CURRENT

ECONOMIC DEVELOPMENTS

World Economic Survey

1967 - Part Two

UNITED NATIONS

Department of Economic and Social Affairs

CURRENTECONOMIC DEVELOPMENTS

UNITED NATIONSNew York, 1968

NOTE

Symbols of United Nations documents are composed of capital letters combinedwith figures. Mention of such a symbol indicates a reference to a United Nationsdocument.

Ej4489jRev.lSTjECAjlOS

FOREWORD

Part Two of the Warld Ecanantic Survey, 1967deals with the salient features of current world eco­nomic developments. Chapter I provides a broadreview of world production and trade as well asthe principal developments in the three major groupsof countries of the world-the developed marketeconomies, the centrally planned economies and thedeveloping countries. Chapter II analyses recent in­ternational monetary and trade developments includ­ing, inter alia, the devaluation of sterling, reformof the internaHonal monetary system, implicationsof the Kennedy Round and trends in regional inte­gration. Chapter III deals with changes in themethods of planning and management in the Unionof Soviet Socialist Republics and eastern Europe.

The survey of the current situation of the worldeconomy incorporates information provided by Gov­ernments in response to the Secretary-GeneraI's ques­tionnaire on economic trends, problems and policies,

iii

circulated in December 1967. The data presented inthe Survey are those available to the Secretariatin May 1968.

For purposes of this report, the developed marketecono~ies comprise North America, western Europe,Oceama, Japan and South Africa; the centrallypla~ned economies comprise eastern Europe, theUnlOn of Soviet Socialist Republics and mainlandChina, and the developing countries comprise LatinAmerica, the West Indies, Africa, West Asia andsouthern and south-eastern Asia. Where, because ofstatistical exigencies, it has been necessary to departfrom these definitions of coverage, the nature of thedeviation has been noted.

The Survey is prepared in the Centre for Develop­ment Planning, Projections and Policies of theDepartment of Economic and Social Affairs of theUnited Nations Secretariat.

CONTENTS

Page

Explanatory notes V11I

Chapter

I. RECENT DEVELOPMENTS IN THE WORLD ECONOMY .

Summary of recent developments .

Policy problems raised by the slowdown in the developed market eco-nomies .

Developments in income and consumption in the centrally planned eco-nomies . .

Cross-currents in the developing countries .

II. INTERNATIONAL MONETARY AND TRADE DEVELOPMENTS

International payments and monetary problems

Implications of the Kennedy Round .

Trends in regional integration

1

1

4

5

6

8

8

16

18

III. PROGRESS IN ECONOMIC REFORMS IN THE SOVIET UNION AND EASTERN

EUROPE .

The conceptual background

Salient features of recent economic reforms

21

21

23

ANNEX................................................................ 29

v

List of tables

Page

1. World production: annual growth rates, hy country group, 1964-1967 1

2. World trade in 1967 and rate of increase, by country group, 1963-1967 2

3. United States and United Kingdom reserve assets, liquid liabilities andbalance of payments position, 1958-1968 9

4. New gold supply and use of gold, 1958-1967 . . . . . . . . . . . . . . . . . . . 10

5. United Kingdom and United States: hypothetical allocation of special draw­ing rights as a percentage of balance of payments deficit, five-year averages,1958-1967 11

6. United States: amount of swap arrangements under Federal Reserve reci-procal currency agreements, 1%2-1968 12

7. United States: utilization of selected credit facilities, 1962-1968 13

8. Selected countries : effective depreciation or appreciation of currency asmeasured by the country distribution of exports and imports, average1965-1966 14

9. Share of exports and imports in world trade, by country group, average1966-1967 14

10. Selected countries: share of exports to and imports from world, by group andcountry, average 1965-1966 15

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

Annex

World production of selected commodities, 1963-1967 .

Market economies: changes in industrial production, by country group, 1963-1967 .

Selected countries: recent change in industrial production, 1966-1967 .

World production of major agricultural commodities, 1963-1967 .

Major food crops: production in selected developing countries, 1964/65-1967/68 .

Annual changes in consumption and investment, by country group, 1964-1967

World trade: indices of export and import quantum, 1964-1967 .

World exports, by provenance and destination: value, 1965, and percentagechange, 1966 and 1967 .

World trade: indices of value of exports and imports, 1963-1967

World trade: recent changes in exports and imports, 1967-1968

World trade: changes in unit value of exports and imports, 1964-1967 ....

Export price indices of primary commodities and non-ferrous base metals,1964-1967 and first quarter, 1968 .

3]

32

32

33

34

34

35

36

38

38

39

39

23. Developed market economies: industrial production and gross national product,by region, 1965-1967 40

vi

Page

24. Developed market economies: gross national product and its main components,by region, 1965-1967 41

25. Developed market economies: gross national product and its main components,by country; actual 1965-1967 and forecast for 1968 41

26. Developed market economies: personal consumption and its main components,1965-1967 ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

27. Developed market economies: gross domestic fixed investment and its maincomponents, 1965-1967 45

28. Western Europe and North America: changes in production in selected manu-facturing industries, 1963-1967 47

29. Developed market economies: prices and earnings, 1965-1967 47

30. Developed market economies: employment and unemployment, 1965-1967 . . . . 49

31. Centrally planned economies: changes in national income, 1964-1968 50

32. Centrally planned economies : changes in gross agricultural output, 1964-1968 50

33. Centrally planned economies: changes in industrial production, 1964-1968 50

34. Centrally planned economies: changes in gross fixed investment, 1964-1968 51

35. Centrally planned economies: changes in volume of retail trade, 1964-1968 51

36. Centrally planned economies: external trade, 1963-1967 51

37. Developing countries: indices of agricultural and food production, 1960-1967 52

38. Developing countries: rate of growth in food production, 1966 and 1967 53

39. Developing countries: indices of industrial production, 1964-1967 54

40. Selected developing countries: indices of industrial production, 1964-1967 .. 55

41. Developing countries: distribution of changes in exports and imports, 1964-1967 56

42. Developing countries: indicated change between 1966 and 1967 in grossdomestic product, volume of imports and total supplies 57

43. Developing countries: changes in cost of living, 1966-1967 58

44. Developing countries: changes in the supply of money, 1966-1967 58

45. Developing countries: changes in government budgetary position, 1966-1967 59

46. Developing countries: balance of trade and changes in liquidity, 1%1-1967 59

47. Regional economic groupings: objectives, status and main features 60

vii

Explanatory notes

The fonowing symbols have been used in the tables throughout the report:

Three dots ( ... ) indicate that data are not available or are not separatelyreported

A dash (-) indicates that the amount is nil or negligible

A blank in a table indicates that the item is not applicable

A minus sign (-) indicates a deficit or decrease, except as indicated

A full stop (.) is used to indicate decimals

A comma (,) is used to distinguish thousands and millions

A slash (/) indicates a crop year or financial year, e.g., 1960/61

Use of a hyphen (-) between dates representing years, e.g., 1961-1963, signifiesthe full period involved, including the beginning and end years.

Reference to "tons" indicates metric tons, and to "dollars" ($) United Statesdollars, unless otherwise stated.

The term "billion" signifies a thousand million.

Annual rates of growth or change, unless otherwise stated, refer to annualcompound rates.

Details and percentages in tables do not necessarily add to totals, because ofrounding.

The following abbreviations have been used:

CACM Central American Common Market

CMEA Council for Mutual Economic Assistance

EEC European Economic Community

EFTA European Free Trade Association

GATT General Agreement on Tariffs and Trade

IMF International Monetary Fund

LAFTA Latin American Free Trade Association

OECD Organisation for Economic Co-operation and Development

SDR Special drawing rights

Where statistical presentation has rendered it necessary, the term "SouthAfrica" has been used to designate the Republic of South Africa, Botswana,Lesotho, Namibia and the High Commission territory of Swaziland.

The designations employed and the presentation of the material in thispublication do not imply the expression of any opinion whatsoever on the partof the Secretariat of the United Nations concerning the legal status of any countryor territory or of its authorities, or concerning the delimitation of its frontiers.

viii

Chapter I

RECENT DEVELOPMENTS IN THE WORLD ECONOMY

SUMMARY OF RECENT DEVELOPMENTS

The pace of growth

In terms of world output the year 1967 saw amixed performance. The over-all rate of growth re­ceded from nearly 5 per cent between 1965 and 1966to about 4 per cent between 1966 and 1967. Worldindustrial production slowed down rather sharp1y­from a gain of 7 per cent to one of 4.5 per cent-re­flecting the sluggish conditions in the major de­veloped market economies. Agricultural productionregistered a considerable increase, however, in thewake of favourable weather in some of the principaldeveloping countries (table 1).

The general deceleration in world growth wasmagnified in trade developments. The growth ofworld exports between 1966 and 1967 was less than5 per cent, not much more than half the rate achievedin the previous interval (table 2).

For the developed market economies the slow­down in the over-all rate of economic growth repre­sented a continuation of the braking process-follow­ing periods of rapid growth in the early 1960's-withits restraining policies for restoring external or in­ternal balance. The maj or exception to this patternwas Japan where economic activities had acceleratedsince 1965.

There were signs of a resumption of faster growthin the developed market economies in the latter partof 1967 and early 1968, especially in the FederalRepublic of Germany and the United States, wheredeceleration between 1966 and 1967 had been marked.

Although the export receipts and industrial ac­tivity of the developing countries were unfavourablyaffected by the slowdown in the developed marketeconomies, a dramatic improvement in the harvestsin southern and south-eastern Asia raised the rate

Table 1. Wodd production: annual growth rates, by country group, 1964-1967(Percentage change from preceding year)

Item and country group

G1'OSS domestic product at constant prices

Worldb..•.......•..... • •......•

Developed market economiesc.•.....••....•••.•

Centrally planned economies',· ..Developing countries f

.

Industrial production

Worldb.....•....•...•.•..••.•...•••.••.•••.•••

Developed market economies c....•.

Centrally planned economies·'< ..Developing countries f

Agrieultural produdion

Worldb. .

Developed market economies c. ..•.....

Centrally planned economies·" .Developing countries f

.......•..•...••..•.•....

1964

6685

8889

34

112

1965

5574

7697

1122

1966

5583

7785

359

-1

1967-

4375

4.52

104

4218

Source: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on estimates of the StatisticalOffice of the United Nations and United StatesDepartment of Agriculture and other nationalsources.

a P'reliminary, based on incomplete coverage.b Average of the groups listed.c North America, western Europe, Australia,

1

Japan, New Zealand, South Africa.d Net material product.e Eastern Europe (other than Yugoslavia)

and Soviet Union.f Latin America and the Caribbean, Africa

(other than South Africa), Asia (other thanmainland China, Cyprus, Japan, Mongolia, NorthKorea, North Viet-Nam and Turkey),

g Based on gross values.

Table 2. World trade in 1967 and rate of increase, by country group, 1963-1967

(Bjllions of dollars; percentage)

Country group and item

Developed market economies"V~~~l~ .Percentage change from preceding year:

1963 .1964 .1965 .1966 .1967 .

Centrally planned economies"V~ue in 1967 .Percentage change from preceding year:

1963 .1964 .1965 .1966 .1967 .

Developing countries·Value ~ 1967 .Percentage change from preceding year:

1963 .1964 .1965 ..1966 .1967 .

vVorldd,e

Value in 1967 .Percentage change from preceding year:

1963 .1964 .1965 .1966 .1967 .

E%ports to

Developed Centrally planned Developing fY1orld d, "market economiesb countriesC

economiesn

112 6 30 149

11 10 5 916 23 13 1410 8 7 910 15 9 It,6 9 3 6

6 15 3 25

13 6 18 816 7 7 814 4 11 720 1 9 6

5 9 3 7

29 2 8 40

10 7 7 109 16 9 105 23 4 58 -2 5 73 -4 1 2

147 24 42 214

11 7 7 915 11 12 129 7 7 8

10 4 8 96 7 2 5

Source: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on United Nations, MonthlyBulletin of Statistics.

Note: Because of lack of information onorigin and destination of all trade, and minordifferences in geographical coverage, the figuresin this table do not always conform preciselywith those indicated elsewhere in this Survey.

a North America, western Europe (includingTurkey and Yugoslavia, excluding Cyprus),Australia, Japan, New Zealand, South Africa.

b Soviet Union and eastern Europe (excluding

of over-all growth in these countries to about 5 percent between 1966 and 1967. In contrast to the ex­perience in earlier years, this rate excee~ed thatachieved by the developed market economles.

In the European centrally planned economies, therate of growth between 1966 and 1967 was slightlylower than that recorded in the previous years butit surpassed the planned target. This growth reflectedan acceleration in industrial growth combined with

2

Yugoslavia), plus trade of mainland China,Mongolia, North Korea and North Viet-Namwith rest of the world.

C Latin America, Africa (other than SouthAfrica) and Asia (other than mainland China,Japan, Mongolia, North Korea, North Viet­Nam and Turkey).

d Excluding trade among mainland ChinaMongolia, North Korea and North Viet-Nam:

e Special category exports from the UnitedStates are included in exports to the worldbut. are not included in exports to any of th~regIOns.

a deceleration in agricultural growth. The perform­ance of agriculture in 1967 was, nevertheless, sa­tisfactory since it followed an excellent harvest in theprevious year and the sector continued to exert afavourable impact on the economy as a whole, Inmainland China, activities associated with the "cul­tural revolution" tended to disrupt operations inindustry and communications, although in 1967grain output was 10 per cent higher than in theprevious year.

Preliminary data and projections l suggest that therate of world growth between 1967 and 1968 islikely to be somewhat higher than that between 1966and 1967, especially in the developed market eco­nomies as a group. The signs of renewed upswinghave been clearest in the countries in which theslowdown in 1967 was most pronounced. There hasalready been a sharp recovery in the Federal Re­public of Germany. Even in the United Kingdom,where policies of restraint have continued to besevere, the rate of growth is almost certain to in­crease. A faster pace of growth in the United Statesis also apparent, though the recently enacted 10 percent surtax, combined with large cuts in the budget,will tend to hold down the rate of increase. InFrance, earlier expectations of a faster pace of growthfor 1968 have not been materially revised down­wards.

In the centrally planned economies the plannedgrowth rates of national income for 1968 are verysimilar to the actual achievement of the previousyear. Most of the countries are expecting a higherincrease of agricultural output, under normal cli­matic conditions, and a small deceleration in in­dustrial growth as compared with 1967.

The combination of better prospects in the worldmarket as well as the good agricultural performancein 1967/68 should place the developing countries asa group in a better position than they were in 1967.The food situation is likely to be much easier and thecombination of higher agricultural output and im­proved export earnings should facilitate a recoveryin industrial production and in investment.

The pattern of world production and trade2

World industrial production increased by 4.5 percent between 1966 and 1967 as compared with 7per cent between 1965 and 1966. The decelerationreflected mainly the slowdown in the market eco­nomies, especially in the more developed among them(table 1). In the centrally planned economies thegrowth of industrial production accelerated to almost10 per cent from 8 per cent.

The deceleration in the market economies wasaccompanied by a shift in the pattern of production.This was most pronounced in manufacturing. Thepace of expansion slowed only moderately in mining.Among the various branches of manufacturing, al­though the slowdown was general, clothing andtextiles, wood and basic metals registered the poorestperformance, especially in industrialized countries.In contrast, the expansion of food and other light

lBased in part on replies 'received from Governments tothe United Nations questionnaire of December 1967 on eco­nomic trends, problems and policies.

2 For background information, see tables 11 to 22 in theannex.

3

industries in the centrally planned economies wasvery rapid, reflecting a growing attention to the rais­ing of consumption levels.

While the pace of world industrial expansion wasdominated by trends in the developed market eco­nomies, the acceleration in the rate of world agri­cultural expansion from 3 per cent between 1965 and1966 to 4 per cent between 1966 and 1967 resultedchiefly from the performance of the developing coun­tries. For the first time in the Development Decade,the annual rate of increase in world agriculturalproduction approached that of industry. Moreover,the rise in food production outpaced the rise in popu­lation, especially in countries with relatively lowlevels of per mpita consumption. Large increases inthe 'Output of rice, maize, coffee and jute were onlypartially offset by declines in wheat, oats, cocoa andhard fibres.

The world production of unmilled rice in 1967/68rose by 9 per cent over the reduced crop level of1966/67. Substantial increases were achieved by mostof the maj or producing countries (India, Japan,Pakistan, United Arab Republic) despite less favour­able conditions in some exporting countries in Asia.Record yields per acre are being reported from manycountries, reflecting significant increases in the useof high-yield seeds, along with fertilizers. Worldmaize production increased by 10 per cent between1966 and 1967. Record crops were reported fromArgentina, Brazil, Mexico, South Africa and UnitedStates.

The coffee output of 1967/68 is estimated to beabout 10 per cent higher than the low figure of1966/67. Large increases are expected for Brazil,Ivory Coast and Indonesia. Colombia, the secondlargest producing country, is expected to produce thesame amount as in 1966/67.

World production of jute, which has been risingsteadily, increased by C1ibout 10 per cent between1966 and 1967. Offsetting these major increaseswere reductions in the production of wheat, oats,cocoa and hard fibres. Wheat output in 1967 droppedabout 3 percentage points from the level of 1966despite major increases in Europe, Asia and SouthAmerica. In North America, notwithstanding a 12per cent increase in acreage, adverse weather inCanada and, to a less extent, in the United Stateskept crops below the preceding year's record level.Wheat output of the Soviet Union-producer ofnearly one-fourth of the world crop-was aboveaverage but substantially below the record level of1966.

The 1967/1968 world cocoa-bean crop is estimatedto be slightly below that of the previous season.The increase in the Ghanaian output is expected tobe offset by decreases in the production of Brazil,Ivory Coast and Nigeria.

The deceleration in world trade between 1966 and1967 was even more marked than that of output.Total trade in 1967 reached a level of $214 billion, a5 per cent increase over that of 1966, compared witha 9 percent rise between 1965 and 1966. While thisdeceleration was widespread among various groupsof countries, the centrally planned economies werean .exception, in the wake of a significant increase inintra-trade.

The acceleration of trade of the developed marketeconomies also reflected the predominance of intra­trade and the slowing down in the 'pace of domesticactivities in these countries. By contrast, the trade ofAustralia, New Zealand, South Africa and Japanexpanded at a very rapid rate between 1966 and1967.

The slackening of trade of the developing coun­tries was sharper than that of the developed marketeconomies. This again reflects the slowdown in eco­nomic activity in the latter. However, despite theincrease in production in the centrally planned econ­omies their imports from the developing countrieswere smaller than in 1966.

The acceleration in the trade of the centrallyplanned economies was greater for imports than forexports. The growth in exports was unfavourablyaffected by the slowdown in economic activity inthe developed market economies while imports fromthem were less affected. Trade of mainland Chinawas sluggish; its exports to the world suffered anabsolute decline in 1967, reflecting principally a re­duction in shipments to south-eastern Asia.

POLICY PROBLEMS RAISED BY THE SLOWDOWN IN THE

DEVELOPED MARKET ECONOMIES3

Among the policy problems highlighted by theslowdown in the developed market economies is therelationship between domestic activity and externalbalance. With a few crucial exceptions, decelerationin a country's economy has again been associated withan improvement in the trade balance and vice versa.The most conspicuous examples in 1967 were thesharp increases in the payments surplus of the Fed­eral Republic of Germany and in the deficit ofJapan. At the same time, the need to improve theexternal account of the United Kingdom and theUnited States has drawn attention to the inadequacyof a short-term counter-cyclical policy in dealingwith persistent payments problems. To the extent thatthe beneficial payments impact of a slowdown derivesfrom the running down of stocks and thus imports,the effect is likely to be short-lived. As soon as re­vival sets in, stocks have to be replenished and thepayments position deteriorates.

This is at the root of the frustrating experience ofthe stop-go pattern of economic activities which

3 For background information, see tables 23 to 30 in theannex.

4

results in underutilization of capacity in the long runwithout, however, curing the fundamental paymentsproblem. The very nature of the short cycle reinforcesthe predominant role of stocks in the paymentspicture since longer-run factors in the trade perform­ance, such as improvement in capacity, design andmarket penetration, can hardly take effect within ashort span of time. It is for this reason that, overand above the emergency measures that have beenadopted for restraining economic activities in theUnited Kingdom, attention has been directed towardsstructural improvements and long-term increases inproductivity, inter alia, through the rationalizationof industries.

To the extent that the payments problem isstrongly influenced by capital items and extra­ordinary expenditures, such as direct foreign invest­ment abroad and foreign military expenditures, asin the case of the United States in recent years, re­ductions of domestic expenditure would have only alimited effect in improving the external balance.Attention has therefore been directed to specialmeasures governing these flows, as in the case ofvoluntary or direct controls of private investmentabroad and arrangements for German purchasesof United States bonds to offset the latter country'smilitary expenditures in the Federal Republic ofGermany.

Even if the link between domestic activity andexternal balance is a close one, the cost (in terms ofthe sacrifice of domestic production) of restraints im­posed in the interest of external balance may be ex­tremely heavy, as is the case with the United States,where the share of trade in the economy is small.This has attracted increased attention to the role ofequilibrating capital movements. Except in the caseof official operations, there is no assurance that capi­tal movements will be equilibrating, especially whena confidence factor is involved. How free capitalmovements should be is therefore a matter for policyjudgement. Restrictions on the capital market hamperits efficient functioning and thereby reduce its equili­brating role. On the other hand, a more liberal policymay facilitate large-scale speculative movements andaccentuate the payments disequilibrium.

Another set of questions raised by recent develop­ments relates to the responsiveness of price levelsto domestic activity. Here recent experienoe isvaried and complex. On the whole, the response hastended to be sluggish. Thus, the initial accelerationof activities in 1961-1965 was not accompanied byany pressure on prices and, conversely, the slowingdown in 1966 frequently coexisted with an accelera­tion in the rise in prices. This was partly the resultof favourable developments in productivity and costsduring the upswing and adverse developments dur-

ing the downswing. However, the long-run relation­ship may not be a simple one. If cost considerationsare more important than demand pressures in thedetermination of prices, a prolonged slackening mayfail to curtail an upward surge in cost when wagerises are not offset by productivity improvements. Atthe same time, a prolonged slackening in the activitieshas rarely failed to be reflected in prices. Here thequestion of "trade-off" between growth and stabilityarises. Increasing interest has, therefore, been mani­fested in incomes and price policies. The practicalimplementation of such a policy has, however, en­countered serious difficulties in most countries mainlybecause, in the fmal analysis, the issue becomes apolitical one. In countries where moral suasion hasbeen relied on, official guidelines for wages and priceshave tended to be ineffectual. More strenuous effortsin scrutinizing wages and prices not only raise diffi­cult administrative problems of enforcement but alsocourt political difficulties. As the market-place givesway to policy decision, grievances and inequities ofparticular groups become a direct responsibility ofthe Government. Moreover, wage drifts-i.e., risesover and above negotiated increases-elude the mostcareful control. Furthermore, wage restraint un­matched by comparable action in respect of profitsis likely to raise questions of equitable distributionof income; yet a squeeze on profits might wellhamper efficiency and growth. The search for aworkable incomes and price policy, in the contextof growth with stability, has thus become moreurgent, but recent experience has not pointed a wayto a speedy solution.

A third set of questions relates to the basic prob­lem of growth in the developed market economies.The slackening of growth rates-and in some casesabsolute declines, even though only brief-haveserved warning that sustained growth is notto be taken for granted. It is not sufficient to beassured that policy instruments exist to stimulateeconomic growth. It is also necessary to know thecost of applying these instruments in terms of suchgoals as external and internal balance. The fact thatthe recent slackening of activities and below-capacityoperations in the developed market economies havebeen strongly influenced by restraining measures in­dicates that goals other than growth have playedan important role. At the same time, recent ex­perience does not necessarily reveal the precise pre­ference of policy makers with respect to the weightsattached to the various obj ectives. Economic calcula­tions, however exact in a formal sense, remain crudeand uncertain. Thus, a policy of moderate restraintmay have been adopted because it was believed to beeffective in restoring balance of payments equi­librium. When it proved to be less than adequate,restraint may have been tightened, not because alower priority had been attached to growth in the

5

first place, but because there was little choice 111 anatmosphere of crisis.

These questions raise the issue of appropriatepolicy mix. Apart from uncertainty regardincr the

. . bpreCIse Impact of (and therefore the need for)specific policies, there is always likely to be a dif­ference between what is theoretically correct and~hat can be implemented. Recent experience pro­VIdes many examples of the difficulty of arriving atan appropriate mix of monetary and fiscal policy.The inflexibility of fiscal policy in many instancesdoes not stem from a lack of appreciation of thefiscal role in the economy, rather it is a consequenceof political considerations and procedural difficultiesthat stand in the way of major budgetary changes.Consequently, reliance has often had to be placedon monetary policy. Though the lopsidedness of thepolicy mix has in many cases been partially corrected-by selective controls and compensating measuressuch as favourable treatment of export credit, gov­ernment financing of mortgages and pegging of dif­ferentials between short-term and long-term ratesof interest-the policy measures have been more bluntand, paradoxically, also more complex than need be.

DEVELOPMENTS IN INCOME AND CONSUMPTION IN

THE CENTRALLY PLANNED ECONOMIES4

The rate of growth of the European centrallyplanned economies continued to be high in 1967.The rise in national income between 1966 and 1967amounted to 6.9 percent as against 7.5 per centin the preceding interval. The slight deceleration inover-all growth was entirely due to a slower rise inagriculture after bumper crops in 1966; industrialproduction accelerated in 1967 in every country ex­cept Czechoslovakia and even there it exceededthe planned rate.

The high rate of growth reflected substantial gainsin productivity. There was a 7 per cent increase inoutput per man in the centrally planned economiesin Europe as a group. In some countries, notablyCzechoslovakia, Eastern Germany and the Union ofSoviet Socialist Republics, this increase was con­nected with the faster introduction of new tech­nology and with reforms in planning and manage­ment. In Czechoslovakia, the 7.1 per cent growthin industrial output was achieved by a 1.1 per centincrease in employment. In Eastern Germany, the¥rowth of output was more than accounted for by an111crease in productivity. Productivity also increasedmarkedly in Romania and Hungary. Only in Poland,where the rise in employment was significantly higherthan planned, did it contribute more to expansion ofoutput than improvement in productivity.

4 For background information, see tables 31 to 36 in theannex.

There was a rapid rise in the levels of consumptionbetween 1966 and 1967, made possible by previoushigh rates of investment but also reflecting currentpriorities relating to consumption. This representeda shift in policy and it was accompanied by a rela­tively fast eX'pansion of light industries and facilitatedby the good harvest as well as by additions tocapacity. In Hungary, the increase in the outputof light industries was greater than that in producergoods. In the Soviet Union, light industry productionrose at almost twice the planned rate.

In most of the centrally planned countries retailsales expanded at a considerably higher rate thannational incomes. In the Soviet Union, the rate ofgrowth in retail sales surpassed that in fixed invest­ment for the third consecutive year. Current indica­tions point to a continuation of this trend: a sub­stantial acceleration in the growth of living standardsis the main feature of the national economic plan for1968, 1969 and 1970.5

The main exceptions to this development in 1967were Czechoslovakia and Eastern Germany. In theformer country, the large increment in national in­come went mainly into accumulation, especially ofstocks, which increased several times more than in­tended in the plan. This rise in stocks was largelyattributable to discrepancies between the forces ofsupply and demand. In Eastern Germany the tend­ency for the national income to increase considerablymore than personal consumption continued.

While the growth of consumption was accom­panied by a general rise in incomes, in most coun­tries the average income of farmers rose faster thanthat of urban workers and employees. As a result,the difference in the levels of living between thesetwo groups of population was reduced.

Although the growth in incomes and consumptionwas met to a great extent by expanding outputin consumer goods industries and services, itwas also supported by larger imports of con­sumer goods. On the whole, the equilibriumon consumer markets was maintained. However,the rapid expansion of incomes and the shifts indemand patterns did impose pressure on supply,particularly. in respect of certain types and qualitiesof goods offered to consumers. Though there havebeen substantial improvements in both the quantityand the quality of consumer goods during the pastfew years, factories have encountered difficulties inmaking adequate and prompt adjustments of outputto changing requirements. In some countries, modifi­cations of retail prices were used to balance thedemand and supply of particular commodities. It is

5 Pravda (Moscow), 11 October 1967, cited in EconomicSurvey of Europe in 1967: The European Economy in1967 (United Nations publication, Sales No.: E.68.ILE.l),chap. II, p. 76.

6

the intention to eliminate the remaining tensions inthe consumer market mainly by a faster expansionof consumer goods industries and an increase inflexibility in supply, made possible by economicreforms now under way.

In mainland China in 1967, consumption also in­creased faster than in preceding years, in relation toinvestment. In contrast to the experience in the Eu­ropean centrally planned economies, however, thiscan not be attributed mainly to a deliberate shift inpriorities. The high rate of increase in agriculturalproduction in 1967, which provided the bulk of con­sumption, could be traced in part to past policyefforts and in part to the relatively slight involve­ment of peasants in the "cultural revolution". More­over, there is some evidence that the rise in con­sumption was influenced by the manner in whichcentral authority gave way to local decisions in anatmosphere of change. There were unplanned in­creases in wages, and sometimes wages, and evenbonuses, were paid despite stoppages in production.The fact that working capital was sometimes divertedfor consumption for "revolutionary purposes" alsocontributed to the increase in consumption at the ex­pense of accumulation.

CROSS-CURRENTS IN THE DEVELOPING COUNTRlES6

Perhaps the most important development in thedeveloping countries in 1967 was the recovery inagriculture, after two years of virtual stagnation oc­casioned by drought in southern and south-easternAsia and parts of Africa. The excellent crops offood-grains in several Asian countries reflect theturn in the weather; but also contributing was asharp rise in yield in a number of areas where newseed varieties had been used. Offsetting this gain,however, was the less favourable external stimulus,in the wake of the slowdown in developed marketeconomies. The substantial deceleration in the growthof export earnings and of import capacity limitedindustrial expansion.

Political and military disturbances in various partsof the developing world had an important impacton several of the countries directly or indirectlyaffected. Diversion of resources for military purposeswas harmful to the development efforts of a numberof countries. Others, however, reaped some benefitfrom the reallocation of demand as a result of theconflicts.

In spite of relatively stagnant exports, the de­veloping countries as a whole managed to increasetheir imports yet accumulate international liquidity.This reflects in part an increased flow of resourcesfrom the rest of the world and the internationalagencies.

6 For background information, see tables 37 to 46 in theannex.

The gain in total supplies was large enough toprovide a moderate increase in per capita consump­tion and substantially expanded capital formation­induding an exceptionally large swing in inventorymovements-in the developing countries.

The over-all rate of growth in developing countriesaccelerated appreciably between 1966 and 1967. Thisreflects the improved performance of agriculture.Industrial production continued to decelerate, reach­ing the lowest growth rate in the 1960's. At 4 percent it was lower than that of agriculture for thefirst time in the 1960's. Preliminary estimates in­dicate that after rising 4 per cent between 1964 and1965, the combined gross domestic product of thedeveloping countries increased about 3 per cent in1966 and between 5 and 6 per cent in 1967.

The loss of momentum in industrial activity wasapparent in most of the maj or developing countries.In India and Pakistan industrial expansion washeld back by the low agricultural output of 1965and 1966 which limited industrial inputs and causedhigh food prices, with a negative effect on consumerdemand for industrial products. In Latin America,an industrial slowdown in Argentina and Brazil wasoffset by significant advances in Mexico and Vene­zuela. Economic activities in some of the principalcountries of Africa and the Middle East were se­riously disrupted by military conflict.

The slowdown of world production and demandaffected the exports of developing countries. Theincrease in their export earnings was less than 3 percent between 1966 and 1967, compared with 7 percent in the previous interval. This deceleration inexport activities was common to all the regions.Among the countries that registered a reduction inexports between 1966 and 1967 were exporters ofcopper (Zambia), wool (Argentina, Uruguay), cof­fee (Brazil, Costa Rica, Guatemala, Kenya) andrubber (Malaysia); countries suffering as a resultof political and military disturbances (Iraq, Jordan,Nigeria, Syria, Republic of Viet-Nam and United

7

Arab Republic); and those with serious structuralproblems (such as Burma, Ceylon, Indonesia andSierra Leone). Those registering large increases inexports in 1967 were the petroleum-producing coun­tries not involved in the Middle East crisis (Iran,Saudi Arabia, Libya), and exporters of rice (Cam­bodia), cocoa (Ghana, Cameroon, Ivory Coast), cot­ton (El Salvador, Nicaragua, Sudan), sugar (Do­minican Republic) and manufactured products(China (Taiwan), Hong Kong, Israel, RepUblic ofKorea). Exports of China (Taiwan) and the Re­public of Korea were stimulated by the surge indemand from the Republic of Viet-Nam.

Deceleration in the growth of imports occurred inall developing regions. In general, countries in whichexports slackened or declined cut back their imports.

For the developing countries as a group, the mainchanges in the pattern of resource availabilitystemmed from the relatively large increase in thesupply of agricultural commodities and the rathermodest increase in the supply of imported goods.Stocks 'Of agricultural commodities, which hadbeen drawn down for two successive years tosustain consumption and exports, seem to havebeen substantially increased. Small increases inthe volume of imports and in the output fromlocal heavy industries indicate modest expansion infixed investment in 1967. In addition, the slow rateof export growth suggests a rate of increase in theresources available for domestic use greater thanthe rise in total supply. In the aggregate, therefore,the rate of increase in gross capital formation, aswell as in consumption, was probably higher than in1966.

Reflecting the gains in total supplies in 1967, therewere indications of a general improvement in theinternal balance of the developing countries. Decel­eration of price increases was significantly morefrequent, and acceleration rather less frequent, in1967 than in. 1966. The proportion of countriesregistering high rates of increase in the cost of living(10 per cent or more) also declined in 1967.

Chapter II

INTERNATIONAL MONETARY AND TRADE DEVELOPMENTS

INTERNATIONAL PAYMENTS AND MONETARY

PROBLEMS

The payments diseqnilibrium

The year 1967 saw a worsening in the paymentssituation of the reserve currency countries. A crisisof confidence developed and this led to a massiveattack on these currencies and a run on gold. TheUnited Kingdom was forced to devalue in November1967 and the gold pool countries suspended thesupply of gold to the private market several monthslater. The crisis necessitated various defensive mea­sures, but it also induced some further steps alongthe road of international monetary reform.

The imbalance in the payments position of theUnited Kingdom and the United States was nota new phenomenon. The United Kingdom had ex­perienced chronic payments difficulties in the post­war period and had remained in deficit ever sincethe payments crisis of 1964. There was a temporaryimprovement in 1966 but it proved to be short-lived:the surplus registered in the fourth quarter of 1966when the balance of payments responded to therestrictive measures undertaken in the middle of thatyear, did not last. In 1967 imports rose again, whileexport expansion came to a halt. Although the im­balance was attributable at least in part to short­run developments-such as the slack in economicactivity in western Europe, the closure of the SuezCanal following the outbreak of hostilities in theMiddle East in June 1967, and the prolonged dockstrikes-the cumulative erosion of confidence insterling raised serious questions about its strength.This was a matter of public discussion, especially inconnexion with the British application for mem­bership in the European Economic Community(EEC). Although it was widely known that theUnited Kingdom balance of payments had been infundamental disequilibrium for some time, when thecrisis oocurred it had a severe immediate impact.There was a massive onslaught on the pound that leftthe Government little recourse but to devalue.

Although the underlying strength of the dollar hasbeen much greater than that of sterling, the im­balance in the United States payments position hasalso been persistent. The cumulative effect of pro­longed deficits was a decline in total reserve assets

8

from about $23 billion at the end of 1958 to lessthan $15 billion towards the end of 1967 (see table3). In the same interval United States liquid liabili­ties rose from about $17 billion to $33 billion.

While the United States balance of paymentsdeficit was welcomed in the early post-war years, asit resulted in replenishment of European reservesdepleted by the war and post-war reconstruction, bythe late 1950's concern regarding dollar shortagebegan to give way to doubts about the impregnabilityof the dollar. The turning point coincided with thegathering strength of the continental European cur­rencies after return to convertibility in 1958, and themounting reserve losses suffered by the UnitedStates. Although intermittent improvements in thepayments situation gave rise to hopes of approachingequilibrium, the deficits have persisted throughoutthe ten-year period that has elapsed. In 1967 thedeficit of $3.6 billion was one of the largest of thewhole period. Restrictive measures designed to cor­rect the imbalance grew more severe over the years.By 1968 some restrictions on the outflow of capitalwere made mandatory.

Under the circumstances, a gold crisis became thelogical counterpart of the crisis of the reserve cur­rencies. For, under the gold-exchange standard ofthe post-war years, official holdings of dollars areredeemable in gold at the fixed price of $35 an ounce.By the end of 1967 the official gold holdings of theUnited States had declined to $12 billion from almost$23 billion at the end of 1957, while liquid liabilitiesto official institutions reached almost $16 billion ascompared with $9 billion a decade earlier. It thusbecame increasingly evident that unless confidencewas restored, a run on gold of massive proportionsmight develop.

N or was the source of attack limited to officialinstitutions, for gold became a favourite vehicle forprivate hoards as confidence in the reserve currenciesweakened. In addition, the demand for industrialuses, especially in connexion with defence, increaseddramatically. As a result, private absorption ac­counted for about $3 billion in 1967 in contrast to arange of between $0.9 billion and $1.8 billion duringthe period 1960-1966 and less than $0.6 billion in1958. The surge in demand for gold, moreover,coincided with a slackening in its supply. World

Table 3. United States and United Kingdom reserve assets, liquid liabilitiesand balance of payments position, 1958-1968

(Billions of dollars)

United States United Kingdom

Liq'Hid tiabilities C Liquid liabilitiesBalance ofBalance of

Total To central payments Total To central current andYearn reserve Gold

Total banks on liqui-- reserve GoldTotal 'monetary long~te1'm

assets stockband dity assets stockb

institu.~ capitalGovernments basis tions t1'ansactions

1958 ......... 22.54 20.58 16.85 9.65 -3.37 3.11 2.81 9.39 6.70 0.421959 21.50 19.51 19.43 10.12 -3.87 2.80 2.51 9.82 6.97 -0.301960 19.36 17.80 21.03 11.09 -3.90 3.72 2.80 10.87 6.32 -1.261961 18.75 16.95 22.94 11.83 -2.37 3.32 2.27 9.93 6.44 0.201962 .......... 17.22 16.06 24.07 12.71 -2.20 3.31 2.58 10.69 6.22 0.081963 ......... 16.84 15.60 26.32 14.35 -2.67 3.15 2.48 11.40 6.53 -0.111964 . . . . . . . . . . . . 16.67 15.47 29.00 15.42 -2.80 2.32 2.14 11.76 6.86 -2.171965 ............ 15.45 13.81d 29.12 15.37 -1.34 3.00 2.27 11.87 6.75 -0.961966 ............ 14.88 13.24 29.78 13.66 -1.36 3.10 1.94 12.50 7.46 -0.371967 14.83 12.07 33.14 15.69 -3.57 2.70 1.29 11.74 7.49 -1.41"1968:

January 14.62 12.00 33.08 15.25 2.75February 14.79 11.90 33.30 15.36 2.77March ... 13.93 10.70 2.72April .......... 13.84 10.55 2.77

Source: Centre for Development Planning, Projectionsand Policies of the United Nations Seoretariat, based onBoard of Governors of the Federal Reserve System, FederalReserve Bulletin (Washington, D.C.), May 1968, and Inter­national Monetary Fund, International Financial Statistics(Washington, D.C.), June 1968.

a End of period.b Including gold sold to the United States by the Inter­

national Monetary Fund with the 'right of purchase, and golddeposited by the IMF to mitigate the impact on the United

production of gold had remained static since 1964and actually declined slightly to $1.4 billion between1966 and 1967. Furthermore, sales from the USSR,which rose from about $200 million to $500 millionannually in the first half of the 1960's ceased com­pletely in 1966 (table 4) .

The translation from crisis of confidence to goldcrisis had occurred in 1960 when a run on golddeveloped as a result of the United States paymentsdeficit coupled with various political and economicuncertainties. The price of gold had surged above$40 per ounce in the London market. It was in re­sponse to this challenge that the gold pool was or­ganized in 1961. Confidence was soon restored withthe help of favourable developments elsewhere. Al­though the gold market had to be supported by thepool from time to time, the combined strength of theworld's principal financial powers proved to beadequate for calming speculative fevers. The situationdeteriorated rapidly in 1967, however; in the middleof the year France ceased to take active part in thepool operations. The assault on the gold marketgathered strength after devaluation of sterling, asthe pressure on sterling was extended to the dollar.As a result, the loss of gold by the members of thepool amounted to about $1 billion in the first monthafter devaluation.

9

States gold stock of foreign purchases for the purpose ofmaking gold SUbscriptions to the IMF under quota increases.

C Because of changes in reporting coverage, figures shownfrom 1960 onwards are not comparable with those shownfor earlier yeacrs.

d Excluding $259 million gold subscription to the IMF inJune 1965 for a United States quota increase which becameeffective on 23 February 1966.

e Estimate.

The determination to hold the price of gold provedto be unconvincing as the prospects for a rapidelimination of the United States payments deficitworsened. The rate of gold loss reached extremeproportions in the final stages of the crisis in March,when the United States alone suffered a loss ofseveral hundred million dollars in a single day.

Events thus made it clear that existing interna­tional monetary arrangements could not be main­tained. Three main alternative courses of actionseemed to be open: a rise in the price of gold, theseverance of the link between the dollar and gold,or a compromise combining elements of both. Whilethe merits of the various alternatives had been thesubj ect of extended discussion in both official andunofficial circles, the dominant considerations govern­ing the choice were fairly evident.

If gold were revalued, the benefit would accrueto a few major producers and countries which hadconverted a large part of their reserve holdings intogold. In contrast, those which had refrained fromthe rush into gold, either voluntarily or in responseto persuasions, would be penalized. Furthermore, itwas felt that raising the price of gold would onlyprolong the life of a system which was inherentlyunstable, and thus hinder efforts at reforms aimed

Table 4. New gold supply and use of gold, 1958-1967(Millions of dollars)

Sales Total Increase PrivateYear Cold by gold in absorp·

production USSR supplY" monetary tioncstockb

1958 ............ 1,051 220 1,271 683 5881959 ............ 1,127 250 1,377 746 6311960 . . . . . . . . . . . . 1,178 200 1,378 310 1,0681961 ............ 1,215 300 1,515 607 9081962 . . . .. . . . . . . . 1,300 215 1,515 372 1,1431963 ............ 1,356 550 1,906 825 1,0811964 ............ 1,406 450 1,856 712 1,1441965 ............ 1,440 550 1,990 213 1,7771966 . . . . . . . . . 1,440 1,440 -56 1,4961967 ............ 1,416 1,416 -1,630 3,0461967 :

First quarter ., . 355 355 -63 418Second quarter . 360 360 -142 502Third quarter .. 357 357 -13 370Fourth quarter . 344 344 -1,412 1,756

Source: Centre for Development Planning,Projections and Policies of the United NationsSecretariat. based on International MonetaryFund, lnternat£onal F£t!anc£al Stat£st£cs, May1968.

a Based on gold production, excluding that ofUSSR, eastern Europe, mainland China andNorth Korea, plus sales of gold by the USSR.

b Including gold holdings of the InternationalMonetary Fund, Bank for International Settle-

at making the creation of reserves independent ofthe haphazard and inadequate growth in the supplyof gold. In addition to these basic considerations,there was the practical difficulty posed by the in­ability of the Government of the United States torevalue the dollar in terms of gold without con­gressional authorization. A full public debate onthe issue would undoubtedly have had an unsettlingeffect on the world's financial markets, especiallyif the debate had been a prolonged one.

Despite these considerations, it was technicallyfeasible for the United States to change the long­established practice of free dollar-gold convertibility.The obligation of the United States as a member ofthe International Monetary Fund could be fulfilled,as in the case of other nations, by operations onthe foreign exchange market. The demonetizationof gold would, however, have had serious repercus­sions on the international monetary system in whichthe role of gold remained central. There would havebeen problems of the adequacy of foreign exchangereserves to maintain exchange stability. There wouldalso have been problems of relations with countrieswhich normally settle accounts by transfers of gold.These problems could have been dealt with only ifstrong international co-operation in the new interna­tional monetary system was forthcoming.

The actual solution to the gold crisis was a com­promise. On 15 March 1968, the London gold marketwas dosed. During the following week-end, the Gov-

10

ments and European Development Fund, as wellas gold 'reserves of countries other than the cen­trally planned economies.

c Estimate of private absorption includes goldfor artistic and industrial uses and private hold­ings. The estimate of private absorption includessome gold acquired by monetary authorities butnot reported in official holdings compiled by theIMF. Private absorption should be revised up­wards for 1966 and 1967 to the extent of goldsales, if any, by the USSR.

ernors of the Central Banks of the gold pool mem­bers decided at a meeting in Washington that offi­cially held gold should be used only to effect transfersamong monetary authorities; they also decided notto supply gold to any gold market, and in view ofthe prospective establishment of a new reserve fa­cility the existing stock of monetary gold was deemedsufficient, rendering further purchase of gold fromthe market unnecessary. The immediate effect of thisaction was to establish a two-price system for gold,one being the old price of $35 an ounce for officialsettlements and the other a free market price forprivate purchases.

It is as yet too early to assess the workings ofthe two-price system. The free market price of goldhas risen considerably above the level of $35 anounce, and has penetrated the previous highs around$40 per ounce. The question arises whether a widen­ing of the gap between the two prices might notendanger the system. In the first place, there mightbe reluctance on the part of central banking institu­tions to settle accounts by sales of gold at a pricemuch below that on the private market. As a con­sequence, official gold holdings might be largelyimmobilized as a part of international liquidity. Inas­much as the United States continues to maintainconvertibility of the dollar into gold, it could losemore gold even if its payments balance were restored,since foreign official holdings of dollars remainsubstantial.

Reform of the international1nonetary system,

In the final analysis, the long-term viability ofthe two-price system will depend on the outcomeof the evolving international monetary system. Theneed for reforming the gold-exchange standard hadbeen debated for a long time, but it took severalmore years of discussions and negotiations before anew reserve facility was finally conceived.

On 26 August 1967 the Ministers of Financeand the Governors of the Central Banks of theGroup of Ten agreed in London on the outline ofa contingency plan for the establishment of a newreserve facility. In September of the same year theBoard of Governors of the International MonetaryFund at their meeting in Rio de Janeiro adopted aresolution which requested the Executive Directorsto complete their work on the establishment in theFund of a facility for special drawing rights (SDR).On 29 and 30 March 1968 the Ministers and CentralBank Governors of the Group of Ten met again inStockholm and gave their approval (with France dis­senting) for the immediate presentation of the pro­posed amendment to the Articles of Agreement ofthe Fund, which was to be attached to a resolutionand submitted by correspondence for a vote to theGovernors of the Fund. The Governors have sinceadopted the resolution. The proposed amendmentwill go into effect after it has been accepted by sixty­five members having at least 80 per cent of the totalvoting power. It is expected that ratification willtake about a year.

The plan, if adopted and activated, would bethe most significant extension of the functions ofthe IMF since its inception. The key feature of theestahlishment of a new facility based on special draw­ing rights is the deliberate creation of a supplementto existing reserve assets as the need arises. Sincethe special drawing rights are intended to be reserveassets rather than reserve credits, they are uncon­ditional in character. The new rights contrast withthe bulk of the Fund's credit tranches which areconditional; they also differ from the automaticdrawing rights since they will be deliberately created.For these reasons the special drawing acoount willbe separate from the general account which will con­tinue the present operations and transactions of theFund.

At the same time, provlslOns are made to ensurethat reserve creation will be decided upon with anaffirmative vote of 85 per cent as contrasted withthe present 80 per cent applicable to quota increase,and the simple majority for all other decisions.1

Furthermore, provision has also been made for a

1 See, however, amendments on voting requirements inInternational Monetary Fund, Proposed Amendment ofArticles of Agreement (Washington, D.C., 1968).

11

member of the Fund to "opt out" as well as to "optback in". Once the new reserve asset is created itsacceptability is assured by obligations of participantsto accept it for settlement of payments. Measures fordiscouraging participants from using up the newreserve assets as fast as possible have been devised,though their adequacy remains to be demonstrated.

The extent to which the new asset might supple­ment the existing international liquidity will dependon the willingness of the principal Powers to createthe asset. A creation of between $1 billion and$2 billion annually for five years would amount toan addition of $5 billion to $10 billion as comparedwith the total world liquidity of about $70 billion atpresent. Compared with the average deficit in thepast ten years, the possible country allocation wouldbe sizable in such countries as the United Kingdom,but relatively small in the case of the United States(see table 5).

vVhile the precise relation between the new reservefacility and the reserve requirements obviouslyvaries from country to country, there is no doubtthat the facility is designed to meet the long-termneeds of international liquidity rather than as ashort-term remedy for payments imbalances. Indeed,major imbalances in the world's payments couldimpede the orderly activation and smooth function­ing of the new facility. There is, therefore, an under­standing that both the United Kingdom and theUnited States will endeavour to eliminate theirpayments deficits. Inasmuch as the United Kingdomhas accumulated external debts, especially in con­nexion with the recent sterling crisis, it is envisagedthat it will move to a position of substantial surplus.

Table 5. United Kingdom and United States:hypothetical allocation of special drawing rightsas a percentage of balance of payments deficit,five-year averages, 1958-1967

Period United UnitedKingdom States

1958-1962 . . . . . . . . . . . . . . . . . . . 47.6 5.41959-1963 ................... 29.3 5.71960-1964 ................... 12.4 6.11961-1965 ................... 13.7 7.51962-1966 . .................. 11.4 8.21963-1967 .. , ................ 8.1 7.3

Source: Centre for Development Planning, Projectionsand Policies of the United Nations Secretariat, based ondata from national sources.

Note: The hypothetical allocation of special drawingrights is based on a total annual allocation of $1 billion toall members' of the International Monetary Fund in propor­tion to their existing quotas in the Fund, taking into accountthe reconstitution requirements for a five-year period. Thepayments deficit for the United Kingdom refers to balanceson cur,rent and long-term capital account, while that for theUnited States refers to liquidity balance.

International credit and the debt problem

This raises the question of the adequacy andappropriateness of international co-operation as wellas of domestic policies. The immediate question iswhether the international credit so speedily providedduring the crisis days has posed a serious problemof repayment. While full information is not availableon the precise amount of credit actually utilized bythe United Kingdom, the almost $3 billion of externalcredit announced at the time of devaluation con­sisted of a $1.4 billion stand-by agreement fromthe International Monetary Fund and $1.5 billionfrom central banks. The central bank credits wereshort-term in character, and although they couldnormally be renewed there was inevitably someuncertainty. A funding operation would thu; relievethe pressure. For this reason, the United Kingdomdecided to draw the $1.4 billion stand-by creditfrom the Fund and use the proceeds to repay partof the central bank credits. It is significant that thiswithdrawal occurred immediately after the drawingfrom the Fund of $745 million2 by France in June1968 in face of pressures against the franc. Thecombined result of the two drawings has been todeplete further the resources of the Fund. Evenbefore these massive drawings, only about $3 billion(other than the dollar and the sterling) of theFund's holdings of currencies totalling $18 billionwere available for lending. The drawings thus neces­sitated activation of the General Agreement toBorrow as well as sales of gold from the Fund

2 Subsequently, a further drawing. of $140 million wasmade by France.

to obtain the needed currencies. At the same time,the Fund's holdings of currencies readily availablefor lending have been further reduced.

A far greater repayment problem for the UnitedKingdom than the central bank credits stems fromthe almost $12 billion of sterling balances. Therehave been indications that a part of the balanceshas become volatile, especially after the devaluationof sterling. Thus a number of countries with sterlingbalances have diversified their holdings by convert­ing sterling into gold or other currencies. In the caseof Hong Kong, agreement has been reached to givea limited exchange guarantee on the value of theLondon balances. While such a guarantee mightprovide an incentive for keeping sterling balances,it could also establish a precedent. To some extent,the problem of the sterling balances had been rec­ognized by the Basel arrangements; part of thatcredit was explicitly granted for the purpose ofoffsetting fluctuations in sterling balances. In Feb­ruary 1968, a $1 billion credit was again made forthat purpose; this was for a year as contrastedwith three months normally applicable to swapfacilities made earlier. Discussions are currentlyunder way for a possible broadening of fundingarrangements, the desirability of which has beenrecognized by a number of central bankers inEurope.

In the case of the United States, central bankswap arrangements rose markedly from about $700million in 1962 to over $7 billion in March 1968(table 6). During this period the duration of thesearrangements had been extended from the usual

Table 6. United States: amount of swap arrangements under Federal Reserve reciprocal currencyagreements, 1962-196Sa

(Millions of dollars)

Institution

Austrian National Bank .National Bank of Belgium .Bank of Canada .National Bank of DenmarkBank of EnglandBank of FranceGerman Federal Bank ..Bank of ItalyBank of JapanBank of MexicoNetherlands BankBank of Norway .Bank of Sweden .Swiss National Bank .. , .Bank for International Settlements:

Swiss francs/dollars .Authorized European currencies/dollars

Total .

1962

50250

505050

50

100

100

700

1963

5050

250

500100150150

50

50100

100

1,550

1964

5050

250

500100250250150

100

50150

150

2,050

1965

50100250

750100250450250

100

50150

300

2,800

1966

100150500

1,350100400600450

150

100200

200200

4,500

1967

100150500100

1,350100400600450130150100100250

250300

5,030

19M!

100225750100

1,500100750750750130225100200400

400600

7,080

Sottrce: Centre for Development Planning, Projectionsand Policies of the United Nations Secretariat, based onBoard of Governors of the Federal Reserve System, FederalReserve Bulletin, various issues.

12

a Data refer to 31 August of year stated except for15 September for 1966 and 8 March for 1968. '

three to six months to as long as a year in somecases. At the same time, the United States hadreinforced this swap network with longer termtreasury issues of special certificates and bondsdenominated in the European currencies (table 7).

Impact of sterling devaluation

The expressions of international co-operationcalled forth by the recent monetary crisis were notlimited to the extension of credit facilities andthe reform of the world's monetary system. Theywere also evident in the reaction to sterling devalua­tion.

The fundamental problems of sterling had longbeen in evidence. One of the reasons why devalua­tion had been resisted was apprehension aboutpossible adverse international reaction. Since sterlingremained a major trading and reserve currency ofthe world, there was uncertainty as to whether thebeneficial impact on the external position ofthe United Kingdom might not be offset by com­petitive devaluation in other countries. There wasalso fear that the forces unleashed by widespreaddevaluation might be unsettling in their impact onthe world economy as a whole.

The reaction of the nations of the world boretestimony to a high sense of concern for the stabilityof the international monetary system. Unlike afterthe devaluation of 1949, none of the major industrialcountries followed suit in 1967 (table 8). Thosewhich did devalue were on the whole smaller coun­tries, accounting for about 6 per cent of world trade(table 9). This reflects the general consensus thatexchange rates of sterling had been out of line.But it also reflects some international harmonizationof policies. Indeed, had not the United Kingdombeen reasonably sure of the reaction pattern of other

major countries, the magnitude of the devaluationmight have been closer to the 1949 figure of 30.Sper cent rather than the 14.3 per cent that was infact adopted. \'Vhen account is taken of the differingadjustments made by other countries, the "effectiverates" of the two devaluations were in fact remark­ably close (table 8).3

The non-sterling countries which devalued in thewake of the United Kingdom were Denmark, Israeland Spain (not counting countries such as Brazil,whose action was not attributable to the Britishmove). In all these countries the decisions wereinfluenced by payments problems encountered priorto the sterling devaluation. Furthermore, althoughthe share of trade of these countries with the UnitedKingdom ranged from about a tenth to nearly aquarter, the United Kingdom was more importantto these countries (except in the case of Israel) asan export market than as a source of imports(table 10).

The decision for Israel was, in fact, a difficultone. Devaluation was chosen in spite of an oppositerecommendation by an economic study group. It islikely that the prospects of gains of Israeli exportsin other markets weighed more in the decision thanthe avoidance of losses in the United Kingdommarket. Moreover, devaluation as an export assist­ance spared the Government from the need to offerto exporters financial assistance, and was thus moreacceptable from the budgetary point of view. It wasalso in line with the reflationary policy recentlyadopted by Israel.

\Vhether to follow the lead of the United Kingdomwas a choice open to the sterling countries also.

3 For a comparison of the effective rates of the two de­valuations, see International Moneta'ry Fund, InternationalFinancial Statistics, January 1968.

Table 7. United States: utilization of selected credit facilities, 1962-1968(Millions of dollars eqttivalent)

United Statesdrawing TTa:fTSacticns by Federal Reserr/c Syste''''' United States

of fm'eign under Tedprocal currenc::y a1Tangcments treaSt/1'Y

Year currencies securities-from the Dro'l.f.J-- RePay· Net Net out- foreign cur-

l11 ternational ings ments drawIngs standing rency sen:esMonetary amount o'ut~

Pund standing a

1962 ......... 421 191 230 230 2991963 768 614 154 384 7601964 ......... 525 475 564 -89 295 1,0861965 ......... 435 690 850 -160 135 1,2081966 .. , ...... 680 710 565 145 280 8601967 . . . . . . . . . 1,278 1,791 1,2001968b . . . . . . . . . 200 -1,234 557 1,490

SOlwce: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on Board of Governors of theFederal Reserve System, Federal Reserve Bul­letin. various issues.

a Amount outstanding as of 31 December of

13

year stated or 1 January of following year.N on-marketable United States treasury bondsand notes issued to official institutions payablein foreign cUHeneies.

b Up to 8 March 1968.

Table 8. Selected countries: effective depreciationor appreciation of currency as measured by thecountry distribution of exports and imports,average 1965-1966

(Percentage)

Table 8. Selected countries: effective depreciationor appreciation of currency as measured by thecountry distribution of exports and imports,average 1965-1966 (continued)

ElJective depreciationor appreciation

measured bydistribution of

Ct>1tntry group Total trade E:rPorts I mport.r

Source: Centre for Development Planning, Pr~jections

and Policies of the United Nations Secretariat, based onInternational Monetary Fund, Intemational Financial Sta­tistics, June 1968, and table 8 above.

.. vVarld total trade excludes that of centrally plannedeconomies and Cuba.

b Devaluation took place in November 1967.

Countries that devaluedb 14.3 12.9 15.8United Kingdom .... 8.3 7.8 8.8All other countries that

devalued .. ' 6.0 5.1 7.0Sterling 2.9 2.7 3.1Non-sterling 3.1 2.4 3.9

Countries that did not devalue 85.7 87.1 84.2Sterling 8.3 8.1 8.4Non-sterling 77.4 79.0 75.8

100.0

Imports

-9.0-8.3

-6.1-9.5

-10.9-7.9

-10.2--':10.6

100.0

Effective depreciationor appreciation

meas'u,red bydistribu,tion of

E:rports

-9.8-6.2

-9.1-3.1

-13.8-4.8

-10.6-12.1

100.0

Devalu­ation

relativeto gold

-14.3--':14.3

-14.3-14.3-19.4-14.3-14.3-14.3

Share of exports and imports in world"by country group, average 1966-1967

(Percentage)

Group andcountry

JamaicaMalawi

Malta .Mauritius .New Zealand .Sierra Leone .Trinidad and TobagoUnited Kingdom .....

Table 9.trade,

World" .. ,

Source: Centre for Development Planning, Projectionsand Policies of the United Nations Secretariat, based onInternational Monetary Fund and International Bank hrReconstruction and Development, Direction of Trade (\Vash­ington, D.C.), annual issues for the years 1962-1966, andInternational Monetary Fund, International Financial Sta­tistics, ] anuary 1968.

Note: Minus sign signifies depreciation. and no sign appre­ciation. Devaluation took place in November 1967.

This option reflected the informal nature of therelationship that prevails among the countries ofthe sterling area. It 1S significant that virtuallyall the major countries of the sterling area chosenot to devalue, although they were outnumberedby those that did.

A crucial factor in the decision of these countrieswas that the United Kingdom was not a majorexport market, although it was important as a sourceof supply for most of these countries. The main

1.20.90.72.51.8

1.31.2

4.41.84.51.84.9

2.62.63.75.02.4

3.34.6

Imports

5.25.93.2

-10.8-11.2-8.3

-10.7-14.3

-8.1-3.6-6.3-7.4

-7.3-3.8

-17.5-6.2

-4.8-10.2-11.3

2.11.4

E:rports

1.41.31.03.01.7

4.93.55.2

4.14.03.73.83.8

3.23.01.85.73.2

3.85.4

-10.4-13.3-6.5

-10.7-16.4

-7.9-2.1-7.4-6.1

-8.8-3.4

-21.9--4.1

-4.2-12.0-12.1

Devalu­ation

relativeto gold

-14.3-14.3-14.3-14.3-20.0

-14.3-8.9

-14.3-14.3

-14.3-5.7

-24.6-14.3

-7.9-14.3-14.3

Group andcountry

UgandaZambia

Sterling area countries thatdevalued

Aden .Bahamas .Barbados .Bermuda .Ceylon .

Cyprus .Fiji .Gambia .Gibraltar .

Guyana .Hong Kong .Iceland .Ireland .

Non-sterling area countriesthat devalued

Denmark .Israel .Spain .

Sterling area cottntries thatdid not devalue

Australia .Burma .Ghana .India .Kenya .

Kuwait .Libya .Malaysia .Nigeria .Pakistan .

Singapore .South Africa .United Republic of Tan-

zama .

Selected industrial countriesthat did not devalue

Canada .France .Germany (Federal Repub-

lic of) .Italy .Japan .Sweden .United States .

14

Table 10. Selected countries: share of exports to and imports from world,by group and country, average 1965-1966

(Percentage)

Share of exPorts to Share of imports from

GrouP andcountry

Selected industrial countries that didnot devalueCanada .France .Germany (Federal Republic of) ..Italy .Japan .Sweden .United States .

N on-sterling area countries thatde'valuedDenmark .Israel .Spain .

Sterling area countries that did notdevaltteAustralia .Burma .Ghana .India .Kenya .Kuwait .Libya .Malaysiab , ............••..•••Nigeria .Pakistan .Singaporeb ..............•.•.•••••

South Africa , .United Republic of Tanzania .Uganda .Zambia .

Sterling area countries that devalued"Aden , .Bahamas .Barbados .Bermuda ........................•Ceylon .Cyprus .Fiji .Gambia .Gibraltar .Guyana .Hong Kong .Iceland .Ireland .Jamaica .Malawi .Malta .Mauritius .New Zealand .Sierra Leone .Trinidad and Tobago .

United Kingdom .

UnitelfKingdom

5.812.14.63.94.72.4

13.05.9

18.622.912.112.1

20.416.4

6.022.717.621.517.417.2

8.337.412.517.533.428.317.634.7

33.521.6

6.043.823.625.432.942.248.057.123.313.718.569.926.954.430.378.545.064.715.0

Othercountries

thatdevalued'

6.22.45.77.15.26.7

12.16.3

4.64.57.23.6

7.411.419.73.07.15.85.64.74.33.1

11.017.25.3

10.98.21.8

4.75.51.3

11.01.15.6

12.38.6

15.33.69.81.54.62.96.30.43.61.5

10.9

17.0

Allcountries

thatdevalued

12.014.510.311.09.99.1

25.112.2

23.227.419.315.7

27.827.825.725.724.727.323.021.912.640.523.534.738.739.225.836.5

38.227.1

7.354.824.731.045.250.848.057.138.617.328.371.431.557.336.678.948.666.225.9

17.0

UnitedKingdom

5.86.85.04.44.72.1

15.06.8

13.516.619.29.2

21.125.610.027.110.131.216.015.121.430.815.017.127.731.837.321.2

25.411.49.3

30.312.817.232.421.552.842.531.810.313.651.223.135.438.225.836.930.716.7

Othercountries

thatdevalued'

4.52.23.14.82.82.48.96.2

1.81.51.32.2

3.44.02.53.91.42.43.03.17.03.01.8

11.62.74.63.80.9

3.84.22.45.22.72.56.6

10.8

2.613.7

1.39.13.25.12.73.52.65.87.93.7

16.6

Allcountries

thatdevalued

10.39.08.19.27.54.5

23.913.0

15.318.120.511.4

24.529.612.531.011.533.619.018.228.433.816.828.730.436.441.122.1

29.215.611.735.515.519.739.032.352.845.145.511.622.754.428.238.141.728.442.738.620.4-

16.6

Sotwce: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on International MonetaryFund and International Bank for Reconstructionand Development, Direction of Trade, annual

15

issues for the years 1962-1966.a All areas listed plus other British territories

and Faroe Islands.b 1966 only.C Excluding United Kingdom.

exceptions were India and South Africa. In the caseof India, devaluation had taken place as recentlyas 1966. For Ghana, a devaluation occurred earlierIn 1967. In the case of South Africa, the effectof its relatively heavy dependence on the UnitedKingdom market was lessened by the fact that itsmajor export, gold, had a ready world market. Atthe same time, a devaluation would have resultedin increased earnings of the export sector in termsof rands as well as higher costs for imports. Sucha development was to be avoided at a time whenthe domestic economy was buoyant and the paymentsposition strong.

In the case of Malaysia, in spite of the decliningprice of rubber and the British withdrawal frommilitary bases there, the balance of payments posi­tion remained strong. In addition, owing to theregional ties with Singapore and Brunei, a unilateraldecision would have disrupted the recently estab­lished system of interchangeability of national cur­rencies among them.

Regional considerations were also present in thecase of the East African countries. Kenya, Ugandaand the United Republic of Tanzania made a com­mon decision not to devalue, in the framework ofthe recent East Africa Treaty. The decision ofZambia not to devalue was apparently also influencedby the similar choice in neighbouring countries.

For several British territories such as Bermuda,British Honduras, Fiji, Gibraltar, Mauritius andSeychelles, the devaluation was apparently con­sidered automatic. An important exception was HongKong, which followed devaluation to the full extentbut quickly revalued to reach a new rate only 5.7per cent below the pre-devaluation rate. The latitudepermitted in the case of Hong Kong illustratesfurther the great flexibility of the sterling area.The decision to revalue was apparently influencedby the very strong external position of the territoryas well as considerations of price stability.

Most of the independent sterling countries thatdid devalue were faJced with a difficult choice.Opinion was often divided as to the appropriatepolicy course. Yet the decision had to be madealmost instantaneously, as uncertainty would havecaused confusion in the market. Indeed, a majorfactor in the decision to devalue was the fear thatdoubts about the abilitv of the currency to maintainthe rate might trigge~ a flight of capital and anattack on the currency. Such a flight might havereached alarming proportions in a very short time,especially as the banking institutions of those coun­tries were often closely linked with major financialcentres abroad.

IMPLICATIONS OF THE KENNEDY ROUND

The fact that the payments difficulties of recentyears have not, on the whole, led to the adoption

16

of defensive trade restrictions reflects in part thesuccess in dealing with the international financialcrisis. In part, it also reflects the momentum in tradeliberalization. Quantitative restrictions of trade wererejected as an instrument of payments policy notonly because they were in conflict with the pro­visions of the General Agreement on Tariffs andTrade but also because they could rarely be imple­mented within a short period of time for lack ofadministrative machinery. In addition, there wasapprehension that retaliatory measures might beadopted. As to tariff measures, the completion ofthe Kennedy Round negotiations in mid-1967 madetheir adoption very unattractive: the achievementsof four years of negotiations could hardly be lightlynullified.

The outcome was especially noteworthy in viewof the obstacles. In the first place, there was thequestion of the principle {)f linear cuts. Secondly,whether linearity was accepted or not, there wasthe question of equivalent concessions at differentlevels of tariff rates, and the size of the exceptionslist. Furthermore, it had become increasingly clearthat tariffs could not be isolated from non-tariffbarriers, including disguised subsidies, and methodsof customs valuation, which touched on importantareas of domestic policy and anti-dumping measures.The significance of a complex set of policies in thenegotiations was especially evident in the case of theEuropean Economic Community whose positiondepended in part on the progress of communityaffairs, such as the agreement on a common agricul­tural policy.

The actual negotiations demonstrated that linearcuts could not replace the traditional product-by­product approach. Complex package deals had toserve the purpose of balancing mutual concessions.

Though the result of the negotiations was lessthan originally envisaged, it amounted to a furthermajor liberalization. In aggregative terms, averageduties would ultimately be cut by almost a third(those for industrial products by 38 per cent). Theparticipants together account for about 75 percentof total world trade, and the concessions wouldaffect trade valued at just over $40 billion. The maindeveloped countries conceded tariff reductions onabout 70 per cent of their dutiable imports (otherthan cereals, meat and dairy products). Two-thirdsof these imports would be affected by cuts of 50per cent or more, while almost one-fifth would be inthe range of 20-50 per cent tariff reduction. On afurther 15 per cent there would be cuts of less than20 per cent. Most of these tariff reductions wouldbe staged in accordance with either of the twoalternative procedures: (1) reductions in five equalannual instalments beginning from 1 January 1968and ending 1 January 1972; (2) a two-fifths reduc­tion on 1 July 1968 and subsequent one-fifth

reductions on 1 January 1970, 1971 and 1972.Canada and the United States were among themajor trading countries to follow the first procedure,while the European Economic Community and theUnited Kingdom followed the second. An exceptionwas made in the case of some tropical products anda few other items on which full concession wouldbe made effective in one stage. For some of these,the entire duty reduction would become effective on1 January 1968.

'While the chief outcome of the Kennedy Roundnegotiations was undoubtedly this liberalization oftariffs, agreement was also reached in severalnon-tariff areas. The negotiation on cereals coveredinternational pricing policy as well as food aid andresulted in the subsequent International GrainsArrangement. Specific provisions were made to bringabout modification in such practices as the AmericanSelling Price system of valuation for certain importsof chemicals and the taxation of automobiles bycertains European countries. Anti-dumping ruleswere clarified to provide a clearer guide for imple­mentation and to guard against abuses.

The significance of tariff reductions on such ascale can be assessed by a comparison with the rateof internal tariff cutting in the European EconomicCommunity and the European Free Trade Area(EFTA). A reduction of about 8 per cent per yearfor industrial products under the Kennedy Roundapproximates the 10 per cent rate achieved in thetwo regional groupings. The pace of tariff reduc­tions in the five-year period after the KennedyRound was therefore comparable to that of the firstphase of EEC and EFTA. The one important dif­ference was that the impact of the first would tendto stimulate trade among the developed countriesas a whole, while the regional grouping had theeffect of liberalizing intra-trade and at the sametime increasing the degree of discrimination againstnon-members. A consequence of the Kennedy Roundwas thus not only the expansion of world trade butalso the cushioning of the impact of discriminationof the regional groupings, which had progressivelyincreased as the final stages of integration werereached.

The removal of trade barriers and the implicitreduction in trade restriction by the continentalwestern European countries should in themselvesfacilitate the process of adjustment of the deficitcountries. Consideration has in fact been given foran acceleration of the tariff reduction on the part ofcontinental western European countries as a partialsolution to the balance of payments problems of theUnited States and, to some extent, also of the UnitedKingdom. In April 1968 the EEC proposed toadvance the one-fifth reduction scheduled for 1January 1970 by one year. Furthermore, the EECindicated that it would not oppose United States

17

postponement of the second instalment cut of one­fifth from 1 January 1969 to 1 January 1970. It hasbeen estimated that this EEC acceleration of tariffcuts would be worth $80 million in trade termsand that the United States postponement wouldmean an additional $70 million benefit for theUnited States balance of payments in 1969. Thisconcession was conditional on the abolition by theCongress of the United States of the AmericanSelling Price valuation system for chemicals by theend of 1968 and on the assurance that no bordertax, export subsidies or other protectionist measureswould be enacted by the United States. Severalother countries have also indicated willingness toaccelerate the Kennedy Round reductions, subjectto certain conditions.

'While the conclusion of the Kennedy Round nego­tiations and current discussions of possible accelera­tion in the EEC have reaffirmed the broad trendtowards trade liberalization, the impact on thedeveloping countries is less certain. 'While the de­veloping countries, without reciprocal concessions,would be able to benefit from tariff reductions nego­tiated primarily among the developed countries, theextent of this benefit is likely to be limited. Anexamination of the tariff profile indicates that therate of tariff reduction for a list of products ofinterest to developing countries was lower than thatfor the developed countries.4

A comparison of the treatment of products inwhich the developed countries dominate worldexports with other products confirms the heavyconcentration of tariff cuts for the former category.Moreover, non-tariff barriers remained the chiefobstacle to exports of many primary products. Fordomestically supported food-stuffs such as grains andsugar, the EEC variable levies and the correspondingagricultural support measures in the non-EEC coun­tries remain high in terms of ad valorem tariffequivalents. It is still not clear to what extent theagreement on the grain prices and on food aid wouldaffect the conditions of market access for grains.A number of vegetable oils, apart from being sub­ject to relatively high tariffs, continue to be affectedby non-tariff barriers. Cotton textiles remain subjectto quantitative restrictions under the Long-TermCotton Textile Agreement and tariff reductions ofthese products were contingent upon the renewalof the Long-Term Agreement.

It is evident that much remains to be done in thetrade relations between developed and developing

4 While the precise result might have been influenced byincompleteness of the sample as well as the degree of dis­aggregation, it is clear that the major concessions negotiatedaffect products not exported to any great extent by thedeveloping countries. See United Nations Conference onTrade and Development, "The Kennedy Round: preliminaryevaluation of results, with special reference to developingcountries" (TD/6 and TD/6/Supp.1-4). .

countries. A first step towards broadening thebenefits of the Kennedy Round to developing coun­tries would be advance implementation of concessionsin favour of developing countries and reduction orelimination of tariffs on products of export interestto them. Although a number of developed countrieshave made some progress towards this goal, thepace has so far been slow.

TRENDS IN REGIONAL INTEGRATION

During 1967 a surge of interest in regional inte­gration was evident around the world. This reflectsthe growing appreciation of the significant progressmade in a number of well-established regionalgroupings, such as the European Economic Com­munity. It also reflects the awareness of problemsof development posed by relatively small States.In many parts of Africa, for example, the politicaland economic fragmentation concomitant with theachievement of independence, is most evident. Thecombined domestic product of thirty-nine develop­ing independent African States (excluding SouthAfrica) is equivalent to less than two-thirds of thatof Italy. Six African States have populations ofless than 1 million each and another twentyhave less than 5 million inhabitants. The very smallsize of the typical national markets constitutes anobstacle to the formulation of an effective strategyfor development. The diseconomies resulting fromindustries of small size or limited potentialities havealready caused concern; duplicate facilities in neigh­bouring countries competing for small markets haveemphasized the need for some kind of regional co­operation.

While the increasing interest in regional integra­tion was accompanied by a general movementtowards that goal, the pace of progress was unevenand the objectives and forms of the regional group­ings were varied. In some cases, the conditions formeaningful integration were totally lacking as anatmosphere of antipathy or even hostility prevailed.In others the traditional and ethnic ties or similari­ties in outlook formed a basis for closer co-operation.However, there was also some appreciation ofregional grouping as a vehicle for removing deep­rooted conflict or rivalry, a possibility of whichthe European Economic Community has given anotable demonstration.

Nor did the increasing trend towards regionalgrouping always have the same effect on neighbour­ing countries. In 1967 the United Kingdom Govern­ment, which had reversed its earlier stand, soughtentry again into the European Economic Com­munity. While this move in turn stimulated a similarone among the members of the European Free TradeArea, the position of EEC members continued tobe divided and little progress was made towards the

18

merger of the two groups in Europe. In Africa,progress in the East African Common Market hadinduced many countries to apply for membership.

The diversity of conditions in the various regionsgave rise to a variety of regional groupings, rangingfrom full-fledged common markets, through freetrade areas to looser forms of co-operation (seetable 47 in the annex). This is especially the casewith the recent proliferation of regional groupingsamong the developing countries. Some of the charac­teristics and the problems posed are examined below.

Africa

vVhile subregional groupings in Africa were alegacy of the colonial period, the new groupingswere not to be limited to either the former Britishor French territories. Three meetings were held,one in May 1967 at Accra, another at Dakar inDecember 1967 and the other in Monrovia in April1968, in an attempt to bring into closer economicco-operation, perhaps through a common market orcustoms union, the various English-speaking andFrench-speaking West African countries. The extentto which the conferences could lead to concreteaction would depend on how some of the difficultiescould be solved. A major difficulty involved in theformation of a West African Economic Communityis the reluctance of the French-speaking AfricanStates to abandon the preferential trading arrange­ments they have with the industrial countries ofthe EEC. 'Moreover, the terms of association of theseFrench-speaking West African States with the EECtend to inhibit preferential treatment of commercebetween franc-zone States on the one hand andsterling and dollar neighbours on the other.

In Central Africa, the subregional meeting ofGovernments held in 1966 endorsed the principleof subregional co-operation. Thus far, however, noconcrete action has been taken to establish linksbetween the existing Central African Economic andCustoms Union (UDEAC), a closely knit tradinggroup established in 1966 on the basis of pre­independence relationships, and the Democratic Re­public of the Congo, the only subregional countryoutside the UDEAC.

The East African Common Market, embracingKenya, Uganda and the United Republic of Tan­zania, provides a barely viable basis for manybranches of industry. For this reason, there appearsto be a real possibility for its enlargement to includea number of the neighbouring countries, such asEthiopia, Malawi, Somalia and Zambia, which alsoneed to associate with the Common Market in orderto break out of their own economic isolation andthe constriction of their economic progress causedby their small size.

In North Africa, the four Maghreb countries­which had established in 1964 a system of joint insti­tutions with a view to the co-ordination of theirdevelopment-agreed in 1966 with the Sudan andthe United Arab Republic to explore jointly thepossibilities for extending co-operation withinthe framework of the Maghreb institutions to allsix countries of the subregion.

Another difficulty common to many regionalgroupings was the tendency for the benefits ofintegration to concentrate on the more developedmembers of the group. The relatively advanced stageof industrialization of Kenya in East Africa was asource of uneasiness on the part of Uganda andUnited Republic of Tanzania, and at one time quotarestrictions were imposed by them on imports fromKenya. A solution was finally arrived at by meansof a "transfer tax" under the Treaty of East AfricanCo-operation. This provision permitted less indus­trialized members to impose a tax on their intra­Common Market imports of manufactures undernarrowly defined conditions and for a limited period.The tax can be imposed only by countries with anover-all deficit in their intra-Common Market tradein manufactures, namely, Uganda and the UnitedRepublic of Tanzania. Furthermore, it can be im­posed only on imports from the partner countrywith which the importing country has a deficit.

Besides the transfer tax, the Treaty contains otherprovisions intended to redress the industrial im­balance prevailing among the three member countries.The new jointly financed Development Bank is togive priority in its lending operations to Ugandaand the United Republic of Tanzania. In addition,the corporations that administer the common ser­vices of the three countries, chiefly railworks, har­bours and communications services, are required togive priority in their own investment programmesto projects in Uganda and the United Republic ofTanzania.

Similar problems of industrial imbalance havearisen in the Central African Economic and CustomsUnion, signed in 1966, and in the West AfricanEconomic and Customs Union (UDEAO), alsosigned in 1966. The Central African EconomicUnion (UEAC), established in April 1968, is basedon "equal sharing of benefits", and whether it willin fact be implemented will almost certainly dependon whether this principle can be given practicaleffect.

This concern for equitable sharing of benefits hasdrawn attention to harmonization of developmentpolicies in some African regional groupings. TheUDEAC Treaty provides specifically for the har­monization of national development plans as anessential part of the integration programme. So doesthe Organization of Senegal River States (OERS),

19

newly established in March 1968. Finally, theMaghreb institutions aim primarily at the co-ordina­tion of development plans and programmes, whilegeneral trade liberalization is not envisaged for thetime being.

Asia

In southern and south-eastern Asia, regional co­operation has been hampered by political difficulties,although the need for closer integration has beenincreasingly felt.

The Association for South-East Asia, inauguratedbetween Malaysia, the Philippines and Thailand asearly as 1961 for the purpose of promoting economicand cultural co-operation, had been suspended forseveral years. In 1967 it was revived as the Associa­tion of South-East Asian Nations, consisting ofIndonesia, Malaysia, Philippines, Singapore andThailand. Its activities are spread over economic,social, cultural, scientific and administrative fields,with emphasis mainly on trade liberalization in whichinitial exploration of the possibility of a free tradezone is being undertaken.

Though its full potential has yet to be tested, theAssociation of South-East Asian Nations is facedwith the problems of a limited variety of exports,non-convertible currency and lack of a common lan­guage. All the member countries export roughlythe same commodities-tin, rubber, rice and timber.Less than 21 per cent of the member nations' tradeis with one another, and their economies are com­petitive rather than complementary. These factors,together with the free-port tradition of Singapore,cast shadows over prospects for a customs union.

In West Asia, a common cultural and linguistictradition has long favoured an Arab CommonMarket. Recent events have tended to reinforce thecommon interest and objectives. At a meeting inDecember 1967, the Arab Economic Unity Councildecided to reduce customs tariffs among membersto 80 per cent on agricultural products and to 40per cent on industrial products. The meeting alsoreviewed final measures for the implementation ofa unified identity card system for nationals of mem­ber States (to induce free movement of labouramong member countries).

Trade agreements concluded in 1967 between Iraqand Syria, and Iraq and Jordan (three members ofthe Arab Economic Unity Council) provide for theelimination of customs duties among these countries.These countries have also agreed to work out andcomplete the unification of their tariffs vis-a.-vis theoutside world and to intensify trade among them­selves, trade barriers between Iraq and the UnitedArab Republic having already been removed. Thefree trade agreement between Iraq and Syria pro­vides for the establishment of a joint permanent

organization to co-ordinate foreign trade, customs,financial and monetary policies, development plan­ning and industrialization with the aim of achievingthe economic integration of the two countries. Fol­lowing upon closer trade relations with the UnitedArab Republic, Syria and Jordan, Iraq has con­cluded an agreement with Kuwait to facilitate themovement of goods. Kuwait will give financial aidto Iraq for a paper mill or a power station. Thepossibility of establishing joint industrial projects-steel mills, petrochemical plant-is being con­sidered.

Latin America

Latin American integration was given a furtherimpetus in 1967 when the Presidents of the Ameri­can Republics agreed on a plan of action for theeconomic and social development of Latin America,including the creation of a Latin American CommonMarket, scheduled to commence in 1970 and to besubstantially in operation by 1985. This goes beyondthe existing groupings, namely, the Latin AmericanFree Trade Association (LAFTA), established bythe Montevideo Treaty of 1960, and the CentralAmerican Common Market (CACM), created bythe Managua Treaty in the same year.

Progress towards an all-embracing Latin AmericanCommon Market would depend on the progressiveconvergence of the existing groups and other LatinAmerican States. Thus far, the pace of integrationof LAFTA towards regional economic integrationis less rapid than that of CACM. Since 1961 therehave been six rounds of negotiations within LAFTAand concessions have been granted on some 9,000items that are traded within the region. About 80 percent of these concessions were granted in the firstfew years of LAFTA and few have been made onmanufactured goods which were conceived to be thebasis for a dynamic regional industrial development.The concessions involved are those on raw andsemi-processed materials that have traditionally com­prised the bulk of Latin American intra-regionaltrade. Since the formation of LAFTA in the early

20

1960's, the intra-regional trade of this group ofcountries has regained the proportion of fifteen yearsago but has not increased beyond that.

On the other hand, the progress achieved byCACM from its inception in 1961 has been encourag­ing. More than 95 per cent of the tariff items havebeen freed, though it should be pointed out that tradein such important products as coffee, cotton and sugar-representing 20 per cent of the group's total trade-have not yet been liberalized.

The long gestation period for the attainment ofthe goals of a Latin American Common Market andthe many intermediate steps contemplated in the Ac­tion Programme are a recognition of the formidableobstacles that remain in the way of integration ofthe region. Trade among the Latin American Statesremains meagre. It accounts for only 10 per centof the total foreign trade-most of primary products-of those countries. The greatest share of the tradeis accounted for by three countries-Argentina,Brazil and Venezuela. In view of the long distancesbetween countries in this region and geographicalbarriers to land transport, sea transport remains thedominant factor in the foreign trade of these coun­ties. Moreover, the lack of diversification which ischaracteristic of the economies of Latin America,has led, especially in agriculture, to several countriesconcentrating on the same product, such as coffeeand meat-a poor basis for intra-regional trade.Chronic monetary instability and steep inflation havealso inhibited intra-regional trade and co-operationand may upset the balance of benefits that these coun­tries expect to gain by regional economic co-opera­tion.

A Caribbean Free Trade Area was formed in mid­1968 with a view to evolving into a customs union,partly in recognition of the role of subregionalgroups in the move towards broader integration.A joint Caribbean Development Bank has also beenestablished. Several major countries of the regionwere, however, conspicuously absent from the group.

Chapter

PROGRESS IN ECONOMIC REFORMS IN THE SOVIET UNION

AND EASTERN EUROPE

The year 1967 and the early months of 1968 saw acontinuation of the changes in the methods of plan­ning and management initiated earlier in the Unionof Soviet Socialist Republics and other socialist coun­tries of eastern Europe. In some of those countries-Bulgaria, Eastern Germany and the Soviet Union-these changes have been under way for some years,and further changes were introduced and additionalbranches of the economy were covered. In Polandthe efforts for improving the efficacy of economicplanning and management continued, while in Ro­mania a set of measures for improving the manage­ment and planning of the national economy was ap­proved at the end of 1967. In Czechoslovakia, a morecomprehensive reform in methods of planning andmanagement was implemented at the beginning of1967, while in Hungary the implementation of themajor principles of a new system of managementwas begun in January 1968.1

It is now widely recognized that both the theo­retical ideas that provide the justification for theeconomic reforms currently under way in the cen­trally planned economies in Europe and the practicalexperience with these reforms are of major impor­tance to the future development of the countriesconcerned.

THE CONCEPTUAL BACKGROUND

The discussions that have been taking place inrecent years among economists in eastern Europe andthe USSR have subjected the ,strictly centralizedsystem used previously to critical scrutiny. It hasbeen pointed out that the central organization of pro­duction and the strict distribution of the bulk of theoutput have served the Soviet Union well, raising

1 For discussions of the eaJrlier phases of these economicreforms see World Economic SurveY,1964, Part Two: C~w­rent Economic Developments (United Nations publication,Sales No.: 6SJI.C.2), chapter 4; World Economic SU1~Jey,1965, Part Two: Current Economic Developments (UnitedNations publication, Sales No.: 66.II.C.2), page 18; WorldEconomic Survey, 1966 Part One: Implementation of De­velopment Plans: Probl~ms and Experience (United Nationspublication, E/4363/Rev.l-ST/ECA/99), section B; WorldEconomic Survey, 1966, Part Two: Current Economic De­velopmeltts (United Nations publication, E/4396/Rev.1-ST/ECA/lOO), pages 41-44.

21

it to a major industrial Power.2 With the growth inwealth and the increase in complexity of the economy,earlier methods of planning and management havebecome less appropriate. It has become necessaryto evolve economic management techniques that arebetter suited to the greater size and diversity in out­put, able to cope more effectively with the accelera­tion in technological progress and adapt the produc­tion process more rapidly to the needs of the morecomplicated and changeable market.

Similar needs have been felt in the eastern Euro­pean countries. New planning methods have beensought in order to improve the over-all efficiencyof economic performance and to make productionmore responsive to changes in demand emanatingfrom both domestic and foreign sources. The earlysystem of planning and management were provingtoo rigid.

Among the common features of the current re­forms are efforts to improve both the scientific basisand the methodology of national planning and to in­crease the use of electronic computers for achievingplan optimization. These efforts will reduce what hasbeen called "voluntaristic planning"-that is,planning which does not take real possibilities ade­quately into account-thereby improving the realismand effectiveness of national plans. In this con­nexion, all countries assign a major role to medium­term (mostly five-year) plans, which are fastbecoming the most important component in theplanning system.

Another common feature is the increase in theauthority of individual enterprises and associationsof enterprises in both the planning of developmentand the decision-making process. This has been ac­companied by a continuous decline in the numberof centrally determined targets. The range of pro­ducts subject to rigid central allocation is being re­duced substantially, while direct contractual deliveryrelationships among trading partners are allowed toexpand.

2 For a recent discussion of the evolution of central plan­ning in the Soviet Union, see L. Pekarskiy, V. Tabelev andB. Tsvetkov, "Sovershenstvovanie upravlenia i planirovaniav usloviyakh ekonomicheskoy reformy" (Improving man­agement and planning under the economic reform), VoprosyEkonomiki, No. 11, 1967 (Moscow).

As a corollary to this, there has been an enlarge­ment of the degree of financial independence as wellas of the responsibilities of individual enterprises.Both the current expenditures and the investmentoutlays of enterprises are now more strictly tied totheir earnings. As a result of assigning a greater roleto enterprise funds and bank credits in investmentfinancing, a direct incentive is provided for enter­prises to achieve greater economy in capital spendingas well as better utilization of existing fixed assets.This tendency is further strengthened by a tax onemployed capital which has been imposed in mostof the countries. The emphasis of these reforms ison influencing the behaviour of enterprises andemployees towards raising economic efficiency andimproving over-all economic performance. The gen­eral aim is to link the financial activities of enter­prises more closely with their own profit. In mostcountries, in addition to the regular wage fund, apremium fund has also been set up to provide asystem of rewards as a further inducement to higherefficiency on the part of managers and employees.As a result of the stress placed on the financial in­terest and responsibility of enterprises, financial toolssuch as prices, taxes, credit and interest are assum­ing increasing importance as instruments of economicplanning and management.

In addition to these common features, certaindistinctive characteristics in both theoretical outlookand practical measures are beginning to emergeamong the eastern European countries. While it istoo early to say if these differences will result inseveral distinct models of economic development,present evidence indicates the emergence of at leasttwo different approaches. Broadly speaking, one ofthem relies primarily on directive planning of theeconomy from the centre, improving and supplement­ing it by an extensive range of measures, includingthose summarized above as common features of thereforms. The other method departs from the principleof implementing national plans through administra­tive orders passed on to individual enterprises bycentral organs, and in its place assigns primacy toindirect methods of government intervention throughthe use of various instruments of financial and fiscalpolicy designed to induce planned development.

The differences between the two models reflectdifferent approaches to the role of the market in a,socialist economy. By and large, the advocates of themore decentralized model consider the influencesemanating from the market as decisive for the deter­mination of the volume and composition of output ofenterprises, making directive targets prescribed forenterprises in the central plan superfluous. In thisview, the continuous impact on enterprises of theinfluence of the normally functioning market con­stitutes the most effective means of bringing aboutthe complete fulfilment of the needs of the national

22

economy as well as of ensuring the most efficientperformance of all enterprises. At the same time,this approach accepts the legitimacy and desirabilityof government intervention in the market throughfinancial and investment policy measures in order toinfluence the development of the economy in theplanned direction. Thus, the purpose of the nationalplan would be to lay down the broad direction inwhich the economy is expected to advance and toserve as a directive to central economic organs andthose in charge of government economic policy. It isthis kind of economic model which, in principle,has been accepted as the basis of the latest economicreforms in Czechoslovakia. Basically, the same modelunderlies the reforms instituted in Hungary at thebeginning of 1968, though the nature and extentof the economic tools used would be different, andwould probably involve a higher degree of centralregulation.3

The other, more centralized, economic model isbased on the assumption that the composition of out­put and its growth must be centrally determined bymeans of a system of balance-sheets and efficiencycalculations. The output directives, together with alimited number of other important indexes, arepassed on to individual enterprises in the form ofobligatory plan targets. Within this central direction,it is intended to introduce measures to increase therights, responsibilities and material interests of in­dividual enterprises. All enterprises would operatewithin the frame provided by the plan and the incen­tives would be linked with the fulfilment of theplanned targets.

Some advocates of this model minimize the roleof the market in the development of the socialisteconomy, seeing a contradiction between the impera­tivesof central planning and the tendencies of thefully functioning market. For instance, some EasternGerman economists have argued that the sheer com­plexity of modern technology and production makessuch a contradiction inevitable and that the marketeconomy with full autonomy of enterprises is out­dated.4 Another contradiction is pointed out by aPolish author who argues that the unrestrained useof the market mechanism would focus the attentionof producers on consumers in the high-incomebrackets to the detriment of the basic needs of thepeople. He explains that

"the employment of the market mechanism in therunning of factories means in practice a changein the aim of production, at least on the factory

3 "The characteristic of the Hungarian reform is that themarket, controlled with the help of the central plan, has arelatively bigger 'role, and the task of the enterprises is aflexible satisfaction of the demands of would-be buyers onthe market." See Dr. J. Wilcsek, "Reforms of the economicmechanism in the socialist countries," Magyar N emzet(Budapest), 3 March 1968.

4 See Neues Deutschland (Berlin), 18 May 1968, p. 13.

level. The direct motivation is no longer the sup­ply of mass needs, it is the consideration of howmuch profit the factory will make by supplyingthose needs."5

The concept of profit as the main criterion of ef­ficiency of enterprises and the right of enterprisesto decide the disposition of their net profits arecharacterized by the Soviet economist S. Strumilin,as "ignoring the dialectics of social accumulationand consumption".6

Other commentators on the reforms accept the posi­tive influence of the market on economic develop­ment but stress its secondary role. Thus, in theirreview of the process of economic reform, £ovieteconomists Pekarskiy, Tabelev and Tsvetkov state:

"While maintaining centralized planning, it be­came necessary to take fuller account of the actionof the market mechanism. This mechanismstrengthens the influence of the consumer on theproducer and performs the function of controllinga correspondence between the production of outputand national economic needs: this means that itserves as an effective means for increasing theefficiency of social production.

"A fundamental difference between the socialistmarket and the capitalist market consists in thefact that monetary relations in the former arebased not on private but on public ownership ofthe means of production. It is this which makes itpossible to develop them not in a spontaneous waybut under the 'controlling influence of the plan.Consequently, at their basis, market relations arecapable of being controlled under socialism. Theold reform of such categories as price, profit andcredit are filled with new social and economiccontent. Money exchange relations like alleconomic relations under socialism, reflect thecommunity of interests between each producer andthe entire people".7

The discussion regarding the concepts and modelsmost appropriate for each economy is still continuingvigorously in all the countries of eastern Europe.The economic reforms at present under way do notfall neatly into the two categories discussed abovefor purposes of exposition. Most of them embodyelements of both approaches, adapted in each caseto the particular iStructure of the economy concerned.

SALIENT FEATURES OF RECENT ECONOMIC REFORMS

Economic changes of a far-reaching nature, in­cluding a radical price reform, were introduced in

5 Mieczyslaw Krajewski, "Demokracja socjalistyczna a'socjalizm rynkowy'" (Socialist democracy and market so­cialism), Trj!buna Ludu (Warsaw), 29 March 1968.

6 Academician S. Strumilin, "An acute question" J(011t­

somolskaia Pravda (Moscow), 16 February 1968, p. '2.7 L. Pekarskiy, V. Tabelev and B. Tsvetkov, "Improving

management and planning under the economic reform"Voprosy Ekon01l1iki, No. 11, 1967. '

23

Czechoslovakia at the beginning of 1967. The newincentives succeeded in raising the rate of growth ofindustrial. output much above the planned level,largely as the result of increased labour productivity.Other components of production costs, especiallymaterial costs, declined substantially. On the otherhand, the high rate of inventory accumulation pro­vided evidence of the inability of enterprises to adaptthe assortment, quality and technical level of theirproducts to the consumers' requirements. Theeconomy has not yet become fully responsive to thepressures and influences radiating from the marketmechanism and this has been a matter of continuingconcern to economists studying the first phase ofthis experiment.

It is believed that a major cause of this insuf­ficient responsiveness lay in the imperfections of theprice reforms. Because of shortcomings in thegroundwork for the preparatory stage of the reformand because enterprises tended to exaggerate theircosts submitted for the computation of the new prices,the profits of enterprises after the price reform ex­ceeded their anticipated levels. This provided littleincentive for restraint on enterprise spending andcontributed to inflationary demand-supply imbalances.The authorities responded by setting limits on wageoutlays, introducing restrictive clauses in the provi­sion of investment credits and adopting measuresrestraining the start of new projects. These anti­inflationary measures inhibited the proper function­ing of the new system and eventually resulted incertain restrictions on the rights of enterprises pro­claimed in the reform. The inflationary situationmade it difficult to achieve planned improvementsin the demand-supply relationships aimed atstrengthening the influence of buyers on the produc­tion process.

One of the principal features of the Czechoslovakreform was a uniform rate of tax, especially on em­ployed capital and on the gross income of industrialenterprises. However, the chief purpose of this re­form-namely, the establishment of uniform andobjective measures of the efficiency of enterprises­was not attained. Existing price relationships, dif­ferences in the level of technical equipment and otherconditions beyond the control of individual enter­prises, made it necessary to "individualize" tax obli­gations indirectly by a system of subsidies and addi­tional payments set for individual enterprises. Thetemporary character of these exemptions wasstressed, and lagging enterprises were exhorted toincrease their efficiency in a specified period of timeor face the prospect of eventual liquidation. The scaleof the exemptions that were granted has beencriticized by some economists on the ground that itlowered the effectiveness of the reforms by con­tinuing the practice of higher taxation of more ef­ficient enterprises and lower taxation of poor per-

formers. The planning authorities, however, claimedthat the subsidies were necessary concessions in thetransitional period.

The abolition of direct targets for enterprises inthe national plan was not fully reflected in increasedindependence of individual concerns. because theassociations in which enterprises are grouped oftenimposed targets and interfered in the activities oftheir constituents. Some of the interference by cen­tral organs in the activities of enterprises was doubt­less made necessary by the persistent imbalances inthe structure of clemand and supply as well as bybottle-necks in eiisential imports. The lack of ex­perience of managers at all levels in their essentiallynew role of socialist entrepreneurs was an additionalfactor slowing down the full implementation of thenew system. Most of the difficulties seem to havebeen prohlems typical of transition, when shortcom­ings of both the old system and the new combinedand reinforced one another.

Progress in the implementation of the Czecho­slovak reform received a new impetus at the begin­ning of 1968, as part of the economic policy of thenew Government. The drive to increase the efficiencyof the production process is continuing, and thenecessity of weeding out inefficiency by the gradualelimination of subsidies has been explicitly recog­nized. Further reform of the price system is alsoconsidered to be an essential requirement for theproper functioning of the new system. The pricesreconstructed in 1967 in accordance with the newsystem of taxes, but without regard to the market,are to be adapted to the requirements of demand­supply relationships of individual commodities. TheGovernment has indicated its intention to take stepsto establish a proper relationship between domesticwholesale prices and domestic retail prices on theone hand and foreign prices on the other, therebystrengthening the influence of the market on the pro­duction process. The Government hopes to establishfree convertibility of the Czechoslovak crown in fiveto seven years.

Most Czechoslovak economists recognize the com­petitive process as a powerful stimulus to improve­ment and innovation in production. In encouragingcompetition, a distinction is drawn between mo­nopolies resulting from the concentration of produc­tion made necessary by economic or technologicalfacts and monopoly created administratively by sub­ordination of individual enterprises in the sameindustrial branch to an association. The latter isbelieved to be an obstacle impeding the initiativeof individual enterprises in competition with othersin the same line of production. According to thisview, CBmpetition should be induced wherever theorganizational structure of production makes it pos­sible, as in light industry, services and trade.

24

Similarly, actual or potential competition from for­eign-made products, on both the domestic and worldmarkets, should be encouraged as a dynamic supple­ment to the competition of domestic producers. It isrecognized, however, that the revival of the marketmakes it necessary to create or strengthen the legalprotection of the consumers against the possibility ofundesirable or harmful practices on the part ofproducers.

If these views are acted on, the role of the in­dividual enterprise in the economy will tend to in­crease in importance. According to the prevailingview, the enterprise should be entirely independentof the ministries or other administrative organs,subject only to the accepted restraints of legal provi­sions and regulations. The enterprise would have fullresponsibility not only for the discharge of its day­to-day activities but also for long-term developments,including investments. These powers would be vestedin each case in an "enterprise committee" newlycreated as the highest organ in the enterprise, takingdecisions on the most important problems concerningthe development of the enterprise, including the ap­pointment of directors. Opinions differ regarding thecomposition of these enterprise committees. Someeconomists stress the independence of enterprisesand feel that most of the committee members shouldbe elected by the employees while others would prefera more important representation of organs outsidethe enterprise-banks, central organs, research insti­tutes and consumers, for example. As far as theassociations of enterprises are concerned, the in­dividual enterprise would have the right to decidewhether to become a member or not. The enterprisesthemselves might create different kinds of associa­tions or common undertakings whenever the needarose.

While the new system of management in Hungarywas officially inaugurated on 1 January 1968, certainplanning and management reforms were made in1%7. There was a reduction in obligatory targetsprescribed in the plan, the investment system wassimplified, the wage system and employment policywere made more flexible, their incentive characterincreased, and a new system of service contractswas introduced. These and other measures increasedthe independence of individual economic units, andset the stage for the reforms introduced in January1968.

In the new system, the fulfilment of the plan willnot be regulated by obligatory targets set at thecentre, but by the use of indirect methods or "eco­nomic regulators". Within the framework and con­ditions set by central authorities, enterprises will beallowed to prepare their own plans, without any cen­tral direction regarding form and content.

The central distribution of commodities has, ingeneral, been abolished. Material balances no longer

play an operative administrative role in the com­modity circulation. Since the beginning of 1968, salesof most commodities have taken place as the result ofdirect negotiations between producers, the wholesaleand foreign trade enterprises and consumers. Insome exceptional cases, however-where there wereabnormal shortages in the market, for example, orbecause of balance of payments problems-the sys­tem of central allocation has been retained.

A price reform has been introduced whose mainpurposes are to bring prices and costs closer together,to make prices reflect more accurately the marketforces of demand and supply (in harmony with therequirements of economic policy expressed througheconomic regulations) and to bring the domesticprice relationships closer to those on world markets.The effect will he a more flexible price control. Priceswill be fixed centrally only for the most importantbasic materials and consumer goods. The movementof the prices of other commodities will be eithergoverned by official regulations-through pricechange limits, for example-or entirely free. In1968, according to some estimates, the system offree prices will cover about 28 per cent of the outputin raw material industries, 85 per cent in manufac­turing industries and 23 per cent in consumer goodsindustries (including services). There are, however,some temporary regulations limiting excessive priceincreases during the initial period.

In Hungary, as in other countries, the methodof distributing profits by enterprises has been oneof the most important objects of the reform. Indi­vidual enterprises had been allowed to use for theirown purposes only a small proportion of their profits;in 1968 they will be able to use, by their own de­cisions and for their own needs, up to four timesthe previous amount. This should increase the directinterest of enterprises in their own performance.

The remaining profit of the enterprise will beused according to central regulations for three pur­poses: development, additional remuneration of em­ployees and as a reserve fund. There will be a flattax (60 per cent in 1968) on that part of profitthat goes to development; what is left will be putby the entrepreneurs into their development fund tobe used at their own discretion for investment forfixed or circulating capital. The development fundis also fed from amortization, of which the enter­prise can retain an average of 60 per cent.

Enterprises are to be taxed progressively on thatpart of their profit which is devoted to raising per­sonal income. The rates of taxation-ranging fromo to 70 per cent in 1968-have been fixed by theGovernment in proportion to wages. Sharp pro­gression is considered necessary to avoid wide dis­parities in personal income arising from the favour­able facilities of certain enterprises rather than from

25

superior performance of the staff. In spite of thisprogressive taxation, it is expected that some enter­prises will be able to provide abnormal wage in­creases. Therefore, the Government introduced addi­tional temporary regulations setting a ceiling forannual wage increases. Enterprises are to put thatpart of the profit left over after taxation into aseparate fund, called the shares fund. From thisthey may payout premiums, bonuses and otherawards-such as end-of-year profit shares and non­monetary social benefits-and maintain their social,cultural and sporting institutions.

A part of the new enterprise income policy is theobligatory setting up of minimum reserves out ofboth development and share funds. Under the neweconomic system, the risks and responsibility ofenterprises will be greater and so will be the chancesfor temporary imbalances. State subsidies on pro­duction in certain fields, particularly in mining, syn­thetic material industries and in the agriculturalmachinery industry, have been made necessary bythe existing production and marketing conditions.

The new Hungarian system has reduced the pro­portion of investments that are centrally planned andfinanced from the state budget, and expanded theproportion financed directly from the developmentfund of enterprises or by means of bank credit. How­ever, the share of the centrally planned investmentis considered to be one of the most important toolsof the Government in guiding long-term economicdevelopment, and will exceed 50 per cent of totalindustrial investment in 1968. The volume of invest­ment credits is determined by the plan in accordancewith the investment requirements of the main sectorsand of certain special branches. It is presumed thatdemand for credit will exceed its availability: it isto be granted according to the rule of competitivebidding on the basis of efficiency criteria. An inno­vation in the credit system is the effort of the Gov­ernment to induce the enterprises to deposit theirtemporary surpluses in the bank.

The system of central limits and regulations inprice, income and investment policy adopted for theinitial year of the reform, as well as the limits placedon enterprise funds, indicates the cautious approachof Hungarian economists to the introduction of thenew system. The aim is to minimize the danger ofinflationary tendencies, in both investment and con­sumer markets, and thereby facilitate the transitionto a new model of management relying more on theindirect tools of financial policy.

In the Soviet Union, the process of economicreform started in 1966 and continued in 1967. Bythe end of 1967, 7,000 industrial enterprises-pro­ducing about 40 per cent of the total output of thecountry-had been transferred to the new system ofmanagement. This process is expected to be com­pleted in 1968.

The economic results of the reforms so far seemto have confirmed the soundness of the principleson which they were based. The growth rates experi­enced by these enterprises have been substantiallyhigher than those for industry as a whole. Higherlevels of profit and output have also made possiblea faster rise of workers' salaries.

The evaluation of experience with the reform sofar has brought to light certain shortcomings, mostlyconnected with the initial stages. As long as themajority of industrial enterprises still operated underthe old conditions the effectiveness of the new toolsof planning and financial incentives was restricted:conditions in material supply and commodity circula­tion did not correspond fully to the new system,and stable trade relations between the enterpriseswere not established. Another cause of imperfectionin the functioning of the reform was the inabilityof some managers immediately to overcome habitsand patterns of conduct practised under the old ad­ministrative system of management. It has beenpointed out, for example, that some ministerial cen­tral organs were to blame for arbitrary assignmentof plan indexes, for imposing unnecessary additionaltargets on enterprises and for changing the approvedplans several times during the year.

Soviet economists have proposed various measuresto improve the performance of the new system.Among these, the improvement of the material sup­ply system has received special attention. Someeconomists8 believe that one of the major prerequi­sites of success in carrying out the economic reformis the transfer of the functions of the administrativesupply system to the mechanism for regular tradeand to direct economic ties between suppliers andbuyers. According to this view, the planning of dis­tribution of output should involve only centralizedglobal balances to ensure the over-all proportionalityin the development of all branches; it should notrequire centralized allocation of deliveries throughadministrative rationing. It is argued that rationingreduces the effectiveness of the reform by restrictingthe opportunities to use the incentive funds in thehands of individual enterprises, generated by thesevery reforms.

The introduction of new wholesale prices as partof the reform was completed on 1 July 1967. Thenew prices are e.,'\:pected to ensure the establishmentof a profitability level sufficient for introducing auto­nomous financing for every normally operating en­terprise. It is believed that the new prices, whichbrought the profitability of individual branches closerto the average, will make it possible to impose uni­form standards for allotments to incentive funds forgroups of enterprises instead of for individual ones.

-8See Ye. Liberman and Z. Zhitnitsky, "Ekonomicheskiei administrativnye metody Khozayistvendvo rukovodstva"(Economic and administrative methods of management),Planovoie Khoziaistvo, No.1, 1968 (Moscow).

26

This change should create better conditions for theobjective evaluation and rewarding of economicprogress in individual enterprises of the same branch.

In Eastern Germany, the reform of prices wascompleted at the beginning of 1967. At the sametime, gradual introduction of additional changes inthe economic system continued. New regulations ininvestment financing, experimentally applied in pre­vious years, were put in general operation on 1 J anu­ary 1968. All industrial enterprises are now respon­sible for their own reconstruction, modernizationand expansion, which are to be financed from de­preciation reserves, net profits and new credits. InApril 1968, a further stage in the introduction of thenew economic system was approved in broad outlines.New measures are intended to bring together pre­viously accepted changes into a comprehensive sys­tem. This includes improvements in central planning,particularly in the field of structural changes in thenational economy and in new regulations for dis­tributing the income of enterprises. Long-term normshave been set for taxes on capital and on net profit,for centralized depreciation allowances as well as forpremium funds. These are designed to create condi­tions for increasing the independence, responsibilityand financial interest of enterprises.

The reforms in Bulgaria have been introducedgradually. By the end of 1967, the bulk of the in­dustrial enterprises were operating under the newsystem and the remaining enterprises are to be shiftedto the new conditions before the end of 1968. TheBulgarian reform is at present characterized by anincrease in the rights of enterprises (for example,in the field of wages), within the framework ofcentral directive planning of the main indexes suchas output in physical terms (expressed as govern­ment orders), volume of investment and of materialinputs, and foreign trade targets and limits. Theapplication of the new methods has given rise to anumber of problems, and in 1967 these engaged theattention of Bulgarian economists. One difficultyrelates to the implementation of new prices. As theseare to be based on world prices, they may be lowerthan the costs in some branches of domestic industry.A system of budget subsidies to cover the losses ofindividual enterprises has been suggested in caseswhere it is in the national interest to produce thecommodity, despite its relatively high cost.

In Romania, directives on "Perfecting of manage­ment and planning of the national economy" wereapproved at the end of 1967. Suggested changes areto be implemented gradually in the course of severalyears. Special emphasis is placed on changes in thestructure of industrial management and on the rightsand responsibilities of individual enterprises. Indus­trial associations, grouping enterprises either on avertical or on a horizontal basis, are to becomerelatively independent units, with a decisive role in

the management of industry. The directives providefor the establishment of collective management inenterprises as well as for improvements in economicincentives. Methods of central planning are to beimproved and some of the powers exercised centrallyso far are e.,'\:pected to be transferred to industrialassociations. There will also be an expansion in theshare of the income of enterprises remaining at theirown disposal.

In Poland, the introduction of various measuresaimed at improving the existing system of planningand management continued in 1967. The number of

27

directives given by the central planning bodies tothe enterprises was further reduced. The aggregatedtargets of output are still maintained as the directivesto the enterprises, but they are used exclusively asan instrument to control the movement of the wage­bill. The obligatory limits covering employment havebeen abolished for the majority of enterprises, andby 1968 experiments with abolishing the obligatorylimits of the wage-bill were well advanced. In viewof the existing conditions of persistent labour scarcityand pressures for wage increases, this measure isbeing implemented with a good deal of caution.

ANNEX

Table II. WorId production of selected commodities, 1963-1967

(Millions of tons, o:cept as indicated)

Item and region Amount Inde". (1963 = 100)

in 1963 1964 1965 1966 1967

CoalaWorldb ............................ . 1,947 103 105 105 105

Developed market economiesc ........ 1,052 103 104 103 102Centra!!y planned economiesd ......... 800 104 107 108 109Developing countriese ................ 95 98 103 105 109

Petroleum, crude

Worldb . . . . . . . . . . . . . . .................. 1,298 108 116 126 135Developed market economiesc ........ 425 102 105 111 119Centra!!y planned economiesd ......... 223 108 117 127 138Developing countries· . . . . . . . . . . . . . . . . 649 112 122 134 145

Natural gas (billions of cubic metres)

Worldb .... ,., ....................... . 602 110 116 126 136Developed market economiesc ........ 465 107 111 119 127Centra!!y planned economiesd . . . . . . . . . 107 119 139 155 172Developing countries· ................ 30 115 122 130 141

Electricity (billions of kilowatt-hours)

Worldb ....... , ........................ 2,812 109 117 125 133Developed market economiesc ........ 2,065 108 116 124 131Centra!!y planned economiesd ......... 580 111 122 132 142Developing countries· ............... . 166 114 124 128 131

Pig ironf

Worldb ................... ............ . 264 113 120 124 129Developed market economiesc ........ 175 117 124 126 130Centra!!y planned economiesd ......... 77 107 113 120 128Developing countries· ................ 12 104 105 111 108

Steel, crude

Worldb ....... , ........................ 375 113 118 123 128Developed market economiesc ........ 253 116 121 123 129Centra!!y planned economiesd . . . . . . . . . 108 106 113 121 128Developing countries· ................ 13 108 114 123 127

Cement

Worldb ................................ 367 110 115 123 127Developed market economiesc ........ 224 111 113 120 122Centrally planned economiesd ......... 94 108 118 129 137Developing countries· . . . . . . . . . . . . . . .. 49 109 119 127 132

Source: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on United Nations, MonthlyBulletin of Statistics and Statistical Yearbook.

a Including lignite (as coal equivalent).b Sum of regions shown.c North America, western Europe, Australia,

Cypruo, Japan, New Zealand, South Africa,

31

Turkey.d Eastern Europe, Soviet Union, North Ko­

rea, North Viet-Nam.• Latin America, Africa (excluding South

Africa) and Asia (other than mainland China,Cyprus, Japan, Mongolia, North Korea, NorthViet-Nam and Turkey).

f Including ferro-a!!oys.

Table 12. Market economies: changes in industrial production, by country group, 1963-1967(Percentage change from preceding year)

Manufacturing

Groupa altd year Mining Non- MetalTotal Lightb HeavyC Food Tex- Cloth- Wood Paper Chem-i- metall1:c Basic prod-

tiles ing eals mineral metals netsproducts

All market economies1963 ................ 3 5 4 6 3 4 5 4 6 9 5 7 51964 5 8 6 9 4 5 5 7 8 9 11 14 8

1965 4 7 5 8 3 3 5 6 6 8 4 5 9

1966 4 7 5 8 4 4 3 4 7 10 5 4 10

1967d ............ 3 2 1 3 2 -1 2 7 2 2

Industrialized countries1963 2 5 4 6 3 4 4 3 5 10 5 6 51964 4 8 5 9 4 4 5 7 8 10 10 14 71965 . . . . . . . . . . . . . . . . 2 7 5 8 3 3 5 5 6 8 4 5 91966 3 7 5 8 4 5 3 4 7 10 4 3 101967d 2 2 1 3 3 -1 -2 2 7 1 2

Less industrialized cormtril!s1963 ................. 5 5 4 6 3 4 7 9 10 7 4 13 31964 9 9 8 12 6 9 8 9 8 8 11 10 171965 7 7 6 9 6 2 7 11 11 7 8 6 11

1966 7 6 5 7 6 1 5 4 9 9 8 11 61967d 5 4 3 4 2 5 5 5 3 6 4 4 2

SO~trce: Centre for Development Planning, Projectionsand Policies of the United Nations Secretariat, based onUnited Nations, ~Mollthly Bulletin of Statistics, May 1968.

a The country groups are those made in the source. Theclassification of countries as "industrialized" or "less indus­trialized" is made according to whether per capita valueadded in manufacturing during 1958 was above or below$125. The groups correspond broadly to those used else­where in the Survey: "industrialized countries" compriseall the countries classified as developed market economies,plus Israel, minus Greece, Portugal, Spain and Turkey; cor-

respondingly, "less industrialized countries" comprise allthe countries classified as developing market economies, plusGreece, Portugal, Spain, Turkey and Yugoslavia, minusIsrael.

b Food, beverages and tobacco; textiles and clothing; woodproducts; leather, rubber and related products; printing andpublishing.

C Paper; chemicals; non-metallic mineral and metalproducts.

d Preliminary.

Table 13. Selected countries: recent change in industrial production, 1966-1967(Percentage change) a

1966 1967Country

First Secmtd Thin! FOH-rth First Second Third Fourthqu,arter quarter qua1'ter qUG1'ter quarter quarter qllade-r qua-rter

Austria 15 4 -4 7 -10 7 -7 7Belgium .......... -4 4 7 -4 -7 15Bulgaria 17 16 8 9 12 12 17 14Canada 10 3 3 7 -3 3 6 6Eastern Gennanyb 8 5 5 8 5 7 8 10Finland 3 4 2 7 4 8 2France 4 7 11 -3 7 7Germany (Federal Republic

of) ... . .. , ........... 11 -7 -7 -7 11 18Greece 13 20 15 16 13 5 10 5Hungary 6 7 7 7 5 5 5Italy ... 15 11 11 7 17 3 -9 21Japan .. 14 21 23 22 14 17 25 21Luxembourg -10 -4 8 -7 -4 4Netherlands 3 7 3 10 3 10 16Nonvay 4 7 7 7 10 -6 17

32

Table 13. Selected countries: recent change in industrial production, 1966-1967 (continued)

1966 1967

CO"ZtHtry First Second Third Fourth Ftrst Second Third Fourthquarter quarter quarter quarter quarter quarter quarter quarter

Poland ................... 6 8 8 7 10 9 8 7Portugal 26 13 -33 7 18 -21 11Romania .......... 10 11 13 14 14 10 14 11

Senegal 13 11 12 15 7 2 -6

Spain . . .................. 19 16 10 11 3 7 4 -2

Sweden ........... 7 3 -3 7 3 7 10

Switzerland .......... 16 -4 15 -4 -4 -4 15

USSRe ....... 8 8 9 9 11 11 10 9

United Kingdomd 4 -4 -7 7

United States 18 7 7 3 -6 -3 7 3Yugoslavia ............ 5 5 5 3 2 -1 -1

Zambia . . ......... 2 -8 -14 -18 -25 2 17 22

Soune: Centre for Development Planning, P'rojectionsand Policies of the United Nations Secretariat, based onUnited Nations, Monthly BLtlletin of Statistics, and Orga­nisation for Economic Co-operation and Development, MainEconomic Indicators (Paris).

a For OECDcountries, percentage change of seasonallyadjusted data from preceding quarter at annual rate; for

other countries, percentage change f,rom corresponding quar­ter in preceding year.

b Including fishing.

e Including fishing, logging, waterworks, steam heat andpower; excluding publishing.

d Including construction.

Table 14. W orId production of major agricultural commodities, 1963-1967a

Co1n1nodity

Wheat . .Rice (unmilled) . .. ..Maizee .Barley . .Oats .Sugard .

Coffee .Cocoa . .Tea... . .Vegetable fats and oils .Cotton . ., .Wool .Jute .Hard fibrese .Rubber:

Natural .Synthetic .

Source: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on United States Departmentof Agriculture, World Agricultural Productionand Trade (Washington, D.C.); InternationalRubber Study Group, Rubber Statistical Bulle­tin (London).

a Data 1"efer either to calendar years or tocrop years beginning in the year shown. Forrice, maize, tobacco, tea, jute, hard fibres andrubber, the data refer to calendar years. Forcoffee and cocoa beans, the data refer to crop

Production(millions of tons) Index, 1967

1963-1965 1966(1966 ~ 100)

a'verage

242.7 285.5 97248.0b 262.0 109187.0b 227.0 11085.3 106.3 10543.0 44.3 9758.9 64.8 101

4.0 3.6 1101.3 1.3 980.9 1.0 100

35.6 37.7 10111.2 10.4 992.6 2.7 1012.3 2.7 1100.9 0.9 94

2.3 2.4 1022.8 3.4 102

years beginning July to October of the yearshown; for sugar, 1 May of the year shown to30 April of the following year, and for cottonbeginning 1 August of the year shown. Forother commodities, harvests in the northernhemisphere beginning in the year shown arecombined with southern hemisphere harveststhat immediately follow.

b 1964-1965 average.e Excluding mainland China.d Centrifugal only, raw value.e Sisal, abaca and henequen.

33

Table 15. Major food crops: production in selected developing countries,1964/65-1967/68(Millions of tons)

Other grains and p1llsesIndia 35.1

S01lrce: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on United States Departmentof Agriculture, World Agricultural Productionand Trade and World Agriwltural Situation,

WheatAlgeria 1.1Argentina . . . . . . . . . . . . . . . 11.3Chile 1.2India . . . . . . . . . . . . . . . . . . . . . . . . 12.3Mexico .. 1.8Morocco . . . . . . . . . . . . . . . . . . 1.2Pakistan 4.6Tunisia 0.4United Arab Republic 1.5

Rice (1lnmilled)Brazil 6.3Burma 8.2Ceylon 1.1China (Taiwan) 2.9Colombia 0.6India 58.6Indonesia 13.0Pakistan 17.8Philippines 4.0Republic of Korea 5.4Thailand . . . . . . . . . . . . . . . . . . . . . 9.6United Arab Republic 2.0

BarleyLatin America 1.1North Africa 1.8India 2.5Republic of Korea 1.4

Crop and country 1964/65 1965/66 1966/67 1967/68-

1.3 0.7 1.46.2 6.4 7.41.2 1.1 1.2

10.4 11.52.0 1.6 2.21.3 0.8 1.14.0 4.30.5 0.3 0.31.6 1.5 1.5

6.6 6.8 7.08.1 7.4 7.50.9 1.03.1 2.9 3.40.7 0.7 0.7

46.0 46.4 62.313.7 14.1 14.317.7 16.4 18.04.1 4.2 4.44.8 5.39.2 11.8 10.01.9 2.0 2.3

1.0 1.21.9 0.8 1.42.4 2.42.0 1.9

28.6 33.3

Foreign Agricultural Report No. 38 (Washing-ton, D.C.); Commonwealth Secretariat, RiceBulletin (London).

a Prelimin3!ry.

Table 16. Annual changes in consumption and investment,by country group, 1964-1967

(Percentage change from preceding .'l'ear)

Personal consumption Fixed investmentCountry group

1964 1965 1966 1967- 1964 1965 1966 1967-

Developed market economiesb 4 6 5 3 9 6 5 2Centrally planned economiesc 5 9 8 9 9 8 7 9Developing countriesd 5 3 3 5 10 4 5 4

Source: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on United Nations, Yearbookof National Accounts Statistics; replies of Gov­ernments to the United Nations questionnaire ofNovember 1967 on economic trends, problemsand policies; reports on plan fulfilment, andother national sources.

a Preliminary; based in the case of the de­veloping countries, on partial data, estimatesand indicators.

b North America, western Europe, Australia,Japan, New Zealand and South Africa.

34

c Eastern Europe and the Soviet Union; per­sonal consumption is based on retail sales;country indices have been combined by weight­ing them by coefficients derived from estimatesof relative value of retail sales and gross fixedinvestment, respectively, as indicated in Sopos­tavlenie Urovnia Ekonomicheskovo RasvitiaS ocialisticheskikh Stron (Moscow, 1965).

d Latin America, Africa (excluding SouthAfrica) and Asia (other than mainland ChinaCyprus, Japan, Mongolia, North Korea, NorthViet-Nam and Turkey).

Table 17. World trade: indices of export and import quantum, 1964-1967

(1963 = 100)

Region ana group1964

Ezport quant"m

1965 1966 1967" 1964

Import quant"m

1965 1966 1967-

World .

Developed countries .North Americab ............•..••...

Western Europe .EEC ..EFTA .Rest of western Europe

Northc ..Soutlrd .

South Africa .Japan .Australia and New Zealand .

Developing countries .Latin Americae .Africaf .

West Asiag .

Southern and south-eastern Asiah .

110

111114109111106

106118101124106

107102112114105

118

120115120124113

110125101159108

113106121122109

127

130127129136118

118138112184110

119111126133114

134

138132135145118

124154131193126

121115124141121

no110108110109111

118106127115115

109108109112107

118

120123118118116

126127140116126

113106114123112

128

130143126127121

129146127136

122

121116117132121

136

139156130131127

127147145171125

126123117136130

Source: Centre for Development Planning, Projectionsand Policies of the United Nations Secretariat, based ondata from the Statistical Office of the United Nations.

a Preliminary; based for some countries on less thantwelve months' returns.

b United States and Canada.c Finland, Iceland and I'reland.

35

d Greece, Spain, Turkey and Yugoslavia.e Twenty republics.f Continental Africa (other than South Africa).g Aden, Bahrein, Iran, Iraq, Israel, Jordan, Kuwait, Leba­

non, Qatar, Saudi ATabia, Syria.h Rest of Asia (other than mainland China, Japan, Mon­

golia, North Korea, North Viet-Nam and Turkey).

Table 18. Wodd exports, by provenance and destination: value, 1965, and percentage change,1966 and 1967

(Millions of dollars; percentage)

preceding year:

E.rporting regionand item

Worlda

Value in 1965 .Percentage change from preceding year:

1966 .1967 .

N arth AmericaValue in 1965 .Percentage change from

1966 '"1967 '"

World'

186,420

9.25.2

35,300

12.05.7

NorthAmerica

28,730

17.25.9

10,230

20.412.6

WesterllEuropeb

84,560

8.54.0

11,060

5.53.0

Otherdeveloped

marketeconomiesc

13,250

6.515.3

3,950

3.918.5

USSRandeast­ern

Europed

19,030

3.37.5

420

33.3-34.8

China(main­land) •

2,120

8.04.4

97

75.3-50.0

LatinAmerica!

9,320

11.71.4

4,030

11.9--2.6

8,170

-0.22.2

813

17.7-20.1

WestAsiah

4,450

13.00.4

844

11.8-4.2

Southernalld south­

easternAsia

12,890

10.22.8

3,235

12.54.1

Otherdevelop­

i~1g

countries I

2,750

7.37.1

608

11.89.6

Western Europeb

Value III 1965Percentage change from

1966 ..1967 .

preceding year:79,030

9.25.3

7,400

19.34.6

50,840

8.94.8

3,710

1.111.5

3,310

13.016.8

370

35.128.0

2,700

13.34.9

4,490

-2.73.0

2,060

13.11.3

2,960

3.4-3.9

820

8.51.1

Other developed market economiescValue III 1965 .......Percentage change from preceding year:

1966 .1967 .. ..

USSR and eastern E,uroped

Value in 1965 ..Percentage change from preceding year:

1966 .1967 . .

Chi.no (mainland)eValue in 1965 .Percentage change from preceding year:

1966 .1967 .

Latin A mericof

Value III 1965 .Percentage change from preceding year:

1966 .1967 .

13,850

12.77.0

19,710

6.19.1

2,020

9.9-9.9

11,060

5.10.6

3,427

20.3

185

31.46.6

15

40.019.0

3,850

8.6-1.4

3,660

7.71.3

3,690

17.14.4

305

24.6-7.9

3,630

6.33.1

1,448

8.820.2

234

31.251.1

245

32.7-8.6

513

9.710.7

342

7.3-15.8

12,460

0.89.4

600

-13.3

730

-4.1-4.3

445

-5.820.5

700

8.66.6

205

-12.2-38.9

453

10.213.4

590

23.712.3

125

-36.0-12.5

1,080

7.4

912

-1.614.9

610

18.0

78

34.614.3

91

-56.025.0

339

19.84.7

235

34.017.5

30

66.7-16.0

51

23.5-9.5

2,513

20.313.6

650

-9.2-6.8

620

16.1-15.3

66

37.91.1

243

16.517.3

6

-83.3

840

-4.83.8

AfricaE

Value in 1965 .Percentage change from preceding year:

1966 . .1967 . .

West Asiah

Value in 1965

Percentage change from preceding year:1966 .1967 .

Southern and south-eastern Asia

Value in 1965 .Percentage change from preceding year:

1966 . .1967 . .

Other developing countriesi. .

Value in 1965 .Percentage change from preceding year:

1966 .1967 .

7,750

9.40.5

6,510

9.55.6

9,310

4.94.2

1,880

5.92.0

605

17.5-5.2

464

4.5-20.6

1,800

5.68.4

755

16.65.7

5,280

8.51.0

3,160

10.88.3

2,200

3.2-0.9

710

-4.2-2.9

290

31.318.2

1,195

12.713.5

1,544

7.412.4

95

10.55.7

455

4.43.2

120

4.24.0

570

5.3-1.7

100.0

115

-28.7-12.2

22

18.23.8

170

-11.83.3

35

34.3-38.3

99

25.3-8.0

125

-12.09.1

87

-11.55.2

600

-6.7-7.2

235

14.9

310

6.5

37

-32.4

120

12.5

550

-3.6-3.8

230

8.7-2.0

4

-25.066.7

160

15.6-8.1

400

15.08.7

2,280

6.12.1

20

70.05.9

6

83.3190.9

65

-1.54.7

54

68.59.9

115

17.411.1

Source: Centre for Development Planning, Projections and Policies of theUnited Nations Secretariat, based on United Nations, Monthly Bulletin ofStatistics.

a The figures for total exports include certain eports which are not includedelsewhere in the table because their regions of destination could not be determined.

b Including Turkey and Yugoslavia.C Australia, Japan, New Zealand agd South Africa.d Albania, Bulgaria, Czechoslovakia, Eastern Germany, Hungary, Poland and

Romania.e Estimates are based in part on import data of trade partners. Where exports

to China (Taiwan) could not be distinguished from exports to mainland China,they are shown as exports to mainland China. Exports of and to Mongolia, NorthKorea and Viet-Nam are included under the heading. Trade among these coun­tries and their trade with mainland China are excluded.

f Twenty republics.g Continental Africa and associated islands, excluding South Africa.h Middle East countries in Asia, including Cyprus and Iran.i Chiefly islands in the Caribbean and Pacific areas.j Estimate for 1966 trade is $1 million and the rate of increase from no trade

in 1695 is not calculated.

Table 19. Wodd trade: indices of value of exports and imports, 1963-1967

(Vahle in billions of dollars)

Grou.p and regionnValue,1963

Ezports, f.o.b.

Indez (1963 = 100)

1964 1965 1966 1967b

Value,1963

Imports, c.i.f.

Inde.~ (1963 = 100)

1964 1965 1966 1967b

World .Developed countries .

North Americac .Western Europe .

EEC .EFTA .

Rest of western Europe:North .South .

South Africad .

Japan .Australia and New Zealande .

Developing countries .Latin America .West Indies! .Africa .West Asia .Southern and south-eastern Asia

135.4104.029.963.737.622.1

1.82.21.45.53.6

31.59.71.66.25.38.4

112113115112113109

113117104122111110109101116115105

122123119124128118

121130106155105116114102124123110

133136134136140126

130154121179111124120108136135116

140144141143150130

134167136192116127120110137142121

143.4110.825.173.740.426.5

2.2

4.61.76.73.6

32.78.72.16.73.6

11.2

112113111112111114

120110127118117111111109111115109

122124127122122120

129132145121129116111113118128114

134137151132133126

134156135141127125123118122140123

141144160136136133

135155158173131130126122123143132

Source: Centre for Development Planning, Projectionsand Policies of the United Nations Secretariat, based onUnited Nations, Monthly Bulletin of Statistics; Interna­tional Monetary Fund, International Financial Statistics.

a As defined in table 17.b Preliminary; based for some countries on less than

twelve months' returns.

C Imports f.o.b.; United States includes special categoryexports.

d Imports f.o.b.e Aus~ralia: imports f.o.b.i Consisting mainly of Barbados, British Honduras, Guade­

loupe, Guyana, Jamaica, Martinique, Netherlands Antilles,Surinam and Trinidad and Tobago.

Table 20. World trade: recent changes in exports and imports, 1967·1968

(Value in billions of dollars)

Region and group

North Americaa .Western Europeb ...•............•.

Japan .Australia, New Zealand and South

Africa .Developed market economiesc .Developing countriesd .

Total, above .

Ezports, f.o.b. Imports, c.i.f.

I ndez (correspond- I ndez (c01"respond.ing period ;ng period

Value, in preceding Value, in preceding1967 year = 100) 1967 year = 100)

1968, first 1968, first1967 quarter 1967 quarter

43 106 106 40 106 11590 105 109 99 103 10710 107 115 12 122 115

6 108 101 8 107 98150 106 108 159 105 10939 103 101 42 104 98

189 105 107 200 105 107

Source: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on International MonetaryFund, International Fhwncial Statistics, June1968.

a United States and Canada.b Austria, Belgium-Luxembourg, Denmark,

Federal Republic of Germany, Finland, France,Greece, Iceland, Ireland, Italy, Netherlands,

38

Norway, Portugal, Spain, Sweden, Switzerland,Turkey, United Kingdom.

C Total of the preceding countries.

d Latin America and the Caribbean (excludingCuba), Africa (other than South Africa), Asia(other than mainland China, Cyprus, Japan,Mongolia, North Korea, North Viet-Nam andTurkey).

Table 21. World trade: changes in unit value of exports and imports, 1964-1967

(1963 = 100)

Unit value of exports Unit vah,e of imports Terms of tradeb

GrouP and region"1764 1965 1966 1967· 1964 1965 1966 1967· 1964 1965 1966 1967-

World ....................... 102 103 105 104 102 103 104 104Developed countries ........ 102 103 105 105 102 103 105 104 100 100 100 100

North America . . . . . . . . . . 101 104 105 107 102 103 104 103 99 101 101 103Western Europe .. , ...... 102 104 105 105 102 103 105 104 100 101 100 101

EEC . . . . . . . . ......... 102 103 103 103 102 103 104 104 100 100 99 99EFTA ................ 102 105 107 110 103 103 105 105 100 101 102 105

Rest of western Europe:North ............... 106 111 110 110 102 103 104 107 105 107 106 103South .... .......... . 100 104 112 108 105 105 108 106 95 99 104 102

South Africa " . . . . . . . . . . 103 105 107 104 101 106 108 109 102 99 99 95Japan ........ , .......... 99 97 97 99 102 105 104 102 96 93 94 97Australia and New Zealand 105 97 101 94 101 102 104 105 103 95 97 90

Developing countries . . . . . . . 103 102 104 103 101 102 103 103 102 100 101 101Latin America ........... 107 107 108 105 102 106 105 105 105 102 103 100Africa ...... ........... . 104 103 107 110 102 103 105 104 103 100 102 105West Asia ........ 100 100 101 101 103 103 105 106 98 98 97 96Southern and south-eastern

Asia .. . .......... 100 101 101 100 101 102 101 102 99 100 99 97

Source: Centre for Development Planning, Projections b Unit value of exports, divided by unit value of imports.and Policies of the United Nations Secretariat, based onUnited Nations, Monthly Bulletin of Statistics. C Preliminary, based for some count,ries on less than

a As defined in table 17. twelve months' returns.

Table 22. Export price indices of primary commodities andnon-ferrous base metals, 1964-1967 and first quarter, 1963

Commodity and groupIndex, 1963 = 100

Index (correspondingquarter of preceding

year = 100)first quarter

Primary commodities .Food .

Cereals .Wheat .Rice .Maize .

Beverages .Coffee .Tea .Cocoa .

Meat .Beef .Mutton and lamb .

Dairy products .Sugar .Other food .

Agricultural non-food .Fats, oils and oil-seeds .

Olive oil .Copra .Coconut oil .Ground-nuts .Ground-nut oil .Palm kernels .Palm kernel oil .Palm oil .Linseed oil .

1964

103105103104100101121133102

9'11211281171027996

10210464

10611010910899

107107111

39

1965

103103

9995

103104111124100

6612613512711353

10410311472

118126118109121139116100

1966

105106105102116105113120104

9412513011911253

1051041117299

107110105103139107

90

1967

10210510810313699

11111210411011712011411755

10296

10275

10511510310210312710495

1967

98101109110121103969099

126939197

10493

1009592

104898598

10085829693

1968

98989693

1079398

10088

10310210211599

1199597

1001011431557092

1229792

125

Table 22. Export price indices of primary commodities and non-ferrousbase metals, 1964-1967 and first quarter, 1968 (continued)

Commodity and groupIndex, 1963 = 100

Index (correspondingquarter of preceding

year=100jfirst quarter

Linseed .....Soya beansSoya bean oilCottonseed oil

Textiles .Wool .Cotton .JuteSisal . .

Wood and wood-pulp .Other agricultural non-food

Minerals .Metal ores

Iron ore ..Bauxite .Copper ore . . . . . . . . . . . . . . .Lead ore .Zinc ore .Tin ore .Nickel ore .Manganese ore .Chrome ore .

Fuels .Petroleum .Coal .

Crude fertilizer .

Non-ferrous base metals .Aluminium .Copper .Lead .Tin .Zinc .

1964

9910010310310210310010589

10591

1021089899

14115814713410010399

100100102103

119105120159140153

1965

97105123114928697

11262

10894

10411499

10018417514515410011599

101100103109

135109145183155147

1966

92115132132929094

12356

108109104115100100230147129142101116109101100104115

156108192152142135

1967

991051091118877

10011649

10797

103109

95108169129127132111107116101100104111

142111166132132130

1967

989887899789

10310892

10181979092

10067779487

108100107100100100100

9510295768693

1968

1179789999890

10784899896

1011051041251221019694

1109086

1001009999

1121001191019494

Source: Centre for Development Planning, Projections and Policies of the United NationsSecretariat, based on data from the Statistical Office of the United Nations.

Table 23. Developed market economies: industrial productionand gross national product, by region, 1965-1967

(Percentage change from preceding year)

Percentageshare in Industrial production Gross national procPu-ctaco'mbined

Region ana grou.p gross 1965 1966 1967 1965 1966 1967nathnJ.alproduct3

1966

Developed ma'rket economiesb . 100 6 7 2 5 5 3North America .... 53 8 9 1 6 6 3European Economic Com-

munity . . . . . . . . . . . . . . . . . . . 22 4 5 2 4 4 3European Free Trade Area. 12 4 2 3 2 2Other western Europe ...... 4 11 9 3 7 7 4Japan ..................... 6 3 13 19 4 11 12Oceaniac and South Africa .. 3 4 4 3 7 3 5

S ouree: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on data from United Nations,Yearbook of National Accounts Statistics; Or­ganisation for Economic Co-operation and De­velopment, Mail~ Economic Indicators (Paris),and official national sources.

40

a At constant prices and 1966 exchange rates.

b For country coverage, see table 11.

C For Australia, fiscal years ending 30 June,and for New Zealand, fiscal years beginning1 April of years indicated.

Tahle 24. Developed market economies: gross national productand its mam components, by region, 1965·1967

(At constant prices and 1966 exchange rates; percentage change from preceding year)

Region and yearGross

nationalproduct

Personalcon­

sumption

Publiccon­

sumption

Fixedinvest­ment

Foreign trade ingoods andservices

Exports Imports

Changein

inven­foriesu.

Developed market economiesb

1965 .19661967 .

North America196519661967

European Economic Community

1965 .1966 .1967 .

European Free Trade Area196519661967

Other western Europe

1965 .19661967 " .

Japan

196519661967

Oceaniac and South Africa1965 .1966 .1967 .

553

663

443

322

774

41112

735

653

753

543

322

575

68

10

544

488

31111

534

345

1395

285

1095

652

85

-1

331

424

894

21020

1451

695

395

1197

64

-1

21711

24165

312

10127

11167

885

534

2213

71225

16

7

1.41.3

1.21.40.7

1.00.8

1.30.9

3.43.3

1.72.63.3

3.91.22.9

Source: As for table 23.

a At current prices, as percentage of grossnational product at current prices.

b For country coverage, see table 11.C For Australia, fiscal years ending 30 June,

and for New Zealand, fiscal years beginning1 April of years indicated.

Tahle 25. Developed market economies: gross national product and its mamcomponents, by country; actual 1965-1967 and forecast for 1968

( A t constant prices; percentage change from preceding year)

Australiac

Countryaand year

Grossnationalproduct

Personalcon­

sumption

Publiccon­

sumption

iFixedinvest­ment

Foreign trade ingoods

and services

Exports Imports

Changein

inven­tor£esb

196519M19671968

Netherlands1965196619671968

Ireland1965196619671968

726

5353.5

2245

534

7353.5

122

41

10136

353.5

312

136

-1

5771

10-5

6

112

8677.5

27

11

1841

7847

426

3.51.02.0

1.61.4

2.30.90.4

Table 25. Developed market economies: gross national product and its maincomponents, by country; actual 1965·1967 and forecast for 1968 (continued)

Foreign trade i-a ChangeGross Personal P1<blic IFi:ced goods in

Countrya national con- can- invest· and services inven-and year prod1<ct sumptiof/, s'l,tmption ment tories b

Exports Imports

Portugal1965 ...... ................ . 7 6 7 10 13 13 1.51966 ..... 3 4 5 11 5 3 1.51967 · . . . . . . . . . . . . . . . . . . . . . . 5 6 7 DD 5 -41968

Denmark1965 ............. 4 4 4 5 8 7 1.51966 ,_ .................. 2 4 4 3 3 6 1.21967 ....................... 3.5 4 6 7 6 7 0.71968 3

Japan1965 ............ " .......... 4 6 2 2 24 7 1.71966 11 8 8 9 16 12 2.61967 · .. . . . ................ . 12 10 5 20 5 25 3.31968 ....... ............... . 8 6 5 8

Luxembourg1965 ... . ........... 2 3 0 -18 5 -1 1.31966 ......... 1 3 6 -3 1 11967 · . . . . . . . . . . . . . . .. . . . . . . 2 0 2 -16 3 -31968 .................. 2.5 2 1 2.5 3 2

Finland1965 ... ............. , .... 7 5 4 9 5 9 3.41966 ... 2 4 4 1 7 5 2.91967 .. , ............. 3 4 4 -2 5 -2 2.51968 ......... .... , ......... 3 3.5 3 -1 7 -1

Norway1965 .... ................ , .. 4 3 10 7 7 9 1.41966 ..... . ............. 4 5 4 6 8 8 1.61967 ....................... 5.5 4 5 10 11 121968 .......... 4 3.5 4.5 -0.5 5.5 -0.5

Belgium1965 ....................... 4 4 7 3 8 8 0.51966 .......... ....... ....... 3 3 7 6 4 8 0.81967 · . ..................... 3.5 2 4 -3 6 31968 ............. 4 2 3.5 2 5.5 6.5

Sweden1965 · . .................... 4 4 6 4 4 11 1.91966 · . 3 2 7 4 6 4 0.71967 ....... . . . . . . . . . . . . . . . . 3.5 3 10 3 6 3 0.31968 ............. 3.5 2.5 6 2 6.5 6

South Africa1965 . . . . . . . . . . . . 5 5 10 17 11 4.71966 ................. 6 6 2 4 6 -9 0.61967 ....................... 7 5 4 4 10 18 5.11968 ............... 5 5 6 6

ItalJ'1965 · . . . . . . . . . . . . . . . . . . . . . . 4 2 4 -8 21 2 0.71966 · . .............. , 6 6 4 4 13 13 1.21967 · . . . . . . . . . . . . . . . . . . . . . . 6 6 3 10 6 14 1.61968 . . . . . . . . . . . . . . 5.5 5.5 4 9 7 11.5

United Kingdom1965 .. , . ................... 2 2 3 4 5 2 1.21966 ....................... 1 2 3 1 2 1 0.61967 ....................... 1 2 4 5 -2 4 0.21968 ....................... 2.5 3 4 12.5 1

France1965 ....................... 4 4 4 5 11 4 0.31966 ....................... 5 5 3 6 7 11 0.91967 ....................... 4 4 5 8 4 6 0.81968 ....................... 4.5 4 5.5 6.5 7 9.5

42

Table 25. Developed market economies: gross national product and its mamcomponents, by coullltry; actual 1965·1967 and forecast for 1968 (continued)

Countryaand year

Grossnationalproduct

Personalcon-­

sumption

Publiccon-­

sumption

Fixedinvest­ment

Foreign trade ingoods

and services

Exports Imparts

Changein

inven­toriesb

Switzerland1965 .1966 .1967 .1968 ,

AUSI1-ia1965196619671968

Turkey1965196619671968

Germany (Federal Repl!blic of)1965 .1966 .1967 .1968 .

Greece1965 .1966 .1967 .

Canada1965196619671968

United States196519661967 ..1968

Spain196519661967

Iceland1965196619671968

New Zealandd

1965 .196619671968

431.52.5

2522.5

596

52

-0.54

885

7634

6635

883.5

54

-32.5

65

-2

423

5533

487

63

1.5

75

D

6554.5

7534

58

D

58

-3

84

153

-1432

267

7141.5

175

A

3733

311117.5

2115D

855

D

118

-1

57

10207

6

-105.5

1316D

1211

-21

84

-14

58

DD

-21715D

101

1262

676

1366

711107

103124

51310

2945.5

-62011

1110

-725

33

344

12103

626

-5

153

10

2144

13135

111678.5

3S15

-1

9167

-3

16

0.80.70.7

1.43.11.8

1.80.3

-0.8

3.71.0

1.81.70.4

1.21.40.7

3.54.3

2.0

0.3

3.83.72.1

Source: Centre for Development Planning,Proj ections and Policies of the United NationsSecretariat, based on data from United Nations,Yeai'book of National Accounts Statistics, andofficial national sources.

Note: Where the direction-but not themagnitude-of a change is known or predicted,the symbols A, D and DD are used:

A refers to an acceleration; D to a decelera­tion; DD to an actual decline.

43

a Countries are arranged in descending orderaccording to the degree of acceleration in therate of growth of gross national product be­tween 1966 and 1967.

b At current prices, as percentage of grossnational product at current prices.

C Fiscal years ending 30 June of years in­dicated.

d Fiscal years beginning 1 April of years in­dicated.

Table 26. Developed market economies: personal consumption and its maincomponents, 1965-1967

(At constant prices; percentage change /I'om preceding year)

Countr:y:tand year

TotalFood,

beverages}tobacco

Clothing DwellingDurables

Hou·sehold Passengergoods carsb

Australiac

1965 .1966 .1967 .

Netherlands1965 , .1966 .1967 , .

Ireland1965 .1966 .1967 .

Denmark1965 .1966 .1967 .

japan1965 .1966 .1967 .

Finland1965 .1966 .1967 .

Norway1965 .1966 ..1967 .

Belgium1965 .1966 .. . .1967 .

Sweden1965 .1966 .. . .1967 .

South Africa1965 .19661967 .

Italy1965 .1966 . .1967 ..

United Kingdom1965 .1966 .1967 ..

France196519661967

Switzerland1965 .1966 . .1967 ..

534

735

122

444

68

10

544

354

432

423

565

266

222

454

423

345

72

354

385

345

343

23

222

753

254

-121

33

52

44

422

6

5

554

558

-2104

144

32

2

2

574

76

4

14

12

444

33

43

632

438

444

554

22

542

364

333

433

54

33

9

2

146

-1

816

91111

42

-283

55

311

454

-456

1-2

2

16

21

6-11

2

24-21

15

4-8

-1519

-4

94425

22-21-13

278

16-1

3

17-26-11

10-824

71517

-6-5

5

1142

455

Tahle 26. Developed market econo:mies: personal consumption and its maincomponents, 1965-1967 (continued)

Cattntr:yaand year

TotalFood,

beverages)tobacco

Clothing DwellingDnmbles

Household Passengergoods carsb

Austria196519661967

Germany (Fedeml Reptlblic of)1965 .1966 .1967 .

Greece196519661967

Canada1965 .1966 . .1967 .

United States

1965 .1966 .1967 ..

5 2 6 3 75 2 5 5 63 3 1 1

6 5 7 5 53 2 2 5 4

1 7

7 4 11 7 65 6 8 8 1

D

6 4 4 6 85 2 2 6 85 5 5 3 1

7 4 7 6 95 3 9 4 113 2 4 3 6

169

-2

13-1

-10

3-1-3

16-3-8

Source; Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on data from United Nations,Yearbook of National Accounts Statistics, andofficial national sources.

"Countries are arranged in descending order

according to the degree of accelerati~\n in therate of growth of gross national product be­tween 1966 and 1967.

b Registration of new passenger cars.e Fiscal years ending 30 June of years in­

dicated.

Tahle 27. Developed market economies: gross domestic fixedinvestment and its main components, 1965-1967

(At constant prices; percentage change from preceding year)

Co'untryaand year

Netherlands1965 .1966 .1967 .

Ireland196519661967

Denmark196519661967

japan

196519661967

Finland196519661967

Norway196519661967

Total

577

10-s

6

537

29

20

91

~2

76

10

Housing

117

14

20-8

83

12

1777

955

555

45

!VIann·factnring

11

9-4

-58

19

52

7198

Generalgovernmentb

12

1-13

15

10d

13d

_d

13-5-2

3

Table 27. Developed market economies: gross domestic fixedinvestment and its main components, 1965-1967 (continued)

Country'and year

Belgium196519661967

Sweden1965 .1966 .. , .1967 .. .

South Africa1965 .1966 " .1967 .

Italy1965 .1966 .1967 .

United Kingdom1965 .1966 .1967 .

Frana:1965 .1966 .1967 .

Switzerland19651966 .1967 .

AHstria1965 .1966 , , .1967 .

Germany (Federal Republic of)1965 .1966 .1967 .

Housing Manu-facturing

11-8 6-4

3 11-2 10

16 1

14e 197e 2

12e -7

-6 -Zoe-1 lOe

4 12e

2 lO-3

9 -5

9 Ig~

3 ~

1-2 1

1

1 5h

1 --h

1 _h

3e 94e -2

-7e -12

17 349

767

2

3f

6f

15f

lldlOd

1018

14124

1316

14

13

2318

66

-1

-927

Generalgovernntentb

1720

-lh

37h

zo18

-2

511

-3

-3-12-5

1744

415

6

Total

1316D

57

568

443

84

-1

-1

-21715

1211

-2

-84

10

36

-3

-lO

States

Greece196519661967

Canada196519661967

United196519661967

Iceland196519661967

Sotlrce: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on data from United Nations,Yearbook of N ational Acco~mts Statistics, andofficial national sources.

a Countries are arranged in descending orderaccording to the degree of acceleration in therate of ,growth of gross national product be­tween 1966 and 1967.

b Excluding government enterprises.

e Including mining, quarrying, construction,electricity, gas and water.

d Including public corporations and govern­ment enterprises.

e Including non-residential buildings andother construction and works.

f Including government enterprises.g Including construction.11 Including mining and quarrying.

46

Table 28. Western Europe and North America: changes in production in selected manufacturingindustries, 1963-1967

(Percentage change from corresponding period in preceding year)

North AmericaPeriod All manu­

facturing Food

Western Europe"

Textiles Chemicals Metal All manu­products factttring

Food Textiles Chemicals Metalproducts

1963 51964 71965 41966 41967b 1

1966:

45232

52

-24

---4

10139

107

4654

57991

33342

2596

977

105

56

13131

First quarter .Second quarter .Third quarter .Fourth quarter .

1967:b

First quarter .Second quarter .Third quarter .Fourth quarter .

5542

3

3333

863

-1

-6---4-0-1

9119

10

8768

5451

-2

---44

910108

3

3454

3422

7852

-3-3-1

6

1011109

6546

15131411

41

-1-3

Source: Centre for Development Planning, Projectionsand Policies of the United Nations Secretariat, based onUnited Nations, Monthly Bulletin of Statistics, November1967 and May 1968.

a Including Yugoslavia.

b Preliminary.

Table 29. Developed market economies: prices and earnings, 1965-1967(Annual average; percentage change from preceding year)

Implicit Wa.Qe

Country" Wholesale Consumer E",port Import dellatian earningsunit unit of gross in

and year prices prices value value national manu",product factMing

Australia1965 .... , .... , ......... 3 4 -7 2 2.8b 401966 ................... 4 3 4 2 3.7b 401967 ................... 2 3 -5 1 3.0b 50

Netherlands1965 ................... 4 5 1 6.0 1101966 ................. o. 5 5 -1 6.2 13°1967 ................... 1 3 1 4.1 7c

Ireland1965 ................... 4 5, 1 3 4.4 51966 ................... 2 3 2 3.3 101967 ................... 3 3 1 4.1 7

Portugal1965 ................... 3 3 1 3.31966 ................... 4 5 4 5.51967 ................... 4 6 2

Denmark1965 ................... 3 7 1 1 7.4 121966 .. , ................ 3 7 4 1 7.7 121967 ................... 1 7 -3 -1 5.9 10

Japan1965 ................... 1 7 -1 -2 5.9 91966 ................... 2 5 1 4 3.9 121967 ........... , ....... 2 3 1 -4 3.9 12

Finland1965 ................... 4 5 4 1 2.6 9d1966 ................... 2 4 -1 1 4.8 8d

1967 ................... 3 6 -1 6 6.8 8d

47

Table 29. Developed market economIes: prices and earnings, 1965-1967(continued)

Countrya. Wholesale ConsumeraHd year prices prices

Exportunit

value

Importunit

value

Implicitdeflationof grossnationalproduct

Wageearnings

inmanu­

facturing

Norway1965 3 41966 2 31967 2 4

5

-11

-1

6.23.64.0

Belgium1965 . . . . . . . . . . . . 1 41966 2 41967 -1 3

3-1

-11

-1

5.14.23.3

994

Sweden1965 5 51966 3 61967 4

3

-2

21

-2

6.15.65.3

l1d

9d

10d

346

3.72.82.1

4.92.32.5

241

-121

5-5

-3-1

1

524

22

South Africa1965 3 4e

1966 4 4e

1967 2 3e

Italy196519661967

United Kingdom1965 .1966 31967 -1

542

142

2-1

4.74.13.7

France196519661967

22

-1

333

141

21

-1

2.52.72.6

Switzerland1965 .1966 .1967 .

12

354

163

132

3.54.54.1

77

Austria196519661967

412

524

3-2

11

-2

6.23.73.6

5d

12d

8d

Tttrkey

196519661967

955

48

15

2.83.4

1710

Germany (Federal Republic0/)1965 21966 21967 -1

331

22

-1

31

-2

3.73.70.7

1074

Greece196519661967

231

352

-22

-2

121

4.43.0

9139

Canada196519661967

242

344

142

3.04.53.9

566

48

Table 29. Developed market economies: prices and earnings, 1965-1967(continued)

ImPlicit Wa.qe

Country a FVholesale Consumer Export I",port deflation earningsunit "Unit of gross inand year prices prices

'value value national manu-product facturing

United States1965 ............ 2 2 3 2.0 31966 ......... , 3 3 1 2 2.7 41967 . . . . . . . . . .......... 3 -1 -1 3.0 4

Spain1965 ........... 10 13 7 -2 11.2 171966 3 6 7 3 6.7 171967 ........ . .......... 1 6 -3 -1

New Zealand1965 ........... 1 3 -2 1 I.Of 61966 ... , ........ 1 3 -2 2 0.8f 51967 6 -S 5

Source: Centre for Development PlaJ1J1ing,Projections and Policies of the United NationsSecretariat, based on data· from Statistical Of­Office of the United Nations, Monthly Bulletinof Statistics; International Monetary Fund,International Financial Statistics, and officialnational sources.

a Countries are arranged in descending orderaccording to the degree of acceleration in the

rate of growth of gross national product be­tween 1966 and 1967.

b Fiscal years ending 30 June of years in-dicated.

c vVage rates.d Including mining and quarrying.e White population.f Fiscal years beginning 1 April of years in­

dicated.

Tahle 30. Developed market economies: employment and unemployment, 1965-1967

Estimated Percentage cha"ge fromcivilianCountrjlR labour force preceding ~'ear in Perce"tage unemployed"total civilianin 1966 employment(millions)

1965 1966 1967 1965 1966 1967

Australia ............... 4,225 0 5 3 2 0.3 0.5 0.6Netherlands ......... 4,187d 1 1 0.9 1.1 2.2Ireland ................. 1,106 -1 .....:1 2e 5.6 6.1 6.7Denmark ... ............ . 2,094d 2 1 1 2.4 2.6 3.2Japan . . . . . . . . . . . . . . . . . . . 48,910 2 2 2 0.8 0.9 0.9Finland . . . . . . . . . . . . . . . . . 2,033d 1 -2 1.4 1.6 2.8Norway . . . . . . . . . . . . . . . . . 1,406d 1 2 1.2 1.1 1.0Belgium ................. 3,5120 3 2.4 2.7 3.7Sweden ................. 3,244d 1 1 -1 1.1 1.4 1.8South Africa ..... 5,692d lle 5e 4e

Italy .................... 19,653 -2 -2 1 3.6 3.9 3.5United Kingdom ......... 24,6170 1 1 -2 1.5 1.6 2.5France . . . . . . , . . . . . . . . . . . 20,269f 1.3 1.4Switzerland . . . . . . . . . . . . . 2,691g 1Aus~ria ........... 3,3700 1 1 -1 2.7 2.5 2.6Germany (Federal Repub-

lic of) ................ 27,161 1 -3 0.6 0.7 2.1Canada ...... . . . . . . . . . . 7,383 4 4 3 3.9 3.6 4.1United States .......... 80,164 3 3 2 /4.5 3.8 3.8New Zealand ............ 1,022 3 4 2 0.1 0.1

Source: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on data from United Nations,Monthly Bulletin of Statistics; InternationalLabour Office, Yearbook of Labour Statistics,1967 (Geneva), and official national sources.

a Countries are arranged in descending orderaccording to the degree of acceleration in therate of growth of gross natiDnal product be­tween 1966 and 1967.

49

b Annual figures are generally computed asarithmetic averages of the twelve monthlyfigures. Data are not necessarily comparablebetween countries.

c 1961.d 1960.e Manufacturing only.f 1967.g 1965.

Tahle 31. Centrally planned economies: changes in national llcome,a 1964-1968

(Percentage change from preceding year)

COlintry

Bulgaria .Czechoslovakia .Eastern Germany .Hungary .Poland .Romania .USSR .

Total, aboveb .

1964

9.60.64.55.07.0

11.59.48.4

1965

7.13.44.61.07.09.57.26.8

1967 1968,1966Actual Planned planned

11.0 9.0 8.6 10.510.8 8.1 6.0 5.34.4 5.0 5.0 5.46.0 8.0 4.0 5.0-6.07.0 7.0 3.4 4.87.9 7.57.5 6.7 6.6 6.87.5 6.9

Source: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on reports of fulfilment ofplans, national statistical yearbooks and statisti­cal bulletins, and replies of Governments to theUnited Nations questionnaire of December 1967on economic tren~s, problems and policies.

a Net material product at constant prices.b Weighted by coefficients derived from the

estimates of relative value of net material prod­uct of various centrally planned economies, asindicated in Sopostavlenie Urovnia Ekonomiche­skovo Razvitia Socialisticheskikh Stran (Mos­cow, 1965).

Tahle 32. Centrally planned economies: changes in gross agricultural output,1964-1968

(Percentage change fj'om preceding year)

1967 1968,Country 1964 1965 1966 plannedActual Planned

Bulgaria ..................... 11.4 1.8 15.0 1.3 5.0 10.0Czechoslovakia ............... 2.5 -3.9 10.5 3.5 2.9 1.7Hungary .................... 4.7 -5.3 6.0 1.0 3.0 3.0-4.0Poland ...................... 1.3 7.7 5.5 2.3 4.2 -1.5Romania ..................... 6.3 6.7 11.2 1.0 5.8 7.5-8.5USSR ....................... 14.4 2.0 10.0 1.0 3.0 7.4

Total, abovea .............. 11.0 2.3 9.4 1.1 3.4 5.9

Source: See table 31.a Weights are derived from data on the rela­

tive value of agricultural production in various

centrally planned economies, as i[1dicated in thesource quoted in table 31, foot-note b.

Table 33. Centrally planned economies : changes in industrial production,1964-1968a

(Percentage change from preceding year)

1967 1968,COllntry 1964 1965 1966Actual Planned planned

Bulgaria ..................... 10.0 15.0 12.2 13.4 11.3 10.6Czechoslovakia ............... 4.1 7.9 7.3 7.1 5.3 6.0Eastern Germany ............ 6.7 6.3 6.4 6.8b 6.0b 6.4b

Hungary ..................... 9.0 5.0 7.0 9.0 6.0 6.0-7.0Poland ...................... 9.4 9.0 7.0 8.0 6.2 7.1Romania ..................... 14.0 13.0 11.7 13.8 11.3 12.3USSR ............ '........... 7.3 8.7 8.6 10.0 7.3 8.1

Total, abovec ............. . 7.5 8.6 8.2 9.6 7.1 7.9

Source: See table 31."Gross value of output, unless otherwise

stated.b "Commodity production" equivalent to gross

output less work in progress. During recentyears, the differences between the rates of

50

change of 'commodity production and of gros'soutput have not been significant.

e Weights are derived from data on the rela­tive value of industrial production in variouscentrally planned economies, as indicated in thesource quoted in table 31, foot-note b.

Table 34. Centrally planned economies: changes in gross fixed investment,1964-1968a

(Percentage change from preceding year)

Source: See table 31.a Unless otherwise stated, the data are ex­

pressed at constant prices and refer to totalinvestment in the case of Czechoslovakia, East­ern Germany and the Soviet Union, and to the

Country

Bulgariab .Czechoslovakia .Eastern Germanyb, c .Hungary .Poland .Romania .USSR .

1964

10.211.99.84.23.6

10.79.0

1965

8.17.8

9.40.8

10.48.78.2

1967 1968,1966Actual Planned planned

24.0 15.6 13.9 10.0

9.8 2.6 4.2 5.47.1 9.0 9.0 10.76.0 15.0 4.7 1.0-2.09.0 11.0 8.1 5.8

10.2 17.1d 17.0d 8.6d

6.0 8.0 7.9 5.7

socialized sector only in the case of Bulgaria,Hungary, Poland and Romania.

b At current prices.eNot including capital repairs.d State investment only.

Table 35. Centrally planned economies: changes in volume of retail trade,1964-1968

(Percentage change from preceding year)

1967 1968!,Country 1964 1965 1966 plannedActual Planned

Bulgaria ..................... 5.8 7.8 8.4 11.5 9.0 8.5

Czechoslovakia .............. 2.8 5.6 5.2 6.5

Eastern Germanya ............ 3.3 4.3 4.1 4.0 4.5 3.9

Hungary .................... 7.5 3.7 8.0 10.0 3.4 7.0

Poland ...................... 4.7 8.6 6.8 7.7 7.4 6.8

Romania ..................... 7.8 7.9 9.9 9.8 9.0 8.0

USSR ....................... 5.3 10.1 8.7 9.4 7.4 7.8

Source: See table 31. a At current prices.

Table 36. Centrally planned economies: external trade, 1963·1967(Millions of dollars)

Country 1963 1964 1965 1966 1967

BulgariaExports ...................... 834 980 1,176 1,305 1,458Imports ...................... 933 1,062 1,178 1,478 1,572

Balance .................... -99 -82 -2 -173 -114

CzechoslovakiaExports ...................... 2,462 2,576 2,689 2,745 3,013Imports ...................... 2,160 2,429 2,672 2,736 2,680

Balance .................... 302 147 17 9 333

Eastern GermanyExports ...................... 2,713 2,932 3,070 3,205 3,456Imports ...................... 2,331 2,634 2,810 3,215 3,279

Balance .................... 382 298 260 -10 177

HungaryExports ...................... 1,206 1,352 1,510 1,594 1,702Imports ..................... . 1,306 1,496 1,521 1,566 1,776

Balance .................... -100 -144 -11 28 -74

PolandExports . . .................... 1,770 2,096 2,228 2,272 2,527Imports ...................... 1,979 2,072 2,340 2,494 2,645

Balance .................... -209 24 -112 -222 -118

51

Table 36. Centrally planned economies: external trade, 1963·1967(continued)

Country 1963 1964 1965 1966 1967

RomaniaExports ......... ...... " .... 915 1,000 1,102 1,186 1,396Imports ...................... 1,022 1,168 1,077 1,213 1,546

Balance .................... -107 -168 25 -27 -150

USSRExports ......... , ............ 7,272 7,683 8,175 8,841 9,649Imports .............. - ....... 7,059 7,736 8,058 7,913 8,536

Balance .................... 213 -53 117 928 1,113

TotalExports . . . . . . . . . . . . . . . . . . . . . . 17,172 18,619 19,950 21,148 23,201Imports . . . . . . . . . . . . . . . . . . . . . . 16,790 18,597 19,656 20,615 22,034

Balance .................... 382 22 294 533 1,167

Source: Centre for Development Planning, Projections and Policies of the United NationsSecretariat, based on reports on fulfilment of plans, national statistical yearbooks, United Nations,Monthly Bulletin of Statistics, May 1968, and information from Council for Mutual Economic As­sistance Secretariat, Statistical Department, March 1968.

Table 37. Devel{lping countries: indices {If agricultural and food production, 1960-l967a

(1963 = 100)

Item and region

Total agricultural prod~tetion

Total developing countries .Latin Americac .Africad .

'West Asiae .Southern and south-eastern Asiaf .

Per capita agricultural prod~lction

Total developing countries .Latin Americac .Africad .

West Asiae .Southern and south-eastern Asiaf .

Total food produ,ctiong

Total developing countries .Latin Americac .Africad .

'West Asiae .Southern and south-eastern Asiaf .

Per capita food prod~tction

Total developing countries .Latin Americac .Africad .

West Asiae .Southern and south-eastern Asiaf .

1960

9190938093

9997

10086

100

9289937994

100969987

101

1961

9595919297

1001009597

101

9492909197

99979497

101

1962

9697989795

9999

10110097

9796989895

9998

10010197

1963

100100100100100

100100100100100

100100100100100

100100100100100

1964

10299

103102103

10096

10099

101

103103102101103

101100

9998

101

1965

10311010310698

9910498

10093

10311010110597

98104

969992

1966

10210510310399

9496969591

10210810110397

9499939590

1967"

109109105113110

999796

10099

111114104113no

10110295

10199

Source: Centre for Development Planning, Projectionsand Policies of the United Nations Secretariat, based oncommunications from the Foreign Regional Analysis Divi­sion, United States Department of Agriculture.

a Calendar years; production is credited to the year inwhich the bulk of the crop is harvested.

b Preliminary.c Twenty-three countries.

52

d Continental Africa, excluding South Africa.e Iran, Iraq, Israel, Jordan, Lebanon, Syria.f Burma, Cambodia, Ceylon, China (Taiwan), India, Indo­

nesia, Pakistan, Philippines, Republic of Korea, Republic ofViet-Nam, West Malaysia, Thailand.

g Cereals, pulses, root-crops, fruit, vegetables, sugar, oil­seeds and cocoa (excluding coffee and tea).

Table 38. Developing countries: rate of growth III food production,1966 and 1967a

Annual rate of growth offood Production

Less than or equal to 2.9 per cent(per capita food productiondeclined or rose negligibly)

3.0 to 4.9 per cent (per capitafood production increased mod­erately)

5.0 to 7.9 per cent (per capitafood production increased sig­nificantly)

1966

JordanSyriaTunisiaMoroccoAlgeria

CubaSenegalUpper VoltaUruguayRepublic of Viet-Nam

LiberiaBrazilLebanonIsraelIraq

GuineaGuyanaPakistanPanamaParaguay

BurmaIndiaTrinidad and TobagoAngolaGhana

EthiopiaHondurasChileColombiaEcuador

Sierra LeoneSudanJamaicaUnited Arab RepublicUganda

Congo (DemocraticRepublic of)

MadagascarDominican RepublicPeruBoliviaRhodesia, Malawi and

Zambia

TogoHaitiCameroonBurundiCambodia

GuatemalaPhilippinesChina (Taiwan)VenezuelaRwandaMexico

IranNicaraguaIndonesiaNigeriaWest MalaysiaUnited Republic of

Tanzania

53

1967

ThailandUruguayJamaicaNigeriaBolivia

Republic of KoreaHaitiEI SalvadorGuatemalaCongo (Democratic

Republic of)

Ivory CoastNicaraguaSierra LeoneUgandaMali

IraqPeruColombiaMadagascarUnited Arab Republic

CambodiaIndonesiaDominican RepublicChina (Taiwan)Dahomey

United. Republic ofTanzania

TogoBurundiChileTrinidad and Tobago

NigerRhodesia, Malawi and

Zambia

PhilippinesPanamaLiberiaMexicoCameroon

Republic of Viet-NamAngolaWest MalaysiaBurmaRwanda

EcuadorHondurasGhanaVenezuelaCosta Rica

Table 38. Developing countries: rate of growth in food production,1966 and 1967a (continued)

Annual rate of growth offood production

5.0 to 7.9 per cent (per capitafood production increased sig­nificantly) (continued)

8.0 per cent or over (per capitafood production increased sub­stantially)

1966

Republic of KoreaKenyaCeylonArgentinaEI Salvador

Costa RicaIvory CoastNigerMaliDahomeyThailand

1967

BrazilParaguayIranGuineaEthiopiaArgentina

SyriaPakistanKenyaCeylonUpper Volta

GuyanaMoroccoTunisiaSudanIsrael

CubaIndiaAlgeriaLebanonSenegalJordan

Source: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on communications from theForeign Regional Analysis Division of the

United States Department of Agriculture.a Countries are arranged in ascending order of

increase in food production over the previousyear.

Table 39. Developing countries: indices of industrial production, 1964-1967

Developing countrie~o. Southern and south-eastern Asiab

Item 1964 1965 1966 1967· 1967· 1964 1965 1966 1967· 1967'(Preceding year = 100) (1963 = 100) (Preceding year = 100) (1963 = 100)

Total industrial productiond 109 107 105 104 127 109 108 105 105 130Mining ................... . 109 107 106 105 130 110 109 105 113 143Manufacturing ............. 109 107 105 103 125 108 107 106 102 126

Lighte ................... 107 106 104 103 121 106 107 106 101 122Heavyf .................. 111 107 106 104 130 110 108 106 105 132Food, beverages and to-

bacco .................. 104 107 106 102 119 107 107 110 95 121Textiles ................. 110 102 100 105 117 108 103 99 105 116Paper and paper products 108 109 106 103 129 107 107 110 104 131Chemicals, petroleum and

coal products .......... 107 106 107 105 128 109 106 108 108 134Non-metallic mineral pro-

ducts .................. 109 107 106 105 130 107 112 103 109 135Basic metals ............. 108 103 108 103 124 100 104 106 100 110Metal products ... , ....... 117 109 103 102 135 116 113 103 103 139

Electricity and gas . . . . . . . . 113 111 109 107 146 114 112 109 114 159

Source: Centre for Development Planning, Projectionand Policies of the United Nations Secretariat, based ondata from the Statistical Office of the United Nations.

a Latin America, including Caribbean countries and ter­ritories; Africa, excluding South Africa; West Asia, ex­cluding Israel; and southern and south-eastern Asia asdefined in foot-note b.

b Afghanistan, Brunei, Burma, Ceylon, China (Taiwan),Hong Kong, India, Indonesia, Iran, Malaysia (excluding

54

Sabah), Pakistan, Philippines, Republic of Korea, Republicof Viet-Nam, SIngapore, Thailand.

c Preliminary.d Mining, manufacturing, electricity and gas.e Food, bevfrrages and tobacco; textiles and clothing;

wood products; leather, rubber and related products; print­ing and publishing.

f Paper, chemicals, non-metallic mineral and metalproducts.

Table 40. Selected developing countries: indices of industrial production, 1964-1967R

Industrial Production Mining Manufacturing Electricity

Co"ntry 1964 1965 1966 1967 1967 1964 1965 1966 1967 1967 1964 1965 1966 1967 1967 1964 1965 1966 1967 1967(Preceding year = 100) (1963 (Preceding year = 100) (1963 (Preceding year = 100) (1963 (Preceding year = 100) (1963

= 100) = 100) = 100) = 100)

Algeriab .......... 115 112 103 98 102 106 109Chile .. , , ......... 106 98 108 102 114 105 105 107 100 117China (Taiwan) . " 127 114 113 117 192 108 106 105 105 127 131 115 113 118 201 118 108 114 115 168El Salvador ....... 130 122 102 117 189Ghana ............. 104 100 108 108 120 98 101 111 90 99 108 96 104 113 122 116 116 125 136 222Guatemala ......... 105 111 104 102 124 104 109 104 98 116 113 118 114 110 167India .............. 107 106 103 102 118 96 109 103 101 107 107 106 102 101 116 115 110 109 111 151

CJlCJl Israelc ............ 114 110 102 93 123 121 124 102 96 150 113 110 102 93 122

Mexico ........... 113 105 111 108 142 105 100 104 106 115 114 107 111 108 146 115 110 110 110 153Morocco .......... 113 101 97 97 107Philippines . ....... 101 109 109 113 136 108 103 109 104 130 :.....Republic of Korea .. 108 118 117 121 181 110 104 111 108 137 107 121 118 174 186 122 120 120 127 223Senegal ... - ... , ... 106 102 113 102 125 125 126 113 114 203 103 99 114 100 115 113 103 109 106 134Tunisia ........... 111 114 106 84 112Venezuela ......... 110 105 99 104 119 108 103 97 104 112 114 108 101 104 129 112 110 115 110 155Zambia ............ 111 109 90 99 114 111 107 86 99 107 117 130 116 116 207 95 93 92 95 83

Source: Centre for Development Planning, Projections and Policies of the R The coverage of industries varies widely from country to country. ForUnited Nations Secretariat, based on United Nations, Monthly Bulletin of 1967, based on data covering less than twelve months in some cases.

b Electricity includes manufactured gas.Statistics. C Industrial production excludes electricity and manufactured gas.

Table 41. Developing countries: distribution of changes in exports and imports, 1964·1967

(Billions of dollars; exports, f.o.b.: imports, c.i.f.)

IndexExports Imports

(preceding Number of countries Export receipts NHmber of countries Import expendituresyear = 100)

1964 1965 1966 1967" 1964 1965 1966 1967" 1964 1965 1966 1967" 1964 1965 1966 1967"

Less than

90 6 6 9 12 3.7 0.6 1.2 3.0 4 6 5 13 2.8 2.3 2.3 4.395 ............. 9 12 13 23 4.0 1.4 1.9 8.6 8 12 13 18 4.2 3.0 6.2 6.3

Coil 100 ............. 13 27 22 36 4.8 7.3 8.5 13.4 12 19 18 26 5.9 6.4 10.4 11.80\

100 or more 60 46 51 37 26.2 23.0 23.4 19.2 61 54 55 47 24.0 25.2 23.4 25.1

More than

105 ............. 49 33 42 25 17.2 14.4 18.1 12.1 51 44 45 38 20.8 15.1 18.9 21.3110 · . . . . . . . . . . . . 35 25 30 16 9.4 8.9 10.7 7.2 43 34 28 24 18.9 11.5 13.2 13.4120 · . . . . . . . . . . . . 21 7 11 5 6.2 1.4 2.9 3.0 24 13 16 11 9.8 4.1 7.3 8.5130 · . .. . . . . . . . . . 12 4 5 3 3.5 0.4 0.6 2.3 10 5 9 6 2.8 1.0 5.6 3.8

Total ......... 73 73 73 73 31.0 30.3 31.9 32.6 73 73 73 73 29.9 31.6 33.8 36.9

Source: Centre for Development Planning, Projections and Policies of the a Preliminary; for some countries based on less than twelve months' returns.United Nations Secretariat, based 011 International Monetary Fund, InternationalFinancial Statistics.

Table 42. Developing countries: indicated change between 1966 and 1967in gross domestic product, volume of imports and total suppliesa

Countryb

IndiaRepublic of KoreaChina (Taiwan) .Iran .Panama .

Costa RicaThailandMexico .EcuadorPakistan .

Venezuela .Bolivia .Philippines .United Republic of Tanzania .Paraguay .

Peru '"Kenya ..Brazil ..MalaysiaEthiopia

Ceylon .Morocco .ColombiaTrinidad and Tobago .Uganda .

NicaraguaGuyanaHondurasEl SalvadorGuatemala .

Ghana .Jamaica .Dominican Republic .Chile .Argentina .

Israel .Barbados .Kuwait .Tunisia .H~ .Uruguay .

All developing countries (percentagechange) .

Smtrce: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on United Nations, l.{onthlyBulletin of Statistics, Yearbook of NationalA ccounts Statistics and The Latin AmericanEconomy in 1967 (Sales No.: 68.ILG.12);International Monetary Fund, InternationalFinancial Statistics; United States, Agency farInternational Development, AID Economic DataBook (Washington, D.C.), various issues;replies of Governments to the United Nationsquestionnai're on economic trends, problems andpolicies, and national sources.

a Based on preliminary estimates of thenational accounts of "indicators" derived fromofficial or semi-official statistics of production,trade and transport. The indicated changes

Gross lotaldomestic Imports' supplies'product

D -B DD G DC F DC ~C CC C C

C C CC G DC C CC D CC F C

C C CC C CC F CC C CC E C

C -c BC B CC D CC -B BC -D B

B -E AB D CB -F AB -D AB B B

B D CB E CB E CB B BB D C

B -F -BB C CB B BB C BB -B B

B -E -BA C BA F CA B AA A A

-c B -B

5-6 4 5

are necessarily tentative, being based in somecases on less than a full yea'r's figures for someof the components of the gross domesticproduct. The symbols indicate the percentagerange of increase or decrease (-): A = -1to 1; B = 2 to 4; C = 5 to 9; D = 10 to 14;E = 15 to 19; F = 20 to 29; G = 30 or over.

b Countries are arranged in descending orderof change in gross domestic product between1966 and 1967.

C Quantum index of imported goods; in somecases it refers to goods and services.

d Weighted aggregate of gross domesticproduct and imports; the weight attached toimports was derived from national accountsfor 1964.

57

Tahle 43. Developing countries: changes in cost of living,a 1966-1967

Item

Percentage of countries in which the rise in the cost of liv£ngindo; was

1 per cent or less .

2 to 5 per cent .

6 to 9 per cent __ _ .

10 to 20 per cent _ _. _ .

21 per cent or over __ .

Total _ _. __ .

Percentage of cO~t1Itries in which, in relation to the precedingyear, the upward movement

Continued _ _ _ .

Acceleratedb _ _ _ .

Deceleratede .

Was negligibled .

Total .

1966

23

39

16

14

8

100

32

31

32

5100

1967

29

4810

2

11

100

21

26

476

100

Source: Centre for Development Planning,Projections and Policies of the United NationsSecretariat, based on United Nations, MonthlyBulletin of Statistics.

a Based on sixty-two countries; changes aremeasured from December to December.

b Including countries in which the movement

of the index changed from downward to up­ward.

e Including countries in which the movementof the index changed from upward to down­ward.

d Including countries in which the indexdeclined at a faster or a slower pace.

Tahle 44. Developing countries: changes in the supply of money,a 1966·1967

Item

Percentage of countries in which the rise in the money supplyindex was

3 per cent or less .

4 to 10 per cent .

11 to 17 per cent .

18 per cent or over , .

Total " , , .

Percentage of countries in which, in relation to the precedingyear, expansion of money s1tpply

Continued .

Acceleratedb .

Deceleratede .

Was negligibled .

Total .

1966

2335

20

22

100

1540

42

3

100

1967

30

28

17

25100

10

40

43

7

100

Source: Centre for Development Planning,Projection5 and Policies of the United NationsSecretariat, based on International MonetaryFund, International Financial Statistics.

a Based on sixty countries; changes aremeasured from December to Dec~mber.

b Including countries in which the movement

58

of the index changed from downward to up­ward.

e Including countries in which the movementof the index changed from upward to down­ward.

d Including countries in which the indexdeclined at a faster or a slower pace.

Table 45. Developing countries: changes in government budgetaryposition,a 1966-1967

Item

Percentage of countries In which the change in governmentindebtedness during the indicated year, as percentage ofgovernment expenditure in the preceding year, was

5 per cent or less .6 to 10 per cent .

11 to 15 per cent .16 per 'cent or over .

Total .

Percentage of cmmtries in which, in relation to the precedingyear, the rise in government indebtedness

Continued .Acceleratedb ...•.....•.••....••...••..........•....•...•.

Decelerated" .Was negligibled .

Total , .

1966

617

1715

100

13314115

100

1967

44309

17100

1339417

100

Source: Centre for Developme1'1t Planning,Projections and Policies of the United NationsSecretariat, based on United Nations, StatisticalYearbook; International Monetary Fund,International Financial Statistics, and nationalsources.

a As measured by net change-claims minusdeposits-in government dealings with the bank-

ing system; based on forty-six countries.b Including countries in which the movement

changed f'rom fall to rise."Including countries in which the movement

changed from rise to falL

d Including countries in which the movementwas downward in the two successive years.

Table 46. Developing countries: balance of trade 'and changes m liquidity,1961-1967

(Millions of dollars)

Group and Item

Developing countriesb

Balance of trade" .Change in total reservesd .

Net change in other balance of payments items

Selected petroleum-exporting developing countries"

Balance of trade" .Change in total reservesd .

Net change in other balance of payments items .

Developing countries excluding selected petroleum-e.rportingcountries

Balance of trade" .Change in total reservesd .

Net change in other balance of payments items

1961

-3,337-5862,751

2,787-18

-2,805

-6,124-5685,556

1962

-2,429-2152,214

3,515-7

-3,522

-5,944-2085,736

1963

-626981

1,607

4,114465

-3,649

-4,740516

5,256

1964

-1,049175

1,224

4,342129

-4,213

-5,39146

5,437

1965

-1,3231,2322,555

4,370261

-4,109

-5,693971

6,664

1966

-1,724611

2,335

4,758178

-4,580

-6,482433

6,915

1967-

-2,116779

2,895

5,176236

-4,940

-7,292543

7,835

Source: Centre for Development Planning, Proj ectionsand Policies of the United Nations Secretariat, based onInternational Monetary Fund, International Financial Sta­tistics.

a Preliminary, including estimates based on less thantwelve months' returns for some countries.

b Latin America (excluding Cuba), Africa (excluding

59

South Africa) and Asia (excluding Japan, mainland China,Mongolia, North Korea and North Viet-Nam).

"Exports, f.o.b. minus imports, c.i.f.d Gold, convertible foreign exchange and reserve position

in the International Monetary Fund.e Iran, Iraq, Kuwait, Libya, Nigeria. Saudi ATabia.

Venezuela.

TallIe 47. Regional economic groupings: objectives, status and main features

Trade (exports), 1966c

Name of grouping andmember C01t1ttries

Principal objecti'vesand status Principal action

Area(thousands POPttlatiou,of square 1966'

kilo- (millions)met,-es)

Populationdensity1966'

(persons persquare kilo·

metre)

Gross domesticproduct, 1965b

Total Per capita(millions ( dollars)

of dollars)

Total(millions

of dollars)

Intra-trade(percentage

of total)

0\o

Council for MutualEconomic Assistance(CME.A)

BulgariaCzechoslovakiaEastern GermanyHungaryMongoliaPolandRomaniaUSSR

ObjectivesExpansion of trade and economic

co-operation through co-ordina­tion of economic plans, specia­lization and standardization ofproducts

Co-operation in production and inscientific and technological re­search

StatusEconomic co-operation

Machinery for co-ordinating eco- 24,957nomic plans of member countriesset up. Medium-term plans ofmember countries co-ordinatedin 1960 and 1966

Agreements signed on multilateralsettlements in transferable roub­les, and the creation of an In­ternational Bank for EconomicCo-operation (1963)

Discussions on long-range ques­tions of co-operation during1971-1975 already started (1967­1968)

332.6 13.6 390,000 1,173 20,910.0 60.1

Enropea.n EconomicCommunity (EEC)d

BelgiumFederal Republic of

GermanyFranceItalyLuxembourgNetherlands

ObjectivesImmediate: common marketUltimate: common market of Eu-

rope

StatusFinal stage of implementation

Treaty creating European Coal andSteel Community (ECSC) signed1951. Rome treaties creating Eu­ropean Economic Communityand the European Atomic En­ergy Community (Euratom)signed 1957, Came into force inJanuary 1958

The EEC Council agreed (1966)to complete the Customs Unionby 1 July 1968, when all tariffson trade between the memberStates would be removed, acommon external tariff wouldcome into effect, and a com­mon farm policy would be com­pleted

The executive branches of ECSC,EEC and Euratom were mergedinto a single Council of Ministers(T1'f!~~ 10h:7\

1,163 181.2 155.8 259,000 1,430 50,627.4 45.9

Area (EFTA)

AustriaDenmarkFinlandeNorwayPortugalSwedenSwitzerlandUnited Kingdom

Central AmericanCommon Market(CACM)

Costa RicaEl SalvadorGuatemalaHondurasNicaragua

Immediate: free trade areaUltimate: common market of Eu­

rope

StatltsFinal stage towards achievement

of free trade

ObjectivesInitial: free trade area with com­

mon external customs tariffsUltimate: the possibility of a mer­

ger between CACM and LAFTAinto a Latin American commonmarket by 1985

StatusFinal stage in achievement of free

trade area

brought EFTA into existence

Removal of tariffs and quotasachieved on 31 December 1966(except for Finland)

EFTA members informed by EECCouncil that agreement could notbe reached on their applicationsto join (December 1967)

Kennedy Round: Austria andSwitzerland put into effect inJanuary 1968 one-fifth of theta,riff reductions they had agreedto make over the next five years.The other EFTA members willmake two-fifths' reduction on 1July 1968

Talks on a Central American Com­mon Market began (1951) andseveral agreements were made ontrade, roads and industrial in­tegration (1956-1959)

Common Market came into exis­tence in 1960. In December 1960the General Treaty of CentralAmerican integration was signed.The main treaties were in opera­tion in all five countries in 1964

By the end of 1967, 95 per centof internal tariffs were removed.Complete uniformity of externaltariffs is expected to be achievedby 1970

A co-ordination committee hasbeen set up to examine the possi­bilities of closer relations be­tween CACM and LAFTA

432 13.6 31.4 3,619 284 843.4 20.3

Latin American FreeTrade Area(LAFTA)

ArgentinaBoliviaBrazil

ObjectivesImmediate: free trade areaUltimate: merger of LAFTA and

CACM and Latin Americancountries not belonging to anysystem into a Latin Americancommon market by 1985

Montevideo Treaty of 1960 estab- 19,301lished LAFTA

Declaration adopted by LatinAmerican Presidents at Puntadel Este (April 1967) agreed on

212.2 11.0 79,595 386 10,032.5 8.7

Table 47. Regional economIC groupings: objectives, status and mam features (continued)

Name of grouping andmember countries

Latin American FreeTrade Area(LAFTA)(continued)

ChileColombiaEcuadorMexicoParaguayPeruUruguayVenezuela

Principal objectivesand status

StatusPreliminary stages of implemen­

tation. About 50 per cent ofregional tariffs have beenlowered

Prindpal action

establishment of a Latin Ameri­can common market beginningin 1970 and becoming substan­tially operative within fi,fteenyears. This trade grouping wouldinclude LAFTA, CACM andLatin American States belong­ing to neither system

Area(t lwl£sa-adsof square

kilo­tnetres)

Popula­tion,

1966a

(millions)

Population Gross domesticdensity, 1966a__p_r_o_d_u_ct_,_1_96_5_°__(persons per Total Per capitasquare kilo- (millions (dollars)

metre) of dollars)

Trade (exports), 1966"

Total Intra-trade(millions (percentage

of dollars) of total)

Andean Group

BoliviaChileColombiaEcuadorPeruVenezuela

Caribbean Free TradeArea(CARIFTA)f, g

AntiguaBarbadosGuyanaTrinidad and

T~I,~~~

ObjectivesImmediate: financing of projects

of industrial complementarity,and integration within region

StatusPreliminary stage of implementa­

tion of joint proj ects

ObjectivesImmediate: free trade areaUltimate: economIC integration of

CARIFTA area

StatusInitial stage of negotiation

This group originated in a "De­claration of Five" subscribed toat a Bogota Presidential Meet­ing (1966)

Andean Development Corporationcreated (February 1968) withheadquarters in Caracas

The Andean Group's achievementsinclude a complementary treatyfor the automobile industries ofChile, Colombia, Peru and Ve­nezuela; also cellulose, wheat,sugar and meat trade agree­ments between Chile and Co­lombia

The Caribbean Free Trade Areaagreement was formally signedin Antigua on 30 April 1968

Agreement on the establishmentof Caribbean Development Banksigned in March 1968

5,452

220

57.4

2.0

10.5

8.6

22,152

92.7

398

471

5,239.2

575.3

2.5

4.9

KenyaUgandaUnited Republi~ of

Tanzania

East Africannomzc andCommunity

Eco­Social

ObjectivesInitial: common market within

East AfricaUltimate: common market of a

wider economic grouping in east­ern Africa

StatusPreliminary stage of implementa­

tion

The i'reary or 1<.ast f\.tncan Lo­operation became opNative 1 De­cember 1967. It incorporated theEast African Common Marketand the Common Services Or­ganization. Headquarters to be inArusha

1,1 J~ LY.;) .io.u £i,l'tV

Central African Eco­nomic and CustomsUnion (UDEAC)h

CameroonCentral African Re-

publicChadCongo (Brazzaville)Gabon

West African Eco-nomzc Community(WAEC)

DahomeyGambiaGhanaGuineaIvory CoastLiberiaMaliMauritaniaNigerNigeriaSenegalSierra LeoneTogoUpper Volta

West African Eco­nomic and CustomsUnion (UDEAO)

DahomeyIvory CoastMaliMauritaniaNigerSenegalUpper Volta

Objecf.ivesInitial: harmonization of industrial

development policies and eco­nomic co-operation

Long-term: commOn market mem­ber countries

Statush

ObjectivesUltimate : common marketGeneral: encouragement of maxi-

mum exchange of goods andservices; elimination of trade andcustoms barriers and promotionof co-ordinated development ofindustry, agriculture, transporta­tion, manpower, energy and otherresources

StatusPreliminary-stage draft treaty

being drawn up

Objecf1~ve

Common external t3!riff and har­monization of customs legislation

StatusAgreement reached on rates of

duty on various products ex­changed among some countries

Treaty of UDEAC came into forceat the beginning of 1966. Headsof State Meeting, which tookplace in Bangui in December1967, discussed harmonization ofindustrial plans

Idea of economic integration ac­cepted in 1966

Articles of agreement establishingthe Community signed by twelveof the fourteen States, and pre­liminary draft treaty considered(1967)

Meeting of Heads of Governmentof member countries approvedthe principle of a West Africaneconomic union and the choiceof Bamako (Mali) as the seatof the secretariat (April 1968)

Customs union formed to replacearrangement of free trade andcommon tariff maintenance whilecountries were colonies (1959)

Agreement on new rates of dutyon goods exchanged betweenSenegal and Ivory Coast reachedin 1966 and came into effect in1967

2,985

6,064

4,405

11.5

95.5

22.8

3,8

15.7

5.2

1,164

10,110

3,862

101

107

169

317.7

2,075.0

615.1

5.9

2.7i

Table 47. Regional economic groupings: ohjectives, sta111s and mam features (continued)

Total Per capita(millions (dollars)

of dollars)

Trade (e.rports), 1966'Name of g?'ottping and

mem.ber countries

West African Eco­nomic and CustomsUnion (UDEAO)(continued)

Pn"ndpalobjectivesand status Principal action,

Agreement on co-ordination offiscal legislation concluded be­tween Senegal and Mauritania(1967)

Area(thousandsof square

kilo­metres)

Pop"la.·tion,

1966"(millicns)

PopulaNon Gross domesticdensity, 1966' pr_o_d_u_ct_,_1_9_65_b__

(persons persquare kilo­

metre)

Total( m.£llions

of dollars)

I ntra-t1"ade(percentage

of total)

Organization of Sene­gal River States(OERS)

GuineaMaliMauritaniaSenegal

Permanent Consulta­tive Committee ofthe Maghreb C01t11­tries

AlgeriaLibyaMoroccoTunisia

Arab Economic Unity

IraqTordanKuwaitMoroccoSyria

ObjectivesImmediate: economic integration

and joint developmentUltimate: formation of a wider

West African economic com­munity

StatusImplementation of joint plans

ObjectivesImmediate: economic co-operation

based on special Maghreb tradearrangements, unification of tariffpolicies, co-ordination of policiesconcerning exports to third coun­tries, and the co-ordination andunification of industrial develop­ment and infrastructure policies

Ultimate: common market

StatusPreliminary stage of co-ordination

of industrialization

ObjectivesUltimate: common marketGeneral: economIc co-operation-

unification of tariffs, customsprocedures, trade policies andeconomic legislation and co-ordi­nation of monetary, fiscal and

OERS replaces Inter-State Com­mittee for the Development ofthe Senegal River Basin set upin 1965 with $5.8 million fromUnited Nations Special Fund tostudy agricultural and irrigationproj ects in the river basin

In 1967 member Governmentsagreed on five joint proj ects cost­ing $16 million

Permanent Consultative Committeeconsisting of President and Min­ister for Economic Affairs ofeach country established to studyproblems of economic co-opera­tion III the area and proposemeasures (1964)

Plan for a trade relations commit­tee drawn up; draft multilateralagreement relating to trade ex­changes prepared and Tunis cho­sen as seat of secretariat (1966)

Maghreb Ministers for EconomicAffai'rs agreed to general eco­nomic co-ordination (1967)

Trade and payments conventionssigned in 1953

Final agreement setting up theUnity adopted in 1957 and signedin 1963; ratified by SIX of theseven States in 1963 and 1965

1,729

3,102

2,380

12.9

31.2

60.6

7.4

10.1

25,5

1,243

6,782

9,961

97

217

164

305.4

2,322.4

2,358

UnIted Arab Re­public

Yemen

Regional Co-operationfor Development(RCD)

IranPakistanTurkey

Association of South­East Asian Nations(ASE.AN)

IndonesiaMalaysiaPhilippinesSingaporeThailand

economic policies among sig­natory States

StatusCustoms tariffs among members

,reduced on certain products

ObjectiveCultural and economic co-opera­

tion, especially in the field of in­dustrial development

StatusMinisterial Council set up to con­

sider and decide upon measuresfor cultural and economic co­operation

ObjectivesEconomic and cultural co-operation

to promote peace and prosperityin the region

Collaboration for the utilization ofthe agriculture and industries ofthe member countries and thestudy of the problems of inter­national commodity trade

StatusPreliminary stage. Grouping

created in 1967

Arab Economic Unity Councilcomposed of full-time representa­tives of signatories establishedin 1963

Summit meeting of leaders ofState of the three countries es­tablished grouping and set upMinisterial Council composed ofForeign Ministers (1964)

Regional Planning Council, com­posed of leaders of planningagencies in the three countries,set up to study developmentplans and production potentiali­ties of the region and make re­commendations on joint projectsand long-term purchase agree­ments (1964)

Teheran (Iran) chosen as seat ofscretariat

Joint enterprises for producingaluminium, ca:rbon black andbank-note paper approved forimplementation on joint equityparticipation and production­sharing basis. Others, such as foriron and steel, electronics andmachine tools being studied

Organization meeting held in 1967

3,375

2,639

158.6

178.9

425

67.7

22,465

22,836

142

128

2,398.2

3,493.6

1.5

(So1trce and foot-notes to table on fol/owing page)

Source: Centre for Development Planning, Projections and Policies of theUnited Nations Secretariat, based on United Nations, Statistical Yearbook, 1966(Sales No.: 67.XVII.1), Monthly Bulletin of Statistics, October 1967 and May1968, "Economic co-operation in West Africa" (EjAC.54jL.26jAdd.2); Inter­national Monetary Fund, International Financial Statistics, May 1968, and Inter­national Monetary Fund and International Bank for Reconstruction and Develop­ment, Direction of Trade, annual issues for the years 1962-1966.

a Mid-year estimates. For the following groupings the years are different:West African Economic and Customs Union and West African Economic Com­munity, 1964; Arab Economic Unity, 1963; Regional Co-operation for Develop­ment, Association of South-East Asian Nations, and Maghreb countries, 1965.

b At factor cost. For CMEA, rough estimate by the United Nations Secre­tariat, based on the official exchange rates. For West African Economic Com­munity, at market prices for 1964. For Arab Economic Unity, 1963 except 1958for United Arab Republic and Yemen. For Association of South-East AsianNations, 1965 except 1963 for Indonesia. For Maghreb grouping, 1964 for Algeria.For Regional Co-operation for Development and West African Economic andCustoms Union, 1964.

e Exports, f.o.b. For Arab Economic Unity, excluding petroleum andd~t<l; for Kuwai.t (including r:etr.o1eum and data for Kuwait, expor!s are $3,504mIllIOn and the mtra-trade raho IS 2.0 per cent). For CMEA excludmg Mongoliabut including Albania. '

d The following countries are Associated States: Burundi Cameroon CentralAfrican Republic, Chad, Congo (Brazzaville), Democratic Republic of th~ Congo,Dahomey, Gabo.n, Ivory Coast, Madagascar, Mali, Mauritania, Niger, Rwanda,Senegal, Somaha, Togo and Upper Volta. Greece and Turkey are AssociatedEuropean States.

e Finland is an associate member enjoying all the privileges of full membership.

f Statistical indicators exclude Antigua.g Jamaica's application to join CARIFTA was accepted unanimously by a

meeting of the CARIFTA Council in June 1968. Jamaica, along with theLeeward and Windward Islands, was admitted on the same terms and conditi@nsas if it had been a member when the agreement was signed. With the admissionof Jamaica to membership of CARIFTA, the socio-economic indicators assumethe following magnitude: area, 232,000 square kilometres; population, 3.8 million;persons per square kilometre, 16.4; gross domestic product, total, $1,737 million;gross domestic product per capita, $463; trade, total, $800.4 million; intra-trade(as a percentage of total trade), excluding trade between Barbados and Jamaica,4.3. (There are no relevant data for the Leeward and Windward Islands).

The West Indian associate States announced that they would sign theagreement on 1 July 1968.

h The Central African Republic and Chad, two of the original members ofUDEAC, withdrew from the organization in April 1968. With their withdrawalfrom the organization, the socio-economic indicators assume the followingmagnitude: area, 1,085,000 square kilometres; population, 6.7 million; personsper square kilometre, 6.2; gross domestic product, total, $846 million; grossdomestic product per capita, $127; trade, total, $263.1 million.

The Central African Republic, Chad and the Democratic Republic of theCongo have formed a new economic grouping, Central African Economic Union(UEAC) , with almost the same aims as UDEAC-regiona1 co-operation and aneventual common market and an investment policy to favour the landlockedmember States (Central African Republic and Chad). The socia-economicm~g.nitudes of UEAC are: a.rea, 4,252,000 square kilometres; population, 20.8m~l1~on; persons per ~quare kIlometre, 5;0; gross domestic product, total, $1,477ml1hon; gross domestic product pet' cap~ta, $71; trade, total, $568.8 million.

i Share of intra-subregional imports in total imports.

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