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Letters

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
March 1985
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Mobilizing domestic resources

In the September 1984 issue the Bank’s Senior Vice President, M. A. Qureshi, answered Finance & Development’s various questions on mobilizing finance for development; the ratio of shares ($3 billion) to generated commitments (about $95 billion) is more than impressive. But organic development is more in need of mobilizing indigenous human and financial resources than of pure resource transfers, which often lead to increased bureaucracies, financial dependencies, and weakened efforts to mobilize financial means within the country. Many projects, especially in the field of rural development, need little or no foreign exchange. It is therefore refreshing to hear that “really only a little bit more money” is needed. With innovative guarantees and adequate technical assistance, the Bank could, I believe, raise even more money for development within the recipient countries, while also creating increased responsibility for its proper utilization. This would complement the Bank’s services and should be included in the exercise to determine the future role of the Bank, because this area was certainly neglected in the past.

Heinrich Bechtel

Lindenfels, Germany

Mr. Qureshi replies:

I agree that a successful development effort must be based primarily on the mobilization of a country’s own human and financial resources. Foreign assistance should not be—and generally has not been—a substitute for domestic efforts. Over the last 25 years over 90 percent of investment in developing countries has indeed been financed by domestic savings. World Bank financial resources have provided a very small share of total investment in developing countries. The key is to use external financial support as a catalyst to encourage and support domestic efforts. The Bank’s recently proposed joint Program of Action for Sub-Saharan Africa is a good example of how this can and should be done.

A Fund-Bank merger?

What the vital “exchange” (September 1984) between Killick and Finance & Development’s Editor indicates is the complexity of the issue and the problem of an ideological commitment to policy prescriptions. For example, Nowzad states that some IMF-supported policies are “distinctly supply-side oriented,” and asserts that adjustment must be part of “an integrated policy package” that includes demand management. Killick questions the efficacy of the demand restraint approach and advocates “a cost-minimizing, growth-oriented framework.”

I guess both are basically supply-siders! However, the policy recommendations for adjustment in developing countries are generally market-oriented, while there is the reality of a dominant public sector.

The exchange reveals the necessity for continuing examination of the institutional evolution and role of both the Fund and the Bank, given the changing patterns of trade, payments, and development. Although there is apparent cooperation between these Bretton Woods institutions, even if it is not always orderly and effective, one gets the impression that serious consideration should be given to consolidating these institutions into the International Agency for Finance and Development.

Bernard P. Appia

Fordham University

Population growth

I read with special interest the article by Nancy Birdsall, “Population growth—its magnitude and implications for development” (September 1984).

I recognize her great competence with respect to demographic matters in the developing world but, with her permission, I would like to make a few points that, to my great surprise, were overlooked.

Her analysis of fertility problems has touched almost exclusively on material aspects. In my opinion, however, other more influential factors are involved in increased fertility, particularly inheritance patterns, the role of farm children as workers, the recommendations of the different religions that promote increased fertility, human pride in the number of children, a degree of reluctance in all countries to address sexual problems, and, finally, the physical and biological potential for reproduction in the Third World, which is not found in the developed countries.

Ben Jelloun jaouad

Casablanca, Morocco

Nancy Birdsall responds:

Mr. Ben Jelloun is, of course, correct that children provide emotional satisfaction. Many nonetonomic factors influence fertility and religious and cultural factors also play a role. At the same time, too, the economic gain (or a small economic loss) that children represent for a poor family may preclude any interest in having few children. In this sense, at least, economic factors matter.

My article was based on the Bank’s World Development Report 1984. An important message of the Report is that religious and other factors do not rule out effective public action to assist people to have the number of children they want. In every part of the developing world, including Catholic Latin America and Islamic Middle East, some governments have made significant progress in developing such programs. I hope readers will have the opportunity to read the World Development Report itself.

A “model” article

I wish to compliment you on publishing “The effects of adjustment” by Wanda Tseng in your December 1984 issue. It presents, within a few pages, the essentials of the problem in a form that is easily understood by the nonspecialist in the field of economics and, indeed, would be useful as well to the educated layman. Its avoidance of technical jargon and difficult mathematics is a triumph of comprehension over academic pretension. It should be a model for our textbook writers. I will use the article in my classes. I recommend more articles of this kind.

Herman I. Liebling

Bethesda, MD, USA

Update

In the article “Agricultural lending by the Bank, 1974-84” by Montague Yudelman in our December 1984 issue, the figures shown in the table on page 45 for World Bank and IDA commitments for agriculture and rural development by regions for fiscal year 1984 were provisional estimates. Final figures for several regions are different. These are East Africa—$166.8 million; EM EN A—$474.1 million; East Asia—$504.4 million; and South Asia—$967.2 million. The updated total is $3,472.9.

Publications from The World Bank

China: Socialist Economic Development

Three-volume set analyzes economic progress since 1949. Covers past development, current policy, and future options. Identifies problem areas. Annexes on the statistical system, population, health, nutrition, and education.

Also Available …

Rural Development in China

Dwight H. Perkins and Shahid Yusuf

Focuses on agricultural performance. Outlines successes and failures of current policy.

The Johns Hopkins University Press/The World Bank

China

The Health Sector

Dean T. Jamison and others

Reviews China’s achievements to date in improving health and in reducing fertility and malnutrition.

From the World Bank’s Staff Working Paper Series …

Agricultural Prices in China (WP 606)

Decentralized Renewable Energy Development in China: The State of the Art (WP 535)

Economic Evaluation of Investment Projects: Possibilities and Problems of Applying Western Methods in China (WP 631)

Economic Reform in Socialist Countries: The Experiences of China, Hungary, Romania, and Yugoslavia (WP 579)

Irrigation Management in China: A Review of the Literature (WP 545)

Recent Chinese Economic Reforms: Studies of Two Industrial Enterprises (WP 652)

Trends in Food and Nutrient Availability in China, 1950-81 (WP 607)

Worker-Peasant Education in the People’s Republic of China (WP 527)

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