as predictions. Theyare included to provide a summaryindication of the long-run implica-tions of recent trends on the basisof highly stylized assumptions. Afuller description of the methodsand assumptions used to calculatethe estimates is available from theEconomic Analysis and ProjectionsDepartment of the World Bank.

Table 18. Demographic andFertility-related Indicators

The crude birth and death rates indi-cate the number of live births anddeaths per thousand populationin a year. They are from the samesources mentioned in the technicalnotes for Table 17.

The total fertility rate representsthe number of children that would

be born per woman, if she were tolive to the end of her child-bearingyears and bear children at eachage in accord with prevailing age-specific fertility rates. The ratesgiven are from the same sourcesmentioned in the technical notesfor Table 17.

The percentage of women in the re-productive age group refers to womenof child-bearing age (15-44 years)as a percentage of the total femalepopulation. The estimates werederived from the population esti-mates in Table 1.

The percentage of married womenusing contraceptives refers only tomarried women of child-bearingage (15-44 years). These data aremainly derived from DorothyNortman and Ellen Hofstatter,Population and Family Planning Pro-grams: A Factbook (New York:Population Council, various issues);Dorothy Nortman, "ChangingContraceptive Patterns: A GlobalPerspective," Population Bulletin,vol. 32, no. 3 (Washington, D.C.:Population Reference Bureau,August 1977); and Office of Pop-ulation, Family Planning ServiceStatistics, Annual Report, 1976(Washington, D.C.: US Agencyfor International Development).The data refer to a variety of years,generally not more than two yearsdistant from those specified.

All country-group averages areweighted by country population.

Table 19. Labor Force

The population of working age refersto the population between 15 and64 years of age. The estimates for1978 are based on the populationestimates in Table 1; those for1960 are from the UN PopulationDivision. The country-groupaverages are weighted by countrypopulation.

The lubor force comprises eco-nomically active persons, includingthe armed forces and the unem-

ployed, but excluding housewives,students and economically inactivegroups. Agriculture, industry andservices are defined in the samemanner as in Table 2. The estimatesof the sectoral distribution of thelabor force in 1960 are fromInternational Labour Office (ILO),Labour Force Estimates and Projections,1950-2000; most of those for 1978are geometric extrapolations ofILO estimates for 1960 and 1970in the same source. The country-group averages are weighted bycountry labor force.

The labor force growth rates werederived from the Bank's popula-tion projections and ILO data onactivity rates, again from the sourcecited above. The country-groupaverages for 1960-70 and 1970-80are weighted by country laborforce in 1970; those for 1980-2000,by projections of country laborforce in 1980.

The application of ILO activityrates to the Bank's latest pop-ulation estimates may be inappro-priate for some countries in whichthere have been important changesin levels of unemployment andunderemployment, in internationaland internal migration, or in both.The labor force projections for1980-2000 should thus be treatedwith caution.

Table 20. Urbanization

The data on urban population as apercentage of total population are fromunpublished estimates and pro-jections by the UN PopulationDivision, supplemented by datafrom the World Bank and fromvarious issues of the UN Demo-graphic Yearbook.

The growth rates of urbun pop-ulation were calculated from theWorld Bank's population esti-mates; the estimates of urbanpopulation shares were calculatedfrom the sources cited above.

Data on urban agglomeration

163

are also from the United Nations.Because the estimates in this

table are based on the nationaldefinitions of what is "urban,"cross-country comparisons shouldbe interpreted with caution.

The country-group averages forurban population as a percentageof total population are weightedby country population; the othercountry-group averages in thistable are weighted by country ur-ban population.

Table 21. Indicators Related toLife Expectancy

Life expectancy at birth is defined inthe technical notes for Table 1.

The infant mortality rate is thenumber of infants who die beforereaching 1 year of age, per thousandlive births in a given year. Thedata are from a variety of sources,including different issues of theUN Demographic Yearbook and theUS Bureau of the Census publica-tion, World Population: 1977; theyrefer to a variety of years, gener-ally not more than two years dis-tant from those specified.

The child death rate is the numberof deaths of children aged 1-4 perthousand children in the same agegroup in a given year. For countrieswith reliable death registration,these rates are from different issuesof the UN Demographic Yearbook;they refer to a variety of years,generally not more than two yearsdistant from those specified. Forother countries, the rates werederived from the appropriateCoale-Demeny Model life tablesto correspond to the expectationof life at birth for 1960 and 1978.2

The country-group averages inthis table are weighted by countrypopulation.

2. Ansley J. Coale and Paul Demeny, Re-gional Model Life Tables and Stable Popula-tions (Princeton, N.J.: Princeton UniversityPress, 1966).

164

Table 22. Health-relatedIndicators

The estimates of population perphysician and nursing person werederived from World HealthOrganization (WHO) data, someof which have been revised to reflectnew information supplied byreporting countries. They also takeinto account revised estimates ofpopulation, which are shown inTable 1. Nursing persons includegraduate, practical and assistantnurses. Because country definitionsof nursing personnel varyand be-cause the data shown are for avariety of years, generally notmore than two years distant fromthose specifiedthe data for thesetwo indicators are not strictlycomparable between countries.

The percentage of total populationwith access to safe water, estimatedby the WHO, is the proportion ofpersons with reasonable access tosafe water, which is defined asincluding treated surface waterand such untreated but uncon-taminated water as that fromboreholes, springs and sanitarywells.

The daily calorie supply per capitawas calculated by dividing thecalorie equivalent of the foodsupplies in a country by its popu-lation. Food supplies comprisedomestic production, imports lessexports, and changes in stocks; theyexclude animal feed, seeds for usein agriculture, and food lost inprocessing and distribution. Thedaily calorie requirement per capitarefers to the calories needed tosustain a person at normal levelsof activity and health, taking intoaccount age and sex distributions,average body weights, and environ-mental temperatures. Both sets ofestimates are from the Food andAgriculture Organization.

The country-group averages inthis table are weighted by countrypopulation.

Table 23. Education

The data in this table refer to avariety of years, generally not morethan two years distant from thosespecified, and are mostly fromUNESCO.

The data on number enrolled inprimary school refer to estimates oftotal, male, and female enrollmentof students of all ages in primaryschool; they are expressed as per-centages of the total, male, or femalepopulations of primary-school ageto give "gross primary enrollmentratios." Although primary-schoolage is generally considered to be6-11 years, the differences incountry practices in the ages andduration of schooling are reflectedin the ratios given. For countrieswith universal primary education,the gross enrollment ratios mayexceed 100 percent because somepupils may be below or above theofficial primary-school age.

The data on number enrolled insecondary school were calculated inthe same manner, with secondary-school age generally consideredto be 12-17 years.

The data on number enrolled inhigher education are from UNESCO.

The adult literacy rate is definedin the technical notes for Table 1.

The country-group averages inthis table are weighted by countrypopulation.

Table 24. Income Distribution

The data in this table refer to thedistribution of total disposablehousehold income accruing topercentile groups of householdsranked by total household income.The distributions cover rural andurban areas and refer to differentyears between 1965 and 1977.

The distributions for the indus-trialized countries are from MalcolmSawyer, Income Distribution in OECDCountries (OECD OccasionalStudies, July 1976); they refer to

posttax income and conceptuallyare roughly comparable with thedistributions for developing coun-tries. The estimates for LatinAmerican countries other thanMexico come from the preliminaryresults of a joint project of theWorld Bank and the UN EconomicCommission for Latin America(ECLA). Those for Mexico are theresults from the 1977 HouseholdBudget Survey. The estimates formost developing countries in Asiaare from the preliminary resultsof a joint project of the WorldBank and the Economic and SocialCommission for Asia and thePacific (ESCAP). The distributionsfor other developing countries arefrom data gathered by the WorldBank from national sources.

Because the collection of dataon income distribution has notbeen systematically organized andintegrated into the official statis-

tical system in many countries,estimates were typically derivedfrom surveys designed for otherpurposes, most often consumerexpenditure surveys, which alsocollect some information on income.These surveys use a variety ofincome concepts and sample de-signs. With few exceptions theanalysis of data does not take intoaccount the differences in house-hold size. Furthermore, the cover-age of many of these surveys istoo limited to provide reliablenationwide estimates of incomedistribution. Thus, although theestimates are considered the bestavailable, they do not avoid allthese problems and should beinterpreted with extreme caution.

The scope of the indicator issimilarly limited. Because house-holds vary in size, a distributionin which households are rankedaccording to per capita household

income, not according to their totalhousehold income, is superior formany purposes. The distinctionis important because householdswith low per capita incomesfrequently are large households,whose total income may be rela-tively high. For this reason it isbest to use the distribution ofindividuals ranked by per capitahousehold income when comparingtwo distributions for welfarepurposessay, those of two coun-tries or those of rural and urbanareas in a country. Informationon the distribution of per capitahousehold income exists, however,for only a few countries. The WorldBank recently launched the LivingStandards Measurement Study todevelop procedures and applica-tions that can assist countries inimproving their collection and anal-ysis of data on income distribution.

165

Bibliography of Data Sources

Nationalaccountsandeconomicindicators

Balanceof payments,capital flowsand debt

Population

Socialindicators

166

Production Yearbook. Rome: FAQ, various issues.

A System of National Accounts. New York: UN Department of International Economic andSocial Affairs, 1968.

Statistical Yearbook. New York: UN Department of International Economic andSocial Affairs, various issues.

World Bank Atlas, 1979. Washington, D.C.: World Bank, 1979.World Bank data files.National sources.

Balance of Payments Manual. 4th ed. Washington, D.C.: IMF, 1977.

International Monetary Fund balance-of-payments data files.Development Co-operation. Paris: OECD, various annual issues.

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World Population Trends and Prospects by Country, 1950-2000: Summary Reportof the 1978 Assessment. New York: UN Department of International Economic andSocial Affairs, 1979.

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Note: Because the United Nations no longer reports data on Taiwan, most of the indicators for Taiwan comefrom its statistical publications.

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Social Affairs, various issues.

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