The key to global growth
These are not cheerful times for any of the world's economies. Mexico's debt repayment crisis is but the latest reminder of the strains many nations are experiencing because of depressed economic conditions. This is why the World Bank's 1982 report on world development comes as a reassuring note. Its cautiously upbeat tone is a welcome antidote to the gloom and doom often purveyed about the poor nations and should help the public keep a balanced perspective.
Specifically, the World Bank reports that the developing countries have adjusted remarkably well to the oil price hikes and other traumatic events of the 1970s. Moreover, despite a decline in aid, weak commodity prices, and other obstacles, they have a fairly good chance of sustaining relatively high growth rates during this decade. In fact the economies of the middle-income countries (with a per capita income of $410 or more) could continue to growth at a faster rate than those of the industrialized countries, even if world economic recovery is delayed. By the end of the 1980s some of them could be approaching the income levels of postwar Western Europe.
Even the low-income countries have made progress over the past three decades and are expected to make further gains in the 1980s. But, the bank confirms, the prospects of the poorest countries remain cause for concern and the plight of some, particularly in sub-Saharan Africa, are ''desperate.''
Wherein lies the solution to the unrelenting poverty of a large segment of humanity? Much may depend, says the bank, on giving higher priority to agriculture. In cases where developing countries have paid attention to agricultural growth, their economies have rapidly advanced and extreme poverty has largely been eliminated. This is in sharp contrast to the once-dominant view that industry must be the engine of growth. In the bank's words, ''The evidence is now overwhelming that countries neglect agriculture at their peril'' - a conclusion which needs to be impressed on the poor nations as well as on the rich nations providing development aid.
In general the World Bank is sanguine about the possibilities for boosting agriculture in the poorest countries. It notes, for instance, that even small farmers respond to economic incentives and can be highly productive. With better scientific research in the developing countries; with more investment in irrigation, transport, and marketing networks; with more rural development programs; and especially with agrarian and land reform, enormous potential can be unlocked for increasing productivity of the land.
Clearly it is up to governments of the impoverished countries to reexamine their priorities, as the bank urges, and make sure they are giving sufficient attention to raising farm output. Most of the sub-Saharan countries, for example, are allocating less than 10 percent of their budgets to agriculture. The bank also suggests that existing food distribution programs are often excessively costly and do little to improve nutrition; governments could therefore better spend the money on direct investment in agriculture.
President Reagan is likely to be be pleased with the bank's emphasis on the importance of domestic policies and on self-help, free markets, and incentives to the private sector. But he and other leaders of the industrial countries should not ignore the role that international aid must continue to play. During the 1970s total aid to developing nations increased, above all in the agricultural sector. Unfortunately, official assistance to agriculture has declined in the past two years - a trend it can be hoped will be reversed.
Protectionism is another stumbling block to progress in the third world. In an effort to adjust to changing conditions, many industrial countries - members of the European Economic Community, Japan, the United States - are tempted to maintain huge public subsidy of their own agriculture and to adopt various nontariff barriers to imports. If the economic gains made in recent decades in both the developing and the industrial countries are to continue, it is vital to resist such insular thinking and keep prying open the trading system.
Poverty, in short, remains a severe problem which calls for unceasing compassion and commitment. But, as the World Bank encouragingly reports, it is not unconquerable.