Page 1

They wear coats and hats of iron. They do not stay a minute in one place, but walk here and there. They eat pieces of stone and drink blood. They give two or three gold or silver coins for one fish or one line. The report of their gangon is louder than thunder......their cannon balls fly many furlongs and shatter fortresses of granite."
Rajapaliya, 8th century
oNT TALK TO ME ABOUT MATSSE
Don't tale to ne about Matliffe, don't tale to me about Gaagain, or even
be earlenir painter van Gogh and the norman reclining on a blood-spread. . . be aboriginal bor by the great white bunter Maniff
it a gun with two not trils, the aboriginal
zified by Ganguin-the yphilis-preader, the yeloned oherity
Dora talk to me about Matire . . . be European style of 9oo, the tradition of the studio gobere abe made zorioztarn reaclinea, forever as a sheet of blood
all to me instead of the culture generallyBony Be Amrderer. Pere Assasio by the beauty robbed of arrage; so our remote villager the painter rane, and our white-mashed mud-but nivere platteread uairib ganfìre
Lakkaasa Wikk ramasinha. 1979

Page 2
INTRODUCING
WORLD DEVELOPMENT
A monthly series on issues that affect the lives of millions
1. TRADE
re: Nu Internationalist which has the joint backing of Christian Nid, Oxfamil and Third World
First.
I. Poor countries rect money to buy . Trade is theref gds froti brid which they need Gaincritl 'Assell for thicir own lle y el Car Tičīlit *"Ethic primary, ii
development".
inance Bo', if from their WI trade earnings.
-----------, ------TT 4. World trade is at the lonent based on | 5. 8ց% of thէ բ birgı irsinlıE power-which depends CF rivs m:t Erials ä you Have to cfler ' El tEn. 盟 etc. Of
had cgicy of Col.
Until recently, the Pir world has
ie with which to clo either. countrics are I just Ilt
products.
الســــــــــــــــــــــــــ
7. The lernard is also uncertain and is 8. The rich wo actually filling for Tany of the pg.or Proportin . world's products. One reason is E. raw material the rich world spends over S, cust of ordii Tilia year on research into producers made substitutes for natural products ill very still "After Eigh
produced by the Third World.
 
 
 

3.
25 -
OH
15鹦剧
1950 - 1955 1950 1965 - 1970
bly has said, trade is world trade has steadily declined from 1strument of ecolonic 30% in 1950 to 18% in 1970. To make Por countries alreally in atters worse, the price of their exports their own development has faller in relatión to the rising cost 'ı "Work fırınd their oykırı of their imports from the rich world.
ur: vitEl. As the UN 3. But the developing countries' share of
ബ
oor world’s cxpurts are 6. Supply of such agricultural raw initelike - fsee, teil, copper, rials can fluctuate wildly. Bad weather in this dependence is a can wipeout a season's work in the field. nial timics. Many poor Good weather everywhere can produce lmost totally dependent a sudden glut which brings world prices ir - two of thesc: maturali tumbling down so that you produce
Illyre il rid el III less.
is spending il decreasing 9. In addition, the rich world subsidizes its incrca.5ing incom: On its own agricultural products and imposes A large fraction of the taxes and limits on imports of raw matey chocolates goes to the rials from the Third World. The : coa, but they receive Common Market, for example subsiFraction of the cost of dizes its own failers in order to be
is. self-sufficient in agriculture.
(Ċart fired an ir-ride Frar rapier) -

Page 3
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At the Lij confider elding HI:H II
 

Number December 17
CONTENTS
COLUMNS
Diary of Events | The Economy 5 Banking and Finance 27 Technology 18 C-111.ditics so Foreign News Review
S S S S S S S S S S S S
COWER STORY
Towards full equality in the 21st century -Bargaining at UNCTAD
Gillage:Era 5 UNCTAD IN and implications for Sri Lanka
Гаудлдrg'ёiід 8. Thic changing international economic order
und UNCTAD IW"
"I Carpers; L 4 Third World approaches to the new intcy
national economic order
CCCCCLGLGLS S S L L TTL S LLLL S a LL LL a LLLL S S LLLLL L LL LLL LL
cCOmnic rile
Gooricitiakr zo Bargaining om a global scale-The Context
within which effective bargaining occurs
S S S S S S S S S S
E.
inging village in Sri Lanka. A many-sided coverage giving beral facets to this phenomenon
pment alternatives
Cole For Tulti-nationals
LL LLamaaLL aaG HH LLL HH LLLLLL LL L L LLLLLL TT S S LLL LLTLTL TL LHH CCL L S HLHL LaK SLaLL L L LLLLL LSL LLLLS LLLuuLLLLLL LL LLLLLS LL L LLLLL LLLLLS LLL LL LLLLLS LLL LLLLL LaLLLLL LLLLHHLLDHDHDLLLL LL LLL LLL LLLLLL S LL S L LLLLLLLLS LL L LLLLH LLLLLL LLLL LL LLLKLLLLSS LL LLLLL YLLTTLLLLLLLLK L LLLL cs with two pieces of writing one from the historical chronicle Riayaliya GLHHL LLStL LLLL S aLLLL LLLL LS u L LLLLaLL LLL LLLS S LLLau uLLLLLL S LLLLLL L aaaLLLL LLLLL LLLK mamaCLLLLL S S L LLLLL L LLLLaaa S LLLuuuLLaCCC LLSL #ish poet in Sri Linki speaking Loday with the new voice of וIIוך
m

Page 4
2
Ny.
DARY O)
The Central Freight Bureau was successful in getting the Ceylon-Continental Conference to reduce freight rates on coconut oil by about 2.4 per cent. The reduction will assist local shippers in improving their competitive position in the international bulk oil larket. Surveys for the first two locations for off-shore drilling in Sri Lanka's Northern Ta ters will be completed in a month’s tille, the Petroleum Corporation's Chairman announced at the opening of an office for the off-shore exploration project, A contract has been signed appointing Peixall in Pacific Inc. as consultants for the off-shore drilling programme. The Imports and Exports (Control Act) was amended in India by Presidential Ordinance to deal effectively with offences pertaining to imports and exports, including misusc of import licences. The Minister of Finance presented the Budget for 1976. This is the sixth budget of the present government. Developed countries as well as members of OPEC, attending an FAO meeting in Rome confirmed their intention to Illect the initial táirget of an International Fu Tid for Agricultural Development, of one billion Special Drawing Rights as originally proposed by Saudi Arabia, Iran and
the OPEC countries. The U.S. Senate approves a S3,100 million foreign aid bill, having sliced nearly S220 million intended for United Nations projects. The export duty on copra, coconut oil, desiccated coconut and fresh cricrinuts was abolished in respect of cxport sales of these items registercd with the Coconut Marketing Board. The U.S. State Department officially informed thic Director-General of the ILO that the United States was Withdrawing from the International Labour Organisation.
The price of an electric bulb costing Rs. 3.90 was reduced to Rs. 555 following discussions between the cofficials Of the Ministry of Industries and manufacturers.
Angola is officially granted independence, when the Portuguese High Commissioner in Angola proclaims the full transfer of sovereignty to "the Angolan peoplc, who alone are qualified to decide how it is to be exercised'.

F EVENTS
12. The 16,000 million United Nations plan to stabilise, world prices will be debated at the UNCTADSession in Nairobi Ilict May, the UNCTAD Secretary General, Dr. Gama ni Corca announced in Gencya. The scheme cnvisages regulating prices and supplies by establishing reserve stocks in the key commodities-coffee, cocoa, tea, sugar, cotton, rubber, jute, hard fibres, copper and tin, and guaranteeing developing countries stable earnings from their commodity exports and countering higher import costs caused by inflation.
12. The U.N. General Assembly admits the Comoros, a small archipelago of four islands with a quarter of a million people lying between Madagascar and the African mainland, as the 143rd member of the United Nations.
16. The Six Nation Economic Sunil it Conference in France reached tentitive agreement on new guide lines for world trade and currency exchange rates, The leaders of U.S., France, West Germany, Italy, U.K. and Japan participated.
T 7 Thic first consignment of citrockery manufactured by the Ceylon Ceramics Corporation för export to Kuwait was shipped fra 111 Colonibo.
Price control was re-introduced 1 a HLLtlLL LLaL S LaaLaLaaL S LLLLL S LLLLL L LLLLL S garinc and tooth paste and reductions effected on these items following discussions with Industries Ministry officials and manufacturers. 1 8 Finlance Ministers fra Til thirteen Ilmajor bil exporting nations (OPEC) decide in Wienna to sct up a multi-million dollar fund to aid developing countries, 23 The Minister of Trade left för Peking ta negotiate and conclude a bilateral trade protocol for 1976 under the 25 year old Sino-Sri Lanka Barter Agreement. 27 Three leading soap manufacturers agreed to ini ke reductions in their retail prices after a discussion with officials of the Ministry of Industries and Scientific Affairs.
The IMF has approved the granting of 10.8 million units of Special Drawing Rights under regular facilities and 21.7 million units of Special Drawing Rights under the oil facility (amounting to Rs. 2.85 million), according to an announceIlent in the National State Assembly made by the Minister of Finance.
El Cox, COM I RIVEEw, DECEM HER I 1973

Page 5
Towards Full
Equalit
Bargaining at UNC
The Well known American strategist and Futurologist Herman Kahn բTCdicted a few years ago in his best selling hook. The Согуing Wаралган SPer State that the Ist cintury Would be the century of Jippini, He: predicted that 器 in a few decades would overtake America ind Western Europe and would se yon have thic highest standard of living in the World. This bril, was Widely reviewed, discussed and was generally belit,Ted irl.
But a factor that Kahn had failed to Foresee was the dramatic increases in the price of oil lifat would be made by a section of the Third World, na inely the OPEC countries. With the fourFold increase in oil Prices, the Japanese rate of growth which had been soaring at an annual rate of about 14%, and which had given rise to predictions like those of Herman Kahn, went into reverse gelır. Consequently for the First time since the Japanese recovery, after the and World War, their growth went negative and Japanese statesmen were soon rushing to Arab capitals, Çılp il hand and head bowed low. This was a dramatic demonstration of the nature of the relationship of unequal change between Third World coin. tries and the affluent societies.
The latter's affluence was created by buying cheap Third World נןrDduots like Tubber and Petroleum and selling their products expensively to
Econostic REVIEW, DFCE BER 175
the Third World. . Conference in T. Illie Illt Wild 5 c3 Equis;- recognition of tl.
H
T
The Sen. hich III til and Development view of Gamani C ir prehensive ing iTimplement: tinnin oi Sessio 11 ha 5, iri Hui Colli Illinity to Illeg
ive step sor wird іп гccenт уeяг5, be
Before delegates together in the Ciri rrë, stimi i the then will already h intensiv. ilegti tij indi riducer C: Cinference in inter Lip-ration Ariel elevel This delegations if the Grip of Na milia, vykre r1will cirile togethic mitters which, fu he alien up in Nii
LlNITAL) I' tä 18 A Inique twent internil Eitt il carnim in Eritrill Leiritti in III-III of the raid have been under sileirihle ti T: EE the Liniel Nations
The chances of results it Nairythi i for the first time, a tiating session i til Conference meets. tri- 8 vivi || HELI - Lih
SS
 

三
the 21st century
TAD
The United Nations acle and Dicyeluphed in I 9 GE with is fact. Its Thail
HE ROAD
inspiration initially came from the Latin Americans whose pioneering efforts showcd the falseless of Conventional analyses of trade. Thic
TO NAROBI
Special Session of the UN is highlighted in many of the issues in up at Nairobi, where the fourth full UN Conference on Trade will rect from i to 28 May 1976. Although its results, in the Corea, UNCTAID's Secretary-General, do not necessarily reflect LLLLLL LLHL LLL LLLL LL LLCLLCLLL00S LLLLL KKLLLLLLL LLLLH LLL F decisions which have ill ready been taken, the Seventh Special 5 apiniun, demonstrated the politicul will of the international otiate certain key issues. This is a significant arid construchich can help to break the apparent statemate which has arisen
tween the poor and the rich, over development problems.
Frt in 150 countrics get Kenyatti Conference pressing issues before tive been subjected to 15. Het weten cilins LIIInter Intries at the Piris nationiil economie coepilent in December, which are incribers 77 will also III eller in yhole Group of 77 for II diselission if ir trion rhs later, will
hi. n, therefore, be seen whit:H will allri W. the unity to consolidate :gotiated programmes political issues that |iscussion for LL CÓIli withii Find outside syst it.
achicving - ccaricrete re increased because, pre-Conference negaking place before the in this session, coulopportunity to table
LLLLGGLGLLLLLLL L S LL S LL S LL L S LLLLLLaLLS they want decisions to he taken. At forEiner UNCTAID C. Inferences, the Limnie vias ilways tuj shit to conte tij grips with such proposits and frequently, therefore, no decisiotiš vere ILLched, 鬣 dellegates Inlet for the final negotiating rounds in Nairobi, however, there will liet ample LLLCCKS LLaLLaa LLLLLL L L LL H aK LLL between the end of the pre-Conference session and the beginning of UNCTAI) IV, during which governments will have in opportunity to consider the proposals
id.
The provisional Conference agenda is short and includes nine major concerns nfUNCTAD, Within each policy area, specific issues for negotiation are clearly identified. It can be expected that the attention of the international community will be concentrated particiularly on två".) item5 : LUNCTAID's integrated prograi, rin me for con modities and the debt burden of the developing countries, which threatens a minumber of the T1 with Ea slow-dowy or even a standstill in their economic progгс53,
3.

Page 6
Himnin eHearts of UNICITA) siflice: then have been to unite the Third World against exploitation,
The Incxt UNCTAD conference will be held in Nairobi in May 1976 and will be crucial for reversing this exploitative relationship. The conference coming in the wake f similar ones crlier like the United Nations conferences on Environment (Stockholm), Population (Bucharest). Ray Materials and Development (New York), Food (Roule) and the recent Special Session OF Elle UN Carl the New Economic Order is a Pre: to the new Third World stand that will be taken at the colling Non-aligned Suminit in Colombo, En November the Sri Lanka Associaltien for the Advancement of Science held in conjunction with the UNCTAD, a five-day seminar on the possibilitics of the New Economit Ortler.
The UNCTAD Secretariat, in a background note, emphasises tte concept of collective self-reliance for the Third World as the framework
within which bar; West could be carri process is not els Correct strategy 15
FC. El 15 recen 2nd, at the UN C the Western indus either abstailccl. fr. opposedl a resolu change trade and ir betyreen rich and Only two weeks industrial Illtinis
what was lescribi up' operation to
to resuscitate their El Hill Tit 5:te:Tl der the Problems
wTarlu litt lieli T 5 LIIT:
In the following ve: FELIS, Oml Sir 3 T e: points and issues bargaining that Seminar, a basic being that UNC. very different kin the Previous One
EXPORTS: VALUE, UNIT WALUE, PURCHASI AND ILLUSTRATIVE PROJECTIONS FOR 1975 B
Exports in clusternat lars ( L-allow iiri S billiari)
T I
(1970 = 100) I75
7.
*"י דם 1.
= I 17
I75" ** דפ1
Export volume index 17 = 10)
17 17
- - - Export unit value inder
Export pшгсltasing power İıltı:
ま
TITI 38, si it. 10.
158 翌9
Éi. It i I Ĝo;
|ჯნ 197 81 187 366 IS 379
L3 | 1 !
II.
Worce: LUNCTAE) secretaritt estill illes- (i) The three la

gaining with the cd out, That this but depends on borne out by the tly as December eneral Assembly, trialised countries öm yöting Ünı Çif tion designed to vestiment relå till:3; | poor countries. earlier six leading met in Francc in բd as a "g:İnging consider measures r iiaiiliililg economics el inclincd ti) pinԵՒ էիt develաբing: mit (See page ho),
five contribu Lu LiCl5 of the main view on the contract of emerged at this joint of agree lent AD. W. will be a of initial Froil
NG POWER AND
Tradic Trends UNCTAD Secrctariat's Wiew
A Timore optiministic hypothetical set of calculations for 1975, made by the UNCTAD Secretariat, shows that hic terms of trade "Would decline sharply in 1975 for all groups of developing countries, with the exception of the three large low-income countries and the fast-growing exporters of manufactures which however remain far below the 1970 level. The index of the purchasing power of exports for these countries wrtյlild drop to around the 1970 level in 1975. In Particular, the cxport purch Asing power index of the developing countries with a per capita income of less than $2 $c would show a marked decline from the already low 1974 figure, reaching al level 19 Per cert below that of 1970. (See table below).
The bleak trade outlook presented here is likely to be reflected also in a serious dampening of the real income growth rates for most of the cle, eloping countries in 1975
WOLUME 1975 AND 1974
Y MAJOR DEVELOPING COUNTRY CATEGORIES
A II other developing countrics
Renaining coLintries
Cos whic 크 of which 玉主 높 많
. E リー
李 玉主 温 。蛋 *王芷 권 은 龚。盖垂臻 O Z - 표조 ー 空 圭。 H &G3; &;ğtar3-| r:5* H "G5~2-
É: 16.3 գն: العالم = E If, II 3. 보로 후후- 로
Tգն II. | 그 王莺引 TH=" 器 LO
I 로 후 로 II 15 후후 1 78 Т95 2 דדדC- T-- 18 176. 贯博卫
1. I I 후 Lն: 후 II I T 87 3ד TI Lf) l 구 G
S. 후 T후 .1 דלי
II. 1. L. L113 דם
18 1ат 후
ge low-income countries,
s: Hard-core" least developed countrict
(b)
Ecosya:: RIVIEW", OFICIEM HEIT 1975

Page 7
UNCTAD V and
for Sri Lanka H. A. de S. Gunasekera
Pyrror Girarekera i Sarag, சீேர நரி ச#g r Er:
நிர்ே.
UNCTAD has performed the role of catalyst in organising the efforts of developing countries in their legitimate demand for a new international conomic framework based on the freedom, independence int sovereignty of nearly 150 nations Of the world. During the course of history, international economic |- tems have been largely the creation of a handful of nations which had the military power and the economic Power Lo impose their will on Smallcr nations. Thitage of Empire has gone. We live in a more democratic er in an age of the common man. It is true, both of individual nations as welias the cntire community of nations.
Decisions taken by a few are being superseded by decisions taken by the many; in other words, by the vast majority of nations representing mankind, both rich and poor. UNCTAD has played a crucial role in Ρτανidiπg points of focus in the long struggle to achieve a desirable international economic order, particularly for the developing countries. In terms of the hist of Organisations, UNCTAD is still a very young organisation. Its task has only just begun.
What we see today in the form of demands for the establishment of a new international economic order is nothing less than the demand of the depressed and oppressed nations of the world for a framework of laws, rules and regulations governing the international economic system. Over the years, the task of building up A systcIII of law and institutions within each nation has been tackled fairly and satisfactorily. This has cluded mankind, however, in the international context. We see today the stirrings of a movement to provide a global apparatus of law in various spheres. In the political sphere we have the rudiments of a system of international law. There are institutions to conciliate and arbitrate on matters in dispute bet
ECONOMIC REVIEW, DECEM TIDLIG 1תדפ
Implica tWern flations.
sphere wear: fогmulatiпg a
rules made by t and ot Formu others. The wr Tlation til econo clerged after t lay in the fact th of the efforts of I think it is gene global economic of which we ar, served the worl that it ensured : ссопоппу, during time. The benef World economy
Centrated among While it is impo tсопопnic expans system that willi of a proper and the benefits of s should also inai. of priorities, whic Wasteful features
Concern with if
The debate of a new internatio takes place at a grāfēr 15is siP between ma
IIII- llestigl which was so luci ing thic Proceeding Conference was clarification of a Hefween mankind and natural rest The old ection conception whate to growth, Scier may have the nil. questions arising Of non-reflexible is not the whole There is also the q testion of life crelsingly the con loping and develop Se:T""W":itionisEs: tHWolved in working life styles which by Han lind with quality of life, Ice cularly appropriate developing countri: ly canno imitate Conspicuous cons

tions
lil the economic IOW in the lidst of Corpus of accepted hic Parties Concerned lated for then by takness of the interIllic system which he last World War at it was the product Lilly a few countries. rally agreed that the system, the decline all observing, has l to solic extent in lil expanding world at least a part of its its of this expanding Were HOThever coia few countries. tint that we ensuite ion, We also inced a clude in it clements just distribution of ulch expansion. It ntain the language h will climinate the ftheaffluent society.
styles the establishment of |al economic order time which there is less of the relation1 Arild flature. The f the Environment dly elaborated durs of the Stockholm Iothing less than a new relationship On the One han rces on the Gther. sic Carder had no ver Of a Fly “limits *Ce and technology *Fins to tackle tie from the depletion resources but that of this problem, Liality of life. The styles is now inCčrn of both deveCd: CCLIII tries. CorOrld over are ing out hypothetical can be sustained out reducing the Insider this a parti: exercise For the 's als they obviousthe patterns of limption of the
N
afflient CCLIntrics. Moreover, the developing countries have to provide the jobs for large numbers of their il Circa sing Pಿಜ್ಡ ital tir The When they are faced with a severe scarcity of capital resources to provide the wherewithal for employment-creation. The subject of Science and Technology is a maior area which will concern UNCTAID IW and I would think that this most appropriate field should be considered by the developing countries in the context of their concern with life styles, employment-creation, income distribution and integrated rural development for the developing countries. Only then will it have a significant meaning for the vast majority of the poorer populations of these countries.
Commodities crucial
A major area of UNCTADS concern is that of commodities. This is one of the key development issues of our time. The role of commodities in the economic development of the developing countries is crucial and UNCTAD's continuing interest in
this subject is most welcome. As a
result of the recent energy crisis, there is a greater awareness Η ΠΙΟΓιg both developed and developing nations of the importance of commodities in correcting the imbalance that exists between the North and the South; between the "North
at represents the world's developed or industrialiscd countries, and the “South' which encompasses the less developed countries, ranging foll the newly rich but non-indus trialised members of the OPEC, to the poorest and least developed countries of Africa, Asia an di Latin America. The potential exists for the countries of the Third World to obtain greater resources through coinmodities. This is clearly shown in the fact that a 10% general rise in price in real terms for commoditics exported by them will more than exceed thic total resources flows in the nature of official development assistange (ODA) which they now receive from the developed countries. UNCTAD's integrated programme on commodities is an imaginative approach to this question. In the international sphere, it obviously takes time for this sort of radical and innovative approach to be imple mented. It requires a political will the dimensions of which we have
5

Page 8
not so far witnessed in the global dialogue that is now talking place.
It is therefore appropriate that UNCTAD is pursuing its ongoing work om individual Commodities 50 that such a disaggregated approach could ultimately result in an aggregation of principles which could ultimately be formulated into a Gencral Agreement on Commodities. I would consider UNCTAD’s proposals for a Buffer Stock Scheme and El Commonl Full EIO - Francco such buffer stocks is being within the power of developing countries to bring about. It is most important that in international bargaining the developing Countries should consistently and continuously Foster and strengthen its growing solidarity by the establish ment of micchi nisi Ils for this purpose. The Dakar Conference om raw materisIs constitutes in this context an important landmark in the history of relations among developing countries. We should now pursue the achievement of those good intentions expressed in the Resolutions at Dakar through the negotiation of substantial agreements at UNCITAD. I W. Our ow i Minister of Finance speaking at the 7th Special Session of the United Nations, made an imaginative and realistic proposal whcin hic suggested the use of gild in the IMF reserves, which are now earmarked for disposil, to finance the Buffer Stock Scheme, as enunciated by UNCTAD. I would like to bring this proposal to your attention. If the developing countries are prepiited to sct apatirt a portion of the funds accruling to them through gold sales, the UNCTAD Fund for the financing of buffer stocks could easily become il reality very soon.
Before I leave the subject of commodities, I should like to refer briefly tu Elie COIIIIlolitics of interest to LIs in Sri Lanka. Two of the five coilmodities isolated by UNCTAD. For carly action under the Programme, namicly tea and rubber, account för 2/3rds of Sri Lanka’s export carinings, and the Programme is clearly of as much importance to Sri Lanka as to any country in the world. In this context, let The refer briefly to our OWile:ECIIC lice.
Firstly, how have the earnings from Sri Lanka's exports of tea and rubber behaved over the last decade, or so?
6
In terms of ex answer is casy. Fr. for example, expo io9, and those of by 27%. Fluctu quantity were sm: about their trend rubber, respectively
How Prices moi to determine, and they are measured rupee Prices we pleasing answer tha increased by 59%, a by Ic32%. If we usi dollar SDR price, satisfactory: a fallo a rise of zo'% for ri
This, however, how the purchasir two major export. period, Our cispo only of benefit to permit us to purch Our export PrICCs C be meaningfully cy
From 1962 to prices of ourt in fact fell by 7 -dramatic f standards.
量 of import prices, an index of import геal prices of tea i fell by 71%, and 5. by any standards it is realised that TEPTIC5C1E3 til Il 4 Wcr: of declinc of Io%
It might lie that 1974 prices I have extint of the dicci some extent, but tea had already f of its 1962 value i. conditions of 1975 far short at 47%.
Compared to tuations in price For tea, real price an average of less trend, rubber by a
When assessing commodity policit nature of past pri

It quantity the In 1962 to 1974, s of tea fell by uhber increased ions in export ll: 3% and 6% lules for tica And
cd is far harder lepends on how If we look at btain the very the price of tea ld that Of Lubber the low familiar le Tills Wer is less 18% for tea and bler.
Hoes not indicatc g power of our fired over thic its ultimately arc us because they a se imports, and an therefore only pressed in terms
974 the Fea 2d and rubber 1 % απd 58% alls by any
Standardiscd by
prices, we sec that Il rubbscr il fact %-dramatic falls particularly when the figure for tea. ge compound rate Per Illum,
ght that by taking over-estillated the le. This is true to the real price of illen to just 42% the more normal | Rubber wis mot
his dccline, fluchave been small. has fluctuated by than 6%, about its
out 9%. the relevance of in Sri Lanka, the e Thow eminents and
likely trends must be kept constantly in Imind.
In talking of price in ovements, I have, tal-kedl as is colwicritici mal irn quantitative terms about long-run price trends and short-terill fluctuations. This leads Illic on to the
second aspect of commodity earnings
which I would briefly like to touch LIPIDIl.
Implicit in most of the recent international resolutions pertaining to commodities has bcell an acceptance of the need to change the terms of trade in favour of the less developed countries by increasing the prices of the commoditics which they export compared with the prices of the goods which they import. Yet this resolve has invariably manifested itself in proposed measures aimed at the reduction of commodity prices fluctulations rather than at the long term increase in price.
Take for example the Interin Report of the Commonwealth Expert Group—The McInture Report. The Report sets out eight general principles which it considers could be applied in working out it detailed commodity policy. Seven of these are directly concerned with or would result in raising the real value of COITl modity exports; on: is colcerned with commodity price stability. Yet in the discussion of Possible measures, the Report devotes three Pages to issues of stabilizatiön, one page to indexation which they Scc– ait l'est as a micans of Illaintaining the real value of commodity exports, and makes no mention whatsoever of increasing the real value of commodity exports. This is certainly inadequate for the developing Countries.
The issue of commoditics has several dimensions to it. It is on the production and export of these contmodities that we in the developing countrics depend for our exterial resources. It is in relation to coil 1110dities that the IMF, the IBRD and the various forums of the United Nations have talken up the question of cornрслsatory financing. There have been notable developments in this sphere. I would, however, consider the initiatives so far taken to provide the necessary compensation for the poorer developing countries to Illect their day-to-day commitments as being
ECorio:IIE REVIEW, DECEMITIEil. I 1975

Page 9
inadequate for the achievement of even extremely limited goals. The balance of payments of the developing countrics havic deteriorated to an extent that the poorer countrics are now facing problems of a magnitude which threaten their very survival. At this point it is relevant to question the criteria adopted by the IMF in detcrimining the grant of balance of payments assistance. Much has happened since the Breton Woods pioneers talked of "fundamental disequilibrium'.
UNCTAD's latest proposal for the creation of a further oil facility is most opportune, Time is however of the essence. There should be a sense of urgency in pursuing a proposal like the Development Security
Policy. These are areas of international action which brook no
delay. The 6th Special Session of the United Nations identified a programme of action to benefit the most seriously affected countrics. Within the last two years, there has emerged a 4th World of Most Seriously Affected countries of mot less than a billiÖTl people, incarly one-fourth of mankind. In all the proposals of UNCTAD for croInnInnoċilitics and for tlnc improvement in the terms of trade and increased resource flows, priority attention should be diverted to this one-fourth of the World's population. It is an unfortunate fact that South Asia is the region that has su Hered most as a result of recent international economic development. The 4th World is not far away from us. It is very much here with us on 3 ur doorstep. It is also an un fortunate fact that some of the poorer countries are not necessarily countries which have economic significance to the devicloped countries. These poor countries are mot always well endowcdlin essential raw laterials like oil. They are in fact even short of the most basic of constities such is find. Their per capita incomes arc so low that they do not constitute major targets For direct foreign investment of the developed countries. They do not also provide substantial markets to be provided with special scherings of assistance from both the developed and the richer developing countries, motivated largely by a humanitarian
purpose,
One of the encouraging features in this regard is the recent so-called
ECONOMIG REVIEW, DECEMBER 1975
"powerty orier policies of des that such puli needs of the would consider aid policies of d far as they affect are complement sive of one : prices for conn that benefits a richer develope larly those cơ Production of II understall that
cial Session of th dexation Was bt. il terms of the er: and finirlerials al II agricultural coIII can be inted their filia in thrus poorer developi Lannt benefit
creases in the p they export. I
WΗ αξ ίς Πι political wil ugh age-old develop fle policies to
challenge of
Connectif 1 to re the interesting the Lome (Co1V clerients in this arc certainly us an improved r developed and d Ulc55 conventi globaliscid they Lut:Lrc:15 0FFrict loping Countries solidarity of the is low sufficient their mutual in not possible for
Lflies try weakan L ferential árrange tend to le tij si
In Aid policy t0 tille PealT50Il t: of GNP being cl loped countris:5 target has not b

litation' in the aid reloped countries, so ties meet better the potrest countries. I that commodity and eyeloped countries so I developing countries ary rather EHarl excluanother, Improved locities will ensure CCILle mostly to the d countries ParticulIII tries rich in the letalls ärid minerills, I at the recent 7th Spee United Nations, inting thought of only sport prices of inctals not of prices of modities. Aid policis I 15 Luchi fashiron that t is directed towards Ing curi tries which from immediate inrice of commodities would like in this
nau 2cessary is the to break throPrejudices and sible economic meet the new OL"r" tres.
fer in Particular to levelopments under ention. There are
Ctrly crition hi-իitii sful in establishing ilationship between Eveloping countries. 15 of this nature aire r: b (3Lind to con5tiIl annong the deve
themselves. The leveloping countries y strong to identify ETC:S ES 3 ) Lihat it is he developed counis solidarity by prelets which could Fil It tIt iii.
e have long referred rget hք a, I per cent verted by the deveas (). D. W. This El cliewed. It is
still around g. 3 per cent. 1 Would |ilçe to raise the fissue here whether it is not possible at least to get the developed countries to diver tha amount of resources, which they would be obliged ideally to channel to the poorer developing countries if they work on the basis of a global 7 per celt taiget Aglobal 7 per celt target would involve an increase of more than U.S. S10 billion from Present levels-more or less a doub ling of aid levels. But if one cosiders only poorer developing countries as an urgent target, and with only half the population of the developing countries living there, an increase of aid by U.S. $3 billion might Tincet their urgent demands.
I think that we should particularly address ourselves to issus which should be raised at the Proposed UNCTAD Conference to mitigate the debt burdens of PC ԸTCT developing countrics. In this connection, it has to be borne in mind that all foreign aid, CDקוחensatory financing, the Oil Facility, the Third Window are at most stPgaps until very fundamental solutions are evolved. In the search for fundamental Solutions, it is meccssary to identify the causes of the present crisis. Amongst these causes, two stand out prominently, i.e. world inflation and cartelisation. Indeed if developed countries control their inflation about half our problems will be solved. The establishment of an automatic link between additional real resource transfers and increased international liquidity is another arca for priority action. The reform of the international monetary system concerns UNCTAD intinately as the climate for development is grievously affected by the vagaries of monetary relationships.
Although the prospects for Trade and Economic Co-operation among developing countrics are enormous many of us have been content merely to pay lip-scrvice to the idea. There are complementaries in Our economies which lend thensclves to a greater degree of integration in trade, in shipping, in industrialization and several other fields. What is necessary is the political will to break through age-old prejudices and develip Flexible economic policics to meet thic new challenge of our times.

Page 10
The Changing internatior
Economic Order
Lal Jayawardena
Pr. styrgårdefra is Mere far, Mirirty of Friarre
I should like to take literally the thrust indicated by the title
iven to my address, This is, "The Changing International EcoTomic Order and i UNICTAID I W”. and it carries with it the important implication that UNCTAD TV ought to be a very different kind of animal from previous UNCTADs, and that this has something to do with the course of ciconomic events in thic last few years. If that is what is expected of me-and I have chosen to interpret that unilaterally-then I think it would be important that we try to take stock of what previous UNCTADs were about, what they tricid to do, and what they succeeded in doing. I suspect I was called upon to discharge this particular role because in one capacity or another I have had a great deal to do with all those UNCTADs, first as a staff member right at the beginning, and subsequently in various national capacities. But I think it is important to get an appreciation of what happened in the past before we go to UNCTAD IV.
UNCTAD'S sold Goals
As far as what I may call the old goals of UNCTAD were concerned, there were really three elements that deserve mention. The first of these Has been the focus on what has been called the trade gap of developing countries. I remember at UNCTADI this stood at something like zo billion U.S. lollars, In other words if by 1970, and UNCTAID II in 1964, the international community could not come up with a combination of trade and aid measures that would transfer the equivalent of zo billion dollars to ဒို့လိုါးမျိုးမျိုး countries, then the growth target for that particular development decade of 5% per annum growth in the GDP could not be realised. That was the first major premise of UNCTAD, of all UNCTADs in the past,
8
and UNC
The expectatio the second elem about this trans a sort of gei persuasion. I do sort GoF intervenitio used to make in L. days. His main b of this was going developing countri gap really did not r development assist we now," have; al II thinking of that tin no more tham Cộnē= the incretent in commodities expo: countries to devel. other words, if | reduced to permit by developed Cou as one-tenth of I exports of develop this, together w assumption about done the trick. Erust of all Ele was, "this was goir very little indeed
And the thir chiaracterisel thros that when dey backed Dr. Prebi of appeal they ahead and mobi sources. So it ding-dong match. countries were as very little indeed
| COLI 1 trics Were si
cannot give you Pottage yoll arc a! and put your ow and then you w position to bent trade regime'. were the goals UNCTAD II lnd
one "W"ay or anoth
The Results —UNCTAID I
I have only u UNCTALO II. IN UNCTAID IL-WI

al TAD W
-arid ent For bringing Fer—was through tle process of 1 railchber the that Dr. Prebisch NCTAD in those Iron was that all to be costless to 35. THE za billiofı squire even the 19, ance target which | ill tells of the leit really required tenth of the 19, of the derländ fUr ted by developing ped Countries, In arriers had been of the absorption intries of 5 little % of incremental ing countries, then iÉh 50me Thurlest aid, would have So the task in thic ppeals in the past ig to cost you chaps
cinelt that discussions Wils eloping countries sch in this kincl were told "go Lisc dolestic rcEccarline i gCort of The developing king for something and the developed aying, "Really we w latever II less Of king for; go thead in houses in order ill really be in a Fit from a letter So those three that UNCTAD. I. UNCTATO III in er developed,
5ed illustratio1s CF w for the results of lenever anyone asks
this is
For something by way of assistance to the Third World, they usually get an institutional framework–å committcc or a set of committees. So that was what happened in LINCTAD. I. A new mechanism Wils born; there were icobs for the boys; some of them were good, some of them perhaps not. Anyway within that framework you had a set of studics. That is Elle second sort that gets thrown to developing countries when demands were made, and these studies were enormously useful and helpful.
Let me list just two of three of them. The very first one which comes to mind was the study of the state of developing countries in international monetary reform, and that really was the first occasion when the famous link that Prof. Gunasckera talked about came into international attention. It was an expert group convened by Dr. Gama ni Corca, then my boss and low SecretaryGeneral of UNCTAD, which gave birth to this notion of the link but drawing again on ideals that Were turned out before- or 5 years before that-by one or two acadeImics,
The second idea that Was tossed out at that time was the notion of general preferences. People had been accustomed to the idea of Commonwealth preferences, i.e. preferences granted to a particulargrouping of countries, and the idea was that these should be generalised and made available con al across-theboard basis to all developing colntries-al tari FF clut across thic board to every developing exporter.
The third ide-and this is relevant in the context just mentioned by Prof. Guinasekera-was really Dr. Prebisch's version of Dr. Kissinger's "Development Security Facility". But the basic idea was the same. When developing countries draw up their plans they are obliged to take a view of two things-a forward view of their export earnings and a forward view of their aid expectations. In the imperfect world we live in there is nothing very much you can do about aid except live with it on an annual basis. As far as exports Were Collcerned, the idea at that time was to give an insurance, so to speak, to the
ECOFIJ: HIC REVIEW, DEEEEEEELLI. 1971

Page 11
expor Lexpectations underlyinga development plan. If thost export citբertations were unfulfilled, then the plan itself would have to be scuttled, and thát was the idei. Which Wis suhjected to intensive study, And for reasons I shall come to subsequently, it was an ideal which remained stillborn until Dr. Kissinger chose to give it a modern dress and a new nime called "The Development Security Facility" designed to meet precisely the objective that Er. Prebisch ther hal in mil. Si thics e Wcrc LINCITAD. It's ideas that were on the agenda for study.
- UNCTA)
UNCTAT) I was a failure Elitsically. It was sitch a failure that Dr. Prebisch quit; he gave up. One of the things he was pressing for at that title which I hatre alluded to-the Supplementary Financing Schcnic which HL HCl i stulie La deith betwr crefi UNICTAID I annicl UNICTIMD) III—was thandoned for lack Of the necessary finance. The question of Preferences was taken a stage forWard, a firm Commitment was made sín principle but nu action yet; the action took place between UNCTAD II inlid UNCTAD III, and that action Again Canbe Viewed as moet bocing in it my way a real circession to de vc loping countries. The sorts of qualifications made to the appltcation of the principle of general preFerences were such that it could be Argued that no ni åjor Hurden för adjustment was imposed on the developed countries that were called upon to absorb imports. From the developing countries. There were Certain cut-off limits to exports that could be: Per II1missible. S preferences was no real gain and supplementary
financing was a "dead duck'.
—UNCTAID HLE
As far:ts UNCTML) III was ColCefined, the emphasis moved to a slightly different area. If developing countries could not at least get the sorts of minimal things they were asking for, then perhaps they might be allowed the luxury of rubbing shoulders with the people who were taking the decisions. Decisionmaking internationally became the major focus of UNCTAID III, and tha L in the specific contcxt of international monetary reform. As many of you will he aware, international
ECOS, EJAL: RELJEV, JEFE, HEI I
III Conletary reform siste cu table taking deci to them and then the rie:St IF Ell: 1 a ffrif arro yw prif i'w dutifully endors h;1 re-and his COIl tributed the -yaš what can "coil littgg of loped countrie:55, cleveloped counti Zealand, and 9 el who were then I of sitting in onc of international would hopefull intert: És of devel account, Sr., the of UNCTAD really the perm for developing c. iiiI i ii process iif vital Ilatterg-ini
Titters—hici the prerogative c. Hiյll successful : sif institutional m :The tij in a mij Eelik issue. Wil up in UNCTA. considerably, A. had gone into it ScCrCEiriat all i instead of gettin Point "We gitt a {
Dangers of first fra UNCTA
Si thir 5 ums Li- First three in trying to lot way of doing have done, I something which the 7th Special Së Assembly by an Himma. Eskjoeld F a group of inde working under fJLiridatiri scit LP first Secretary-Ge. Nitti E35, i ned this i El Tirl Will Future. It Says th Il-Litwrimid Lili ir 1 clicancy, the elang LINCTADs, the nalistic partnersh thic real liitLiric CF and the real dan Bank's pressing bution with grow

in those days contries sitting round a ions on matters put placing them before Torld community as hich WTC:null theil be d. What we did s where UNCTAD lajor political thrust Le to be clled the i” (i.e. the Io deyeone make-weight y, Australia or New eveloping Countries) termitted the luxury room to take it wie "i" monetary isSLI es that hive taken the oping countries int) major break-through I in Santiago was ission, if you like, Juntrics to take part decision-making on ernational monetary Either tro lac Eocen If the richi COLL litricts. that Particular picce achinery was I shall menit. By that Limic ich Had Heer startel D I hal matirel great deal of work in the UNCTAD In the Fund. But g the link at that
Immitte,
ls
up the results of UNCTADs, and k around for it that better than I was driven try was presented to ission of the General
utfit Caled the Dag
Jundation, This is Jendent resciatiche T3 the auspices of a
in tle niile of the lefill of the United s what it says which
Illust Lvoid in thic at the Third World Stitutionalisel III ener of Lhe First three
illusion of paterip without tears, the Pearson Report ger of the World theme of redistrith ill thic sterile
construction of desirable year zood Inodels without specifying concrete initial steps and subsequent scquences for moving towards them as exemplifield in the Lima Chiarticir of UNIDC). This, in capsule form, is an indictment of fast approaches to the question of international economic diplomacy, Whether il UNCTAD) por cliseWohlere.
The role of UNCTAID TW
This brings nie, to the new". Tulc that I think-and this is a personal view-would be expected of UNCTADIW in the context of the changing international colonomic order. This role I think, is again having three major elements. In a large measure-and this is my first point-the problems are un changed except in magnitude and in composition. Let me gothick to magnitudes first because this is important to get a focus on the new this List that is required.
Dr. Prebisch" si : Ebillion dollars for 1970 has now becomic Inc. billion dollars for 1980. This is the latest UNCTAD projection, and too billion dollars is whit one needs by way of overall resources-trade and aid taken together if the new Development Decade target of 6% per year is to beachieved -6% against the 5% for the previous decade. This too billion-and I in going on the balsis of the projections I have seen-means something really like Go billion in 1974 dollars. The way these things are donc is that you work with base year magnitudes and values and make an adjustment for in Flation. So While line co billir III compares with Dr. Prebisch’s zo billion if one is looking at it front today's standpoint, it is in the order of 60 billion. And in this gline of projections a number of outfits are involved and LINCTAD's efforts are corrupleillented by those of the Bank.
Before I get to those details l think one important thing that stands out is that the Togo billion is not the soft Of figure that can bc inct by aid efforts alone, and that is the basic pointthe difference between the future and the past, That too billion announts to something like 1.3% of today's projected GNP of the developed world in 1980. It also amounts
9.

Page 12
to something like.7% of their GNP by Way of official development assis tance. This is the point of the .7% target we were talking about, and what Prof. GLumisekera referred Llo as not yet achieved, which was to be achieved last year and which is only achieved to the extent of.3%. The argument here is that if by 1980 developed Countries muIst set LP their will and effort and get the .7% they will have discharged their official assistance obligations 5 years late no doubt, but discharged them leaving the balance over for trade measures, But if you again take thic realistic assessment—and then you have Lo go to the World Bank for their in-house studies-you will find that there sects to be no hope whatever of getting that .7%. Their projections in fact imply a decline from today's .3%, which Prof. Gunasekera mentioned, to something like 29% in 198o, and if this ճo billion that I talked about in 1974 prices is to be the focus of thinking, for a möment let Ille switch trì thäf flow.
We can find that 30 billion of that 1re within sight by way of plans that that country also already has für flid transfers. Wimother 53 billion hi48 tot BC found, and this su billion tränslates along with that proportion of the 30 billion already found which is imputed to the developed countries, Let us say 47 billion is the total I am hoping for; that 47 billion will require something like 8% of that GNIIP by I98o in order to be fulfilled. In other words, which you look at this problem in terms of constant price relationships or current price relationships, if you rely on additional aid for this Development Decade target of 6', the answer is that aid is not going to be forthingוחct
Trading with OPEC
So; developing Countrics haye really got to be thrown much mor on their y Win re5 CILJir:Cc3 CbI1 sēdeking to widen their Hrading CPPPGItunities than was really the case with any of the previous UNCTADs. In considering the trade efforts I think there arc Lwo things that could be highlighted to supplement wat may reas Cinably be exipccted and these LWO consist in relationships which the Third World might forge with the ()PEC tyrld. The estimates are of
O
this order and they From UNCTAD էլ 1ԼITCE: Today
something like (5% country exports. If rise by Itj80 (U SOI of developing Coun it can be argued th; dollar gap can be sorts kif mill thiiit , tations OECD lev look like coming up cular access Lo OP Et, bie III:ïfried Wirk trade barriers of thic tries which could billion. What has
that many of the de have mounted pla protection in order: tēTIETL 臀 items such as bett, are lowered bette the stiliation is
countries can gain I. billi E1 bl-ecca Liġi: Capacity to export t develop that expo Elle ty") a re:15 tof I coElle up in Current suppleme. It ali zaidi : il sight really are CLIII tri: il ii T. tecticiis III i Il tlie:
Ne vir directifs foi
The secolul area * Ingly), Tull. For UNE He fået tilt to to to diyalite :: III LII:ll II thin they were in them åre really on til achieved develope applies mostly to th COLLIl tries will have of export-led gro problem concerns t Ofours Ind that col from Sri Lanka, of and the Sahel. I vå they would som fifthi, and Elit is the And the reason for of the Bl fFII13 dr | these places have training in places Schill JF || EccTITI Cambridge: Cat wha let that pass, Any problem of develo now more variegal tliet lil Fifoort ittri : lter el also, cr su expect. In terms

coille again not bul Frit'ıı Bail. OPEC absorbs of developing that 6% were te icthing like 5% try exports, then it the loo, hillion 3ridged with the Il CICLITT-TIE, C3, IECelped countries with. This partiFC Illirkcts as reduction in developed counadel i nryther, 1 2 happened here is velupical CCL Intrics Ils fur glorilestic Lo safeguard their It if Erics G7In Sugar And collon r:irld f98Cייםnri that developing something like : they have the lese products and it potential. So Title which have -- StLidiçesi ildə "Willi grtwhici; il CE Er wEH CFLC sduction in PTCdeveloped world.
aid effort
CTAD COlsi55 il reloping countrics ore variegated luit 1964, Տքme pք le verge ofhaving | status. "['is: e Latin Allcricin епјoyed a period will. The reill is Foul World Isists really, apart Bangladesh, India. is told a story that be joined by a United Kingdom! that is that Filany LITTLE WHU ILI la el their original |ike the London ics, or Oxford or Li have you, But way, because this ping countries is ech, the thir Lust of irrespondingly be aid as in Carl of World Bank
constant price prictions I was talking to you about a while ago, in addition of so billion dollars in 1974 dollars riccids to be found between now and Tg8C!, if this só%, target is ta' be suppotted. ()fthat 30 billion, the requirement of the poor lot of them is not IImmore tham | to 2. billicorn
dollars annually. This gives the LLLLLaL S S LYL S HLaaLaS LLaa S S aa aLYlLL is moving, but it is not really
clear whethicir cinc Cam rely cycn upon the aid effort to deliver LLLLLL LLLLaLaS LSEEt S LLLLLLals GaL LLLLLal S LLLL L LLS the opportunity of really working aut new tradilig relationships of the LLL DuHuaLLu SSS LLL LLaaaa SS S S L S moment and which I have illust alluded to also.
Power behind de II land
LLLLSLLLLS S LLLLLLalLaaaaL aL a LL aa K LaL for UNCTAD extends really fundilmentally from the retort that the developing countries gave to the Call of Previous UNCTAIDs to Tobilise their domestic resources. Jrie grup of countries- OPEC-tyl: that call quite literally, and when they ibilise their resources all hell began to break loose, and it is this actir in which has really Creat Cd al possibility for serious bargining and negotiation by developing CILIIlt IIE 5. and in my view it is this which accounts for the revival in Illideral ress First; F is which did it get of the ground in previous UNCTADs, ELE WIch when developing countries have effectivo power L S LaLLLLS LL LLLLLLLaaaaaS aa aHLLLLLLL LL whicre effective power backed their demand, the whole picture does change. And I Would like titi g_3 back Here again to the Dag Hammerskjoeld Report, which I think ought to enjoy wide circulation here, to say exactly what I think it ought to incin. In talking of collective selfreliance they say: "This concept requires | capacity and power. Will includes not simply desire for change and a vision of a il-;irable new economic Corellcir. Tt Tulist includile a clear conceptualisation of what measures and sequences are necessary to begin serious progress. Capacity includes the sibility tó work allt strategies and policies and to for mulate the institutional or bargaining processes necessary to bring then into being. Power is probably tic element in which collective selfreliance can offer the greatest id
LLLSL LaLLHLLLL LLL SHH L SLLLLCLLLLLCLLLLL 000

Page 13
vances beyond national self-reliance and these are the key points'.
It involves the capacity to offer real benefits and to impose real sanctions, Collectic self-reliance must be backed by a potential for confrontation damaging to the industrial economics as well as by a potential for providing new relationships of positive value to them. In other words, we are now in the territory of negotiated interdependerice, of negotiation from strength, and this is I think the key Task of UNCTAD IV. If onc looks at UNICTAIDIW in this light I think, it has implications both for Ehıc gecentcılt of UNICTV 1) anıldı For the form of UNCTAD, I do not propose to undertake a or 'Farion of the content 5F UNCTAD because that might take me beyond Iny allotted timic limit. So I shall try in the available time to telegraph as quickly as possible the brid areas if concern on which I think. UNCTAD TV might focus.
These four areas are commodities; other furns of Third World Co-operation and this is thic real meat of collective self-reliance; in development finance which is standard UNCTAD territory but in my view in the future ought to the Ilarginal UNCTAD territory; and finally monetary issues which really erettes the Franleyork in Which economic growth compatible with self-reliance can proceed. These are YLK S S SY S LLL a LLLL a LLL SS HH LLLLa L LL flag briefly, but let me focus a little Flore precisely on corn modlitics Eo begin with
Commoditié5
As I have justindicated, the current concern with coral modifies is really nothing more than a compulsion, if you like, to take seriously the concern of developing countries when they begin to agile from a position of strength. And what this particular
OPEC action hits created For it is
a new set of opportunities. The idea was not flew. As long ago as 1942 LLLLLLa L aLaLSKS S aCCaaaa a LY aLLaLLLHHL S LLLL S separate agency for administering buffer stocks. This lay hidden in the British Treasury archives for a good long while. Dr. Prebisch tried to find it, but by some Curious accident came across it, and what we now have in UNCTAD really in terms of this
Erosojic RTV Ev, DECEFIE. IgT,
integrated com III. nothing more tha that particular sic new here is the inities that have was absent in 194 are three sets of I Would lille to f
Three sets of 0.
The first is the of thic concern F with issurances concern F devel have reasonable of excessive pri defeating because accelcrate the Pro which will leave licers 11tre still So developing ce. loped countries h; interestthereing prices.
The second oբ: Te, 5 LLETTO IL CE loping countries : ind importers of exporters they w Prices, A.Ş. iTıp0 naturally want lo's come is bArgaining IF Hic Third W. COTT TA101 ilt:tr:Stš Intich cartelisation level of pricing wi Elle bullet stock II provide.
The third opport EHilt le cil rail The money is ther: ever possible befor done i iniu Tibicir " this point and they, :uוךmilled comr"הר טHם by conling up with: dities which would lisation costing so billiam Holläfs, wh the magnitude ()ք on official account sekera referred to. scaled down that to something likt and that implies sc commodity list fro like Io. The iTip thell down in thi in live a schelic countries would g. Words, if you stil corpus of commod

ridity progra in Inc is in a detailing out of helic, But what is
political opportiէlgen cretited which 2, and briefly there pop OTELITiities whichi
lig:
ppor Lurities
lossibility of trading icveloped Countrics F supply with the töpcd crni Intrics te rices. The points tes Ei b se-E. the Protnote and CICES CF 5 Listitutiji coincidity proerabile thidin bizi-fi.org. ILI I tries inti ley -- lve a mutuality of bіng for reasonable:
FELunity that the :Los 55 till:it doiveire both exporters Collidities. As "ould like higher rters they would vero Priccs, and if for the collectivity fld WH-f †ler
rest i 1 5
but a reasinible ich is What real; Cichiamii:i'ïl Bicks; E
: Inity of course is the OPEC cities. Which vyras leyer *, UNCTAD. Has F calculations III I think, fightened ity to begin with list of 18 citricզuirc prior stabimething like Io. his really about HC EGItalid Flow "liichi Prof. Gini
They have since 1rtic Lillt es Einflte UT 3, Eilion, ling down of the - I 8 to something Itance of scaling Way is that you where developing t; ifle. In ther with a siltaller
ies i Tid Wirk ut:
a sort of arrangement which indicates to OPEC countries that they have a mutilality of interest in 5LIPPכוrting such a scheme, then I thini, one can get to UNCTADIW with a scheme which is already pre-negotiated and Worked QL Land the developing countries will be in a situation where the rest of the developed countries will have an incentive to join. What I think I have in mind is not a cartel schelle but a realistic scheme to stabilise commodities at priccs of about 1974-75 before the peak of the boom and which would be in the interests of OPEC Countries o sԱրPTE ind it is this area of interest. I think, which UNCTAD cught to be exploring. The import dependence On primary commodifies of Opլ:C is Substantial today, They import something like 4-5% of the world's exports of wheat, something like 7% of the crports of slīga, Sīetling 盟、 of rice。氙á Something like 8% of tria, and their iהוחrיrt ilhas expanded pretty substantially during the last year by about jco II. I.
A vest cel interest in stabilisation scheme
Šo any grip of Countries in th sort of position with a heavy import commitment expected over the years is really in the position of httving 4 Wested interest in a stabilisation Scheme where Qnc căn dặaw Fröm international Stocks Father han raise market prices to astronomical levels. Ånd thi Jught to sit the developing countries as well because of the obverse of prices shooting up to excessive levels with the slump that follo JV5. So if jine Cimin voorkout 單 schene of mutually acceptable prices which gives OPECaprofitableavenue for investing morney — and the tini buffer stock has shown that buffer stock operations can bc very profitable; over 19 years they realised söI mething like 27 millioni PTufit in the operation-then I think developing countries can get to UNCT AĪD with a realistic prospect of "talking turkey about buffer stocks. I an saying this because as a result of OPEC action OIl commodities. Une has had initiatives from the developed countries. But when one probes these initiatives one is a little unclear about the exact content of these initiatives.

Page 14
Not transfers of money but a reasonable price
I have already mentionell Dr, Kissinger's Development Security Facility. That really is nothing more than the old UNCTAD supplementary scheme given a new |label, and it does nothing mure tham transfer money to developing colntries. What developing countries are now looking for, if I understand the mood a right, is not transfers of Inoney but in reasonable price for their products which they are in a position to obtain by unilateral action; all when line talks of that action cric again goes back to the second initiaLive which was taken by Prime LLLLLLLLS S SLSLLLLLSaH LLaL LLLL LL L LLLLLLLHHmHmtLLS wealth Prime Ministers' Meeting. He has a principle which I have already illuded to. The principlc is that producer countries should undertake to finaintain adequate and secure supplies to consumer countries and he is proposing here a generation after the General Agreement II Tari FHs and Trade, which is GATT, a great deal more at the level of individual action on commodities.
I have gut the document that H.M.G. has provided as a result of the Jamaican Conference. What it comes down to is nothing Tore than a return to the old approach which has failed to yield dividends, which is the ເommodity-by-commodity approach, Everybody talks a great dical about how Commodity N is different from Commodity 'B' and how the approach For Commodity 'A' therefore his to he different, and one result of this is that for Ehe la 5 E III y elrš 10 TT10 FC than two er three igreenilents hii ye len workel out, So that to Tilly mind, is the wrong Tatl to tike. What is perhaps the right roAtl, 1s what UNCTINIÖ Ilias in mind Which is the simultaneous negotiation of l-mufieri stoolks For L Illum Tiililr iif ICI FTI
di Ei E5.
There is 11th Such thing FA 5 Ai tommodiէ:-by-commutlity iբբրծach here, It is a straight across-the-heard approach which has really a number of advantages to Incinbers. If you Five a single authority running it, tlīt melns lāt tit Lility ca tai ke account of the inter-relationships Het wEen commoclitics, It Can Illikesure that the rices set for tell is a norm are such as lot try torpedo Er
u intier Iiiiiiliet tliet li producers. It can perspective of pr F a rice at whi Commit price at which it mote the right : ittitudes. WHät conllódities irl. El Prices shoot up ex you have overplace and thein pri Hiva: ti ble CLIE be broken if you looking into coin taken together,
Arresting the of the usiness
Then you call ing the vaga ties e 3 At it title of worl de Weloped Ci Ll nitr modity prices, authority can inte all tell collid rate the impact si Illilarly it il til: gan intgryere tij M E - This vir L. Linless yell had approach with
Fick it Lillil vi. Li il tHiç İlışırket 15 by a single lif which no singl coIIIlirii. Teri ci. Third that degre Ele market il ; LLE I JE Ile CF Iniliji ciliars. diferenci vili:l Prachi Tillal:-5. İl Hill Striu LISİlç: י יִןis tC c{ITigu
ELE | LI cio FH1c te » the Ilegi cij IFE, 3 clip II i the grund Wi developing coln Tioltier a suficii is werkell Just gil probability is th interest: if eve 81 i clie 11.
Gap in Prices producer and
| HITE I III Il cron1 T1 diti: on that Tarticul something whic Fair mot really

weird of coffee
take a liger Lerni ices, If you think sh it is lesirable t. lities, it is als : is desirable to prostort. Of Investment
has happened to he past is that when cessively in a boom investment taking ces falland à Creigés :k. So, that cycle can have a single body modity price trends
agaries cycle
ave. Il Way of arrestF the business cycle. El in Flation, hocırılı İı ies li mill rising to fil
Llit buller stock rweile in the Ti:Irket FEL: & 5), 2a5 tÕ ITI OdilloF in Elition. And of TeCc33 i Ti, Il
buy com Todities.
ld not be possible
Flm i CTriS5-the-beard Entյսբh finance fr} le 1 carry conviction
regard intervention Ter Stock altithority collinodity can illilitics call Clinie CF con Fidence in
Eo billicul della Tmillodity aird z CD THigit is the fit-TI CF LD :1"rL:5:-th:-E5r"ñgirdl
So I would siggest L'Hill i UN (T^1) 1Y rith go Tic thing conibbilities, i t shiiriiiiild itiating table with a
which Cirl get of th the SLIFFICITE COf Erics, fılone, Kırırd thic intly detailed schemic ong these lines, the at itt vil Ele il the ybody else to join
of
:JITELIII - I
lore point to ill-like is before I end air part, and that is
UNCTAD is :
| Tito : TILLC: l: 1|
perhaps ought to do. What I in referring here to is the price which the producer receives for a commodity and the price which a consumer pays for it, and the gap between the two. The only study that I know which his gone into this quicstion is an UNCTAD study on banants and that shows that as little as Io', of the final CII.1511111er price is what geti to the producer. The balance is trapped a long a whole range of middlerien, Lisurers, shippers, wholesalers, and it is this particular gap which OPEC action has bridged on Elle bil 55 of its unilalticiral ciffort in respect of oil. Some of the differences between the price of the coils unler and the measly or 5 dollars per barrel that OPEC countrics got Was absorbed by Way of taxes by the developed countries. This provided revenue for their budgets, and what the whole bargaining process in LLLLLS SLL L SLLLLLLLL LL LLLLL S S LLLL S LLLLS really bring back to their cohers monew" which wriull Lothici w fiŝe lia vi
gone to leveloped country exclic
quers. That same sort of exercise Caught to be done or Can ble done Flor a vyhole range of other cilities; and it would be very helpful if UNCTAD had half a sheet of paper which for every single commodity Öf significance gives the World åt large the difference betwcci the final price and the producer price. What I lo have is al se E of cul-ulitions ima de by a friend of Filine and colleague, Dr. Mahabub uil Haq, inı the World Bank globally, and that show's a very interesting story. Of the go billion that it whole list of cur Iriodities thilt hic has COITI piled Fletches in thic World market, only as little as 3.0 billion gets to the developing countries. The rest of thic swag is apportioned cult clsewhere. If this ir:Til tisiltiCJIL DE facts and statistics were placed upon the table, the bargaining task for the developing countries would becomic considerably easier.
Monetary Issues
In order to draw this try it close within the timc-table I havc had to Set myself. 1 only want to touch on international monetary issues. The arguments, I think, can be discussed in seminar-type intervention when thic occasion irise, ind is I have already said clearly development Finince is in my view marginal in terms of a realistic capacity for countries to
LS S aaSSLLL L S LSLS S DDSSLLL LLLL S S L uS

Page 15
Colle up with that; so I do lot PorciPiose to go into that. But marginal issues are important and this is for a single reason, and that is that the world inflationary process that Prof. Guna sekera alluded to is entirely the result of a malfunctioning internation til monetary system. If you take the magnitudes you get a very revealing picture.
Between 1949 and 1969-a span of zo years–the stock of international money which is reserved-gold, dollars, lostly dollars actually-grew only by something like 32 billion of at an average ratic of 2.7% per year. Between 1970 and 1972 yol had literally in explosion of liquidity when as a result of a range of factors which sometimes people rush under the table-colimitrilicits to international diplomacy and so for th; the Wietnam War Cones into this at some timethere was a major injection of dollars into the world economy. The result was that reserves which had been growing by 2.7% per year jumped to an annual rate of 27% in 1970-72; annual rate of international money growing by 27%, as against international output growing by about 4-5%. That is the root cause of World inflation, the fact of very simply too much money chasing too few goods. And that was because the whole international mechanism for liquidity creation went awry at this very crucial juncture in world history. What resulted is that in the periodi since I97, betveen I 970 Ind 1975, thic total addition to internitional liquidity was about ico billion S.D.R. But 97% of that went to the developed countries, and 3%, i.e. 3 billion only to the developing countries. This is the measure of maldistribution of world liquidity that has been witnessed in the past few years.
A rational design
In that situation there is clearly a rational design for the world to return to, and that again is nothing new. Someone I propose to quote in a few Illinutes has been writing a cit del about it-Prof. Triffin of the Yale University-and his ideas are really basically very simple: Replacc this arbitrary business of using one inition's currency as international money by deliberately created inter
Ecoxasic REWIEW, DECEI 1975
national munci, the rate of grow In other words, proof way of ma sive loney and And as an adjun see thic Internati being converted national central Triffin says is c in this regard be way of using strength in this like to quote f design had been if the Triff d place before the "all countries wo Inited to accum future surpluses With the Fuld i cycled or sterilised internationally a objectives rather investi such sur pli and to trigger switching them at ilational currency into another for for speculative re. countries may a less willing today a collinitinent Ell: licen fit a tirlic y have singled then countries expected sovereign right to as they pleased Y other countries to with appropriate g ing might make it all, to rcduce in fac
“Experience har fih feles —are a faible arefighting Kif the int. filar r-grt
For airier.
Birt expérie#ce Fe ffing gif the liitter, ஜர்ww Ti gf

taking into account h of world aut Put. his is the only fooling sure that excesinflation is a titled. t to that one would mal Monetary Fund Il til å geiluline interlink. What Prof. Etrency interesting aust: he Sces son: OPEC bargining rocess, and I would form that: “IF this
in existence' (i.e. "sign had been in oil crisis erupted) Ild ThayFc been1 coII11late most of their
Il r:St. TË LICOLITIts S.D.Rs to be re| by itin the light of reed criteria and
than left Free to ises as thcy wished urrency crises by
any time from one
or Eurocurrency political as well as asons. The OPEC limittedly be even to negotiate such In they might haye then it would not 1 out as the major to relinquish their West their reserts et the agreement of such a corruit Lucerit uarantecs and earnmore acceptable to the huge cxchange
risks now inseparable from reserve accumulation and strengthen the ability of the international community to titucet other yet un foresccn, crises certain to emerge in thic future as in the past”. Hic is describing here a design that might have been operative had the systern been in place before thic oil crisis. But the fact that there is leverage within the Third World so long as thic Third World remains united plus the need to apply a certain measure of technical expertise into working out details of this sort docs permit some thinking along these lines to come up on thic UNCTAD agenda very squarely I am saying this advisedly because financiers are notoriously very conservative people, and when one was talking about an international central bank and a world central bank as recently as six months ago one was sort of being laughed out of court I Lillink, But I crime across, in the "London Times', the other day the Managing Director of the Fund, Johannes Witteveen, talking very much in the Sc ticir II13. He Wat S talking about over the longer term the International Monctary Fund could become an interrational central bank. It already Perfor Ius Central barıking functions in a limited way since it has created S.D.Rs or paper gold, monetary reserves etc. So UNCTAD can play the role, in my view, of using the leyeragic that the Third World hals today to bring about an ideal monetary design on mutually acceptable
ETIS
ay ha? Third World countrie-The co-operating anyong theyY GLGGGLLGTCT CCCCC S LLLL uTmLmTGGTLL LGTTTY S TL H TT S TL LLCTTGLG S LL LLLLLS LLLLL CCHJJ LL umLLmGG HLCCCCCL Y L CCCLCCmL S LSL L S LGLLTLL G S CCLTLLmmL S L LCLCLGL LL LLLLL LL LLLLL L LLLLLL
L T GGCHH LLLLL S LLLLmT TmTT S L uJJCLL LCTGmLLLL LLLLLL LL LLLLL urrSLaGT L GGG J LLLL LL LTCHHLT S L L LLTLGGGLT CCJS wirtual co-opera fio'r llar det rrally fo i wple werf if”.
Thc Ig7 5. Dag Hanınmarskjoeld Report
13

Page 16
Third World Approaches New International Econom
Paul Caspersz
Patris Carperiak ir a refera reler ar r r ar ur af flye Msirga Waffifilife Affried flr y Grif, பி:
The proposal for a New International Economic Order had, so far as I am aware, its main immediate source in the Third World and specifically in the Fourth Conference of Non-Aligned Countries held at Algiers in September 1973. Unmistakable both in the Declaration and in the Programme of Action is
the new mood of impatience, even
of belligerence, in the Third World, against the injustices of the է 11:1 International Economic Order (OIEO) and for the specdy establishment of a New International Economic Order (NLEO).
It is indeed unfortunate-and is in itself an indication of the present disadvantage of Third World countries even in the field of developinental research-that after the official Declaration of the NIEC) on 1st May 1974 at the U.N., further Third World response to it and Third World discussion of its actual implications have lagged behind the response of the Other World.
other World responses have, on the contrary, been forceful and clear so the extent of change considered to be fair and practicable. This paper will occasionally refer to three such responses, namely, the Wilson proposals (una de at the Commonwealth Heads of Government meeting On Ist May 1975 at Kingston), the Kissinger proposals (made on st September is 73 at the Seventh Special Session of the U.N. General Assembly), and the Sussex. Institute of Development Studies Green-Singer transition PTOposals (made in an article in Er Deperprett in June 1975.)
In none of these proposals is there an analysis of the bases of the OLEO, and only Prime Minister Wilson makes the clear admission that the relationship, the balance, between the rich and poor countries of the World is wrong and must be remedicid. Kissinger indeed states quite clearly
14
"So let us get dow us put aside the ster tHir. 3. Ly,," turi Iıii Hitler til II
a decquate."
It is my view FF i fyll
possible without til
Let us therefor briefly an analys They are chiefly t the perceptions of countries of the O. weakness, and t weakness, of the the Third World. the continuing asp the rich Countrie: wer crucial con1. food; the power to markets; the pow sources: the Pu with holl aid CoE li power; military ps. exception of cul data analysis pov Haustive.
The Weakness World was basica arising from the colonial periphery all the present. Th were like India, Indonesia, Kenya, Algeria directly ul. cal power. But all ccolonic contro C15c5 Flowed 0 VTe real, political con ship was never Ol ship to en Sireth equal partners. structuredL Eo tlıc: group and to the other, to the ex superiority and and to the crld inferiority and si other.
Is Fair Trade P
If this analysis cepted the next 4 whether a NIEC) as this contradicti between the Th World. More UNCTAT conti

to the hic Order
Il II HLISill: 55, Let ille debate over whecorder is required or economic ord.cr is
that no significant of a NEO is is debate.
e attempt however is of these basics. wo: the power, and 'power, of the rich ther World, and the he perceptions of
poor countries of
Green-Singer lists ects of the power of s: economic power Tlodities, especially Fatulent consumer "er over capital rewer to granilt för Danis; technological ver. With the Orie ural, research åTitl wer, the list is ex
of the Third lly a structural Orlë, metropolitan centre
relationship. Not ird World countries Sri Lanka, Pakistan, Uganda, Tanzania, Inder western PolitiCirilm: Linder Weste:Tl which in several r into indirect, but trol. The relationle of equal partnera parallel growth of It was intriciately advantage of one disadvantage of the ercise of economic control by one rince of Economic ubservience by the
ossible
is substantially acuestion that arises is is possible so long in of positions exists ird and the Other concretely, in an xt, is fair trade
possible between uneqıal partilers? I answer negatively, but add that the situation is not irremediable. För our poor countrics have potentialitics of power of which we should make ourselves progressively more aware. Third World countrics and China account for nearly the whole of the world Production of Eca, ricc, bananas, pepper, coffee, Cocoa, jute and kelaf and allied fibres, hard fibres and natural rubber. They can exercise control over the world exports of LLLLLaL LLLLHLHHLHHLLLLLLLS SKKS S HuGL KK L HHHLuuLL more than half the world exports of sugar, tobacco and cotton.
If this illustrates the power potentfall of the Third 嵩譜 over certain food and agricultural commodities, the potential in other lines of production is by no means small. India. has z I and Brazil 15 per cent of the world's iron ore resources, and so oil. The course of oil in recent years is only the most remarkable example of what can be achieved by the Third World to work the change from the Old to the New International Eco
lothic Order.
There is also the tremendous potential of Third World human resolurces which both by absolute size and rite of growth far outweigh those of the Other World. Indeed, this is recognized by some More Developed Countries (MDC) demographers and is, I am sure, donc reason for thicir intense fervour for population coiltrol in the Tiss Developed Countries (LDCs).
The Tost important condition for removing the contradiction of power relationships between the Third and the Other World is co-operation among the countries of the Third World. But this is solething that is all too easily proclaimed at conferences Of Third World COLIntries Without significant progress in the hard, patient and unglamorous task of working out the detailed implications of such actions in solidarity.
With a wiew to UNCTA.D.: IW, it would bc useful to examinic in sonic depth the implications of the NIEO in the field of the exchange of collinclitics between the Third and the Other World. Letit be fairly acknowledged that this exchange has consistently-to my knowledge without one ciception-been an unequal one. Its history is an old one, and it would
-ܨܕ="
YSLLLHHLHHLHLCLLLL LLLLCCKLCOLS LL LLLLLLLLS H000

Page 17
bic worthwhile to take one illustration of how unequal exchange became cmbedded in Ehe structures Of intern-1tional trade. This is thủ: Case of tr:1.
The Case of Tea
Long before India and our own Country began to produce te commercially, China tea was imported into Britain by the East India Company. This tea was grown by subsistence Chinese cultivators and manufactured by them as a domestic industry. Living at a subsistence level, with little communication with the outside world, and no knowledge of the real exchange value of their product, they were prepared to part with their tea for the low prices in money or in goods offered to them by the crafty and experienced Company traders. The unequal exchange of Third World tea against Other World products had begun.
In the early 19th century the East India Company was faced with mounting difficulties in maintaining their trading monopolies in respect of China tea. Following the normal capitalist practice of risk-spreading, British capital Ellere före Imo vicd into India and 勘 into Sri Länkai iil order EO OPECill IntlCW Cea ဂျိုး'့် and InariuFacture tcı. India antl our Ow'ı country thus gained at the expense of China-in carly illustration of the obstacles placed in the way of Third World economic solidarity by the practices of capitalist international trade.
The process, incidentally, continues in our own day when, in the face of growing risks to tea investment in India and Sri Lanka, foreign capital is moving at great speed and in vast quantities-through Brooke Bond, Lipton, Williamson Mager and international balls-to East Africa, lost recently even to Nigeria, to Latin Americal and elsewhere in order to Emake Guire that there vill be Other tica gardens for metropolitan interests when those of India and Sri Lanka are taken away.
The price of China tea was low because of thic lOV S Libsisticilice lewel of the Chinese growers—anı iJlusitration of this theory is now being developed by the French Marxist economist, Arghini Emmanuel, that it is not prices which determine wages, but wages that determine prices.
Eεατοειτα REvIну, DECEMBER 1977
Adding their pl British traders w at prices which c were able to take. were opened in L. to thic real produ reference to the tea, Indian price: of Indian tell Wr mor 15 for Sri IL
Wages in all te tries were thus falling rate of pr compensated for E turnover and by polistic control linkages of tea, Europic grew acc tea as the cheapes the end of the 19t was thus firmly 5 tulation of un equal tea and the man
of the rising w; Brittäinl.
A Just and Equit
Division of Lab.
A New Intern Order carriot Col exchange, If in t of socially neces produces Io units MLIOCs the $arıne units of Y, then exchange for 2 of of exchange will rlIl Coulter to th NIEC).
In my view thi important and Crt that of the secul deterioration in t Which Halwe ille: poor countries pot which was a good of Third World sense that their pr the rising index deflated by the risi values, declined F. Third World cur Fire attailable for UNCTAD report turcs of World T. ment 1974-T 1975” which we have a report entitled "I in 1974-75' of O. So fat is II klow - Sri Lanka.

ofit margins, the re able to Sell Lea n.3111crs in Brita in
When tea gardens dia, tci prices Paid ers were Sct with w prices of China ind the low levels rkers then set the ıka.
a-producing coun1= abysmally low, a it was more than y rapid increases in interlocking oligower the forward and colsunline ES in Istormed to Tegard beverage. Before 1 century the stage et for the perpecxchange between lfactured products ge inclustries of
able International
ill
lational Economic Intenance unequal te LDCS One holIT sary labour time
of X and in the time produces 20 I unit of X must Y. Any other rati: be unfair, and wili 2 principlics of the
5 is al Tutlich Timore cial question than Lr and continuing lic terms of trade ndate maling the rer. Even in 1974 car for the exports
countries in the Ces generally rosc, of export values, 1g index of import of the majority of tries. The figures inspection, in the
on 'Salient Feaade and Develop
of August 1975 din tlie GATT itcrational Trade tober 1975 which is not yet reached
It is against this background of deteriorating terms of trade that countries of the Third World in recent months have been pressing for a scheme of indexing the prices of their exports according to the prices of their imports 懿 th Other World. Yet the Other World ಙ್ಗ explicit in opposing even 38:"ור a study on indexation.
Indexation
The Fate of the Fillous Resolution 308; at the 28th Session of the U.N. General Assembly on 6th December 1973 is well known. This Resolution merely asked that UNCTAD should prepare a study on indexation. Four leading countrics of the Other World -the U.S.A., the U.K., France and the Federal Republic of Germany with Greece voted againstit; twentysix, including the Soviet Union, abstained; while all the developing countries with China, voted for.
In their speechcs at the U.N. soon after the Declaration on the Establishment of the NIEC), the delegates of both the U.K. and the U.S.A. expressed opposition to indexation. The Third World, however, continued the pressure and Mr. Wilson at Kingston adopted a rather more flexible attitude. Yet Mr. Kissinger a; late as Ist Scptember this year at the 7th Special Session of the U.N. sid:
"Many solutions have been put Forward to benefit producers of particular products--cartelization, price indexing, commodity agreements and other methods. But reality demonstrates the interdependence of all our cconomies, and therefore the necessity for approaches that serve global rather than narrow interests'.
Does Mr. Kissinger believe that the interests of three quarters of the world's population are narrow interests? AtletLSE, letus Imake it clicialir at this Seiinin ár that this is no E our belief.
Kissinger and Wilson show themselves most ready to consider schemes of compensatory finance when Third World exports fall below a predetermined reference level. This was also its Fair as the EEC countrics were prepared to go when they planned thịt: 5TABEX_scheme_{1t the L[]IIl:
15

Page 18
Convention of 28th February this Y EL T.
A scheme of indexation is a scheme of elementary justice. But it is my view that as I have already indicated We must go further than that. We have to evolve a schemic of export prices for many commoditics independently of what prices these coinmodities have so far secured, for the simple reason that the established prices are prices of uncqual exchange which were imposed upon the countrics of the Third World but which they can now see are unjust, -
The costs of cstablishing a regime of equal exchange will be short-term, but the bricits will be both shortAnd long-term. In the les 5 : CrimoIniotis and more peaceful political climate that will develop, the benefits will be perceived faster than in the Ecgfigrict area. But as the present DCs incrcase their capacity to purchase the exports of the present MEDCs, the nomic benefits will begin to be reaped by all trading partners. Thic tremendous potential of rising markets in the vast popul: lations of the Third World is indeed the strongest guarantee that the NIEC) wiĪ1 het a bettet order för everybody.
The objection vill certainly be raised that we in the Third World are secking to go too fast. It may furthic ble argued, as Green-Singer seeill to do, that all that is possiblic in theinlinediate inths ahejlis action ԾIl certain limited programmes choscn according to the four criteria they ropose: practicality, mutual interest, colicirc nce, cuir nulativendiss.
The unsatisfactoriness of the GreenSinger transition in my view does not lie in its transitionality--essential and inevitable in any case to any dialectiCal View of die velopment—but in its lack of expressed clarity about either the OILEC) or the NIE (). It would not II atter so much if We travelled slow provided wie knew where we were coming from and where we are going EO, The Green-Singer piece gives no clear evidence that it knows.
Take the measure of cquail exchange prices for Third World commodities to be Followed by indexation in order to protect these just prices against inFlationary rises in import values. Third World developmentalists would argue that these measures eminently
16 .
fu il the criteri Cumulativeness,
Imutual interest
Ericticable. C differently. Agr right and who is ed onlyby recou th of the ÖLE
Exports and Ali
Raul Prebisch, Gilleri II F UN prp seci three the trade gap b. North in He 111 raise prices of St. EPuge eXports factured goods, a
No iction was if thicse Teisires CF these collid LIStl;ll nլ=-lianism: Capitalistic trade. takert of the seco ಕ್ಷೌpers havg ಗ್ಲ! thit Thirt Weill satis Éiclismail sive illustries on these alone could ment Proller Els of seeking to exami Carl Imandations al unermployrient bei the CE-r Werl.
However, ther filk Dışı idi. Thir adduced For this: { existing strong was relati Ullship; (ii) ex Pensive that II Pia Third World givel i 1 the for FIn COinitiercial i niwclist: fitable: (iii), gaid a"YTr. the ricfor F st in the recipient co
Reforming Struci
The refill of INCTAD shoul important clement:
{}The El-Fllerit is oụ Wages latwiccil. M Hiust be progressiv il futile to cxper Workers in the MD to a lowering of w be taken progressiv in the LDCs. Thi

L Jf Löherence und that they will be of
und that they are "thers would argie eel Tierit as to who is Wrong Carl be att lill3ę to Clreful analysis ) and of the NIEC).
the first SecretaryTAD, in the sig“; Teasures to bridge :ty,krc::r1 the .FFluent derdeveloped South: luthern exports, elĊif Southerrnl Iiiiin Il
ill äid.
til kert of the First : instead, the prices ties were left to the 3 offrce critèrprise Neithic I wasg Hadition ld. Instcad, Foreign ibly Tccommendel il countries retain |-scale hali CLIF-inten
the argument that 50 Iwerthic un enn playthese Çğını tries, Indot nic why similar rere: First immie Wei comes a problein in
i His been ilutih ee: Tica. 8 Jarls Dmily be i) id Tintains the il: Centre/periphery lid is Iliuch legs ing just prices for ports and, when If tied aid, lit is or ment, is very proids and postpones :Listill res, sit it leagt intries themselves,
է|TLEէ:
S:t E-LIFE, vyrii: if titiaEC HAS 3-veral
용. "In gin in MITOCs antil TLC0C5 ëly réduccd. As It it that unionized "Cs would consent "lgo, action Ilust 'ely to raise wages is is a matter not
only for leaders acting together in the LDCs but also for leaders in the Other World. Among these latter the leaders of the socialist countries should take the lead in unequivocal support for higher wages and hence for higher export prices for Third World products.
A second clement would be the introduction or thic extension of developmental research in, and not merely for, the LDCs. Research is necessary for the attainment of progress in the spheres of product development, processing of raw interials,
marketing and technology. In 1971
the U.N. approved and published a World Plan of Action for the Application of Science and Technology to Development. But lmast nothing has been done to promote development research by the Third Worlders for the Third World
In this connection may we ask for the immediate setting up of a U.N. library in our country where all U.N. and ancillary institute documents and publications will be made available to all serious local researchers with the minimum delay? As matters now still several of these documents noyer reach the Third World, or only long after they have been studicd in the development institlitics of the Other World.
The third element would be equillza Eiroru in the structures F world production of goods and services. There is no logical reason Willy the Other World should continue to Processo the TAW" Inaterials of the Third World, or why they alone should manufacture goods using vast economies of scale, while the Third World produces the raw materials and only simple manufactures to be sold at low prices to Other World tricles.
The fourth element is to devise Ways and means of providing access to the views of Third World masses, Which are thic greatest resources of the Third World. What * ITarl Bements are being made to have these views head at conferences preparaLLCCu S LG aLLL LaLLLLSGSLL0S LL LLLLL S aa HSLLS TAD I Witself? To helle these vicws ourselves, certainly to give expression to the W- may have to leave the precincts of Hotel Taprobane.
Econostic RLVIEW, Licini BER 1975

Page 19
World Crisis and the N. international Economic
Godfrey Gunati i leke
Griffey Graffiliis a esgrifari for UNCTATO arraf Directar ffilie Margi riff
My intention, at the beginning, is to place the pressure-the agitationthat has recently grown for a New International Economic Order-in the Context of the crisis of the great dis. orders that have overtaken the world economy in thic first half of the current decade. I intended to do that for two reasons. I think it might help ELS EC L'Imake in somewhalt realistic: assessinent of the prospects for a New International Economic Order, and if we do so, the prospect of making a substantial and significant progress to wards re-structuring the existing system of international economic relations and to some extent restoring the balance between developed and developing countries. And this is very important because I think the 4th UNCTAD tales place in a COIltext witch is radically different from the context in which the other three conferences took place.
The other three conferences tool: place at a time when the world econoJny Walls still progressing Oni ian Lininterrupted path of expansion, of boom, and the conferences were really concerned with how to integrate the backward centres of world CCK JIJI I ly into this booming industrialised segment—the metroPolitan Ceilt:ITCS.
The 4th Conference takes place in an entirely different atmosphere. We mily ask the question whether in fact the crisis that his overtaken the world Cnolly will not stall, will not defeat, the whole pressure towards a New International Economic Order. Whether the cleveloped countries Would respond to their own crisis and would resort to inward looking policies to make their own adjustոլոnts and perhaps give a few pilliatives, a few marginal adjustinents here and there, foi deal with the clamour of the developing countries'
On the other hand, one would ask whether in fact the kind of crisis that
Egoore REVE, DECIEr. I
hä5 Overtaken th Il Oi Dio ! PI TIS LIC severity doles no lenis of the inter different Friinew there would the ilitional consensu EPprise the Who. tions that gover trading and dev
■ 'The real p of power, ti strength betw. rent groups
COn the Eller | հuch a re-appraisa, for us in thic. Thir Will help us decidis We are going to UNCTAD Confere in the past, we in LîlJayawardena qL lalised nendicants to international pro Ö3-cilla tiiim Bact Weisen the Colle liaid and is Other and it is inte Schizophrenic per developing Counti UNCTA) forum and at the MIT a the other. The U. бПе підde the exp, Öf1 Tilde: Pronoune El 15 irriticisis It was the Forum Criticis F115 i Hollit til
The cother fora File:Lded for coices: to get minor adju. relieve the situatio developing countrie BS Ге. Caspersz said, is font: cf power, SETenghlı bictween tlı Jf Luftries. In th Hill EO extrict con STECill to bi-literal Ell'ulti-literal agricem declariticits and d. Where orc wanted to

W Order
e World economy is tion P. Whether the East all the problational systeri ina "Grk Arld whether reföre ble al interS TE) retricev" i Eld reble system of relatIn the international elopment systems:
roblem is one 2e bargaining reen the diffeof countries.’
TEATEREagleal
land, I think that is very i Triportant: d World because it What is thic still
tikt at the ti 'ne, As veknow, Pe 5:e:i'll what Dr. Lited as "institutioin our approach blens. It has been confrontation, on upplication in the :resting to see the it Italities of the tes leaders at the Til the Öle hiland til the GATT con
NCTAD is where
is tires and where olloitsid leelabLut the systein. I like the basic + 3y:5Letri.
Ārē "Warliere: Hle Horis nով Winted stillent; late to in in which the 3. Were in. Herc, the real probler
էlic bargining e til FETIE EքEլի5 te förall where e Ըessiof15, Wre re
fliegotiations as ints was left for : [1].']] inti Fations LLI
getti COnceggio,
you Werc prepared to go it aloille in Order to get head of fival Competitors for this charity, for the global concessions that the developed countries Wete going to make.
This is the setting in which one has to look at the th Conference, Have thic conditions changed? Is it Possible to see at the 4th Conférence, a breakthrough? My viewis that the Conditions which led to the United Nations Declaration in 1974 have in fact created a possibility of a breakthrough in a short term. It is not that we do not know the answers to the probler, Dr. Lal Jayawardena set out the possible answers, ranging From the first supplementary finance Proposals to the Stabex schene. the integrated PTICIPTA. TIl Tric al cominodities, all the possible ways in which one can give relief, the burden of external debt, the transfer of technology to change the structure of the developing countries. All these hi ve been Set fJlt in differen Fra.
It is not that the problems have been ignored nor that the answers have not been ProRounded and offered. It is
really the question of how the developing world itself works out the strategy, in proves its bargaining strength and sees a way in which they can get their concessions and change the present structure.
Why I thought it would be useful to look at the New International Economic Order in the context of the crisis is to point out the possibility of the international consensus Con the kind of solutions that are available, You Have three externes of Countries. There is one extreme that says "Let is leave the system as it is and let us compensate fór the problem of the developing countries through schemes such as COTոբerlSatory finance and aid with a little mixture of trade". There are the other extremes of countries which arc Seeking for il total tesitT LICELL Fring of the systein. The Dakar Declaration is an example.
The problem is, what is the realistic target for which the developing countries themselves must organise and mobilise their power. It is true that one can identify the cnofrious latent power in the position of raw
17

Page 20
materials, the trade in raw materialshow this could be done across thic differences that separate the developing countries is what is important.
Raw Materials
If you look at the New International Economic Order or thic declaration which took place, which was made in 1974 April, one would first say this is as an immediate reactiön to the crisis that overtook the economic rise in oil prices. If you remember the French President alsked For a U.N. conference on the energy situation and in response to that the Algerial President called for a conference of raw materials and development. While it is true that it was a response to the immediate crisis, the very fact that the perspective, the scope of the U.N. Special Sessions was altered in this way, an attempt was made to focus on the whole system which has given rise to this crisis, that itself indicated that the developing countries were concerned about a structural change in the system.
Food Problems
Just after that one, one moved into the food crisis and that gave the developing countries an entirely new perspective. Here was a situation where the population had increased by 45%, where agricultural output had increased by 75%, but we move into a food scarcity; this condition was present over a large part of the globe. What did the fool-crisis do? In short it exposed it international level the whole system of the way in which the output during these zo years had been distributed over the world community. It still left the masses in a backward situatitori, in a frighten ing situation.
Ital:Goiridicated tielkind of Flationell strategies of development that were being followed in the developing countries themselves whicre the backward sectors, which were the peasant traditional sectors, which were producing food had not improved technologically. These sectors were still living at levels which were extremely low. The Fool crisis in that sense once again brought to light in a very dira Tiatic way the diference of a whole systein where trade and aid ha di not helped to transfer resources or to increase the purchasing power of large masses of the human population,
18
Monetary Crisis Then wc Inc course to the Inonetary crisis. two decides no I% and then su increase of arolin seventics (now i. at about 1.7%) a even the incret fairly substantial, commodity price tries received in 19 by a wholcinflatic sent the prices of %םך by about קu countries were a meaninglessness Was all the fille i trade sit advers Here too one is inherent features you get oil the of dards of living Countries with Ill. inal distribution Will colities fairly equitable distribution with, inised working bargain for a be incomics ağırıldı. Vilhic up the costs of in of developing co a better pattern bution emerges countries themsel creasing and wid the developing at tries taking place Reversills of Or
It is in this co, the energy crisis t Was the first time action raw mate able to change til goveriled a very world economy. el tılı gere:after. "L"}, uninterrupted ex stillen halt, C joyed surpluses playinents WEC 3. frigh Lening deficit and along with t cruployment occ loped countries. the Third World put the OPEC Third World F. callic: ; leilder to tries. They acqui ","ct": – 5O II1:i,3Si WTe

el tereafter of Hole internatio lill flation during the d at slightly over denly you got al 1.7%, in the early Fl-4 til is rullning this et that fe in prices-the izeable increase in developing coul73/74-were eroded nary process which ianufactured goods The developing gain alerted to the if a system which loving the terms of aly against them. conscious of the CF a KV55 Lemul "Withiēric | မျိုးမျိုး rising stanin the developed chilisills for interFincome in their nich provide for 1 1itteril Of in CCIT1for instalce, orgaSlasses Which ein ter distribution of has a result sends anufactured goods untries; and while of incoille distriin the developed Ves therc is a Il ilening gap between ld developed coll
all the title,
der
1text of course th:1t ook place, Find this where by unilateral ial producers were hic relationship that vital sector of the Manythings happenle whole process of ;pansion came to a Collitrieg "T," hich elin their bilance of Liddenly faced with 5. Theinflation rose1ät wery fnassiv; unurred in thic deveAlong with that as a w kole- if you countries into thic
1r the first tirne be
the developcd collired surpluses which that they were not
able to absorb thern Within their own economeis, and these moneys flooded back in to Western countries, placing hic Third World-the COPEC colintries-in the position of a lender. Key Questions
In this situation Oile has to tisk what is likely to be the approach to the 4th Conference, I would like in fact to Place before you al Sct of few key questions that will determine the strategy, One of the first questions Cine Illas to ask is, what is the nature: of the crisis that has ovcrtaken the economy. Is it what the economists call cyclical or is it structural? Is it something which can be solved by minor adjustments amongst the West ern nations or is it something which calls for a change of the ground rules, a total re-structuring of the present relations between the developing and the developed nations? Is it some thing which can be still managel within the rules of the Italiet eco-nomy or does it call for inter governmental intervention through certain institutions which will regulate the operation of market forces in thւ: world colonomy?
Resistlic:
You will find the hard-core-which is really the dominant Western economics-resisting any approach which is characteristic of the New International Economic Order because whint the New Order is asking for is For a change in the ground rules, for new institutions, measures which will lead to inter-govern Ilental inter vention. fin short, a regulation of the world market economy. Within the Western countries themselves there arc progressive groups, including the Scandim:4 yizin group, որիigii are pressing for a change in the ground rules, which arc saying that the title has come yllen "Jo Illust make basic changes in the systell of international economic relations, Compensatory Finance and Aid
Within this, we have two sets of remedies being offered to us. One is the rennedy that Fr. Caspersz was referring to; the remedy which clcends largely on compensatory 1. ii. lln tliet approach there is an estort för the time being while this transition takes place to support the developing countries through schemes of collpensatory finance, through Ellorc II mas
CLLaLCLLLL LLLLHHLLLLHOS LCLLLLLLL LHH

Page 21
sive offers of aid, and you would find that these are the essential features of the Kissinger proposals.
This is a way of deflecting developing countries from their specific target of changing relationships so that they will have higher bargaining power, greater export Carning capacity, better bargaining strength in their relations with developed countries. As long as the compensatory finance-transfer of resource approach is diminant in the relations between developed and developing countries, the dealers of power will be in the industrialised nations.
It is, as Fr. Caspersz said, they who will determine how the general system will operate and they who will dictite The LeTT115 0F trade Find the relations between us.
Collective Self Reliance
Thc other approach is for ilin approach which calls for a different strategy. How can this be done? Let us look at the next question I would ask. If that were not so, what are the strategies open to the Third World? I think every one of the speakers who preceded me drew attention to what is inevitable. It is the Third World's collective selfreliance which determines collective and joint strategy on all these fronts. How best could this lic worked out? It is in fact in this arta that we are weakest. The past Confirences that have been held, including the Special Sessions, have been largely given to Eronouncing certain general demands, to outlining the broad general foatures of a new conomic order. But they have not really gone down to the specific part of getting the contents of this economic order, of working out really the forms of collaboration between developing countries by way of investments, by way of trade expansion, by way of technological exchange, of technology and know-how between these countries, by way of payment-agreements. All these things are extremely vague. It is up to the developing countries themselves to hive institutions which will work out these schemes in much greater detail and give specific content to this whole concept of self. reliance. We have been mouthing this phrase time and again. It has become a watchword among the developing countrics. But I have still to see anything like a concrete
Ecoxa), IIC REVIEW", DELCEM HEIL I 975
plan of action or any kind of ment which spe: World, in sorte the kind of colla that self-reliance The next questior these structural chặt effect of all this, I address ġur minds Ek really much work is Cillsts of the Wolk scernitris. There i: which his been sittir working out differe: jne. New York of it is interesting. likely to be the imag in cool, D. EEE “If the Thir tries can tak which has E them, then wi generation w See SOE WE progress...' EEE
In all this there which is importal developing count Tole of the Sociali: question of the Economic Orde situation, how is to relate itself to t that has emerged. world has always: developing world to fight for chan system. But the cColonic Order kind of challeng challenge posed in a national c working class be collective bargair ployer and imp Fir-a-fi employer their standard of better distributio come, It is so How does the S the New Inter Order? We have clear positions fri And it is importa developing world out imaginative alliances with this national commun their strategies f t:FlԼ: Է:

the Third World rategy of develop| olIt for thc Third ind of investment, ration at all levels 1 Է5t Ilt3: s supposing there were es what will be the met is stricthing we must I can only trill you that uw being doneon foreeconomy in several the Tinbergen Group for the las E six non this; alternatives. There is id whathas come Out For instance, what is of the world economy
■ World counthe initiative een cast upon thin the present e are likely to ry substantial
is another question nt, I think, for the rics. What is the it Bloc in this whole New International IP. In such a the Socialist world his new perspective In fact, the Socialist allied itself with the in the U.N. foru II. ges in the existing new international poses a different ... It is like the o a Marxist party mplex when the gins to undertake ing with the cm"ove its position and to improve living and get a of the total illlewhat analogous. cjalist World view tional Economic still not had very in these countries. it, I think, for the therefore to worl: relationships and group in the intery in formulating the 4th Confer
The last question I wish to ask is: What is the new Third World order we are talking about, because it is mot so much a riety," international e COnonic order: it is within that a new Third World order-1 new Third World order where there is much greater trade relationships among developing countries, where there is to some extent a de-linking of the relationship between developed metropolitan and developing countrics, a slight shift from the vertical relationship between the periphery and centre to horizontal relationships between the developing world as a whole. What exactly are the clements of this?
I was hoping that the Third World countries would be able to work out a detailed strategy which shows arcas of investment which indicate thic complementarity between the surplus and investment needs in this part of thic World but Wre hawe still mot hald that. I think that has to be done if one were to be working on this. If one w Tere to Conne: With Sonne realistic possibility, you would find that the whole tenor of the 4th Conference will change, just as much as what would happen if what Dr. Lal Jayawardena said were to take place.
The moment they realise that, the developed countries will Want to participate and Want to take part themselves and sinilarly, if wc were to come up with an imaginative Third World Plan, there would be a new approach to thc developing countries because that is the bargaining power that developing countries need, the capacity to realise investment opportunities and development goals by themselves. That strengthens the developing countries' position,
I do think it is a long process. I do not think we can achieve much in this short term it seems to me because of the way in which the world economic order has to be changed. The crises have converged, there is movement towards a consensus that the ground rules of the world economic order have to be changed.
If the Third World countries can take the initiative which has been cast on them, then within the present generation we are likely to see some very substantial progress towards what has been described as the New Tnternational Economic Order.
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Page 22
Bargaining on a Global -The context within wh effective bargaining occu
Susantha Goonati lake
Dr. ČøÇIFAT fikke fir Dirreført of FREEarri, Perpis' II. ri La-Erfröf fo be Economic Reviglif,
I hope to sensitise here solle of the issues introl",ted in the concept of co-operation between Third World countries in the bargaining situation that is emerging. I will deliberately take a historical perspective as this will highlight the past failures and the reasons for some successes. Thereafter, I will highlight what I believe are the significant points foi possible future strategics in the birgaining situation specially From Tia Sri Lilia rase.
Historically Our cconomies h:1ve been structured by a particular centrePeriphery relationship arising fron the colonial past and its continuation in the ecolonic spher. This basically has an important conditioning factor in the co-operation situation. Firstly our cloities - that is th: Third World ones-are not basically complemer tary, they had beel historically structured With thi- , pri IT:ity cefiltEeperiphery economic relationship as the funda II ental Comic. Therefore there is in comparison little we can exchange between our cconomies although within this lilitation there may be considcrable cxceptions,
A she backgrowd UNCTAD dari ryweryf" för i'r ffi:
SSTC LLLTTTLLLLLL TT TTlCTTTTLT TT LTLLL LLLLLLLLS LL LHHLGLGGL C S LTL LLGLGLL T TLGGGGT LCHES uLLLLLS LL S LLLTTTS L L TTTTLTTS LLL LT TT T LS ήξει σή εταποκτής ξrύμ ή αν αιτίαήέα οιητήriεr, F: : ரீக் தி:ர : ஆf tர் 8ம் ஆ LGGT HHHLHH HLHCGGTTLLLLSS S TT CLLGLCuS CLLuHL Hu LOLOLLLLLS TuT LCCCHCLCLHHL SS LGG T GLG CLLLLL S LLLLLL CLuLTLS LT LTYLCTTCLTLS kkLTLCCC TGGGGLT επητήriεr, πήίτε εκεrείτε α εία τίπαπί ένήτηκε αμέr r வீரர் வி: TFFEர :- ஈ: i Wர rே: து:rg τηiff έγιν ήττα της ηγαίνετοί είενεί μέης έλήήήrfar".
The background document identifies some of the areas of co-operation based on a policy of collective self reliance emerging as a result of the increased bargaining of developing countries as sources of supply of
2O
Ssenı ti:ıl rzıçı" nılılığı existent of cy The dictint Ecc ccuse jF di FFET Bettytën the dë, themselves there possibilities for e across the periplic Ehic: Imej Tę: w:dict trieå Căn exThữIt exch: Illige for som rials of the less t suggests new link loping Countries f goods and services and technical co-o:
IL als recogni: High ProportioΠ flows årnung de consist of intra-fi trans-national corff flect the Ilark sharing arrange III. related transfer p flotapproximatent It clvisages a set preferentzial arrari Third World tour Services Stor: || Iršu rince. ioint bargaining at
ping Countris: logical and scientii
Must Cor Imple Inc. Remain Utopian
I vyrill 10 micchanic-5 or cor these co-operation cally an arithmeti given the cxports developing counts ငြိုမျိုးါး{ find arg: mCILEA TIEy, EWC:n II changes of traditi Fil5 5 cvoked recently writer, tea was gr sugar in the Car Centriil Americilă a 3. Eitt tille British höusewife Cruld | teil. Iris casy to co at r ra ngcmcnts of

terials and of the sourCCs of Finance. Ignises the fact that ntial development reloping countrics would be increasing xchanges to occur ry, So that Some of l developing countheir products in c CF tkıc raw maticcycloped oncs. It s a mong the deveor a wide array of including scientific Picrittiön.
Es thic fact that a of present trade veloping countries rimi transactions kjif orations, which re: är lid production *Titsi sarı Eur wrihi:lı rices frequently do rinal market prices. ting up of several 1gements between tries including the ike Shipping ind dition, it calls for :Eicon vis-a-vis de Wes1d for joint technoicc co-operation.
intarity
ill with the litent3 COF SCIE: ČF i dels. It is lisical excrcise where and imports of the ic5, Wre CCL1lic ComLs of somic CompleIl the CASE OF exDlal ravy Illa terial5. ng the apt image by a Third World vytil in Sri Lanka, ribcan, Einaris in Il Cocoa in Africă and the European lave her 4 o'clock inceive that through complementarity,
agail to use the saime Inetaphor, Third Wrld Housewives could have their 4 o'clock teas paying the resEcctive producers a just share. HowCver, such conditions of complementarity Ellist reillain Utopian when viewed in the context of wohät the hackground docuInent refers to als control of these economies by the multinationals. This control, as the document points out, cists also in the case of the flew Illanufacturers that have opened up in these countries. Thic sale vertical integration extending from the producer at the periphery to the consumer at the centre exists with the corresponding disfunctions of the misusc of transfer prices, withholding of information etc.
It is here that we illust look at the present evolution of the world system in context. Pious hopes of getting á fair deal existcd from the beginning (FUNCTAD or even before, In fact various regional systems of integration 藍 been thought of in the Third World and I believe in the mid 60s, there was one actively discussed LL S KH S aaaLLHHLLtttLL S SLLLLLL S L LLS Nu War: Eliya. The sai II: efforts alt regional Co-operation and bargaining with the metropolitan centre also was behind the minds of all those will suggested producer cartels. These included products as varied as coffee, coca, teil, TL.bber a II lid bil, The speakers, on the second day of this conference, who dealt with the problell of joint action with other countries as far as our primary products were concerned, namely tea, rubber and coconut emphasized thic difficulties involved in the process. For instance, how does one colle to an agreement limiting tea production when East African countries are reluctant to join it specially when the teal industry in those countrics are operated by multinationals who have political influence within those countries and Willo Would naturally resent any limitation of the oligopolistic control they had on the industry which a bargaining situation would tendi ti Erodic.
The Case of Batıa Haus
I think to illustrate limitations of the pure Utopian concepts of cooperation more clearly, let me give thс сxamplc of a сопnпnodity namely bananas which were lentioned in the first session of this conference.
Econostic REVIEW, DECEMTER 197;

Page 23
It is this product, balalas, which gave rise to the non-derogatory terril "Banana Republic' in the same Way 15 Ceylon became Lipton's Tea Garden'. Today the market for bananas is handled by the transnational companies United Fruit, Castle all Cooke all. Del Molt: Between thern, they Control sortething like go', of the marketing and distribution system.
Within the last 20 years, there |haybeen cost reducing innovations, introluction Of Tarietiles resistence to Panama discase, in Circa sed inputs of fert Flisers and the introduction of larger and quicker cargo ships. HOWever, during the last two decades, the rice ricceived by producers ha 5 remained static whilst imported manuFactures have risen drainatically in "price, a parallel to the Ceylon tradii tional export produce. The purchasing power from cirilings of banana exports declined 60%.
LS HH LLLLLL S LLLLLLaaLL LLLLHHLHHLLaLLs that General Torrijo, the Panama. President started a banana producers OPEC, a Union of Central Americii Bantina Producing States. It met in March last year and Panama, Cust. Rica, II Conduras, Columbii and Gull:Lite-- mala, al agriccd to ley y a cine dult taxon cver case of Fruit exported.
This decision brought is strong counter attack by the banana Illulti initionals. Castle and Cooke refused to pay the tax and with the existence of alternative supplies frtill countries like Equador, and the producers' Union HLHG SLLLLLLLL LLLL LaaaaLaaaaLaLSLLaLLLLLLL LLLLLLL followed the example of Castle and Cerrke. In CASE: Rica, the CCPI il få my Ventback Jli Vige Settlencīt hat had alreday been ride and provoked a strike by the plantation Workers. In Panania, banana Cutting operations were suspended "because of re-neg." LLLLaLa S LLL a LLLaaLLLLLLL0S LHHHmHmLLLL officials simply stopped the shipments, leaving Timorc thin IE5, Cigo, Crates of fruit tra literă Hyori tin Elie port.
As il result if this concertcliction, the countries concerned give in under the stubborn stand of the companies. Recent revelations in the Wall Street Journal have pointed out
in addition, the Illyric covert Way's Lil
which the producers' stand was Erkel, The Honduras President Was given I million dollars to cut the
ודתו HLH חדFדThrin , הינו ח"ו H II בטן 25.1 ונ115-}E
propščd S II tax
As soil is this ly (hearings are in current sessions inth such activitie: United FFTLI it ca III jumping from his
I have tall co-operation betwe tries to highlight automatically arise | htly ra'il this that co-operation crucessior; Friðri di should nut be: "|13 pianism but on th 1975. Dag Himit" calls 'the Will Third World' || and to illustrate til introlved that Tw attēl til Taj Elie of the history of Lal Jaya Wardlena h
量置 Wringing ou depends on power of the
Eggs.
Hle Hile:Iittiöillel wä5 stärtcl wi: the charitaldeveloped count TUNCTAID II F43 Prehisch quit. U cver, changed its crı Phasizing tillic making organs is system, Organs i cwer lly, UNCT will a chill internatioilal SCCIl World II Gay," has (: Dag Hillanılmarskje will, capacity and tigris con ilticir-lo position of stren ponses from Wils Ciri d'Estil, g : changing nload countrics in res. Third World lili I vish Fr Imake is i moment is to changed possibili: any change of Pla for comino dity c guining from a P.

to 30 tš. bis,- ribe was reve, illel, progress in the if the US Senate s) the President of mitted suicide by 4 4-str o'rcy riffice,
„It this eximple of : EI1 producer LIF the problems that in such situations. example te show for wringing tյալ leveloped countries Sed til false - UthFict Filth narskjoeld Report ind power of the is irnl this comltext it tEIլեr:11 dynamic "LILL li li like Lil drawir Excellent Sull Illty UNCTA) which asimilde.
"t COFICe55 j075 the Wis ad Third World.
EL JIŽNICTWO I th An applical tro instincts of the its which filed. gall 3G a fail Life <ir NETWO III Elf","- tatics ind beigām study of decisionthe international v Hitch EHC Feal TAND I'W', hic WcycT, nged climate in the e, where the Thirl again to quote the eld Report) "the Power For negotiaependence from a th”. Re:Cient IGSgin, Kissinger, Gist". indicate the of the developed 101:15e to the iniew itancy. The point, hat our need at thc ecognise that Llic ies giore IOL froII 1 ns in the proposals hanges but in barinsition of strength,
specially after OPEC. Paris 1975. UNIDO, - thc Seventh Special Session, Stockholm 1972, Rome I 1975, Bucha rest 1974, etc.
Therefore, my further remarks are going to rest largely on how to inCrease Ourbargaining posture, because it is Only Within the framework of bargaining from strength that Concessions have been given and will also in thic fu turc bc given. So therefore, I would like to spell out soIIle areas in which further work will tend Li increase our bargairling Fit isture,
First yould be tu take a lenf froni UNCTAID III and study decisionmaking organs that structure our dependent situations. Whereas UNCTAD TTT strategy in effect began the study of large scale international organisations, our strategy should be to study those international orgamisations in the developed countries that have at bicaring Un our dependen E. situations. In the case of tea, one such carly study was hy N. S. Jayawardena and Jayapalin, to be followed by the Grover I1 Ilment Criminission1 El Nge:Flicy Houses. The study of the tea industry institutions were taken a step further by the Marga-IDS Study on the marketing of tea donc by Paul Caspersz. In short, with this study, we are now beginning to study those institutions at the opposite end of the bargaining table from within their countries therselves, an advantage viac i not liälye EfiTC.
Third World Expertise
One of the background Tal-Firs for this conference emphasizes the need to explore the possibilities of
joint work vith institutils sympathctic to the Third World in te Westcrit cumtries. Tillis is i
problem that has been raised in the Western world itself specially rising From the fact that in almost all Third World countries today there is il higher degree of expertise than avail. able in the development studies Field in the West. In this respect I believe we should utilize such Third World oriented institutions to study those structures in the defilleged "arrrri. that de Priveus of our fairshfire of resources. This is a reversal of the usual development studies and which also recognises that most of out problems are due to external res. traints. May I als add that all
1

Page 24
studies should preferably be under the guidance of the Third World academie:5 themselve; whic) áre actlially engaged in this.
Confrontation and Supplication
Mention was laide by Godfrey Guna tilleke of the UNCTAID AS ALI institution where we confront with the West and the IMF as one where we supplicate. Reference was also made to 'The Debt Trap" that interesting hook by Cheryl Payer of Ehe LMi, For a country which deals with the IMF as a supplicant, a study F the IMF should be very essential For any strategy of self reliance. I believe we should cxchange infornation with other Third World countries about their experiences with the IMF, the depth of information which is collected by IMF teams, լիe various options that fire cբcn etc. I am sure the IME in it operations, say in Rumania of Yugoslavia or for that matter in Italy would be acting very differently from the cast f a country like Sri Lankiւ ^\rid,:4. comparative stilds of these experiences would be a very instructive cilort for us specially in the context of an IMF which is changing because of a changing world context specially with le growth of Arab POWor.
This type of study should list: includ. UN and other Organs Upëriting on the development front in our countries. The Dag Hammarskijoeld Report has a section for the re-Organisition of various UN' Organisation: (I believe Lal Jayawardena had much foi cle) with drafting that particitlar section) and it envisiւges interesting changes. For our part we should carry uit Eicjil studies On the local Urganisations, their bility to servicc Lis, ind specially the quality of personnel tlhe E. It is vell known that Uften these organs act as a kind of cliploy
ment club and any III:Literial assistance they give is tied with an opening of jobs for the boys. Our enquiries should go into how we can utilise that type of LEN (LLC), FA () CEc.) aid so that we who have enough hunan expertist in this country get the material aid without the burden of often irrelevant experts.
Strategic Possibilitics
Our strategic position should not only be the study of those institutions
at the opposite end of the bargaining Halle but should als extend to the
נר
FLIEL TFIGĦ Tesource positions. Lion of various st Growth' type, th trics Tei incrcati jccticotis in TAW" Fili: thic reby also maki: ance of sich sup
litics. It is hel
ke siirstu perspective aECILI requirements of r Thirkcts. For raw stiies should nt mocratic form bu countries, they is entire ganTut of th Լrun including th, ties which such is loped countries');
We si Lull T. osition of East Lit uit als ty i F35 (LITCagainst us by the The Dag Halim Tilžir: Ti a study llon Country on the strategic weatril World Well, L. Hitley Grk Jil C. 5; Lucili ceritualities should split Luis IC3 m iw.
Respectability .
Godfrey GLi nat previous paper a models being cur and Tinbergen F viewpoint. I Pe: id:lific ICS: TTA, pectability of fut Il acccpi Lits uls=4S In this respeet, mention the : developed in the Worldll position15 Kul Tair yw'r yeatr if thesic F11Falcl5. specially the yea: ed respectively ti and also to Kili work reveals tha. cail studies ind share of the "I world's cake, countries would gical Scenariu5 metais Luired in Cent Western standar dcנI11םar accס quoted and has ciousness, if the

s of the will's With the publicalics F "Limit 5 ta' c dcveloped crÒ Linngly nint.ing prolterial positions and ng plans for issutlies of thici alterElla le hivi to lies from II ("Will E falso Our futuro esources as well á8 Laterialls. SLlı Cekli stake a purely teclillit as in developed hould explore Llic egg-political spece Hnilitary crventualitulis im the die WesLe 153 LI TIL C.
}t only study the ces, thit Wire. Filis: Sless s that may be used leycloped crollTitries. slielāReportrefers c by a developed Se of fred a3. I
against the Third ld Hentյw doing the Junter Scenarios fOT at least such studies similir studies Frini
if Futurology
Elekcinit. Initioned in i b ċilit two-yCallT 2359 structed by Leontief ran a third World sonially have scious Linns : ԷյքլIt thic r::- urology. Howel y CE, a sensitising device. it is necessity tllier izcigo Imōdels West all the Third in the ITI, Kishárl sigo analysed some 35. LG Elixit Conteil L. - zoog models adducհ CaltւIng find lungk In aild Wientir. His tall such futurologiicate a diminishing Third World in the Further developing under these futur ClOtake time periods uries to reach present ds of living. These ls haye been Widcly - cam Eercd - Eble conideveloped countries.
Counter Scenarios
It is therefore, recognising the ctinsciousness imprinting nature of Futurology, for Listo develops Cenarios counter to these. The proposed Tinbergen Approach for example: would not necessarily satisfy the criteria of a Third World viewpoint inspite of the latter's avowed ProThird World sympathies. The cfore, IL 3 sif 獸 importance for us to develop our own ingdels. In this respect, máy I add that Wë llyt sufficient expertise in our midst if only the will and imagination were there to develop then, Let Int lust give one example of a recent Ceylonese systems analyst, who using basically the same type of ForesterMr.ndows World tlyithmics approach incorporated in the study Τέχνή, η Grafij, has analysel Sri La Tikalna development scenarios.
This need try develop our CWT scenarios is not purely an intellectual luxury but also a rises fruil the fict that sonne of the scolarios Pitt forward by developed country strategies envisage confrontation with the Third World over raw materials involving COnventional and nuclear Wat faire. I refer specifically to the well known Suggestions made in a certain developed country strategic circles in Ll. vā F. PĒC success to scLIr by military force a corridor of oil licaring Saudi Arabian land. I also refer to Herman Kahn's well known nuclear scenarios which include Third World situations. Peter Worsely for instance from a Third World perspective has envisaged a warfare. With the Third World with the escalլtion of hargining processes. May I also add tilt tirë is a study by a few London based strategists on a Third World 1ueleår strategy Which in Effect Puts Hermin Kahn on his head.
I will now atterll Fit it'. Eg. 'Ille to i the last item which I wish to deal with and which has been throughout the seminar repeatedly, referred to by Various speakers, namely the need for widespread dissemination of informit in till a non-clitist bilisi 5.
Apart from Pure information think what is of paramount importance also is dissemination of the new theories and analyses being made to explain this phenomena. Most f these explanations lic counter to the
Eto:gric Riv Ew, DLC EIFFH 1971

Page 25
conventional economics taught in the Western countries (at lcast those taught in the fifties and sixtics) and a new science of economics from its own perspective and problematic has emerged. Let the add that the growth of this new thought parallelled the growth of UNCTAD and in fact provided the background for Illiny of its positions,
Conventional Economics
These approaches began as an active confrontation With the Hitherte Western economic thought. In fact 1964, the year of UNCTADI, also saw the well known declitation of Latin American Economists which detlared the emptiness of conventional economics in explaining Third World phenomena and called for in cffect KS SL LLLLL SYYLYLS LSLSLLK LLLSLL a SLLLLaSL calls hi vici et luced in the case i FM Eric in 1968 where a fresh look of the teaching of economics was taken, as Well as in Santiago in 1973 when it call Was Iliadci on similaliir i Lle 15. TIO) illustrate the terloï of Liegg tills I will quote from the call in Santiago 1973 titled "The Third FVariel Fort *°
SY L S YCS TTG S L S L S S SY S LLLL L S YJLCLLLLCLCLS GG u TY GCCCCJ T S CClGGTTCJJYYS μίίύ μεγοί καμία είiεία, πιλό παίκες οι εξαμίλλαίς LLLLLLLLuuuuuLLLLLL D TT LCL YSLLL YYY YYL YLGL SLHK uLCGYYS TTTTTL S S mTuT LCLuDLYS TCCCu CGCCLLS Μικό ο έθε τεμέατί έληξε ιεί τη δε είτε ομία: : A : y :ார்: LS CC CY L T L YTu uLLK S CSLLL T G GLLG L BCSY S CYYSYSCLCS CCLGCCLLGGCCS G G GGGCCCCCLL LLLL S LLLLLLLLYLLLL CCCCJLLL u SS GGGL YSSGLLLLL LL LLLLLL リrrエリrリ Ιηγών Μπήταμ Αγία Γάιανή ήτταίου . Τέέ Γκήή LLLCLLLS S L LCTYYGGG T CYJ J S TCLLLLS S L GL LLYC CCCC CCCCYCLCSYCCm C L S L S S S CCS CTTL L S LGG YS CGL GLT S L uLCuTTTG GGLLLLSS муfrг оғ. ғрұл шBoyz JAMғуғгеfier, Wiki ferry of SLLLTTTLTY CCCCCTYYTTS SSL LLLL S CCCuCGYJLS uCL шi// л д елділrily for frm fдағfерчМаркутстf ref/fr. I'Aire
Fra' Tartuff”.
SYSTGTYYSYLLLL LYS YS G LCCCG TL L LCCCCuu LLGLLS C CCCLCCCL S YLCCGGGG u GGYS YY YSL LY Tu T Y SY u uu u S YYYTGL LLGGG u T TL S LYLS гдїнёїї; frr:g fлf fije /'їri! IE%rld!",
"..... fer the Field gi ferrari in the fig LL LCCCLK J S Y S LLYKS S YJSCS JSKS S LTLSLSSSSS S KS GGTCCCCS uu S Y LTT LCC CLJJJ J J J LCCLL LL LLL LGLYLGLGL S L LCLCLGGLY S CCGCCT CCLLu TTCLCCL απ το ταυτό είναίκή τέήί με όλείοίος ήταν ήλιο LCLTTTJYGGu L CLCLS T Y S S L L G LLLLLL LT LCC CL S u GTCCCL Y SL GGGLLL S L HHYYS CGGS LTLL CCCS LLLTTS S uu S L L L SS SY u S S LLCCLLS SS S CLCCJLCCH bға&&gyr of file T Aird loorld go try frier A.jpg LL mlL L S S G Lm mGCCL S SS L GGLGLCLS Y C LLLLLCL LLLL
■」島*「冒五」°.
Eccox{3% TIC REVIEWY, TEOFICILATERIE 1975
We should make our contribution
In this connic Innention Lh: m. Vicy of reality that we in effect discussion of the terday a colleagt a private discu Chenery, the Wo
Recently Chen a Էյքոl Rքերքո which is now bic. in all the Third the latest gospel much to reconii let me illustrate 1. tific book was a ch developed count Eõk Wis C-alt draytni from thë lopment Studies World Bank sind di5CLISSiOl CIl d various Ileinbers writing, let me as: a CacleIlie but ill. involved a high d with very differe significant Portlic"): vere left Cutin ti at the IDS and these discussions 501Tle UE. Elle LD5 instance uIlhapp drafts they hald ti of World Bank book was publish the crgins of the reviewed critically discussion has in trying to Point ol ment which will guidelinc for sus whicht. Inany of Luis as authoritative tcm se discussiell Country C{}f\text: Welust lepend Listela Ilice from Flt leist Enter Critical Ind HW in Illuci. Le Sale
ther Third Wo
I am sure by TiLigt le somewh only Latin
 
 
 

| I-II를 on our part own creative
Il TI would like to liter in which our i pre-structured sic ir ofte leeft cout of Centralissues. Yolcswas mentioning in in the name of ld Bank Enlist,
ty has co-authorcd if ivv i FA GFGIFTET Å ng seriously pushed World Countries als I believe there is ild in the lok but te manner in Which Lilly written in thic ry context. Thc hored by members Institutul Ulf III)c1cat Sussex and the was the result of rafts prepared by The process of iure, was not purely So 'political and egree of bargaining ht drafts indi many is of the chapters, e final draft, I. vyras it in for Some ti E and 1 km. W tlıEAL luthors Were for about the final adopt on account ressure. Now the 2d last year and in LDS Ele botik Vas and art interesting rged, What I am Eiki that this doqtupushed as a policy In the futurc ind will begin to quote a product of inin the developed I believe that if
for intellectual roid we should that spirit of
e discussion tot Way as saly son: Countries, d.
"W" Galli Tlalni Corea concerned with herican thought
underpinning UNCTAD positions
And must be Larkin clects tr. hope he is.
yearning for
Sri
Well int letišt L.
There is in the Western World much more information about our problems
than we ourselves possess.
At an
undergraduate level some of the ideas that we are discussing here are deci
Tiliated in the West.
There arc in the Western WGrld several new journals apart from
th
TI
Third World
the a cademic ones, specially for a perspective. I refer to
in Oilth
lics like Hic Nery IIITEFITIFg7iff (LE England which provides a Third World perspective coverage as the Ergia. It does for a British cityoriente clientele. I believe as a first step we should at least take to those journals that deal with economic problems from our perspective.
A Dynamic Body of Thought
Within the last decade
E TITLETY,"
dynamic body of thought has emerged providing sufficient explanation from the Third World perspective. These originated with the structuralist views of sorne Latin Americans leading to thic dependency theorics as well its
other Inorë recent formulations.
this tradition of the new thought turc those like Frank, Furtado, Stavenhagen, Sunkel and Santos associated
with the 正盘ti
American scene,
Emmanucl Willerstein from Canada, Arghiri Emmanuel from France and Saint L. MITiini. FFUmı Africa LLa a K KKYLLLLLLL SLLK K J SLSSa SLu KK LLLLL S S
Llu Elintors of recent UN TIL
Sune Of
their
declarations of Third World positions,
It is however, regrettable that thic works of these writers are hardly known in Sri Lanka (I believe Lal Jayawardicmai and Godfrey Gunatillekti referred to the 11 in their discussion). It is of absolute importance that the works of these Writers whi
are forging
alle.
a new Third World iSocial Science should be Iliade avail
So let me conclude by stating that our highest priority should be in cooperation in the information and analytical sphere, Wellust exchange our cxperiences with other Third World countries and learn from each other and we should on our part make our
yw'n creative Cottributions.
23

Page 26
THE ECONOMY
Outward Looking Economic Policies
It is quite commonly said that in most developing countries the scope for import substitution has now been virtually exhausted and that these olities shgild W. Joentrite on export-oriented industrial development. In short, the "inwardlooking' (import-substituting) economic policies should now give way to "outward-looking (export-oriented) policies. Thc import-substitution policies followed by the developing countries during the last two decades or so have bc.cn the subject of much criticism in recent years. It has been pointed Lut that such policies have led to the creation of high-cost industries confined to sheltered donestic markets, Linable to reap economies of scale; being high-cost, they are Liriable to achieve : break-through into export markets. The so-called foreign exchange constraint’ om devele Pinnent has continued to be a major problem under such a policy and the problem has in fact worsened owing to the continued existence of a high import content in the final products turned out by these industries, Their employment generation has been low and frequently the technology used is imported and inappropriate to the conditions of a developing economy. ಙ್ಗಣ್ಣ: and monopolistic princtices have grown up in domestic markets fully sheltered from forcign competition. In short, the nature and Imagnitude of economic growth that hias resulted from import-substitution his been disappointing and fallen Far short of original expectations.
There is undu In thicscasserti)5 as somic of coLL r iilii Erics Elrc Cincer manufacturing ind ly under the privat Fblance crimis and tok pl milliam micr rätter till with a conscious TIl'ont program Ille. restrictions impos sixties (for balanc, sons) initnufacturi kinds grew up to T1:irket, amdl man fra Til the shortcup H Despite the liberal centives Willle exports, In any of tuiting industrics h;
IMIPORE
TRİCE: , Stigar - - - Mille and mil: pr Fish Products
Grinlig til Pils Упп and THrca. Fertiger
TE 1 {8) as ag if tutul
Sւյնrcը:
in the export field.
tic market coupl foreign exchange For r:LW" 1ıIEeri-a.li 1 the growth of c. utilization of Capa utilization in the
dustrialisector als à
Industrial Gruus
Сар
1. Manufacture of Food, Beverages and Tobacco ... Textiles, Wearing Apparel and Leither Industrics - - 5. Manufacture of World and World Products including
FLITILIELIr: - - - | Manufacture of Paper and Paper Products - - - S LLLLLLLLL Laa LLLS LLLLLLaaS LLL LLLS S LaLLLLL LL
Plastic Preklucts
6. Manufacture of Non-Metallic Minerii Products except
Petrele III and Cral Basic Metal Products
8. Manufacture of Fabricated Metal Products, Machinery a Hal
Tr#TF8Fort Equipment
y, Manufactured Freducts (nrt Cisewhere specified)
Total

itedly some truth latticularly insofar lufacturing indus. The growth of Istries, Particular: sector, was a byof payments probLice in ill ad liնը 11 in accordance industrial developUnder the import 'd since the early of payments reag industrics of al Exploit a sheltered y cof thicmi ss Uffer lings listed above. fiscal and other inFor 11-tralitional the import-substilive not faircrl well
than 50% in recent years, The most recent Industries Survey, the Central Bank's half yearly survey of industrial production, also shows (as in the table at bottom left) that overall industrial capacity utilisation, As a percentage of the total installed capacity, which amounted to 40.2 percent in 1974, with the heavy increase in Groups and g, is likely to rise to 54.7 percent in 1975. Still in the region of 5 o per Coil T.
"Inward-looking" for Agriculture and Primary Production
While the criticisms levelled against an inward-looking policy contain a high degree of validity in the case of many manufacturing industries, they losc much of their validity and relevance when it comes to import substitution in the field of agriculture and primary production. In fact, the probleTill inil FilAny developing CCLIII
'S OF SELECTED ITEMS OF HIGH IMPORT
SUBSTITUTION POTENTIAL
(RS, Ililions)
A verage
#ד-197G ו-97ז 1973, 1974 ו 197 סידעI 18 T95 If I 그 7 7-- 335 17D -8 후 է ց: -부다 Jellets 55 s TD TC)
8. 『후 8, 후 - 6. =; 63 8. 5 דז.
I - fT 고I டிபி 洲山 siji - II ΤΟΤ
- - 876 771 1םד 96ד T-333 8םני import bill - 7. 후 3 후
Č'r ffairy %s', FFFF"
Ticinarrow" collesd with inited locations, available imports have led to Insiderible LIIndicricity. The capacity ոlanufacturing inwhole has been less
city Utilization
Rare (%) .1974 1975 65.I பி:ே 56.3
후 * 7,5 i. 후-구
8.
7,ნნ ם.8ד ----
33-D
6.9 18.4
과 후
umumn
trics such as Sri Lanka is that the olicy of import substitution has not 畿 carried far enough in the field of agriculture and Primary production. Only limited progress has been made in the exploitation of the considerable growth prospects available from the import-substitution in this sphere. The potential scope for growth available from such a policy cannot be matched by any other policy in the short and medium term at least. A glance at the import statistics in the table above, Will readily show the available potential.
As senintheabUvetable duringthe five year period 1970-74, the average annual import bill on selected goods with a high import-substitution potential has been Rs. 9oG imillion or about one-third of the average annual import bill. This figure calculated at the official exchange rate grossly under
ECOS III REVEIN, DECENTHIH 1975

Page 27
states the real value of these imports in terms of scarce foreign exchange resources. When these imports are valued at the FEEC rate of exchange, the figure rises to nearly Rs. 500 million. Morcover, these figures do not reveal the actual extent of the country's requirements of (or the import demand for) these goods, They only reveal what the country could afford to import with the restricted foreign exchange availabilities. Hence the scope for possible substitution by local production goes beyond what these figures suggest.
The foreign exchange saving that is available from import substitution in these goods is of a magnitude that cannot be easily matched by the forcign exchange earnings that even the best of export-oriented industrial development plans can promise. Moreover, import substitution in this sphere is also attractive from the point of view of employment generation ad incole distribution. A considcrable portion of the benefits of such policies is likely to flow into the rural sector of the economy. One development strategy envisages con centration of effort on those sectors or point of the economy which promises high growth potential, the so-called growth poles'. In the case of Sri Lanka, for the next few years at least, the development efforts must concentrate on the following key areas: (a) Principal foodstuffs e.g. rice, sugar, grams and pulses (b) animal husbandry (c) Fisheries (d) principal raw materials for industry, e.g. cotton and (e) agricultural inputs e.g. fertilizer, In the Current eČČrnomic context of Sri Lanka an "inwardlooking policy in the above mentioned fields presents immense scope for rapid economic development. While the export-development envisaged in an “outward-looking” policy should undoubtedly receive emphasis intheshort and mediul termat least, a concentration of the nation's development efforts should centre on import substitution in primary production and selected agricultural inputs such as fertilizer.
EconoMic REVIEW, DLCEMBER 1975
Ban
The air friar frow the earl barking". In furral Developa Μεχμ, ο Γηral d reprWadirre #ige/ai, Sri Lara ya as if leading Modeed and M
8AAAASL A SL AASASAeSSLS e SLLLS eSS eSeeSS SL eA SLSASL AAAS AAASA
THE ''NEW D) BANKING
Prefa II ble
A5 the crisis il de in the Asian and 1 challenge to all
contributic to the extelt to alchi ileyici 1 crisis lies not onl development in
century has not res ment of the eco conditions of per people of this mainly small fairn poor, but in that values are being mented process th;
Thc task before to ensure that dice as a whole and inw. of people-their economic needs-ii cess. Man is As
In the Asian all view of the prese lopment, the landrate of increase of . little choice, but "collective' appro: –an approach whi individual capacity his consent and tij in the long run.
The Process
The small Farnhir fragmented by ind interests working f

- Finance
f the Air Tiger r grg க்ர்ே : y : து JS GGLTCTS SLCLLJ J CCL L G L LLLLL LGLLLSLLLSS SLGuLuTCCLL CSGLL CC Tm SCCCL LCCumuGGuGu GG TS S LCCGGCCC YYGGGLS LLLCL LLTLCLS LH L u uGC LLL LL LL LLLCLL S LLLL TTTTL C LGGTS LGGGLCCLLLLS S L LCCLCCL T TL LLLL JL LLS CCCCCCCC S LLLLLLT HHHHH S S LTTCCCCS LLLLLSLuCCC TT CCLCCCCS JLTGTCu G LJ LLLCGLS represented if this Conference by the General Managers bank r, the Bank of Ceylon and People's Bank, Mr. M. r. Donald Kaw//ar:gагg.
SeeeSLALSLeAkSeLeLSSSeSAeSMSALSLAeASeASeSASeASLMASLSeSeeSeSeSMSLMLeSLSeMSMLMSASeSASeeSLSeLSeLSLLMALeSLLLeSASeSMLMMMkMSMMeLSAeSeSeSeMAMeMMMAASSLAMSeMeSeMAeSLeLeSLeASLeAeLeLASLeLeeLeALeSS
EWELOPMENT
Pelopment deepens acific context, the institutions is to
greatest possible turning point. The in the fact that the past quarter ulted in the betternomic and social 1ap5 8o%, of thc: region, who are lers and landless their basic human roded by a fragut by-passes them.
all institutions is lopment is viewed plves development Lu Italin ĝis "well as 3 an evolving Proa's greatest asset.
Pacific region, in 1t stage of devem:ımlı ratiq) - Balıd the
opulation, there is .
III, IIILTEillTitle'll Hil ch Lo the problem hı strengthclis the and exists with serve his interests
g communities are vidual and social Grını withiI als Well
as outside these communities. Often tradition of individualism forms part of the value system of such commuinities. However, we realise that small and marginal farmers can become viable through joint action. It is important to note that hastily formed groups for gaining assistance rather than for action arc by the very nature
of their objective different from
groups that are striving for self. reliance and for community action.
The banks or any other development agency wishing to stimulate formation of self-reliant farming communities would gain if they bear in find that the initiative for formation and sustenance of the group must emerge from within the group.
Therefore the aim should be to develop communities in a way that joint decision making and action replace individualism of farmers. It may be assumed that decisions taken by these groups would be such that they will be within the capacities of the communities to implement. When these decisions are implemented the group would have taken a step towards self-reliance. Movement to a higher plane of technology will coinc as a consequence of such effective group actions. The banks and development agencies will have a role to play in up-grading technological levels by a gradual PrO CeSS.
The group decision or aspects of community life will provide the plan
25

Page 28
Banking -
Fin
of action for the area. A larger su PporLive Plan may have to be developed by banks and other development agencies LC support a mumler of such groups in the area. Such plans may highlight development prospects that are as yet beyond the imagination of individual groups. The supportive plans may provide a framework for larger action.
Role of Barks
In the Crittext of What Hills licen stated earlier, the role of banks in the developing cconomies would hawe to be re-defined, to enable them to lend support to Small Farner development. The institutional capability of the banks to mitivite Weaker sections is very much more crucial than the mere provision of credit. This the banks are in a better position to achieve by mobilising local savings and ploughing them back for the economic regeneration of the area. The re-cycling of resources would be conditioned by the rcquirements of the small farmers for their productive operations and their basic consumption needs. The firmers and the finily members would contribute thic Icsources which tlıcy coImmand viz: the labour and their native expertise,
The banks would bridge the gap in resources. This credit would, by and large, ble Converted into "agroservices'. The banks inced not only finance the production cycle of the group, but may need to help the grou P ar range for the Tmarketing of the produce, their consumption requirements, help the group take up agro-processing activities, so that the benefits accrue to the group. Finally the effort of the financing institutions would be to help the group continually refile and impreve the Package of practices. This should be in tuine with their local ethos and aspirations.
26
While the initiativ of the groups sh Tated, the bilink5 m. hlve Sorelligeful gering the proces: these liles in ireil: y et have been touc of Collective Solu proble Ins.
Re-organisation
Stri CLL li Tessi I, III
In order till group developme their part II ay h: their organisation level and make a in the existing la CELLITEE, til 5 LI TI fa triners. The su this regard are the
(I) the Organisati
more fil-to emphasis on sin ilking sanctioning ul I Lille El Tr:III required by f:
(z) appropriate : bility criterii enable the gr.
(3) tie lo ii Ii iilp
LIET TIL EL suited to gro.
(4) the security r
SLICH HIL til: responsibility
It al.
With the re-orien all development bar financial institutio tij re-examin e tille and procedures to cess of change,
Action Projects
T|1ere are a flur and inspiring cxa

ance - Bankin 3.
e for the formation ould be self-gelelay examine if they Folc to play in trigof thinking along $ which ITiāy flot as hed by the concept Lijn LO individual
of the Institutions,
Systems
hieve the goals of int, the banks on W : L ' 2-3 LITTLL: L II Fo : il set-up at the field ppropriate changes in policies and proliceds of slaller ggested cha Inges in
following:—
ional Set-up ble ilgilde: inted with greater de-ceIItrilised deci: pertaining to the fl:Lils Jurid perti liug el 11 t af services El TIl golg5.
Напре8 in the eligiI HELI KI 3; II, up to acquire credit.
lication forms and lCO CLI till: 15, pe II DIT up lending.
:quirements be made у іпcorporate group As El Security for
tition of the Hitlопil: Ihle İnternational ls would also have ir own approaches
facilitate the pro
Imber of intcrcisting Illplcs of the new
typic of rural development projects, These provide valuable insights into the process of development. Mere observation and static analysis of these efforts is an insufficient basis for learning, particularly as multiplication of these projects at a rapid rate is the Prille objective of development institutions. The best way for the banks Lt) leä, r1 and to trat in their persommel in this new kind of development banking is to get involved in initiating such experiments at the ground level in selected it reas. These “laboratories' which would combine social action, economic development and sound banking in the right propio'- tions derived through a pragmatic method, would be the proving ground for ideas and people. Analysis of this accumulated experience will create the necessary knowledge which is a pre-condition for massive action it a later stage.
The Conference recommends that cach Bank should undertake at least one action project which is based on the spirit of self-reliant development described in this policy statement. The size of project, its nodal thrust and its organisational form may be decided by cach institution in Conformity with the needs of thic area and the philosophy and capability of the banks,
The Asian Development Institute in collaboration with national institutions may provide to the banks such assistance as is necessary for the formulation of the projects. It should also provide a mechanism for the exchange of personnel between the banks and a continuous Frull For pooling of experience to accelerate the process of developing a body of knowledge Un “iew development banking to assist the Asian banking Community to move forward in
1 illisiini.
ECONOMIG REVIEW, DECEMBER 1975

Page 29
TECHNOLOGY
Clay Refrigerator Runs Without Electricity
REFRIGE FLATOTL51 Failable in Sri Lanka are constituted of a small freezing LLLLatLLL LLLL LLLLLS LLLLLLaa GGGLLLLL SL LLLSL appliance which is kept several degrees above freezing point. Meats are generally stored in the freezer while vegetables among others are stored in the main part of the refrigerator. The cheapest refrigerator today in Sri Lanka costs about Rs. 4ood- and consumes clectricity and/or keroscil c.
An Indian engineer Shri N. Ramu has developed a very cheap refrigerator which provides some of the facilities in the more cxpensive varietics. The refrigerator runs without clectricity and costs only about Rs. 100- and is based on the principle of thc cooling effect created by the evaporation of water.
Simple in construction and design, the new refrigerator uscs hollow blocks of baked clay available in different lengths from I ft. to 2 ft. Eight blocks of suitable sizc are sufficient for a 2.5 cu. ft. capacity box-model refrigerator; for greater capacity the number of these blocks may be increased. The refrigerator can also be made in the shape of an amirah with shelves to store fruits and vegetables. The box-model would cost about Rs. so- and the almirah type about Rs. Iod- according to Shri Ramu,
The refrigerator can bc constructed by any mason by mounting the blocks on a concrete platform and fitting an airtight insulated door on one side. Water, the only refrigerating agent used, is filled in the hollow blocks, which arc interconnected by a suitable arrangement. The water is drained out when needed through a spout provided at the bottom of the refrigerator. The top of the box is closed by a thin reinforced concrete slab with small holes, which are essential for effective functioning of the refrigerator. As water evaporates, the sides of thic blocks get cooled and provide refrigeration by convection.
Shri Rami has found that the
temperature inside the box remains
between 73 a to 7 o F. This tem
ECONOMIC REVIEW, DECEMBER 1975
perature as wel humidity in th almost Constanti pective of any c temperature.
Tests conduct refrigerator have tables and Fruits r før i L1 I libër to: utilized directly ing, unlike those trical refrigerator, brought to the before cooking like lemons, linne and vegetables ravi," liiania Illas retili freshness for over vegetables remain days,
The new refrig tinct advantage of initial cost in coln ventional refriger entails no runnin can be utilized cy there is no electr homes, this tyP systein could be p restaurants, food tries, vegetable m
Towards a {Whi Soya Miik
IN a previous issu Review attention production of mi and the total inad country's require Toccorded a fall il milk, as well as t the elite milk pro country. Furthel production of le South Asian regio the clite category i. compared to 4 I 3950 kg. in the U. New Zealand. W miliki imported, source of mik is soya Imilk.
The bagic: TAW milik is soya bean 40% protein and .
 
 

I as the required le refrigerator are 7 finlaintained, irreshange in the room
ed with the new
show!, that vegeeta in their freshness f days and can be or cooking or eat- preserved in clec5 which need to be r_0011 teTimp Crallt Llire or eating. Fruits is and sweet limes, ike beetroots and in their texture and
two wrecks. Other
fresh for to 3 to Io
erator his the dis
having a very low Parison to the coniting achine. It g experindi turc and en at places where icity. Apart from e of refrigeration rofitably utilized in processing indusarkets, etc.
e Revolution"
of the Economic was drawn to the ilk in the country quacy to lect the Lient:5. There wo. the production of lc rapid decline of lucing herd in the the finnual Ilı ilk cal cows in thic 1 not belonging to Only about 173 kg. 4 kg. in U.S.A., & illid 3902 kg, in ith the Paucity of a supplementary that is emerging
material for soya It contains about 2% oil. It is now
being grown extensively in Sri Lanka and processed soya belán could be a very good source of protein. The Indian University, Pantnagar Agricultural University has developed, soya milik as one of its soya prodicts.
Soya milk has al Protein content similar to that of milk. It can be mixed with ordinary milk in proPartij Els as high as e : 5a. This mixture is almost indistinguishable from cow's milk. Thus, soya milk and ordinary milk can not only cocxist but also supplement each other. As for the nutritive" value of SCWA milk, the data given in the following table speak for themselves:
М'їғлії, ரேடி" தர Світлfffffнfr ಙ್ yi:
Proteins ... 32' 3.2% Fats ... i. 5: I.2. Carbohydratics - . Minerilg; 5%-ס 7%.ם
Though equally nutritive, the production cost of soya milk packed in bottles or sachets comes to only about one-third the cost of cow's milk. Soya milk can be imparted with Any flavour or taste. With the addition of 6 to 7 percent sugar, it can be used as a good beverage. The unsweetened milk could also be used in other forms like curd.
Soya nilk can be stored for quite a sufficient time. Pasteurized soya milk can be stored for about a week at 5 C. The milk can be kept in bottles, plastic sachets or in bulk containers according to convenience, About 10 litres of soya milk can be prepared from one kilogram of soya grålirls.
The soya grain hins to pass through a number of processes before obtaining soya, milk, The various processes involved are cleaning and grading, dc-hulling, cotyledon separation, blanching, wet grinding, colloid Imilling, blending, homognization, boiling, chilling and packaging.
According to the Pantnagar Agricultural University a plant producing 10,000 litres/day of soya milk can be Set up with a capital investiment of about Rs. Io lakhs. The investment could be reduced to only Rs. I lakh in case of modern dairies already in existence.
Stya milk is already extensively used in some countries like China and Japan.
27

Page 30
COMMODITIES
TEA
Increased Earnings
Over Rs. 5 co million Sri Lanka's foreign exchange earnings from tea exports, for the first to months of this year, fetched over Rs, 500 million more than during the samme period last year. Prices fetched during this period in the Colombo and London auctions show a higher average price per kilo. The inforImation pertaining to the prices are given in the tables on the right.
The rising trend in tea production continued into October and (as forecast in the Eranayii Replieu of May 1975) the declining production trend of the last few years has been reversed. Tea production for the period January to October 1975 was 399,992,315 lb compared with 365,082, 830 in the first ten months of 1974. Exports during this period amounted to 393.9 million pounds in 1975 compared with 525.0 million pounds in 1974.
COLOMBO A
(Persifae.
High
Med
Lዲyኒy ... Total
LONI) ON AWUJI
(Ney Frr
N. India. , Indii Sri Links Kenya
Llgilinda TIL DEEL III il BLI LIII Rw'Équaliti
Zaire Mfi:ılı"yi Mozambique Bangladesh S. Wiell .. New Guillea ... Brazil
Britain's Interest in World Tea Agreeme
The British government is discussing with the minin Colimonwealth tea producing countries the scope for an internation:ligreeIncrit Un probletts in ehe El industry, The British government believes the solution to roblemis III List be soughton an international asis. Discussions were recently held in Sri Linki, with British officials where we late a strong case against the continuation of thic ractice by international institutions like the 蔷 Bink, the Commonwealth Development Corporation and other leiding institutions of giving financial assistance to countries for expansion of tea increage. The L.K. delegation favoured an export quot l agrecallent between exporters and importers which the British government could by administrative methods put into effect if there W45. Il consensus Limongst thic II Lajor exporters and importers.
The problem arising from a long-term agrectilent for tea, basically a regulation of exports through export quotas at agreed price Projections will be discussed further in February 197ć when Sri Lanka hosts a conference of the principal tea exporting countries. This will be followed by a meeting of Commonwealth tell producers in Londom on the eve of a FAO meeting in March 1976, Matters to be considered in the future include:–
28
I. A scheme of tea producing court belov an agreed leve
z. A levy on imp final work. Such Same country for ge
3. A sperial con statistics to keep in ti lems II tica.
4. The need tụ prices and to identify altre III LI merative to
5, The need for su ITiers to gettoget
At the Seventh S. Exporters of the Inti held in Jam. I g7+ LI it was agreed that th bc I.4 5o,65 DTilri, Ibs, ; 1975-1976. The exp was 472,2 mlrı, ll»5. March 1974 but Sir only 435 mln-as The export quota same period was 4 actual exports were
shortfall of 63.6 ml
 
 

TION PRICES
rål:)
IT 1975 ,86 ..I. தரப் .ே41 .., 6.5 7구
.. .ே40 ն.gt
TION PRICES
திர சிங்)
Ig74 197 . 8.3 கே78 16. 58 دقة ... ... 39.43 53-44 ... g.g6 65.5 ... Ĝo... 2.5 ĜI..3:14
56.57 8.77 . :) தே.8ெ 58.29. 59. II 5.00 57.1 5.8: 5. II அதே 4ே2 ჯiჭi — 56.98 $5.17 წ. 55.66 후
subsidising ettårigings_of ies ifprices ofteå fall 1.
orts of tea fit profiloinds to be used in the neric promotiou of feat.
mittee to be set up for Juch with current prob
imit lyse: trerids ir til prices that are suitable the tea producers,
Both exporters and coilHET.
ession of Sub-Group of Firmationali Group on tea #{{#if: the F# []. Hus pfl:E8 Le quatifor I974-1975 indigas. Inlin, lbs., for ort cluota for Sri Linki. for Ist April 1975 - 31st Lanka's exports were hortfall of 38.8 milm, lbs. greed for India for the go.2 min, lbs, but her
only 4IĞ.Ğ rtırılmı. Tb:54, 3 ... Its.
WEATHER AND CROPS
There were heavy rains during Oct. -N.Y. 1975. Despite producer belief till the city fins recorded recently would have led La decline in crop compared with list year, earlier forecasts halve proved corrcCE als telt crop for October has recorded 16,248.7 kilograffilines as against 1548,035 lillgrammes for the sinue month in 1974, increase för Jan. - COCE. 1975 Ls against the same period in 19 is therefore, 1.8 million los. i.e., the total harvested to date being 81,434,678 kilos, as against 165,598,985 I1 Ig"
Oct. 1975 Oct. 1974
High 5,3-8, III 3
Elil ,367,6gg 19த் Low ... ... 5,57,137 4,545,596
Titul 15, , 4구 1.48905
Jan.-Oct. Jan Oct.
1975 1דפ+
பூஜ் . . :3:03,333 4ே: MedilIIII , LOTT ... 5,556,08, 43,661,935 Tril #81,433,578 105,ڑgH,g83
First Consignments of Tea for Lond (in Auctions
The first consignments of ti to the London Tea Auctions of behalf of thë Lind Reforms Commission were loaded in Colombo and Trincomalee on Ist Noyellber, 1975. In the Colombo port a consigli Irient of tea was loaded or board the S.S. LagTiedot by Statutory trustees, Mackwoods Estates & Agencies (1972). Ltd. who were the first stil Lutory trustecs to be granted approval by the government export of teas for sale at the Lord in auctions.
In Trincillalee i shipment of God tons was loaded by Ms. George Stellarts, als stätutory trusteC5.
LOWER FREIGHT RATES FOR SRI LANKA's SORGHUM & MAIZE
The Ceylor 懿 EBLE Re: L1 Of Sri LinkL has persuaded the Ceylon/Straits Higkong to giant Sri Lanka promotional freight rates for exports of sorghun and maize to be ce from November 1, 1975 till 3 oth June 1976. The rate is 19. So U.S. dollairs for Iooskilns subject to currency adjust Irent factors and the prevailing bunker surcharge. Under the Fool Drive sorghu III a Irld Thiazi= cultivation were encouraged but the influ of low priced wheat flour into the local market did not make it remunerative for farmers to undertake Extensive Cultivation of this crop. Unlike kurikkan, Illinic, sweet potatoes and other yam substitutes sorghun and Italize were not as popular ning the people. The Paddy Marketing Boardiis therefore-air Ining ilt, export corders from Singapore and sgttle far East Coultries, for Sri Lanka to be competitive freight charges had to be reduced.
Ecoloric REVIEW, DECEMBER: Igly

Page 31
COCONUT
Actual Exports
Export earnings from coconut products in October 1975 at Rs. 49.6 m, indicated an increase of Rs. 23.3 m. in comparison with the previous month and Rs. 9.8 m. drop in Comparison with the corresponding month last year.
Earnings from the export of coconut oil in October 1975 at Rs. 19.8 m. showed a recovery from the previous month's sharp drop.
Fibre tradic re.
Earnings from October 1975 at a slight decrease compared with t
Earnings from fibre and fibre E 1975 at Rs. 8.4 m tial increase of R: pared with the pr Vytas an indical tiron the fibre trade, below.
EXPORTS OF COCONUT PRODUCTE
1974 January - October 1975
H"afrivour, re.
CulicoTILLI LI DI C. 55 I, а та I22, 203,56 リエ D.C. GG4,219 197-75ד,8 וב Cort 12:C.GC C . Puna. $7,8g| 9777 L3 T Frishnu Es 1,313,557 Illits 주, 77 °斗、 Filare: Problucts , I, 8; II, 2,5 to I 87,ն2ց,74ն 1 ية وتعليم Shell Products 496,570 그6,36g, 호 18, I
Total Wille
6, 그다
SPICES Cardamoms earnings up
Export earnings from spices during the period January to October this year continued to be lower than the corresponding period in 1974. With the exception 器 Cardillons all other spices showed a decline both in quantity and in value. Cardanon exports at 5,251 cwt.s. for the first ten months of this year showed a substantial inèrease over the same period in 1974. Total earnings from spice exports up to October this year were R8. 47,4 m. CODImpated tO R.s. 69.z. mil. during the corresponding period in 1974.
Sole Crepe Latex Creps Scrap Crepe ... Sheet RLibhter ... Black Rubber... Lite:
Grind Tutil
SS
197 January - October J இார் 2. t. ur. r. 蓟 Spice Exports
(iiitlrliiiL Imbil III, I3ճ 53-ס 雷
rdLII I,836 =H=tاق Clives ໘. It, : Pւpper 6, στΤ 다. Nutmeg 고, 287 I.A. Essential Oil Exports
Cinnlimin 蔷 -71 -1.7 Cinnarritin Bark Oil .ד.ם דם Citronella Oil . Ginger Oil ... - - - 0. Cardation Oil - - - I 2.7 (CITE (); l Nuttleg Oil ... 7고
EconoMI REVIEW, DECEMBER 1975

Very he export of D.C. in ls. 17.5 m. showed f Rs. 1.2 m, when c previous month. the export of coir "ocluıcts in1 ()Ctober showed a substan3.9 m. when comvious month. This of the recovery of Details in table
ärary - October
"ሶ! T.J. R.
If I52,834,94. tյն τέιτ, ή και 4, 384
,68,34 i 6,82,376 58 7,287,708. T- II,8çı6,7 კჯ
7,6ip구
RUBBER
Sri Lanka's export earnings from rubber had dropped by over Rs. 15c. million up to the end of October, when compared to the same period last year, Though the exports of rubber during January to October t 75 hits shown a substantial increase in quantity, export earnings at Rs. 492.6 rin. was lower by Ris. I 50.9 m. when compared with the corres ponding period in 1974. R.S.S. prices averaging Rs. Il 5o per l'b. during the month of November were higher than those of the corresponding monthlastyearby 46 Cts. Average prices for September and October this year were Rs. 1.46 lb. and Rs. 1.47/lb, respectively as compared with Rs. 1.20 lb. and Rs. 1.2.1 lb. in the corresponding Tilonths of 1974.
Production increase Forecast
It is reported that the International Rubber Study Group (IRSG) has Forecast that world natural rubber production for 1976 will increase to 3.5 million tons from an estimated 3.25 million tons in 1975.
RUBIBER EXPORTS
IT тутј January-October January-October
இராச்' Porfir 2дам/##у al
*) (R.I. Fr.) (II) г.) (品、)
7, 1985 -- 2I.
18고, 후 б4-р,| .2 3 م تمكالملوثات
*$,igნფ„g:46 56. 74, TT
134,133,71 I 1ός, η 84,7οί asis, H.
피 후 3 = 5 .2,032,870 الة.
H14 .9םם +, 후학
후 6,구 19,736 4ே3.3 29, 10,328 4ஒ:
ESSENTIAL (OILS
1975 -
Inuary - October Exports of cinnamon leaf oil and : citronella oil have shown a slight increase in October compared with the ܕ ܼܲܚ ܘ ܵ ܼ ܘ 후 exports during the previous month. 蠶 However, total exports of these items, 8. 誉 during the first ten months of this I til year were much lower than compared with the corresponding period in 813 I. I974. Total earnings from essential 6. 蠶 oil exports up to October this year at "": ది. Rs. 3.6 m. was lower by Rs. 8.1 m. 표 when compared with the corres6, s ponding period in 1974, Details are
given in the table at left,
ni i * கொழும்பு ஆகிழ்க் தற்சு
(ple-A 29

Page 32
F O REI GIN NEWS REVIEW
WHEN SIX RICH NATIONS MEET NIE.
The thre: day ccc nomic summimit rof the six leading industrialised nations that took place at Rambouillet near Paris in mid November brought, once again, to the fore the strange cconomic dilemma in which the western world is now caught up. LLLLLL L LtLLtLLL LLaL LLaLLLLSS SLLSL LLLLL L LLLLL LLLL SLLLLL the USA, France, Britain, West Germany, Italy and Japan pledging DLL LLLL LLLL LLL LLLL LLLLLLLLLL S LLLLS Co-operate closer in managing their increasingly inter-dependent economics and agriccing to fight vigorously against high un cmployment, contiriu ing in Flation and scrious cinergy problems' without thic slightest indication of how they could achieve such inhere il tly ciri tradictory gråls.
Dilemma
The dilemma facing these societies is that if they take energetic steps to revive economic activity they would provoke a new outbreak of inflation. On the other hand the steps taken to curb inflation could prolong the recessin which threaters to become chronic, Today there are as Illiny is T2 to 15 million unemployed in the industrialised Western World; whilc inflation rates in these countries wary from Britain’s 7,5 per cent to ó Per cent in West Germany. The severity of inflationary pressures in these six LLLLaaHHLLLLLLLKS LLLHLLHHLLLLLLL LLLL LHHLLLLLuLLLLHHLLuLLS This became quite apparent in the Laaa LLL LLLLLL aaL LLLLLLLLLLH HuHLLLL stated that their lost urgent task was SLLLLL LLLLLLaL LLLLL HGLaL LLLL LLL LLLLLS sources in LineDiployITient". In the så me breath they were compelled to Caution that "in consolidating the recovery, it is essertial to avoid Lllleashing additional inflationary forces which would threaten its success" The political and social consequences that could a rise if this situation got put of handis causing scrious concern in the Western World, most of all a long its leaders,
Anxiety
The Western press voiced illuch of
the fears of their leaders and anxiety
at the ineptness of these helds of state
to suggest any concrete solutions. Britain's Girdly, for instance, ex
30
pressing all III, a bouillet they foi LIn in such things tāriffs, which cø1 industrialised wo fatal fragilentatio the great depress ind the Terrible v of it". The react yers, aill some ai ment chiefs, will London's I), E bied the gathering Ye:Lir"",
ther reactions tT 1, זניח, וחנן 8 וII" a masque, either"; **II SLIT, F.C. t. seemed to give better grasp of
Ems"
I exactly only "each othel eWjked the cob Wit) Third World that El far more Fruitful six leaders als clisc of the less develo
The Rimbituilt ils0 t{1 the frire : world community compartmentalised level. Here: the W. nations upset bey group tofoil produ decided to assert is raw III1 a terial pro socialist states pu goals at various economic activity Thirl World coin raw material prod of a system still no A closer indi filoj logue a mong all mål. tillcc of the irew. and more permane is what the Third ing to take for grai by the world's Consolidate ilmid pi dards at any co: Il chuil ritmicimit thirri luping world, Disiillusion Ilment
RAI1bCol Lillet vwa 5

AR PARIS
illed Lilit at Railda loose agreement
als currency and ld "also split the -lel into i kind CF in that helped create ion if the thirties vars that were Platt ion of many obserdes to the gouveril5 sunriled up by i: 're-fi", which dub"Nin-Event of the
We: Te the Easy Fry FFF" iLiph Lit Tiit just and Ti'ye 1magazine E) face discuissions the Six leaders i ach other’s Prob
L1 is clerii with is problems' that Lis relcitiu Il of the it would have been | Exer Lis“ lädthese L15:Secl the problems ped Worll.
it summit brought hic reality that the
is getting Thore
at the CCormic Sternindistrilised 2nd control by the cing countries who their rights et Mor ducers, the Western Irsuing their own levels of planned and finally the Iprising largely of ulcers at the mercy I within its control. e Illeaningful diations andan accepitability of a new it economic order World is now coited. This attempt 'ichest nations to reservic their sta Ilit calı cause disLughout the cleve
Certainly an occa
Lt H a LLLLLaLLaaLaaa LLa L Ha respect. The six said that they would play their part in urgent measures to help the Third World meet its deficits and to stabilise its export ernings, The Americans put ForWird algair their proposals developed at the United Nations Special Session, Tejected indexation IJf comi midity Prices, El Llt said they Werc ready to be crimist TLICT tive til CCIETIMITE = dities case by case.
The Issue, hij wever, is moet stabilisation of export earnings but of protecting the purchasing power of thc developing coultries, The ulcercII JIlious rejection of the derland for indexation of prices of goods exported by the developing world emphasised once again where exactly the stumbling blocks to the evolution of cquitable international monetary and trading systems lay.
A Lypical Third World reaction was LaL StY YLLS LLLLLLLLSS S SS YLlLLEESLSLHHLaaH correspondent Batul Gathani
"Ahogh leader of the fix leading ##Fial Fiation. Fided their éroßir WWi y giழ :ri : for o awit, fra de, fögre fairy Trial effergy fújaferation, he Rayloriile rar șiiție has the lars of a fished affair eledded ir Myrgiofariais platififiad físich fee ar få ignore fatal, fie preferire lid plight of the Third World Twyf Fam waterias prodirig corrie.
The Perfer, Jorld Frar IT: Traghi I inI II Forloge croftir dile#ART offearl #2 Мутёe deарғгалғаffewрлі Ғ, ғауғ іғі лëін. 4 trial cort and carrieqiences for the les déveloped parti of the Horld 'bese fiseypt are being fl:Id is fybody'; glief, fiii fiii "gariging p” operation a bar:y bring arry/gy a le Haarer cor:};rier of the Isra.
TE FA şif gyi:e'd war Mike i ##Fỉ Wor:#ịg (f # PrgofệrọHir: ##- a first rarel. If it also a radar welll'ory of the Pro Ferrf health Trid futhre of fr-dy' Ford e corre orer herare i'w ore theatri arwything else the Rica yw hi o filler LLCLCLuT LC CLLLLL LLLLLLLELLL LLLL LSL LLLLLL I'r Ffri'r de fire foi rritz Frølilla fe ad preferire சோசிார பூ சாகிா : artil Frönsínir þrosperify at any cs.ff. Brit LY LLuCHCCLCLL LLLL LLLL LLG LCH LLu LLLLLL LLLSyJS bởillef "Spirii” (vill du 5 her fra 77 era af fussafjor-free Frong wie reffpas'.
ECOSOMIC REVIEW DECEMIER 1973

Page 33
LATIN AMERICA
"The quetzal bird is the national symbol of Guatemala. He is said to hil ve IJst his voice when the Mayils were defeated by the Spaniards. Others say he never lost his voice, but since then has refused to sing. The fact is that when he is cagedi e dies".
EDI LTA I: ior-b G ALLEAxg *** Gorffe Wasa, Charraiff forrrrrrrr"
For most of us in Sri Lanka, Latin America and its countries are merely distant images. The lines of modern communication existed only via the BWells of Metropolitan Europe. There are no direct links. Only images. As school children, we may have gathered some vague idea about the length of the Amazon river and the Primitive na Lure of the indigenous Scttleinent along it, or of the Garrella on horse-back rounding up large herds of cattle in the Pampas. These blurred images may have received some new life since the events in Chile. For not merely Sri Lankans, but indeed the whole world had heard of Salvador Allende and his Linfor tunate experiment of attempting to introduce a revolutionary Marxist Society through the Parliamentary road. The demise of Altende and his dreams were accompanied by blood shed, vengeance and ritual blood letting. But what happened in Chile to the mass of the people was hardly an exception in "the history of Latin America. Latin America's tranquility ended with the advent of the Spanish Conquistadores. From then began the chronicle of plunder and disposition, of hunger and death. At many times in the history of Latin America, brave men have risen to defend their continent from the ravage of foreigners. They spoke eloquently about the pillage of their wealth to feed Europe and America, but they came and went Zapata of Mexico, Bolivar who gave his name to his country and the legendary Che Guevara. Allende joined this long and seemingly never ending list. Whatever their weaknesses they did not just die for a dream. They dicd in order to make their dream a rezility. They dreint of liberating their people and giving them a part of their birthright-the massive wealth of Latin America. Death has not brought an
Ecosostic REVIEW, DEEEtitil 1975
Then And
entri Terteved was in Latin halve Filis) Eoceen te Tuilers,
Whatever in theories of the in :Jf Libro IF Elle fac SCII të hiqte liceri
CSers. Latin Am since those ren: Venturcd:Cross || their tcc thin the and Azetecs and 24tians." From til gCill al Id ne sunt: travelled from Europe. The pict The ships still it The only differe thcy carry perhap phates and main buried in the Lat Tracle ind indust Cmptying thic wefal shifted from Elle S and has now pass lands, American հA re a Trivileged Latin American back as 1913 P. Wilson said "You given to capitalists You do not hear foreign capitalists Stitcs. They are Cessions'. He wen that ili Ee pledged ... Cessions are in th Foreign interests i: their clo mestic af: Tie verleen i matud
It was like the cle equality to the ch latter, Benjamin C Prilie Minister i of the låst century, Nilerica said "It in to existence to r of the Cild”. Hiscal Same ideology of arrogance, for he si of "eth Ilan for for LIs a II''. Larg 'illerica were desi by the Foreign pov plied minerals, ot riges and so on. Ti labour of the Latin

Now
hallenges; and in a merica death may ible enemics of the
1milly say about the ernational Division remains that so far Winners and others !rica hiš last ''ever issance Europeans * Céin sind bllried throats of the Mayas ther Indiam civilien on, ship loads of ims of silver have the continent ty |re has mot changed. ravel in one way. nce is that today s coflce, oil, phos y other minerals in American earth. ry Concerned with th of Latin America anish to the British ld in to Allerican
1bu sinc55; cc) 1Cerr1s
Position im 111 Øst ountrics. As far esident Woodrow hear of concessions , in Latin Americi.
of concessions to in the United
mot granted conit on to say "States
...to grant conis condition, that *e apt to dominate kirs“. Tiere Hä8 lity in the process.
phant spealking of ickens. For that Israeli, thc British
El second half speaking of Latin all a new world dress the balance was based on the
domination and joke mellifluously hilisel and God e arcas in Latin gnated functions ’ers, Some suphers II neat, bevehe wealth and the
American people
was transmitted to Europe and the United States as capital. What Latin
America lost became the SS of The finite nature of its
thers, wealth is evident low in the endless number of emptied tunnels which were formerly mines for precious letals: the silver mines of Potosi are now merely a big hole in the carth. The desolation of the Chilcian nitrate pampas and the Amazon's rubber forest are "history" books in then5elves.
Throughout this period the living standards of the people of Latin A Tierica have deteriorated. Around the 18 jo's the world's rich countries enjoyed a 50 per cent higher living standard than the poor countries. By the end of the 20th century this would have grown by is times in the case of La til America. The United States citizens' average income is 7 times that of Latin America and grows Io times faster. But even this statistic is deceptive for 6 million Latin Americans at the top share the same amount as the to million at the botton. One child in Latin America dies of disease or hunger every minute and in per capita terms Latin America today produces less than it had produced before World W III.
The population of Latin America is growing at such a rate that in the year 2cdo it is estimated to reach 65 o million. Of the today's 280 million 50 million are unemployed and one hundred million arc illiterate. The population keeps growing and the health keeps decreasing. According to the tencts of the population controllers one may even sity that Latin Americans are over-enthusiastic lovers who have thrown precaution to the wind. The family planners sow pills and condoms but reap children. But the Problenn is mot the inability to support this population, for the magnificent lands of Latin America could give to its people enough and more. The problem is with the system that expropriates and controls the wealth of Latin Allerica for the benefit of those who live outside the continent. The dominating ideology was expressed by President Johnson who said "let us get on the fact that dollars invested in population con
3.

Page 34
轟
trol is Worth 1 og dollas ir Vested in economic growth'.
But the absurdity of this is that Tost Latin American countries have no surplus of people. In fact they have tota few. “Brazil has 38 times fewer People per square mile than Belgium, Paraguay has 49 times fewer than England. Peru has 32 times fewer than Japan'. Half the territory of Bolivia, Brazil, Chile, Equadr, Paliraguay and Venezuela Have no, inhabitantsiit all. Could population Control be preached in such circumstances? Today
Times have changed but for Latin America the process of exploitation Eու-Ց Ճn, III 蠶 to the extraction of raw materials. The external debt of Latin America has also kept increasing as seen from the following Eiable:
Foreign Investment and External Debt in 1965
(i. Williaris gf196a dollár)
fort frg exigri.
frr:FF flyger' affi Ffilltir Bга;іI . 후구고 5, cip Menezuela 8¤ 7QC Argentima I,28, 2,350, 5,555 Mexico - 2ே0 1,தேன் 3,27) 蜘e., في أذناي 1 83 كل I في بي Cirileirilia PL ճ8:: .ם3ניח כיבוש Bili Tiri. - 다. 고 다 그 Pi I סד 고 ECHE - - TTE 2. Pārim Repub. I to LTபgபது * : TT C Gunteni-1 Iso 이 , 구 CTSEL Riti ଗ୍ଯାo। էյE F TGO באדם Nitiragua - - 다. Paraglity 1 다. $C) Latin Americi. 15:43D IE, IEC :55ք
"ørero ECLA, 1966
Statistically speaking Africa and Asia Πlay be in 1 νοτς. position but the income differentials within Latin America are massive. Every ney and then some country in Latin America attempts to redress the balance, but all thcy seein to achieve in this POTU CESS of trying to gain control of their natural resources is disaster in most cases, and sometimes a mere "Renegotiation of the terms of depenlenite'.
Lind distribution reflects colossai
divergences. They speak of Latifindi and Milfridi (big and small
End holdings). The it Verage size of Latifundios in Argentina is 27ó times that of Minifu idios. In Guate
32
Tilikia L. Latifundi I,732 times the fundio, The in is huddled even smaller plots of
ut a living. Ti American busines POVer Ileans Ei business Tien tre development are collictition or be ration like Gene thin Tost of the s El Il CICLIII tries. T ITT, Anaconda a not be repeated Kelileidy, plırı cal Progress was dub rica as the Alliar Imperialism, Cou spy dramas are pri \ Eller I can sub so chieved indepen Asia and Africa nonic strangulati Teal rulers have
18:4he Briti Canning wrote it the lails driven, free; and if we do affairs sadly, she English did na, Latin America l American Monro. then Latin Americ ing more than a United States of A. of this pillage has Il Cintly by Eduard Furtado, Andre Gl enorrhage of p. U.S. investinents has been five times years than the infus men E5, All at temp բTքcւ:58 Hit we Liceր According to an In ng Survey in 196; branches of U.S. Allerica holding billion dollars.
The price differer Ili teriiiii ls indi min have steadily grow Price of 2.2 bills : Ford Tractor. T. Will Coast ai Ebout httempts at import s been of little avail the rape of virginia abated after Five ce Parts of Litin Ame:

lay be as much as size of the Minioverished peasant ore in Smaller änd ld and barely ekes size of the Latin concerns and their El Latin American pting independent hither smashed by ght up. A CorpoMotors is richer haller Latin Amerile roles played by Ed Kenriccolt need ere. The famous ld the Alliance for led by Latin Amecc for Progress of 15, revolutions and ducts of the Latin The continent lence long before has suffered coin tew crisince. The come and gone, sh Prime Minister The deed is done, Spanish America is not missimanage out is English'. The e their profits in it ther calc the doctrine and since has become nothbackyard for the merica. The story been related clolo Galicano, Celso inder Frank. The rofits from direct in Latin Arıcrica greater ill recent ion of new investits to control this of little avail. ternational Bankthere were 135 Banks in Latin leposits of I.27
LCes between r:Ly ufactured goods 1. In 1954, the ould purchase a day a machine animals, All Lubstitution h:ve
and meanwhile nitlis goes Öl unnturies in many rica, particularly
the Brazilian North. In theory the Latin American has equality of opportunity with a foreigner. Anatole France once said that the law in its majestic equality forbids the rich as well as the poor from sleeping under bridges, begging in the streets and stealing bread. The majority of the Latin American people understandably when convicted of such oftences naturally do not salute the impartiality of the law.
In recent times Latin A II herica’s plight änd the dängers ruher economy have growr Intire and more evident, The inability of the people of Latin America to take Eharge of their own resources and re-structure their economics in the initinner they would wish Et has left them III il terlative La diperhid on the vagilities of world trade. Through the period 1974-1975 market Cunditions for most of Latin America's principal expert products deteriorated. Terms of trade, consequently, have continued to get Worst Several countries in the region derive ag." or more of their export receipts front coffee sind the relative let-line in coffee Prices hild El Particularly widespread effect. Lowr copper prices have liversely affected Chile and Peru, and lower wool prices together with a decline in world market meat prices reduced the exploit earnings of Argentina, Paraguay and Uruguay. To make matters worse the EEC placed limitations on heef exports to the countries of the Community,
Countries such as Argentina, Brazil, Columbia ilind Mexico have ichieyel a fhir degree of economic diversification but the recession in the industrialised world only LLLLaLLLL LLLL S SLLL S KLKK LLLLLtSLLLLLLL exports, For mest of these countries, changing price indicrand conditions nin llger tral deficīts andivith their existing KLL L LLLLL LHHLLLLL LL LLL LLLLL LLJJ GGL0 L tt LLLLL LLLL CLLaaLLS
growth.
And thc circle continues to Prové mort LKLaL CLK SY LLLSS S aLLLLLLLaaa LLLLL LLLLLLY S own existing economic structures like it even minore difficult for them to liversify | their exports arid break the stranglehold.
The saddest part of the Latin American scene is the runway inflation that has plagueil seiteral of these countries fund put many of her people ini helpless pristion. The folleywing Figures, tell thel: - Tailinse eloquenti.
The table below sets out rates of increase of consurner prices in sorne Latin American countries. The I973 figura: is the perën tagë. increase over I. and I7- the increase * ''{f 1973.
ID73 1)T 9.3 I. PLI FILLIT , 5.9) 1.8 ħrgem titla 6t. 18.7 Craufhin . 2. Mexico ... ܪ ܪ + I 고-1 ユ*・3 Nicaragua. ... 1그 - 후 E CILLIC: , T. 주 - Paraguay... I-7 ( Brazil Bihliwia . . 31. Ĝi 구. Uruguay ... T-후 71-- Hill 7
LL0La aLL LLSL L LLLLHLHCS LLLLLLLL u S

Page 35
"Til The Ob victis inswer is for Parcountries Fit to switch to industry and manufactured of goods which provide more stable reve:irl iue and Incore employment. World ill trade in manufactural goods has risen ci twice as fast as trale in raw materials h (excluding oil) in recent years.
BLI E IL start Lupa III tries requires cipita technology, Trai aill { if which tre in
III ir ca. 1 tries,
... Even if this barrier is overcome then
the manufactured exports of countries are also heavily taxed by the rish countries, Raw iron can Ec irtiported into the USA duty-free. But բiI15 or drain pipes are subject to import tax.
零玉 இஜ்
6. This is why the distinguished Swedish economist. Gunnar Myrdal has said: "The fact is that international trade will generally rend to breed inequality, and will do so the more strongly whern substantial inclualities are already establih".
4.
Despic all this, ti fictired goods fro has gryTñ hy 15 og yei Tš, But three qui h3:s COITI: froIII onl countries and one-th
able to Icing Kong
For the 3}{ןDrיvurld r
CILIl get Eugether in : Pay T1-re for the ra perhaps other. Thir rials, ind so finance
 
 
 
 
 
 

- inufacturing indusl, factories, machin
Illin-Ti"For etc. ptor tri huy many manủfactured prö=
a. Even if the poor countrics can over
come this obstacle, their people are too short supply iri che: ducts-so they hive to sell verseas. But the rich countrics have already sewrin up the rimain Ovcrseas Imarkets.
the present terms of world trade are becoming increasingly unjust for the poor countries
export of ill- 15. At the riot of the problem is the fict Tin the Por worlal that the rich world is coming to need POČT "glir ir 1 recent Thost of the products of the Por til Korld rters of this increase less and less, whereas the poor world light developing needs the products of the rich world ird of it is attribut- !Tigre ind Triore, for its development
ill.i.e. , E.
Low, the Illain hope is that the producers of still-vital raw materials a kind of trade union of the Third World and so make the rich world laterials is needs. OPEC has shown the way with oil. Now 1 World nations can co-operate to earn more for their raw matetheir own development under their53 wuri cu trol:
- - \

Page 36
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