INTERNATIONAL DEVELOPMENT TARGETS

INTERNATIONAL DEVELOPMENT TARGETS

The desirability of expanding and systematizing the transfer of resources from the more advanced countries to the less advanced was given the unprecedented international endorsement in 1960 when the General Assembly adopted resolution 1522 (XV)setting a target of 1 percent of the national income of the former for the total of such transfers. This was followed in the next session of the General Assembly by resolution 1710 (XVI) declaring the 1960's a "decade of development" and adopting another target, namely, a minimal 5 percent as the annual rate of gross domestic product growth to be reached by developing countries before the end of the decade.

 Events have cast doubt on the adequacy of these targets--not only on the magnitudes are chosen but also on the way in which they were denominated and on their simple but ambiguous arithmetic--but as tangible expressions of need and intention they represent unprecedented landmarks in international economic policy. Though their impact and significance have differed considerably from one country to another, there can be little doubt that their over-all effect h.as been stimulating: without the debates and discussions they have evoked, in both national parliaments and international forums, the effort made by the more advanced countries to provide resources and the effort made by the developing countries to raise their growth rates would probably have been appreciably less than in fact they have been.

While they epitomize the common concern about disparities in income and economic viability, these targets do not furnish benchmarks against which progress can be meaningfully measured. The resource transfer target is too, aggregative and too do not center to provide a means of assessing the value or effectiveness of the transfers actually made. The growth target is too absolute and too simplistic to be used for appraising achievements in the complicated process of development.

The fact that among the sixteen principal developed market economies over the period 1961-1966, for example, the highest performance in respect for the resource transfer target fulfillment was about eight times the lowest is by no means an accurate reflection of the range in the resultant development impact of the transfers.1 For, apart from the diversity of the nature and form of the transfers and the pricing and quality differences subsumed in the single target figure, the impact of any transfer depends on its appropriateness to the purpose on hand in the recipient country.

Efforts to take the quality of transfers into account have continued. In 1965, two subsidiary targets were recommended by the Development Assistance Committee of the Organization for Economic Cooperation and Development for the terms of official lending--interest rates, grace periods and maturities-and another for the progressive reduction in the degree of tying of loans to specific commodities or countries of supply. The desirability of a target for the official component of resource transfers was discussed at the second United Nations Conference on Trade and Development (UNCTAD). And it has been suggested that a target that was net of returning flows of investment income and a target for the grant component of official loans would also be useful. In general, the search has been for a set of targets that would provide simultaneously a satisfactory measure of the volume and usability for the development of the resources provided and the real cost to the donor country.

Similar problems have arisen in applying and interpreting the growth target. There has been an even wider range of performance among the developing countries. In the period 1955-1965, for example, the spread of gross domestic product growth rates was from zero to almost 20 percent per annum. Among the high-growth countries, the crucial factor was .often a single export industry, in many cases foreign-owned; among the low-growth .countries, a frequent factor was a change in political r4gime or other non-economic disturbance,  accompanied in many cases by the flight of capital. In these circumstances, a single measure of output is a poor guide either to the development effort .that is being made or to the country's capacity for future growth. 

A 5 percent target would not appear to represent much of a challenge to a country whose growth rate already exceeds float figure, yet half of the twenty-five developing countries whose 1955-1960 growth rate was about 5, percent recorded a rate below 5 per .cent in the following quinquennium, and in most of, these cases the rate was more than halved. Thus the attainment of a 5 percent growth rate over a five-year period is by no means conclusive evidence that a firm foundation for the continuation of a satisfactory rate of progress has been laid. Contrariwise, half of the .the twenty-five countries whose 1960-I965 growth the rate was above 5 percent had grown at less than that in the preceding quinquennium, and in about .half of these cases the rate had been more than doubled. The gross domestic product has tended to be a very unstable indicator. 

To appraise the progress a country has been making thus requires more than a review of the course of total production or even of changes in the structure of production,, including such crucial features as the relative contribution of agriculture and industry and the course and composition of exports and imports arid the external balance. No less important than the rate of overall growth is the pattern of investment and the structure of the productive capacity .that is being built up, the creation and transformation of institutions so as to liberate and stimulate the energies of producers in the economy and the improvement of human resources in ways that raise not only living standards but also the productivity of labor. Even countries registering identical overall growth rates may be achieving quite, disparate results in terms of structural and institutional changes. 

This may reflect basic differences in their economies or in their goals and policies or even a failure to appreciate or come to grips with some of the less tangible problems whose consequences are not readily measurable or immediately discernible. Nor can the significance of identical average rates of growth in income be assessed without some information concerning its internal distribution: differences between the "modern" and the "traditional" segments. within an economy and between the rich and the poor within. the modern segment is often wider than those between countries. The fact is that beyond the typically low degree of industrial specialization the developing countries are characterized more by their diversity than by their uniformity. 

Even the range of per cavity income is extraordinarily wide: the average for the richer county tries (Argentina, Israel, Kuwait, and Venezuela, for example) is about twenty times greater than the average for such countries as Burma, Ethiopia or Malawi. The differences in the nature of the development problem between the Gambia and India, between Bolivia and Indonesia, between Mexico and Somalia, are so obvious and so great that it is only with the greatest circumspection that averages and aggregates can be deployed to depict the course of events in what is sometimes called the Third World. These enormous national disparities notwithstanding, two facts still have to be borne in mind: one is that though there are even greater differences within many of the developing countries, yet the decision-making organs of government are faced with the responsibility of national! policies. 

The other is that certain obstacles to the development process, however, this is defined, recur so frequently and in so many different circumstances that they constitute a set of common problems. In essence, these are the obstacles that prevent or slow down the process of raising the productivity of labor by improving the quality and use of .of human resources and equipping workers with capital in appropriate form and amount to permit a higher degree of specialization, and with it a transformation of the structure of the economy.