Chapter

Chapter 4: Developments in World Trade

Author(s):
International Monetary Fund
Published Date:
September 1971
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General Review

The value of world trade rose by almost 15 per cent from 1969 to 1970. In nominal terms, this increase matched that of the previous year, which had shown the largest annual increase in world trade since the Korean War. Increasingly after 1968, however, the buoyancy of trade values stemmed from rising prices for goods moving in international commerce, while the rate of expansion in trade volume tapered off in each of the past two years from a 1968 peak (Table 11).

The 1969-70 advance in world trade volume amounted to about 8½ per cent. Although this did not match the exceptional gains of 1968 and 1969 (12½ per cent and 11 per cent, respectively), it remained above the average annual increase of the past decade (8 per cent). Moreover, the 1970 figure represented an unusually strong rise in world trade volume for a year of relatively slow economic expansion in the industrial countries. This latter feature is explained in part by the maintenance of rather strong expansion in Europe, where external trade looms large in relation to production, together with the centering of the economic slowdown chiefly in the United States, whose external trade is comparatively small in relation to output. For most of the industrial countries, including the United States, an increase in the ratio of imports to gross national product (GNP) contributed importantly to the overall rise in import volume.1

The average unit value of internationally traded goods rose by some 6 per cent from 1969 to 1970. This unusually sharp increase may be compared with 3 per cent in the previous year, with a small overall decline in 1968, and with an average annual increase of only about 1½ per cent over the decade ended in 1970. For 1970 as a whole, the increase was centered in manufactured products, for which price advances were especially marked in the first half of the year.

In the latter part of 1970 and particularly in the early part of 1971, there were indications that a further tapering off in the growth of world trade volume was being accompanied by some slowing of foreign trade price increases. However, the whole period around the turn of the year was one of distortions caused by special factors, such as strikes in several large countries, which have made clear interpretation of recent world trade trends very difficult.

The 1970 export gains were distributed fairly evenly among the groups of countries listed in Table 11.2 In terms of export values, rates of increase for the countries of the European Economic Community and for Japan were well above the global average, while the rise in exports of the less developed countries was somewhat smaller than the average. The latter result was attributable mainly to the relatively flat movement of prices for exports of primary products, as the 1969-70 rise in export volume for the less developed countries as a group was only moderately below the global average.

The geographic pattern of export expansion in 1970 differed from that of the previous year, chiefly in that export gains of the United States and Canada paralleled those of the other industrial countries much more closely than they did in 1969. The year 1969 had been one of relatively weak export growth for the two North American countries.

Among developed countries, the increases in export unit values were quite pervasive in 1970, as they had been (on a smaller scale) in the previous year. The largest average increase in 1970, as well as the sharpest acceleration over the corresponding 1969 rate of advance in export prices, was that recorded for the European Free Trade Association, where export prices rose by 7 per cent in 1970, compared with 3 per cent in 1969. For the countries of the European Economic Community, as well as for Japan, the United States, and Canada, the increases in export unit values were around 6 per cent in 1970, compared with some 3 to 5 per cent in 1969. Among the industrial countries generally, but especially for the European countries and Japan, the increases recorded in both of those years were strikingly larger than the annual averages for the decade of the 1960s.

For the less developed countries, 1970 was the third consecutive year in which increases both in real output and in export volume appear to have exceeded the average rates of the past decade. With respect to export volume, the difference was moderate—7 per cent in 1970 versus an average of 6 per cent per annum from 1960 through 1969.

However, the international purchasing power of the 1970 increase in export volume for the less developed countries was curtailed by an adverse shift in their terms of trade. After a sharp upward spurt in 1969, the export prices of those countries rose less rapidly in 1970 (and were actually declining during the second half of that year), while their import prices were raised by the acceleration of inflation in the industrial countries. Although the available statistics on these relationships are not very precise, it would appear that the purchasing power of the export earnings of less developed countries rose by about 5 per cent in 1970. While that rate of increase did not compare unfavorably with the corresponding long-term average (also in the neighborhood of 5 per cent annually for the 1960-69 period), it represented a sharp reduction from the unusually large gains in the international purchasing power of these countries’ export earnings in 1968 and 1969 (about 10 per cent in each year).

The recent export price experience of individual less developed countries, as well as that of more developed primary producing countries, has differed widely, of course, according to the composition of their exports. A relatively favorable overall movement of Latin American export prices, for example, reflected the sharp rise in coffee prices and the importance of coffee in the exports of several major Latin American countries. Conversely, the fall in prices of major grains, wool and certain other fibers, and rubber contributed to a weakness in export unit values for the more developed primary producing countries of the Southern Hemisphere and for some of the less developed countries of Asia. In a different category were the more developed primary producing countries of Europe, which shared in the general upsurge of export prices in intra-European trade.

Broadly speaking, developments during the first few months of 1971 did not suggest an early upturn in prices of primary products. However, as noted later in this chapter, negotiations between the international petroleum companies and the authorities of the exporting countries in late 1970 and early 1971 resulted in new agreements greatly increasing the unit values of most petroleum exports. These changes can be expected to have a major impact not only upon trade values and average export prices for the countries directly affected but also upon broader averages or aggregates for the whole group of less developed countries and upon the import expenditures of a number of industrial countries.

The course of world trade developments has continued to be governed in important respects by cyclical changes in aggregate demand and imports of the industrial countries. Following the 1966-67 recessions or slowdowns in a number of those countries, a generalized upswing in economic activity induced an unusually strong and sustained surge of import demand, both for industrial raw materials and for intermediate and finished manufactures traded mainly among the industrial countries themselves.

In its early stages, during 1968, this wave of import expansion reflected mainly the surge of demand in the United States. Subsequently, during 1969 and 1970, the primary impetus to growth of world trade emanated from European and Japanese import demand (Table 12). However, the rate of increase in U.S. imports, while tapering off considerably after 1968, remained quite high by historical standards through the second half of 1969. The result was an extended period of exceptionally high rates of import expansion for the whole industrial world, greatly outpacing the concurrent growth of output. From the beginning of 1968 through the middle of 1970, this expansion proceeded at a consistently high rate averaging some 15 per cent per annum, and the pace slackened only moderately in the second half of 1970. Throughout this three-year period, rates of increase in imports, both in Europe and in North America, were considerably above those prevailing in earlier periods of comparable capacity utilization.

Exports of the primary producing countries were broadly responsive to these changes in demand in the industrial centers. They began to rise strongly during 1968 and continued high through 1970, as already noted above. Imports of the primary producing countries also responded to the cyclical upsurge, although with some lag. The peak semiannual rate of increase in these imports was not reached until the second half of 1969, and they were still rising faster in the first half of 1970 than in any other half year from 1966 through mid-1969. Imports of the more developed primary producing countries were particularly buoyant in 1970, but the rise in imports of less developed countries in that year was also high in relation to the average rate of increase during the 1960s. It reflected the widespread continuation of relatively high levels of economic activity in the less developed countries themselves, as well as the general improvement of their export earnings and official reserve positions during earlier stages of the post-1967 boom in world output and trade.

Notwithstanding the accelerated rise in their imports from 1969 to 1970, the less developed countries as a group maintained in 1970 a trade balance approximately equivalent to the one that had emerged in 1969. (See Table 23.) The more developed primary producing countries, however, showed a substantially larger collective deficit in their external trade accounts, as imports soared while export growth tapered off in some countries of this group. The negative shift was especially marked for the more developed primary producing countries of the Southern Hemisphere, where the slowdown in export growth was centered. For the European countries in the primary producing group, export growth remained quite high, but did not fully keep pace with import expansion from 1969 to 1970.

Sizable deteriorations also characterized the trade balances of the smaller industrial countries, where an accelerated average increase in imports contrasted with a declining (although still high) average rate of export expansion in 1970. For the larger industrial countries, in contrast, 1970 was a year of substantially increased export surpluses or reduced trade deficits. The combined export surplus for the seven largest industrial countries 3 approximated $15 billion, compared with $9½ billion in 1969. As noted below, this swing reflected chiefly a sharp bulge in net exports from Canada, some rebound of the U.S. export surplus from its depressed 1968-69 level, and a swing from deficit to surplus in the French trade account (Chart 7); smaller increases in the export surpluses of Germany and Japan, together with a moderate further improvement of the U. K. trade balance, were offset in considerable part by a shift of the Italian balance into deficit. In absolute terms, the largest trade surpluses in 1970 were those of Germany (almost $6 billion), Japan ($4 billion), Canada ($3 billion), and the United States ($2 billion).

Trade of Industrial Countries

Factors in the Growth of Imports

Since 1968, when rates of output expansion were exceptionally high in most of the industrial world, the major countries have exhibited contrasting patterns of change in economic activity. These have stemmed primarily from differences among countries in the phasing of the boom under way during 1968 and in the degree and timing of the policy restraints that were widely applied. In some instances, distinctive noncyclical features of national economic developments have also exerted important influences.

As brought out in Table 13, the outstanding contrast of the past several years is that between the changes observed in continental Europe and those taking place in the United States. Although and a decline of about ½ per cent occurred in 1970.

Declines in rates of real output growth were also registered by the United Kingdom and Japan for the past two calendar years, although the deceleration for each (as indicated in Table 13) was much less pronounced than that in the United States. For Japan the rate did not dip below its average for the 1960s.

The 1967-70 expansion of total economic activity in the industrial countries featured a strong wave of demand for imports in those countries. This began with sharp upturns in both U.S. and German imports even before the beginning of 1968 and was subsequently reinforced or sustained by surges of imports into various other large countries. Differences among those countries in the phasing of cyclical developments after the rate of expansion of aggregate real GNP for the continental European industrial economies was already relatively high by historical standards in 1968 (at 5½ per cent), it accelerated considerably further in 1969, to 7 per cent. For this group of countries, it was not until 1970 that the rate of expansion began to taper off, and even then it fully matched the 1960-70 average of about 5 per cent. In the United States, on the other hand, expansion of total output fell back to less than 3 per cent in 1969, after having approached 5 per cent in 1968; 1967 generated a tendency for them to succeed each other as principal sources of incremental demand for world exports, and the persistence of global import buoyancy over so long a period stemmed importantly from that factor.

The shifting origins of the most expansive import demands among industrial countries can be traced in Table 14. That table also indicates, both for individual countries and for the group of industrial countries as a whole, that the rise in imports in recent years generally outpaced the concurrent growth of domestic economic activity by a rather wide margin. Particularly in 1970, this was true for a number of countries whose imports increased during the 1960s no more than proportionately to the rise in national output. It was also emphatically true in 1970 for the United States, where the average annual rate of increase in the value of imports during the decade of the 1960s was already half again as high as that in the value of GNP.

The composite data at the bottom of Table 14 provide important clues to the reasons for the maintenance of a high rate of increase in the aggregate value of imports from 1968 to 1970, a period of sharply falling growth in total output of the industrial countries. In the first place, the movement of the U.S. economy into recession was much less important in a world import context than in the measurement of global output, owing to the relatively low ratio of U.S. imports to domestic production. This consideration is reflected in the contrast between (a) the series of import-weighted averages of increases in real GNP in the industrial countries given in the last line of Table 14 and (b) the series of increases in aggregate industrial country output given in Table 13. The former series shows a much smaller decline from 1968 to 1970 than does the latter.

The second principal clue lies in the behavior of import prices. These rose much faster in relation to GNP price movements in both 1969 and 1970 than in earlier years, thus sustaining the rate of increase in the total value of imports in the face of a decline in the rate of import expansion in volume terms after 1968. On either a volume basis or a value basis, however, the ratios of the latest annual changes in imports to those in output of the industrial countries remained quite high in historical perspective.4

A particular factor underlying the high marginal ratio of import expansion to GNP growth in recent years has been the general prevalence of high capacity utilization rates in the European manufacturing sector since about mid-1968 and in the United States from late 1967 until the end of 1969. As measured by the Wharton indices (Chart 8 and Table 15), the composite utilization rate for six principal European countries approached 97 per cent in the first quarter of 1970, compared with an average of 92 per cent over the past five years. It had exceeded the five-year average throughout the second half of 1968 and all of 1969, following nearly two years of relatively slack utilization from late 1966 through mid-1968, and it remained above the five-year average through 1970, despite some decline after the first quarter.

Plotted along with the indices of capacity utilization in Chart 8 are data on rates of change in the volume of imports of the same countries. The association of major changes in rates of European import expansion with major changes in the level of the composite capacity utilization index is unmistakable, despite the difficulties and uncertainties inherent in measurement of capacity utilization. As indicated by another panel of the same chart, this correspondence is especially marked for Germany, where swings in both capacity utilization and import growth over the past five years have been wider than the average for the European countries.

For the United States and the United Kingdom, the relationship between import volume growth and capacity utilization has been somewhat less distinct than for Germany. Nevertheless, the U.S. panel of Chart 8 shows a clear general tendency toward association of rapid U.S. import expansion with high rates of capacity utilization. For the United Kingdom, any such tendency is greatly blurred in the data under review by strikes and the effects of sterling devaluation in 1967.

Another feature of Chart 8 is the failure of the volume of U.S. imports to turn down as sharply in the 1969-70 recession as might have been expected on the basis of earlier relationships to declines in capacity utilization. There appears to have been a shift in recent years in U.S. import/GNP relationships, perhaps manifesting the growing competitive strength of foreign suppliers in the U.S. market.

At the same time, it must be remembered that the United States was by no means the only industrial country whose imports rose much faster than domestic output in 1970 and other recent years. On the contrary, marginal import/GNP ratios have been very high during this period in the great majority of the industrial countries, apparently reflecting a progressively higher degree of integration of world production and trade and possibly certain cyclical influences.

In view of the large proportion of world trade (about two thirds) that moves among industrial countries, high rates of import growth for those countries have assured high rates of expansion of their own export markets, in addition to providing generally buoyant markets for the primary producing countries. The former aspect of growth in world trade flows is discussed in the following subsection, while the discussion of trade flows involving primary producing countries is reserved for a subsequent section of this chapter.

Export Performance and Trade Balances

The industrial countries exhibited fairly wide variations in rates of export growth from 1969 to 1970, generally reflecting both shifts in relative export performance 5 and differential rates of export market growth.5 The latter, of course, arose in considerable part from the marked differences within the industrial world in rates of domestic economic expansion. Also of importance in this connection were differences among the various industrial countries in the proportions of their exports going to the primary producing countries, where import growth in 1970 was appreciably less robust than in the industrial countries themselves.

However, the variations among industrial countries with respect to export market growth occurred in 1970, as in the two previous years, around an average rate of expansion much higher than that prevailing over most of the past decade. As shown in Table 16, the average since 1967 has been about 4 to 6 percentage points above that for the full decade 1960-70, and some of the 1970 rates exceeded the historical averages by wider margins. The recent high rates of growth in individual countries’ export markets were the counterpart, of course, of the sustained intensity of total world import demand over the past three years.

Generally speaking, the markets that expanded most strongly from 1969 to 1970 were those of the European countries whose trade was most heavily concentrated in the relatively fast-growing continental European market. Rates of expansion in the respective export markets of these countries in 1970 ranged from a little under 17 per cent for Germany to 20 per cent for Austria. At the other end of the spectrum, with market growth in the 12½ to 13½ per cent range, were the United States, Japan, and Canada, all of which sell relatively large proportions of their exports either in the North American market or in the markets of primary producing countries; in both of these market areas, import demands in 1970 were far less expansive than in continental Europe. Export markets of the United Kingdom showed a rate of expansion—15½ per cent—intermediate between the average for the continental European group and that for the other industrial countries.

For the whole period 1960 to 1970 the range of market growth rates was appreciably narrower, as well as lower. Rates for the United States, Japan, and the United Kingdom all averaged close to 9½ per cent; those for the Scandinavian countries and France approximated 10 per cent; and the averages for the other continental European countries were in the neighborhood of 11 per cent.

Countries’ average gains or losses of export market shares, listed in the right-hand columns of Table 16 and explained in the footnotes to that table, showed much wider variations in 1970 than did the respective market growth rates. Some of the major changes in shares represented continuations of medium-term historical experience, while others departed sharply from such experience.

In the latter category was the large market share gain (3.7 per cent) for Canada in 1970. This spurt in Canadian export performance, coming in a year of no growth in the country’s imports (because of slack domestic demand, especially for capital goods), resulted in an unprecedented enlargement of Canada’s export surplus, from less than $1 billion in 1969 to $3 billion in 1970 (Table 17). The latter figure was out of line with longer-term historical experience, reflecting not only the cumulative improvement in Canada’s international trade position over a number of years but also various special factors that combined to enlarge Canada’s export surplus last year.

The other large export market share gain among the major industrial countries in 1970—that of Japan—was by no means out of line with experience of the past decade. Indeed, the 7 per cent average of increases in Japan’s shares of individual markets, although not so large as the corresponding gain in 1968 or 1969, was about the same as the average annual increase from 1960 to 1970. Given the relatively slow growth of Japan’s principal markets in 1970, together with the high rate of increase in Japanese imports, the large export share gain resulted in a moderate further increase in the large surplus in Japan’s external trade account.

An unusual feature of the global pattern of changes in trade balances from 1969 to 1970 was the increase of $1½ billion in the U.S. trade balance during a period of rising export surpluses for both Canada and Japan. Because of the heavy weight of these two countries in U.S. foreign trade relationships, large changes in their combined balance have in the past been associated more often than not with opposite changes in the U.S. balance. In line with that pattern, the bilateral balance of the United States with Canada, which had already swung from surplus in the middle 1960s to sizable deficits in 1968 and 1969, showed a further negative shift of some $0.8 billion from 1969 to 1970.6 In bilateral trade with Japan, the U.S. deficit declined slightly from 1969 to 1970 but remained considerably larger than in the mid-1960s. In U.S. trade with areas other than Canada and Japan there was a surplus of $5 billion in 1970, roughly the same as in the middle 1960s, but considerably above the comparable surplus of $2.8 billion in 1969. The 1969-70 increase in this surplus was concentrated in trade with Western Europe, where the proportion of imports supplied by the United States rose in 1970 (although not enough to compensate more than fractionally for large declines in other recent years).

Globally, the U.S. share of industrial countries’ export markets was maintained in 1970. That export performance contrasted with the rather steady declines in U.S. market shares that had been occurring for a number of years and sufficed, in a period of fairly moderate import expansion in the United States, to permit the rise in the export surplus already noted. Data for the first four months of 1971 suggest, however, that even the modest 1970 export surplus may be difficult to maintain in a period of renewed domestic expansion and less buoyant demand conditions in the rest of the industrial world.

Other major industrial countries whose export growth in 1970 matched or exceeded the growth of their respective markets were Germany and France. In neither instance was there a very large increase in market share or one very different from the average experience of recent years.7 However, these share gains were sufficient, given the rapid growth of both countries’ export markets, to bring strong expansion of their exports.

For Germany that expansion sufficed, despite a large increase in imports, to raise the export surplus by $0.6 billion, to $5.8 billion. In France, however, 1970 import growth was considerably below the average rate for other continental European countries, so that a moderate trade surplus replaced the $1 billion deficit of 1969. Both the 1969 devaluation of the franc and the effects of the accompanying domestic stabilization program contributed to this recovery.

Countries whose exports did not keep pace with their markets in 1970 included the United Kingdom, Italy, and all of the smaller industrial countries except Sweden. For the United Kingdom and Italy, as well as Denmark, Norway, and Switzerland, the shortfalls were on the order of 4 to 5 per cent.

The slippage of the U. K. share represented a reversion, following a comparatively strong export performance in 1969, to an earlier pattern of persistent share losses over a long period. However, since the 1970 expansion of U. K. imports was also much smaller than that for most of the industrial countries, the U. K. trade balance showed a slight further improvement in the wake of the substantial one registered in 1969.

Italy’s export market share loss in 1970 followed a smaller loss in 1969 but contrasted sharply with the perennial gains of earlier years. In both of the past two years, the country’s export performance was adversely affected by the impact of strikes on supplies available for export. These disruptions of production, coming at a time of sharp wage increases and fairly strong consumer demand, also tended to induce increased flows of imports. Consequently, the Italian trade balance8 swung from moderate surplus into moderate deficit.

In most of the smaller industrial countries, the shortfall of exports in relation to market growth in 1969 was accompanied by particularly high rates of increase in imports. The latter rose faster than in 1969, while the rate of export expansion subsided somewhat, bringing a substantial enlargement (from $2½ billion in 1969 to well over $4 billion in 1970) of the combined trade deficit for the seven smaller industrial countries. In several of these, including the Scandinavian countries, domestic demand pressures were mainly responsible for this rise in net imports.

The 1969-70 increase in the combined trade deficit of the smaller European industrial countries approximately offset the concurrent increase in the combined trade surplus of the large industrial countries outside North America. Given the sizable expansion of the Canadian and U.S. export surpluses, however, the whole group of industrial countries showed a substantial increase, from about $7 billion in 1969 to $11 billion in 1970, in its collective trade balance with other countries.9

International Price Movements

Prices of internationally traded goods, already rising briskly in 1969 after several years of little change, turned sharply upward in 1970. That year’s increase in the average unit value of global exports, approximating 6 per cent (Table 18), was the largest annual increase in export prices in almost two decades.

The size of the 1969-70 increase reflected several interrelated factors. Predominant among them was the acceleration of domestic price inflation in the industrial countries, where the average rate of increase, as measured by GNP deflators, rose to more than 5½ per cent in 1970, compared with about 4½ per cent in 1969, 3½ per cent in 1968, and 2½ per cent in the early 1960s (Table 19).

Only in the United States and the United Kingdom, among the large industrial countries, have movements of export unit values tended over a considerable period to parallel movements of the respective GNP deflators. Elsewhere, and especially in the larger continental European countries, advances in average export prices prior to 1970 tended consistently to lag behind domestic price increases.10 In 1970, however, the export unit value series for nearly all of the industrial countries (expressed in U.S. dollars) showed advances at least as large as the associated GNP price changes.

As noted in Chapter 1, this new relationship of foreign trade prices to domestic prices apparently stemmed in considerable part from pricing reactions of European producers to the German and French parity adjustments of 1969. Moreover, price increases in Europe were largely unchecked by any strong competitive influence of North American prices, since the latter were rising almost equally rapidly (after having risen more sharply than European export prices for several previous years).

For the more developed primary producing countries of Europe, the 1969–70 export price rise was also exceptionally large, reflecting the close linkage between many of these countries and neighboring industrial countries. This characterization, however, does not apply to the more developed countries of the Southern Hemisphere, whose export unit values were affected by adverse price trends for some of their agricultural products.

Prices for exports of the less developed countries, in contrast to those of the industrial countries, rose less in 1970 than in 1969. Indeed, the overall trend of developing countries’ export prices was downward during the second half of 1970, as prices of metals and agricultural nonfood commodities weakened in the aftermath of their bulge during the 1968-69 surge of demand in the industrial countries.

Import prices paid by both the more developed and the less developed primary producing countries moved upward more sharply in 1970 than in 1969 or in any other recent year. Like the import prices of the industrial countries, the prices of primary producers’ imports were adversely affected by the intensification of inflation in the industrial countries.

It should be noted, however, that the rise in foreign trade prices appeared to be tapering off in the second half of 1970 and the early part of 1971. Rates of increase reported for the latter period have been considerably lower than those recorded for the first half of 1970.

Changing Price Relationships Among Industrial Countries

Over the past several years, differences among industrial countries with respect to degrees or stages of inflation (discussed in Chapter 5) have clearly affected their competitive positions in international trade. Those positions have also been influenced by differences among countries in relationships of export price movements to domestic price movements, and recent shifts in such relationships may be modifying the impact of differential domestic price movements on international competitiveness. In addition, the exchange rate adjustments made by several large industrial countries in recent years have played—and continue to play—an important role in the realignment of international price relationships.

To some considerable extent, trade levels and patterns have already begun to reflect such a realignment. However, in view of the long lags often involved in adaptations to basic changes in market characteristics and competitive positions, it may be presumed that some of the adaptations likely to ensue from developments of the past year or two remain to be made gradually over a further extended period.

Relevant data on some of the key changes in international price and cost relationships, focused specifically on comparative trends among competing countries, are depicted, in medium-term historical perspective, in Chart 9. One outstanding feature of that chart is the extent to which increases in manufacturers’ unit costs in Germany, Italy, and Canada, expressed in U.S. dollars, have recently outrun the corresponding increases for their respective competitors. Italy was the only one of these countries whose trade balance declined in 1970. Nevertheless, it seems quite possible that the comparative cost shifts depicted in the chart may foreshadow a period of underlying downward pressure—except as it is offset by cyclical or other short-term influences—on the trade balances of the countries in question.

Of course, the underlying general trends in manufacturers’ unit costs will not necessarily be reflected fully in export prices directly affecting these countries’ international competitive positions. Indeed, the chart shows markedly more favorable comparative trends for the export unit values of all three countries than for their unit costs. Only for Germany, where the 1969 revaluation of the deutsche mark was a major factor in boosting dollar prices of exports, does the export unit value comparison indicate a shift in price relationships favorable to competitors in 1970.

Another feature of the same chart is the extent to which U.S. manufacturers regained during late 1969 and 1970 the ground lost with respect to their comparative cost position between the end of 1965 and mid-1969. Literally, the indices suggest that the comparative cost position of U.S. producers has recently become appreciably more favorable than it was in 1963 or 1964, when the U.S. trade balance was much larger than it has been in the past few years. Whether such a cost position will tend over time to restore a more favorable trade balance will depend not only on whether it is maintained or further improved but also on the degree to which it may eventually be reflected in comparative export prices. Through 1970, as indicated in the right-hand U.S. panel of Chart 9, only a small part of the earlier divergence between export price trends of the United States and of its competitors had been reversed; although the U.S. export price movement tended to flatten out during 1970, the export price indices of competitors advanced considerably less sharply than their indices of unit labor costs.

A country whose comparative cost-price position improved strikingly—with results readily visible in its external trade balance—is France. The 1969 devaluation, together with subsequent moderation of unit labor cost increases, opened a wide gap between the index for France (restored to its pre-1968 level, as expressed in terms of U.S. dollars) and that of its competitors, which soared throughout the second half of 1969 and the whole of 1970. Moreover, the relatively flat movement of French unit labor costs (in dollar equivalents) was strongly reflected, thanks to the 1969 devaluation, in a corresponding (though much less emphatic) contrast between the 1969-70 change in export unit values for France and the average change for its competitors.

In the United Kingdom, where devaluation antedated that in France by about two years, much of the gain in competitive position was retained through 1970, despite the steep rise in British costs and export prices. The composite index of competitors’ costs was rising almost equally fast, and there was only a moderate erosion of the U. K. cost position, as depicted by the data plotted in Chart 9, over the whole period from the second half of 1968, when the price adjustments to devaluation could be considered to have run their course, through the last quarter of 1970. However, the U. K. export price movement during 1970 compared less favorably with that of competitors, whose export unit values tended to level out after the early part of 1970.

Japan’s unit labor costs increased fairly sharply during 1970, but this change did not close the significant gap that had opened up from 1966 through 1969 between the Japanese trend and the generally rising trend of competitors’ costs. Japanese export prices, unlike those of most industrial countries, apparently rose faster than manufacturers’ unit costs in 1970, but the Japanese competitive position was little affected, owing to the almost parallel movement of other countries’ export prices.

Among the smaller industrial countries covered in Chart 9, the one displaying the most notable comparative cost-price gains from 1969 to 1970 was the Netherlands. Both in terms of unit labor costs and in terms of export unit values, less sizable year-to-year increases in that country than in competitor countries resulted in an apparently substantial improvement of the Dutch competitive position.

Commodity Price Developments

Prices of commodities exported mainly by primary producing countries, after rising strongly under the impetus of boom conditions in the industrial world from mid-1968 through 1969, remained high in the early part of 1970. Subsequently, however, there was a general softening of prices for commodities other than food and petroleum, reflecting the slowing of economic expansion in the industrial countries. While food prices continued to rise throughout 1970 and into 1971, prices of inedible agricultural materials declined rather steadily over the same period, and prices of metals dropped sharply from a peak in early 1970 through early 1971 (Chart 10). As noted below, these differential price movements gave rise to marked regional differences in overall movements of export prices and terms of trade.

Notwithstanding a downward movement of about 6 per cent from April to October in the overall index of primary producers’ prices, as measured by the National Institute of Economic and Social Research (NIESR), the general average of such prices for the full calendar year 1970 was about 2½ per cent above the average for 1969, when the price movement over the year was strongly upward (Chart 10). Moreover, the decline appears to have been arrested in the first quarter of 1971. Movements of prices for food and nonfood agricultural products continued to diverge, while the 1970 decline in prices of metals and minerals began to taper off, leaving such prices on the average at about their late-1968 levels.

The strength of most food prices during 1970 was associated with impaired crop prospects for certain important commodities, and especially for coffee, wheat, and vegetable oils. Under such supply conditions, export earnings of the countries concerned rose much less than prices of the affected commodities (Chart 11). Prices of certain foods, such as sugar, were also bolstered by new international agreements or arrangements affecting their marketing.

Relatively high volumes of trade helped to sustain export earnings from some agricultural raw materials, e.g., rubber, in the face of declining prices. However, stagnant or contracting markets exacerbated the effects of unfavorable price trends on other export proceeds. Wool, hard fibers, and jute were among the products in this category. The long-term weakness of their prices was probably in part a reflection of increasing competition from synthetic alternatives.

The decline in prices of metals during the latter part of 1970 followed spectacular increases during the previous period of strong world-wide industrial demand and tight supply conditions. It reflected the re-establishment of more normal demand and supply relationships, particularly for copper, rather than the collapse of a sustainable price level.

Several classes of commodities of large and growing importance to the primary producing countries are not covered in the NIESR index (Chart 10), or in the foregoing discussion. Foremost among these is petroleum. Although petroleum prices showed no marked change for 1970 as a whole, they have been greatly influenced by a succession of developments dating from the latter part of that year. Following certain relatively small upward adjustments of posted prices before the end of the year, major increases in oil prices were negotiated in the early months of 1971. These new arrangements between the international oil companies and the authorities of the important exporting countries, combined with increasing demand for petroleum, have assured a very sharp rise in prices and in total value of petroleum exported from primary producing countries.

The relative weakness of nonfood commodity prices in 1970, coupled with the sharp increase in prices of manufactured goods imported by the primary producing countries, resulted in some deterioration of the terms of trade for most groups of primary producing countries outside of Europe and the Western Hemisphere (Table 20). However, the export unit value index for primary producing countries of the Western Hemisphere rose sharply, and their combined terms-of-trade index also showed a marked increase, chiefly because of the strength of coffee prices during 1970. For different reasons, involving their sizable exports of manufactured goods, the primary producing countries of Northern Europe also represented an exception to the pattern of generally declining terms of trade for primary producing countries in 1970. Elsewhere, however, movements in the export prices of such countries were generally too weak to prevent some impairment of the terms of trade.

Trade of Primary Producing Countries

Export Expansion

Total exports of primary producing countries rose in value by about 11 per cent in 1970, compared with 13 per cent in 1969, but the rate of increase remained well above the longer-term average (7½ per cent for the period 1960-70). The primary cause of the 1969-70 deceleration was the slower overall rate of expansion in economic activity in the industrial countries, where most exports of primary products are marketed (Chart 12). However, the mildness of the 1970 slackening of economic expansion in Western Europe, which absorbs about 45 per cent of total exports of the primary producing countries, helped to temper the easing of world demand for such exports, as did the fact that U.S. import demand was much better sustained than domestic output in 1970. The relative weight of the European market, which was expanding rapidly in 1969, had also figured heavily in the acceleration of primary producing countries’ exports in that year, when the, post-1967 surge of U.S. economic activity was already beginning to subside.

Exports of the European primary producing countries, contrary to the overall trend, showed another very strong advance of about 17 per cent in 1970 (Table 21). One element in this advance was a 26 per cent rise in Spanish exports, after a 19 per cent rise in 1969. The faster pace reflected the influence on agricultural exports of favorable weather during the 1970 crop season. Acceleration of export growth was also recorded for Ireland, which benefited from expansion of U. K. demand, and for Turkey and Iceland. Rising by 20 per cent, Irish industrial exports amounted to more than half of the country’s total exports for the first time. In contrast, the exports of Finland and Yugoslavia rose somewhat less rapidly in 1970 than in 1969. For Finland, export growth may have been inhibited by the high level of domestic demand; otherwise, a stronger export trend might have resulted from improvement of the country’s external cost competitiveness, in which a notable element was the apparently effective incomes policy adopted in 1969 to help preserve the comparative cost gains flowing from the 1967 devaluation of the markka.

For the more developed primary producing countries in the Southern Hemisphere, export expansion decelerated sharply in 1970. Although Australia’s export performance was relatively good, exports from New Zealand and South Africa remained virtually unchanged. The falling price of wool was an unfavorable influence in all three countries, and bad weather hampered South Africa’s agricultural production and exports.

The growth in total exports of the less developed countries also decelerated in 1970, but only moderately. The average rate of expansion in value was about 10 per cent, compared with 12 per cent in the previous year. However, the experience of the individual countries and regions entering into this average was highly diversified.

Among the outstanding export gains were those of the Far East countries, whose exports had risen faster than those of any other group of less developed countries during the 1960s. This performance was sustained in 1970, when exports of the Republic of China rose even more strongly than in 1969, while Hong Kong and the Republic of Korea recorded export increases almost equal to the large ones recorded for 1969. These gains were made despite the relatively large weight of the United States (whose imports, as noted above, rose less in both 1969 and 1970 than those of most other industrial countries) among the markets for Far East exports. It was the commodity composition—heavily centered in manufactured goods—and the price competitiveness of these exports that permitted their exceptionally rapid expansion.

In contrast, exports of the South and Southeast Asian countries grew only about half as much in 1970 as the average for all developing countries. In South Asia even that performance represented an improvement over the 1969 record, but the reverse was true for Southeast Asia, where most of the principal countries were adversely affected by a decline of about 15 per cent in the price of natural rubber.

Within the Southeast Asian group, only Indonesia and the Philippines experienced an acceleration of export growth in 1970. For the former, a 20 per cent rise in exports of petroleum (the largest single category) and a doubling of the value of exports of forest products outweighed the effect of the rubber price decline. The good export performance of the Philippines in 1970 was attributable in large part to higher copper and sugar prices, as well as to the fruition of recent investments in industries connected with those products. In contrast, the value of Thailand’s exports was affected unfavorably not only by the rubber price decline but also by a drop in the price of rice, driven down mainly by the approach to self-sufficiency in major importing countries and by the supplying of rice on concessionary terms by the United States and Japan, mainly to countries in balance of payments difficulty. Singapore’s exports, after a 22 per cent rise in 1969, ceased to expand in 1970, when exports of refined petroleum products to Viet-Nam were reduced and earnings on rubber exports—like those of Malaysia—were dampened by the price decline. Two war-ravaged countries of the region, Viet-Nam and the Khmer Republic, experienced drastic decreases—about 40 per cent each—in their exports.

Within the South Asian group of countries, the least satisfactory export results in 1970 were those reported for Burma. That country, like Thailand, was adversely affected by the difficulties mentioned above with respect to rice. Indeed, it was affected to a greater degree because of its heavier dependence upon rice for export earnings. Burma was also hurt by floods that reduced export shipments of teak, its second most important export. Pakistan’s exports, consisting preponderantly of jute and raw cotton, barely regained their 1968 level in 1970. However, the total for the latter year may have been affected by delays in shipment and underinvoicing, stemming from speculation in the latter part of the year on changes in the foreign exchange system. The increase in India’s exports from 1969 to 1970, amounting to about 7 per cent, was relatively small in relation to other countries’ export performances, but compared favorably with India’s own average annual export growth for the previous decade. Both India and Ceylon were helped by the increase in tea prices in 1970; also, the former, with its diversified export structure, now appears to be benefiting from export promotional measures undertaken in recent years.

In the Middle East both oil exporters and the other countries of the region increased their exports in 1970 at rates slightly below the average for all less developed countries. For the countries whose foreign exchange receipts are not dominated by oil, that rate represented a marked deceleration, centered in the United Arab Republic and attributable in considerable part to a leveling out of prices for raw cotton (which accounts for two fifths of U. A. R. export earnings) after their sharp rise in 1969. Among the oil exporters of the area, the export pace was led in 1970 by Iran, which obtained some 85 per cent of its current foreign exchange earnings from oil.

In Africa the average rate of export growth was somewhat lower in 1970 than in 1969 but continued to exceed the global average for less developed countries. For North African countries, increases in petroleum exports dominated the 1969-70 change, as Tunisian agricultural exports declined and those of Morocco failed to increase appreciably, for each country partly because of adverse weather conditions. In addition, North African exports of citrus products were dampened by intense competition from other Mediterranean countries.

In other parts of Africa, exports were influenced by a wide variety of factors. A continuation of impressive export growth for Nigeria was attributable largely to the petroleum sector, which now accounts for more than half of the country’s export earnings. However, in two countries whose exports are dominated by copper—the Democratic Republic of Congo and Zambia—a deceleration of export growth reflected declines in copper prices and the flooding of a major mine in Zambia. For Uganda bumper harvests of cotton and coffee, together with increases in prices of these commodities, brought a large increase in export earnings. Dahomey benefited from the same price increases and, more importantly, from rising prices of palm products, which account for two fifths of its exports. Rwanda and Ivory Coast were among the other beneficiaries of rising coffee prices, and the latter country increased the volume of its exports of cocoa more than enough to offset the decline in cocoa prices. Ghana was able to bolster its 1970 export earnings considerably through the high cocoa prices of 1969, since a substantial proportion of its crop had been sold on a forward basis.

For the less developed countries of the Western Hemisphere as a group, the rate of growth in value of exports edged downward only slightly in 1970, to about 9 per cent. That average comprised, however, a much weaker performance for Mexico and several of the Caribbean countries, and little change in the performance for the South American countries as a group. In Mexico bad weather severely limited agricultural production for export, and shrinking acreage devoted to cotton production also contributed to a decline in total exports. In most of the Central American coffee-producing countries, total export earnings increased by sizable percentages. Some of the Caribbean countries also recorded large increases in traditional exports (e.g., sugar from the Dominican Republic and bauxite and alumina from Jamaica).

Among the South American countries, the largest absolute export gains from 1969 to 1970 were those of Peru, Brazil, and Colombia, each on the order of 20 per cent. Percentage increases in the 15-25 per cent range were also recorded for Ecuador, Uruguay, and Paraguay. Peru’s good export performance stemmed from a rise in the price of fish products and a large volume of shipments of fish, mineral, and agricultural products. For Brazil and Colombia, where coffee still accounts for one third and three fifths, respectively, of total export earnings, the rise in coffee prices was an important factor. Although bad weather reduced Brazil’s coffee crop, the volume of exports was maintained by drawing on accumulated stocks. In addition, the proportion of Brazil’s export earnings coming from sales of manufactured goods rose to 13 per cent, compared with only 5 per cent as recently as 1964. Brazilian exports have apparently benefited generally from the exchange rate policy adopted in August 1968, under which frequent small adjustments of the rate have eliminated much of the uncertainty formerly overhanging foreign trade transactions.

Of the larger South American countries, the one whose exports rose least in 1970 was Chile, where the previous year’s rise had been exceptionally large, reflecting the bulge in copper prices. In 1970 the decline in the unit value of copper exports tended to balance an increase in their volume, and the total value of Chilean exports showed little change.

Imports and Trade Balances

Imports of primary producing countries continued to surge upward in 1970, increasing in value at a rate of 13 per cent. That figure exceeded by 2 percentage points the previous year’s rate, which itself was well above the trend rate for the past decade (Table 22).

To a considerable extent the rise in the value of merchandise imports of primary producing countries was attributable to the marked increase in import prices, which rose by 5 per cent in 1970, compared with 3 per cent in 1969. Both rates closely paralleled the concurrent increases in unit values of manufactured goods exported by industrial countries, reflecting the predominance of such goods among imports of primary producing countries. Nevertheless, the rise in these imports was also generally in line with changes in output and export growth in the primary producing countries themselves. Their aggregate export receipts, as noted previously, rose more rapidly in the past few years than during a number of preceding years, and this probably helped to stimulate the growth of their output.

For the two years 1969 and 1970, the expansion of aggregate real GNP is estimated to have averaged 6.5 per cent for the more developed primary producing countries and 6 per cent for the less developed group. Each of these rates was about 1 percentage point higher than the corresponding average rate for the 1960s.

This acceleration of growth in domestic output and demand was supported in turn by the rising imports of recent years. These were facilitated during 1970 by the allocation of special drawing rights and probably also by an enlarged flow of private capital to the primary producing countries, as well as by sustained growth in those countries’ export receipts. Although the overall flow of official capital and aid to the less developed countries has increased only moderately in recent years (as noted in Chapter 5), it continued to provide financing for a substantial volume of imports into those countries.

The growth of imports in both 1969 and 1970 was much higher in the more developed group of primary producing countries than in the less developed group. In particular, the European countries in the former group increased their imports by 21 per cent in 1970, following a 17 per cent increase in 1969. A good deal of this increase in the value of imports was no doubt a reflection of the aforementioned upsurge in import unit values—a rise that was greater for this group of countries in 1970 than for any of the other major groups of primary producers. In addition, the pressure of domestic demand was clearly a major factor in Finland, Greece, Portugal, and Yugoslavia, all of whose imports increased by 20 to 35 per cent. In Finland the economy was working to full capacity after two consecutive years of strong growth under the stimulus of intensive private investment activity. In Yugoslavia strong upward trends in output, costs, and prices, already evident prior to 1970, accelerated during that year, when imports increased by 35 per cent. In contrast, import expansion was curtailed in Ireland and Spain, where earlier upsurges had resulted in deterioration of the trade balances in 1969. In Spain the value of imports increased by only 12 per cent in 1970, following the imposition of fiscal and monetary restraint in the second half of the previous year. The 1969 increase had amounted to 20 per cent. The U.S. dollar value of Turkey’s imports rose by 22 per cent in 1970, despite a 40 per cent devaluation of the Turkish lira in August of that year. This sharp rise reflected mainly the clearance, after the devaluation, of a backlog of import applications accumulated in previous years because of lack of foreign exchange to warrant their approval. The growth of imports was also strong in Australia, New Zealand, and South Africa.

For the whole group of more developed primary producing countries, both in Europe and in the Southern Hemisphere, there was a substantial deterioration of trade balances in 1970, despite the continued strong showing of exports of the European group. The negative shifts were most notable in Finland, Greece, Yugoslavia, New Zealand, and South Africa. For Ireland, Spain, and Australia, there was practically no change in trade balances from 1969 to 1970 (Table 23).

For less developed countries as a group, the growth in value of imports in 1970 is estimated at more than 10 per cent, following an increase of about 9 per cent in each of the two preceding years. Since there was an estimated 5 per cent rise in import prices paid by countries in this group in 1970, the increase in the aggregate volume of imports into less developed areas was perhaps no higher in 1970 than in the previous year. Among the major less developed areas, Africa and the Western Hemisphere were the ones where growth in the value of imports was higher in 1970 than in 1969. For the Middle East the rate of import growth was lower in 1970 than in either of the two previous years.

Among the Asian primary producing countries, those in the Far East and in Southeast Asia maintained slightly less buoyant rates of import growth in 1970 than in 1969. The countries in South Asia, however, increased their aggregate imports by only 1 per cent in 1970, after three years of absolute decline. Except in Korea, whose imports in 1970 were dampened by the control of credit expansion and of short-term capital inflows in order to curb the rapid increase in the country’s external debts, the growth of imports was sustained at very high levels in the Far East economies. Hong Kong and China showed particularly large increases, broadly commensurate with the continued surge of earnings from their exports of manufactures.

In Indonesia, Malaysia, and Singapore, the growth of imports was also very sizable in 1970, despite a decline in rubber export earnings after the 1969 bulge. A revival of private investor confidence and activity, along with a substantial expansion of government expenditures, underlay the rise in Malaysian imports. In Indonesia the sustained growth of imports in 1970 was supported by increased export earnings from petroleum and other products, as well as a substantial increase in the inflow of official aid and private foreign investment. In contrast, imports into the Philippines and Thailand were depressed, in the former by the implementation of a stabilization program and in the latter by the slow growth of export earnings in recent years.

In India improvements in agricultural operations, particularly with respect to wheat production, have resulted in rising money demands in the economy and lower importation of foodgrains. Other categories of imports, therefore, were higher for the first time in two years. In Pakistan the economic situation deteriorated during 1970, particularly in the second half. The large 1969-70 increase in Pakistan’s imports was associated with a widening budget deficit, an expansion of bank credit to the private sector, a rise in wages, and the disastrous cyclone damage in East Pakistan.

For Asia as a whole there was a rise in the region’s trade deficit from 1969 to 1970. It was centered chiefly in Singapore, Malaysia, and Pakistan, as most of the other countries in the region either maintained their balances or showed small positive shifts. In Malaysia, one of the few countries in this group with a trade surplus, that surplus remained large by comparison with 1967 and 1968 levels, even after dropping sharply from the 1969 peak reached under the influence of that year’s rubber price rise.

The pace of import growth was slower in most Middle East and North African countries in the year under review than in the preceding two years. Import declines or dampened import growth rates were evident particularly among the petroleum exporters, including the Libyan Arab Republic, Algeria, Kuwait, and Saudi Arabia. The rise in Iranian imports was kept in the 14 to 15 per cent range to mitigate the increase in the external deficit that resulted from a 20 per cent rise in imports in 1968. The main force tending to raise them has been the sharp growth in government expenditures. The new oil agreements negotiated in November 1970 and in February 1971 have significantly changed the short-term financial position of the Iranian Government and may lead to substantially higher imports in 1971.

Imports into the Libyan Arab Republic decreased sharply in 1970, when they were affected by the tapering off of major oil exploration and the repatriation of many Italian nationals formerly present in the country. In contrast, imports grew steeply in Morocco and the United Arab Republic. In the former, this reflected the import liberalization introduced early in 1970, while in the latter it stemmed from a more liberal application of trade and payments controls to facilitate the provision of imported inputs for the country’s underused industrial capacity.

For the Middle East as a whole, the slowing of import expansion in 1970 resulted in an enlargement of the area’s overall export surplus. This accrued to the oil exporting countries, whose exports were well maintained. Since the countries of the region not exporting oil reduced their import expansion by less than the decline in their combined export growth, the shift in the trade balance for this group was negative.

In many parts of Africa south of the Sahara, the tempo of import and output growth quickened in 1970. Among the most striking changes was the expansion of more than 50 per cent in the imports of Nigeria. This movement accompanied the recovery of that country’s petroleum exports and the release of pent-up demands following an extended period of internal strife. Expansionary trends were evident also in Kenya, the Democratic Republic of Congo, Ghana, and Ivory Coast. A major exception was Zambia, whose imports showed little change in 1970, as the authorities pursued a restrictive budget policy to mitigate the expansionary pressures emanating from rising copper exports in the preceding years.

Despite the substantial expansion of African imports, no marked general deterioration of trade balances resulted. Indeed, because of the very large rise in the trade surplus of the Libyan Arab Republic, the total surplus for the whole region increased substantially from 1969 to 1970.

Among the primary producing countries of the Western Hemisphere, higher rates of import expansion in 1970 than in 1969 were recorded by Mexico, Panama, several Central American countries, the Dominican Republic, Brazil, Colombia, and Uruguay. The high rate of import expansion in Mexico was caused in part by the need to remedy special domestic supply problems in certain sectors. The large increases in imports of Brazil, Colombia, and several Central American countries apparently reflected primarily the acceleration of domestic economic activity. The Brazilian economy in 1970 was in its third consecutive year of rapid growth in output, and constraints on imports were relieved in large measure by the substantial growth of export receipts and capital inflows. The high level of coffee exports has also enabled the Colombian Government to implement a substantial import liberalization, and this contributed to an import expansion of 22 per cent in 1970. In contrast, the growth of Argentine imports was greatly reduced in 1970, after an unusually sharp rise in the previous year. Among the factors in this reduction were the tight monetary policies pursued by the authorities, a slowdown of economic activity, and the 12.5 per cent devaluation of the peso in June 1970. In Peru, too, imports rose only slowly in 1970, as a surge in internal demand associated with Peru’s recovery from the preceding recession was met principally through increases in the utilization of existing domestic capacity.

As a group, the less developed countries of the Western Hemisphere incurred a substantially larger net deficit on external trade transactions in 1970 than in any other recent year. The dominant element in this change was the marked rise in Mexico’s negative trade balance. In South America the large positive trade balance for countries in the region increased somewhat from 1969 to 1970.

Table 11.Growth of World Trade and Output, 1960-70(In per cent)
Trend 2Change from Preceding Year
Relative

Magnitude 1
1960-70196819691970
Exports
World 3Value100.01214½14½
Volume812½11
United States and Canada 4Value21.512½15
Volume109
JapanValue172423½21
Volume6.616½241814½
EEC countriesValue31.111½14½18½16½
Volume101613½10
EFTA countries 5Value14.58815½13
Volume1212
Primary producing countries:

More developed areas 6
Value915½12½
Volume6.5812½
Less developed areas 6Value19.8712½10
Volume610½87
GNP in Volume
World 3100.053
Industrial and more developed primary producing countries85.355
Excluding United States43.676
Less developed primary producing countries14.766
Sources: Trade data: International Financial Statistics; GNP data: U.S. Agency for International Development, Office of Program and Policy Coordination, Gross National Product.

Based on trade or gross national product in 1969.

Compound annual rate of change.

All countries except the CMEA countries, mainland China, etc. See footnote 2, page 52.

Data exclude U.S. Department of Defense grant-aid shipments.

Not including Portugal, Finland, and Iceland.

For country coverage, see footnote 2 on page 52. Figures for less developed primary producing countries in 1970 are partly estimated.

Sources: Trade data: International Financial Statistics; GNP data: U.S. Agency for International Development, Office of Program and Policy Coordination, Gross National Product.

Based on trade or gross national product in 1969.

Compound annual rate of change.

All countries except the CMEA countries, mainland China, etc. See footnote 2, page 52.

Data exclude U.S. Department of Defense grant-aid shipments.

Not including Portugal, Finland, and Iceland.

For country coverage, see footnote 2 on page 52. Figures for less developed primary producing countries in 1970 are partly estimated.

Table 12.Cyclical Pattern of World Trade: Changes in Value, 1966-First Quarter 1971(Percentage changes from preceding six months, at annual rates, based on seasonally adjusted data)
Six Months Ended
Dec. 1966June 1967Dec. 1967June 1968Dec. 1968June 1969Dec. 1969June 1970Dec. 1970Mar. 1971
World imports954131512161510
Imports of industrial countries8451417131615119
Europe4348191715181210
Japan20241681383223194
United States and Canada16162913714759
Exports of primary producing countries 15258111413815
Imports of primary producing countries 1107-510111015148
Exports of industrial countries 21061620111817109
Sources: International Financial Statistics; U.S. Department of Commerce, Overseas Business Reports (for seasonal adjustment of U.S. data); and Fund staff seasonal adjustments of other data.

Figures for changes during 1970 and 1971 are partly estimated by Fund staff.

Excludes U.S. Department of Defense grant-aid shipments.

Sources: International Financial Statistics; U.S. Department of Commerce, Overseas Business Reports (for seasonal adjustment of U.S. data); and Fund staff seasonal adjustments of other data.

Figures for changes during 1970 and 1971 are partly estimated by Fund staff.

Excludes U.S. Department of Defense grant-aid shipments.

Table 13.Industrial Countries: Growth of Real Output, 1960-70

(Percentage changes in GNP, 1 at annual rates)

Annual AveragesChange from Previous Year
1960-651965-701960-701967196819691970
Canada5.74.75.23.54.85.13.3
United States4.83.24.02.64.72.5-0.6
Continental European
industrial countries5.35.05.13.15.57.15.2
France5.85.85.84.74.67.96.0
Germany5.04.54.8-0.37.28.14.9
Italy5.36.05.66.86.05.95.1
Other 25.14.34.73.64.15.95.1
United Kingdom3.22.12.61.53.62.01.7
Japan10.012.211.113.214.412.111.2
All industrial countries5.24.54.83.55.74.82.5
Sources: National economic reports; secretariat of the Organization for Economic Cooperation and Development; and Fund staff estimates.

Gross domestic product (GDP) in some instances.

Austria, Belgium, Denmark, Luxembourg, the Netherlands, Norway, Sweden, and Switzerland.

Sources: National economic reports; secretariat of the Organization for Economic Cooperation and Development; and Fund staff estimates.

Gross domestic product (GDP) in some instances.

Austria, Belgium, Denmark, Luxembourg, the Netherlands, Norway, Sweden, and Switzerland.

Table 14.Industrial Countries: Growth of Gross National Product and of Imports, 1960-701(Percentage changes, except as noted)
1960-7021967-681968-691969-70
GNPImportsImports relative to GNP 3GNPImportsImports relative to GNP 3GNPImportsImports relative to GNP 3GNPImportsImports relative to GNP 3
Canada1.213¾1.61014¼1.4-1¼-0.2
United States101.59232.51.1112.3
Belgium-Luxembourg 4111.36162.510¼19¾1.913¾1.4
France10¼131.312½1.315¼30¾2.011½181.6
Germany101.2916¼1.81220¾1.712¾121.0
Italy10¼12¼1.20.610¼212.011¾201.7
Netherlands10¼111.11011½1.211½18¼1.610¾222.0
Austria1.181.413¾1.411½25½2.2
Denmark11¼10¼0.91010½1.113½17¾1.312¾15½1.2
Norway1.0-1½1.015½25½1.7
Sweden1.091.415¼1.710½18½1.8
Switzerland911¼1.31.2172.09242.6
United Kingdom771.022¾3.170.890.9
Japan16½15½0.91911½0.616¾15¾0.918¼25¾1.4
Memorandum item: all industrial countries 5
In terms of value10½1.215½1.710½15¼1.51014½1.4
In terms of volume591.8152.66112.04102.4
Sources: Organization for Economic Cooperation and Development, Main Economic Indicators, and National Accounts of OECD Countries, 1950-68; national publications; and International Financial Statistics.

GNP at current market prices and value of total imports on customs basis, both expressed in national currency values. Growth rates rounded to nearest quarter.

Compound annual rates.

Ratio of percentage change in imports to percentage change in GNP.

GNP data cover only Belgium.

The composite changes shown here represent averages of percentage changes for individual countries weighted by their respective total imports (valued in U.S. dollars).

Excluding estimated U.S. imports of copper and steel associated with strikes or hedging against a possible strike, this ratio would be 2.4.

Sources: Organization for Economic Cooperation and Development, Main Economic Indicators, and National Accounts of OECD Countries, 1950-68; national publications; and International Financial Statistics.

GNP at current market prices and value of total imports on customs basis, both expressed in national currency values. Growth rates rounded to nearest quarter.

Compound annual rates.

Ratio of percentage change in imports to percentage change in GNP.

GNP data cover only Belgium.

The composite changes shown here represent averages of percentage changes for individual countries weighted by their respective total imports (valued in U.S. dollars).

Excluding estimated U.S. imports of copper and steel associated with strikes or hedging against a possible strike, this ratio would be 2.4.

Table 15.Wharton Indices of Capacity Utilization in Manufacturing Industries, Selected Time Periods
Utilization Rates
Mean

Utilization

Rates,

1966-70
1st Qtr.

1970
4th Qtr.

1970
Highest Recent PeakHighest

Previous

Peak
United Kingdom95.295.794.696.9 (4th Qtr. 1968)99.0
Belgium92.192.493.895.3 (3rd Qtr. 1969)98.8
France91.598.395.998.3 (1st Qtr. 1970)99.2
Germany91.499.294.499.2 (1st Qtr. 1970)97.8
Netherlands91.097.094.597.0 (1st Qtr. 1970)99.0
Italy88.490.486.991.0 (2nd Qtr. 1969)98.5
Average of six European countries92.096.793.996.7 (1st Qtr. 1970)96.5
United States92.990.582.594.9 (3rd Qtr. 1969)97.3
Sources: Wharton School of Finance and Commerce, Wharton Quarterly (Philadelphia), various issues.
Sources: Wharton School of Finance and Commerce, Wharton Quarterly (Philadelphia), various issues.
Table 16.Industrial Countries: Growth of Export Markets and Relative Export Performance, 1960-70(Percentages; based on exports in U.S. dollars)
Growth of Export Markets 1Relative Export Performance 2
Annual

percentage change
Change from

preceding year
Per cent

per annum
196819691970
1960-701967-701968196919701960-701967-70
Canada11.315.121.411.113.0-0.1+0.1-1.8-1.6+3.7
United States9.313.011.414.113.6-1.5-1.8-1.7-3.8+0.1
France10.016.112.217.318.8+0.1+0.3-0.7+0.8+0.7
Germany10.815.212.216.716.7+0.7+ 1.0+ 1.9+0.2+0.8
Italy10.916.313,917.717.3+2.5-1.2+2.7-2.2-4.2
United Kingdom9.714.312.115.315.4-3.2-3.4-4.8-1.0-4.3
Japan9.413.014.611.712.7+6.9+8.8+8.4+ 10.4+7.4
Belgium-Luxembourg11.517.014.818.917.3+0.3+ 1.0+ 11+ 3.3-1.3
Netherlands11.016.913.419.218.3+0.3+0.3+ 10+0.2-0.2
Austria11.316.712.117.820.1-1.3-0.3-1.9+2.9-1.4
Switzerland11.015.712.916.917.4-0.4-1.7+0.5-0.2-5.5
Denmark9.814.211.013.817.7-1.3-3.9-6.4+0.5-5.6
Norway9.914.511.615.017.0+0.8-2.0-0.1-1.2-4.8
Sweden10.214.39.415.518.1-0.3-0.2+0.7
Sources: International Financial Statistics; International Monetary Fund and International Bank for Reconstruction and Development, Direction of Trade; and Organization for Economic Cooperation and Development, Overall Trade by Countries, Series A (as basis for 1969-70 market growth calculations).

For the purpose of these calculations, the world has been divided into 33 countries and country groups: 14 industrial countries; 11 more developed primary producing countries; 6 areas of less developed primary producing countries; CMEA countries, mainland China, etc.; and a residual group (for trade unallocated by destination). The growth of a country’s export markets is taken to be equal to the growth rate that its total exports would have achieved if its share of industrial countries’ exports to each of 32 markets (all the above-mentioned except the country itself) had been exactly maintained.

The percentage by which actual exports of a country exceed (or fall short of) the value of exports implied by exact share maintenance as described in footnote 1.

Sources: International Financial Statistics; International Monetary Fund and International Bank for Reconstruction and Development, Direction of Trade; and Organization for Economic Cooperation and Development, Overall Trade by Countries, Series A (as basis for 1969-70 market growth calculations).

For the purpose of these calculations, the world has been divided into 33 countries and country groups: 14 industrial countries; 11 more developed primary producing countries; 6 areas of less developed primary producing countries; CMEA countries, mainland China, etc.; and a residual group (for trade unallocated by destination). The growth of a country’s export markets is taken to be equal to the growth rate that its total exports would have achieved if its share of industrial countries’ exports to each of 32 markets (all the above-mentioned except the country itself) had been exactly maintained.

The percentage by which actual exports of a country exceed (or fall short of) the value of exports implied by exact share maintenance as described in footnote 1.

Table 17.Industrial Countries: Trade Balances, 1961-70 1(In billions of U.S. dollars)
Annual AveragesCalendar Years
1961-651966-70196819691970
Belgium-Luxembourg0.200.24-0.020.180.76
France0.33-0.030.01-1.220.70
Germany2.014.975.685.165.80
Italy-0.680.321.050.54-0.34
Netherlands-0.47-0.56-0.32-0.42-0.88
Total, EEC countries1.395.146.404.236.04
Austria-0.32-0.49-0.46-0.33-0.60
Denmark-0.29-0.55-0.46-0.63-0.79
Norway-0.65-0.87-0.71-0.69-1.19
Sweden-0.21-0.20-0.17-0.17-0.21
Switzerland-0.74-0.66-0.38-0.51-1.33
Total, other continental European countries-2.21-2.77-2.18-2.34-4.12
Total, continental European countries-0.822.174.221.891.92
United Kingdom-0.61-0.70-1.54-0.34
Japan0.392.732.533.703.96
Canada0.391.251.380.902.98
United States5.432.240.620.662.11
Total, all industrial countries4.787.697.216.8110.98
Source: Data reported to the International Monetary Fund.

The data in this table are on a balance of payments basis; they are thus comparable to (and implicit components of) the data in Tables 24 and 25, but are not directly comparable to the data for primary producing countries in Table 23.

Source: Data reported to the International Monetary Fund.

The data in this table are on a balance of payments basis; they are thus comparable to (and implicit components of) the data in Tables 24 and 25, but are not directly comparable to the data for primary producing countries in Table 23.

Table 18.Unit Values of Exports, 1956-70

(Index, 1963= 100; measured in terms of U.S. dollars 1)

Annual AveragesCalendar Years
1956-601961-651967196819691970
Industrial countries99101106105108116
United States97101110111115122
United Kingdom94100108101105112
Continental Europe101101104102105114
Japan107100101102105111
Other developed areas989910298101104
Less developed areas106101103103107110
Sources: International Financial Statistics; and United Nations, Monthly Bulletin of Statistics.

I.e., in terms of national currency indices adjusted for changes in par values of currencies.

Sources: International Financial Statistics; and United Nations, Monthly Bulletin of Statistics.

I.e., in terms of national currency indices adjusted for changes in par values of currencies.

Table 19.Industrial Countries: Price Increases, 1960-70(Percentage changes in GNP deflators, at annual rates)
Annual AveragesChange from Previous Year
1960-651965-701960-701967196819691970
Canada1.94.13.03.43.64.74.1
United States1.44.02.73.24.04.85.5
Continental European industrial countries 14.24.04.12.73.04.76.1
France4.14.54.32.95.06.95.2
Germany3.63.43.51.11.63.57.4
Italy5.43.44.43.01.54.26.3
Other 1,24.34.64.44.33.54.15.6
United Kingdom3.44.84.13.23.95.17.4
Japan5.04.54.84.23.74.16.2
Average, all industrial countries 12.54.13.33.13.64.65.8
Sources: National economic and statistical reports; secretariat of the Organization for Economic Cooperation and Development; and Fund staff estimates.

Weighted average of percentage changes for individual countries, with their respective gross national products, converted to U.S. dollars at current exchange rates, used as weights.

Austria, Belgium, Denmark, Luxembourg, the Netherlands, Norway, Sweden, and Switzerland.

Sources: National economic and statistical reports; secretariat of the Organization for Economic Cooperation and Development; and Fund staff estimates.

Weighted average of percentage changes for individual countries, with their respective gross national products, converted to U.S. dollars at current exchange rates, used as weights.

Austria, Belgium, Denmark, Luxembourg, the Netherlands, Norway, Sweden, and Switzerland.

Table 20.Primary Producing Countries: Unit Values of Exports and Terms of Trade, 1956-70(Index, 1963=100)
Unit Values of ExportsTerms of Trade
Annual averagesAnnual averages
1956-601961-6519671968196919701956-601961-651967196819691970
More developed areas989910298101104979898939694
European countries99100108102105110959910410110099
Australia, New Zealand, and South Africa979796949796999792939288
Less developed areas106101103103107110104100100102103102
Middle East10810110110110110010910096989491
Asia105101999710310610510199100103103
Africa108101109110115116110101104105109103
Western Hemisphere10310110610711012010299102102104108
Sources: United Nations, Monthly Bulletin of Statistics, January 1969 and July 1971.
Sources: United Nations, Monthly Bulletin of Statistics, January 1969 and July 1971.
Table 21.Primary Producing Countries: Changes in Value of Total Exports, 1960-70 1
1970

(Billion

U.S
Compound Percentage

Annual Rates
Percentage Changes

from Previous Year
dollars)1960-701960-651965-70196819691970
More Developed Areas
Europe9.7910.49.111.76.417.117.4
Finland2.318.87.610.16.721.416.1
Ireland1.049.27.511.01.811.716.2
Portugal0.9511.211.910.48.711.910.9
Spain2.3912.75.919.914.919.426.0
Greece0.6412.210.114.4-5.518.216.1
Turkey0.606.57.65.4-5.28.312.5
Yugoslavia1.6811.514.09.01.016.713.8
Southern Hemisphere8.177.26.38.14.214.07.1
Australia4.779.38.79.91.419.713.0
New Zealand1.233.83.64.01.619.91.2
South Africa2.185.73.87.610.32.0-1.1
Total, more developed areas17.968.87.610.04.615.512.4
Less Developed Areas
Asia14.506.53.89.210.814.611.8
Far East4.7818.414.822.020.628.324.1
Hong Kong2.5113.810.717.114.224.915.4
China, Republic of1.4324.222.426.025.130.936.0
Korea, Republic of0.8438.239.636.742.236.734.2
Southeast6.603.60.86.58.014.56.8
Philippines1.076.66.56.83.30.724.9
Thailand0.705.48.82.3-3.47.6-1.6
Malaysia1.683.60.86.510.722.61.8
Singapore1.553.2-2.69.611.521.90.3
Indonesia1.183.9-3.07.613.214.018.7
South3.133.04.01.97.11.45.4
India1.963.94.93.08.74.66.8
Pakistan0.726.36.16.511.6-5.46.2
Middle East10.918.58.09.09.49.17.5
Oil exporters8.719.08.69.49.27.28.5
Iran2.3710.99.112.7-2.611.713.1
Kuwait1.585.15.34.95.96.17.1
Saudi Arabia2.1510.111.19.08.95.35.2
Other Middle East2.216.55.96.910.316.77.6
Israel0.7813.714.712.715.313.97.1
United Arab Republic0.763.01.34.79.919.82.3
Africa11.959.78.311.216.116.411.4
North Africa4.3313.512.214.729.015.48.2
Libyan Arab Republic2.3772.0135.024.358.516.19.1
Algeria1.006.02.79.54.823.17.4
Morocco0.493.34.02.76.17.81.4
Other Africa7.628.16.89.49.617.013.3
Zambia0.9913.215.840.8-7.7
Kenya0.296.15.36.14.98.87.0
Congo, Democratic Republic of0.754.5-5.617.315.926.316.0
Nigeria1.2410.19.610.6-13.651.739.4
Ghana0.464.6-0.29.616.118.117.6
Ivory Coast0.4711.612.011.130.88.51.7
Western Hemisphere15.875.75.26.15.010.19.4
Central America, Mexico, and Caribbean5.055.95.95.97.57.95.2
Mexico1.406.27.94.510.414.0-2.2
Trinidad and Tobago0.485.37.03.67.30.21.9
South America10.825.64.96.23.711.211.4
Argentina1.765.06.73.4-6.617.89.4
Brazil2.748.04.711.413.722.918.5
Chile1.189.27.011.43.023.91.3
Peru1.049.39.19.48.0-0.120.8
Colombia0.754.82.96.89.411.619.7
Venezuela2.640.80.41.20.3-0.64.6
Other Areas0.498.34.212.716.717.119.5
Total, less developed areas53.737.25.98.69.812.510.2
Total, primary producing countries71.697.66.38.98.713.210.7
Sources: International Financial Statistics and Fund staff estimates.

Based on customs data, not adjusted to balance of payments concepts. Regional figures are comprehensive, including data for countries not listed separately.

Sources: International Financial Statistics and Fund staff estimates.

Based on customs data, not adjusted to balance of payments concepts. Regional figures are comprehensive, including data for countries not listed separately.

Table 22.Primary Producing Countries: Changes in Value of Total Imports, 1960-70 1
1970 (Billion U.S. dollars)Compound Percentage Annual RatesPercentage Changes from Previous Year
1960-701960-651965-70196819691970
More Developed Areas
Europe16.6012.413.911.04.617.221.2
Finland2.649.59.19.9-8.126.830.2
Ireland1.629.910.59.310.418.814.6
Greece1.9610.810.111.517.514.422.7
Portugal1.5611.011.111.011.210.020.1
Spain4.7220.633.09.41.120.112.3
Turkey0.927.04.39.811.6-2.122.0
Yugoslavia2.8713.39.317.45.218.834.5
Southern Hemisphere10.267.07.56.54.58.316.0
Australia5.106.56.86.212.04.111.8
New Zealand1.244.75.73.6-6.312.123.9
South Africa3.928.79.57.8-1.913.519.5
Total, more developed areas26.8610.010.99.14.413.519.2
Less Developed Areas
Asia19.527.05.09.16.810.610.5
Far East6.4114.49.219.922.124.216.7
Hong Kong2.9111.08.913.113.119.418.2
China, Republic of1.5217.813.422.312.134.325.6
Korea, Republic of1.9819.16.133.846.924.78.7
Southeast9.266.94.19.71.212.310.7
Philippines1.216.36.26.39.2-2.0-3.5
Thailand1.2510.710.211.28.58.00.9
Malaysia1.394.33.84.86.71.617.9
Singapore2.466.3-1.314.615.422.720.9
Indonesia1.295.04.45.53.619.117.1
South3.850.54.0-2.6-6.4-7.31.1
India2.13-0.84.1-4.6-9.5-12.3-3.2
Pakistan1.155.89.82.0-6.9-1.113.5
Middle East8.267.88.27.512.211.27.1
Oil exporters4.399.69.39.912.48.26.4
Iran1.7812.08.515.620.414.714.1
Kuwait0.6310.09.310.63.05.7-3.3
Saudi Arabia0.7712.616.68.825.12.20.4
Other Middle East3.886.11.25.011.8Ü’.l1.9
Israel1.4411.110.611.643.918.39.0
United Arab Republic0.872.76.9-1.415.913.315.5
Africa9.805.33.96.48.68.810.4
North Africa2.802.4-2.88.117.011.31.2
Libyan Arab Republic0.5512.613.611.635.54.8-18.0
Algeria1.02-1.8-8.08.627.623.80.8
Morocco0.674.91.88.26.62.019.0
Other Africa7.006.87.35.85.41.114.6
Zambia0.498.26.2-4.1
Kenya0.426.84.98.26.01.415.8
Congo, Democratic Republic of0.518.06.49.721.132.323.8
Nigeria1.055.75.06.5-13.627.752.4
Ghana0.411.34.3-1.5-3.812.819.3
Ivory Coast0.3911.512.610.518.97.315.1
Western Hemisphere17.226.04.98.89.78.612.0
Central America, Mexico, and Caribbean7.727.16.08.27.96.212.6
Mexico2.467.65.69.512.36.018.4
Trinidad and Tobago0.546.310.22.62.412.612.5
South America9.505.14.19.311.410.711.6
Argentina1.683.0-0.87.06.734.86.6
Brazil2.766.6-4.620.327.95.222.9
Chile0.946.02.89.32.216.19.2
Peru0.635.414.8-2.9-25.8-2.04.5
Colombia0.844.9-2.413.129.56.722.0
Venezuela1.944.74.15.116.32.96.6
Other Areas0.626.58.74.414.0-4.6
Total, less developed areas55.426.44.78.28.99.510.3
Total, primary producing countries82.287.56.58.57.510.713.1
Sources: International Financial Statistics and Fund staff estimates.

Based on customs data, not adjusted to balance of payments concepts. Regional figures are comprehensive, including data for countries not listed separately.

Sources: International Financial Statistics and Fund staff estimates.

Based on customs data, not adjusted to balance of payments concepts. Regional figures are comprehensive, including data for countries not listed separately.

Table 23.Primary Producing Countries: Trade Balances, 1967-70 1(In millions of U.S. dollars)
1967196819691970
More Developed Areas
Europe-4,499-4,560-5,349-6,806
Finland-20539-39-330
Ireland-395-401-524-587
Greece-691-925-1,041-1,314
Portugal-358-416-443-610
Spain-2,076-1,908-2,300-2,323
Turkey-167-274-217-316
Yugoslavia-455-533-660-1,193
Southern Hemisphere-1,388-1,474-1,214-2,490
Australia-435-854-341-330
New Zealand40115208-18
South Africa-993-735-1,081-1,747
Total, more developed areas-5,887-6,034-6,563-8,901
Less Developed Areas
Asia-4,745-4,659-4,695-5,022
Far East-1,134-1,423-1,645-1,636
Hong Kong-293-314-279-391
China, Republic of-165-101-163-96
Korea, Republic of-676-1,008-1,203-1,149
Southeast-1,952-2,055-2,209-2,664
Philippines-351-432-400-143
Thailand-379-492-534-556
Malaysia131188473291
Singapore-300-390-491-910
Indonesia-122-52-105-107
South-1,659-1,181-841-722
India-1,159-756-367-173
Pakistan-456-305-333-428
Middle East-2,3182,3672,4372,662
Oil exporters3,4673,6773,9044,320
Iran804523543599
Kuwait720780830956
Saudi Arabia1,2121,2271,2811,384
Other Middle East-1,149-1,310-1,467-1,658
Israel-220-475-590-657
United Arab Republic-226-44-10-110
Africa4291,0611,8572,155
North Africa5629801,2321,527
Libyan Arab Republic7021,2221,4921,812
Algeria85-56-75-14
Morocco-93-101-77-177
Other Africa-13381625628
Zambia175249581498
Kenya-96-106-89-127
Congo, Democratic Republic of180200234239
Nigeria5448200189
Ghana-34244446
Ivory Coast6111112481
Western Hemisphere-339-971-860-1,348
Central America, Mexico, and Caribbean-1,849-2,008-2,055-2,669
Mexico-610-706-648-1,063
Trinidad and Tobago2345-8-59
South America1,5101,0371,1951,321
Argentina3681993683
Brazil-13-25146-17
Chile188194298234
Peru-27251262415
Colombia13-85-63-91
Venezuela1,011771706701
Other Areas-270-300-210-130
Total, less developed areas-2,607-2,502-1,471-1,683
Total, primary producing countries-8,494-8,536-8,034-10,584
Sources: International Financial Statistics and Fund staff estimates.

The data in this table are on a customs basis, not adjusted to balance of payments concepts, and therefore are not directly comparable with trade data on a balance of payments basis in some parts of this Report (e.g., Chart 7 or Table 17). Regional figures are comprehensive, including data for countries not listed separately.

Sources: International Financial Statistics and Fund staff estimates.

The data in this table are on a customs basis, not adjusted to balance of payments concepts, and therefore are not directly comparable with trade data on a balance of payments basis in some parts of this Report (e.g., Chart 7 or Table 17). Regional figures are comprehensive, including data for countries not listed separately.

Chart 7.Trade Balances of Groups of Countries and of Selected Industrial Countries, 1959-70

(In billions of U.S. dollars; on a balance of payments basis)

1 The trade balances plotted here, being on a balance of payments basis, are not directly comparable to the data on a customs basis in Table 23.

2 Austria, Belgium-Luxembourg, Denmark, the Netherlands, Norway, Sweden, and Switzerland.

Chart 8.Selected Industrial Countries: Import Expansion and Capacity Utilization, 1966-70 PERCENTAGE CHANGES IN HALF-YEARLY IMPORT VOLUME

(Seasonally adjusted annual rates)

* Adjusted for distortions arising from strikes.

* * Distorted by strikes.

Chart 8a.Selected Industrial Countries: Import Expansion and Capacity Utilization, 1966-70 PERCENTAGE CHANGES IN HALF-YEARLY IMPORT VOLUME

(Seasonally adjusted annual rates)

* * Distorted by strikes.

1 Includes Germany, the United Kingdom, Belgium-Luxembourg, France, Italy, and the Netherlands.

Chart 9.Selected Industrial Countries: Comparative Cost-Price Movements, 1964-70

(Index,1963 = 100; in U.S. dollars)

* Change in par value or floating of exchange rate.

Note: Indices of competitors are weighted according to the total size and geographic distribution of their trade in manufactures.

Chart 9a.Selected Industrial Countries: Comparative Cost-Price Movements, 1964-70

(Index,1963 = 100; in U.S. dollars)

* Change in par value.

** Strikes.

Note: Indices of competitors are weighted according to the total size and geographic distribution of their trade in manufactures.

Chart 10.Prices of Commodities Exported by Primary Producing Countries, 1962-First Quarter 1971

(1961 = 100; ratio scale)

Chart 11.Major Primary Commodities: Export Earnings and Prices for Less Developed Countries, 1964-71

Chart 11a.Major Primary Commodities: Export Earnings and Prices for Less Developed Countries, 1964-71

Chart 12.Less Developed Countries: Volume of Exports and Related Variables, 1958-70

(Per cent change from preceding year)

1 Composite index for seven industrial countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States), weighted according to value of imports from less developed countries.

For countries in an expansionary phase of the business cycle, the rise in the import/GNP ratio was not surprising; however, it was unusual for the United States in a period of cyclical recession.

For convenience of analysis this Report employs the classification of countries set out below.

Classification of Countries

1. Industrial countries—Austria, Belgium, Canada, Denmark, France, Federal Republic of Germany, Italy, Japan, Luxembourg, Netherlands, Norway, Sweden, Switzerland, United Kingdom, United States.

2. Primary producing countries

a. In more developed areas—Australia, Finland, Greece, Iceland, Ireland, Malta, New Zealand, Portugal, South Africa, Spain, Turkey, Yugoslavia.

b. In less developed areas—All countries not included in 1 and 2.a above or in 3 below.

3. CMEA countries, mainland China, etc. (countries generally not covered in this Report because of the absence of data).

a. Members of the Council for Mutual Economic Assistance—Albania, Bulgaria, Czechoslovakia, Eastern Germany, Hungary, Mongolia, Poland, Rumania, Union of Soviet Socialist Republics.

b. Mainland China.

c. Cuba, North Korea, North Viet-Nam.

It is recognized that no simple classification, such as that adopted in this Report, can reflect the full nature of each economy. For example, industrial countries such as Canada and the United States are also important producers and exporters of primary products; some countries classified as primary producers, such as Australia and Spain, have significant industrial capacity; and, in a few instances, some countries classified in less developed areas may have relatively high per capita incomes.

Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.

For a discussion of some of the factors underlying the high income elasticity of imports in recent years, see Annual Report, 1970, pages 44-45.

The terms “relative export performance” and “export market growth” (or close synonyms) are used throughout this section in the context of the specific statistical measures presented in Table 16 and described in the footnotes to that table.

A substantial part of the 1969-70 rise in the U.S. deficit with Canada was attributable to the uneven effects of strikes on U.S. exports and imports.

Germany’s export market share was probably less well maintained on a volume basis than in terms of trade values; however, market-share calculations in terms of volume are not available.

With both exports and imports valued f.o.b.

Because of unidentified asymmetries in the reported trade statistics, this increase exceeds the concurrent increase in the collective trade deficits of the primary producing countries as measured by available data.

For a partial explanation of this contrast among industrial countries with respect to price relationships, see Annual Report, 1970, pages 54-55.

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