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International Monetary Fund. External Relations Dept.
Published Date:
June 1975
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Seeking new perspectives

Secretary-General Kurt Waldheim of the United Nations spoke at the opening of the Second General Conference of the United Nations Industrial Development Organization (UNIDO), at Lima, Peru, on March 12, 1975. Here are excerpts from his address:

This year, in addition to the present meeting, we shall have the International Women’s Conference, and also the seventh special session of the General Assembly which will be devoted to development and international economic cooperation. This special session is, of course, the logical successor to the special session held last year and will be of even greater importance to the future economic well-being and political stability of the world, in addition to its effect on the future structure of the United Nations. All these developments will be of crucial importance to the future effectiveness and reputation of the entire United Nations system.

Next year, 1976, the United Nations will convene two other major world conferences on trade and development (UNCTAD IV) and on human settlements.

While each of these meetings is concerned with different aspects of the economic and social problems which confront mankind, they must be regarded as forming the component parts of a new global perspective, and of a new global strategy to deal with subjects which are truly global in character.

Furthermore, these problems are all interrelated, and they all affect each other in complex ways. Some of them have become so acute that the world community must face them on an immediate and urgent basis if we are to entertain any hope of overcoming them.

The very real danger of starvation confronts many millions of people, and the possibility threatens many millions more. Inflation has become a world-wide phenomenon affecting most countries, and is now combined in some areas with recession and increased unemployment. The fragility and, in some fields, the inequities of the international economic order have put the entire system of international trade and payments under severe strains. Such a combination of circumstances threatens economic and social stability in many parts of the world and in itself constitutes a new threat to peace.

There is now a much greater awareness of the fact that the global problems which confront us can no longer be resolved through national, or even regional, approaches alone. While the nation state is, at this stage in the world’s history, the principal executive authority, the nature of these problems requires the development of new international strategies which effectively fulfill the objective of the Charter to make the United Nations “a centre for harmonizing the actions of nations.” One of the most encouraging aspects of 1974 was that the need for such an international approach was accepted far more widely than ever before. Now, however, it is essential that we should move into the realm of effective joint action—and do so quickly.

It is evident that industry is a vitally important part of the complex system of international economic relations, and cannot be separated from the other elements. The sixth special session of the General Assembly last April recognized this in the Programme of Action which it adopted, and emphasized the fact that in any new world economic structure there must be a substantially higher participation of the developing countries in world industrial activity.

Industrial output in some developing countries has increased rapidly in the last 25 years, but their total share of world industrial output has remained at the ominously low level of 7 per cent for the last two decades. The participation of these nations in world trade in manufactured goods, although increasing, is still exceedingly small. This situation is understandably viewed with the greatest concern by the developing countries, and in the regional meetings which preceded this Conference they have established targets calling for a substantial increase in their participation in world industrial activity. The results of these meetings demand careful attention and discussion.

Industrial output in the developing countries could and should increase much faster than that. During the last 25 years they achieved a fivefold increase in their industrial output. There is no doubt that they have the potential to achieve even greater progress in the next 25 years. But if they are to do so, much more attention will have to be paid to their industrialization and intensified programs of international industrial cooperation will have to be established immediately to achieve this goal.

All financial institutions, particularly indigenous development banks, will have a crucial role to play in this expansion. But such a process must go hand in hand with the urgently needed expansion of agriculture in the developing countries. The situation varies widely from nation to nation, and from region to region, and each country must therefore carefully examine its development priorities in the light of its own requirements, and the world Organization must assist in devising strategies which effectively reconcile national and regional necessities.

This calls for new perspectives, the courage to admit errors, and the determination to face facts as they are, and not as we would wish them to be. It also calls for new concepts of practical cooperation.

“an atmosphere of shared concern and common purposes”

The importance of accelerating the industrialization of the developing countries, and the changes in the pattern of world industry that this requires, need to be understood and accepted by the developed industrialized countries. It should not be a subject for confrontation and conflict, but should be discussed and negotiated on both sides in an atmosphere of shared concern and common purposes.

Although the world economic situation contains many complex and serious problems, it also offers new possibilities which we must seize. Only as we realize the benefits of interdependence will we discover new opportunities for creating more equitable economic relations between poor and rich countries.

Defining the contours of world economics

The following are excerpts from a speech by Iranian Prime Minister Amir Abbas Hoveyda at the opening of the Iran-Europe International Economic Symposium on March 15, 1975 in Teheran.

Our world today, more than ever before, faces multiple difficulties. We are grappling at this moment with a series of problems of global scope; and no country, no matter how powerful or rich, can pretend to confront and triumph over these problems alone. The nature and the quality of the life that future generations will lead on our planet depends more than ever on the ability of all nations, large or small, industrialized or developing, to cooperate with one another and to prepare effectively for the future in the interest of all.

A concern for the future must lie at the core of every important decision. Certainly, the future cannot be foreseen, and many futurologists have met with resounding setbacks. But the future can be invented. It is, moreover, what responsible men and women in every field do and have done — even, perhaps without knowing it, in the manner of M. Jourdain — that matters. The new element is that it is now a question of profiting from our recent discoveries to foresee events, as Daniel Bell has said, to have an advantage over our ancestors.

Obviously, the thoughts which I suggest to you are not intended to provide immediate solutions to problems. It is simply a question, I submit, of examining the concepts, in order to better understand different motivations and opinions and to define the contours of the perspectives and choices which are available.

This may perhaps sound astonishing, but I believe that at heart the present crisis has even a positive aspect: it confronts the industrial states, willy nilly, with problems about which they speak, but whose real import they neither feel nor appreciate.

Over the years, in international forums and elsewhere, we have spoken of these problems. But no one ever heard us. We called for help. But no one gave it to us. Our appeals were scattered by the winds, and our cries of distress raised no echo. It required the petroleum crisis to awaken consciences. Analyses increased. And the results of international conference have at last enlightened the most recalcitrant.

The world crisis has provided evidence for the fact that the development, wealth and power of the industrial states have been founded largely on the underdevelopment, the poverty and the weakness of two thirds of humanity. However, these lessons have not yet been assimilated. A minority still seeks to determine the destiny of the world by refusing to share resources, means and responsibilities.

We have thus recently heard voices seeking to blame the existing economic disorder on the increase in the price of petroleum. They have spoken of the artificial, exorbitant, excessive and unreasonable rise in prices. According to their Cassandras, if these prices are not immediately lowered, the world will move toward disaster. We have heard talk of occupation, of seizure of the oilfields, of the cut-off of food exports to the oil producing states and I don’t know what else.

Such threats may impress the unknowledgeable. But they cannot convince serious and informed observers.

Considering that Iran is among the principal producers of oil, I must make some comments on this matter.

It is often said that the lamentable state of the world economy as well as inflation are the result of the readjustment of the price of petroleum. In fact, the rate of inflation began its upward spiral and reached astronomic proportions more than five years ago, thus eroding the purchasing power of the oil producing states.

“a new economic order based on equity, sovereign equality, interdependence, common interests and cooperation among all states”

Each year, the producers of primary materials had to pay the equivalent of a larger volume of their products to secure an equal volume, if not a smaller amount, of imports of food products, machinery and manufactured goods. This was a process which led, as we have said and repeated often in the past, to a systematic impoverishment of the developing states, while the developed industrial states grew increasingly wealthier.

At the same time, and in spite of allegations to the contrary, the increase in petroleum prices has had only a small impact on inflation. In fact, according to statistics produced by the experts of the industrialized states themselves, imported petroleum contributed only 0.45 per cent to the rate of inflation of the United States and about 1.5 per cent to the rate of inflation of other countries, while the general rise in prices in all these countries exceeded an average of 12 per cent.

In other words, the disorder in the world economy and in international money markets preceded the rise in petroleum prices and was essentially due to the poor management of the economy in America and the European states, and also to excessive consumption in the most advanced countries.

The increase in petroleum consumption at low prices, combined with the decrease in oil prices in the industrialized countries, constituted a major contribution to widening the gap between the poor and the rich countries. Thus the developed states progressed rapidly at the expense of the oil producing countries.

These countries, growing rich at our expense, paid no attention to the problems of the developing countries. They did not even consent to allocate 1 per cent of their gross national product for the development of the under developed states.

We, on the contrary, have always taken the problems of the developing countries into consideration. Since the readjustment in the price of oil became a reality, we have begun to furnish bilateral and multilateral aid to the developing as well as the developed countries, assistance to which I shall return. We are equally conscious of the need for recycling. But this cannot and will not come about except through a reasoned exchange of views and multilateral discussions. The accusations directed at the producing countries will solve nothing.

The persistent economic disequilibrium in the relations between the developed and the developing countries, however, is grave, and the process which continues to widen the gap between them so inexorable, that action can no longer, as in the past, be limited to simple corrective interventions or ad hoc measures. If we wish to succeed, we must undertake a concerted effort to launch a fundamental revision of the concepts and practices underpinning the international economic system.

Real structural changes will be achieved if we are prepared to elaborate a new economic order based on equity, sovereign equality, interdependence, common interests and cooperation among all states. In this context, it is to be hoped that the world’s industrialized countries will not lose the opportunities which are now available for cooperation with others in the search for appropriate solutions.

For its own part, Iran remains fully conscious of the necessity to assist other countries, particularly the developing states, without forgetting the industrialized countries needing assistance. I will not here attempt to give you a detailed picture of my Government’s efforts in this field. But it is perhaps useful to recall that the total sum of Iran’s bilateral and multilateral undertakings toward other countries has already reached a figure of $10 billion.

A nobel view

Gunnar Myrdal spoke about the emerging trends on the world economic scene in his lecture delivered in Stockholm on March 17, 1975 when he received the Alfred Nobel Memorial Prize in Economic Sciences. Here are excerpts from his lecture:

In recent years there have been sudden major changes in the world economy. They have radically affected the economic situation of all underdeveloped countries, though in different directions and degrees, and thereby the entire setting of the equality problem (among nations). For by far the larger part of the peoples in underdeveloped countries, these changes have been worsening their development prospects and in many countries are now threatening the survival of large numbers of their poor masses. The type of marginal foreign aid we have provided is clearly not enough to meet their barest needs.

The underdeveloped countries are therefore now proclaiming the necessity of not only increased aid but fundamental changes of international economic relations. By their majority votes they can in the United Nations carry resolutions like the “Declaration on the Establishment of a New International Economic Order,” passed at the conclusion of the Special Session of the United Nations General Assembly held in April 1974 to consider the emergency situation.

Particularly delegates from the group of smaller countries, that had already in the earlier epoch consistently shown more sympathy for the cravings of underdeveloped countries and who have also maintained or even increased their modest aid, have often voted for the most general though noncommital declarations.

And they have sometimes positively expressed agreement with the radical demands for a new world order, which logically must imply an infringement of their countries’ share of the world’s resources. They must then have spoken and voted without much sincerity, as they cannot have been ignorant about the fact that the nations they represent are not really prepared to give up privileges, least of all on a scale commensurate with their general promises.

As development is frustrated and living level brought downward among the masses because of the oil crisis and the food crisis, any population policy, which might be inaugurated, becomes less effective. And so the food crisis becomes goaded in the way of circular causation with cumulative effects.

In this situation there are certainly moral and rational reasons for a new world order and to begin with, for aid on a strikingly much higher level. In particular, people in the rich countries should be challenged to bring down their lavish food consumption. It is estimated that if the average American were to reduce his consumption of beef, pork and poultry by 10 per cent, 12 million tons or more of grains would be saved. This would mean making so much more food aid possible, saving perhaps five times as many million people as tons released, or even more, from starvation in the poorest countries.

As has also been amply demonstrated, the cutting down of consumption, and of production for home consumption, of many other items besides food, and in all the developed countries, is rational and in our own interest. This is what the discussion of the “quality of life” is all about. Our economic growth in a true sense could certainly be continued, but it should be directed differently, and in a planned way, to serve our real interest in a better life. At the same time, it would release resources for aiding the underdeveloped countries on a much larger scale and to begin with for solving the acute food crisis.

Real economic planning should be done in these rational terms. Such planning could help us to be more successful in solving the internal equality problems and would at the same time provide for a much larger aid to development in underdeveloped countries, in the first place, it could prevent the serious risk of human disasters for the majority of the poorest peoples in these countries. The blunt truth is that. without rather radical changes in the consumption patterns in the rich countries, any pious talk about a new world economic order is humbug.

According to present estimates as many as 10 million people may starve to death this year, and at least half a billion are hovering on the brink of starvation. It is against the background of the expectancy of world catastrophes that the attitude in developed countries has to be considered in moral terms.

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