Experts Urge New U.S. Role in Third World : Change in Emphasis Could Help Trade Deficit
The stubborn U.S. trade deficit would decline faster if poorer countries, once important markets for American farm goods and industrial products, were encouraged to grow faster, solve their debt problems and play a role in an expanding international market, a group of international economic specialists contends.
The Overseas Development Council, a Washington-based think tank that concentrates on Third World development and debt issues, took this stand in a report released this weekend. Many of its judgments are widely shared by finance and trading ministers in the industrial world.
But the report also argued that the Reagan Administration has placed excessive emphasis on promoting faster economic growth in Japan and Europe rather than on encouraging faster growth among poorer countries. In particular, ODC officials held that solutions for the debt crisis in Latin America and help for sub-Saharan Africa could do just as much to absorb U.S. exports as resurgent demand in the industrial world.
Agriculture Cited
The report, edited by ODC President John W. Sewell and Stuart K. Tucker, a fellow of the nonprofit group, supported that claim with the contention that the U.S. trade deficit in goods and services with Third World countries in 1986 was $71 billion--more than half the total goods and services deficit of $156 billion that year.
That assessment neglected to point out, however, that emergent industrial countries such as South Korea, Taiwan, Hong Kong and Singapore--the “tigers” of the Pacific Rim--are included under the report’s overall Third World rubric and account for an ever-increasing share of U.S. imports from countries other than Western Europe, Canada and Japan.
What made the latest ODC publication unusual, however, was the consensus reached by its contributors that free-market growth, including expanding technology and market-based agricultural policies, are really the key to Third World development for the rest of the century.
Reflective of the growth-oriented thrust of much the new ODC report was a conclusion of agriculture specialist Robert Paarlberg of Wellesley College: that increased farm production in the poorest Third World countries of Africa and South Asia would make them more, not less, likely to buy American agricultural products.
Paarlberg argued that wealth and demand will both increase if poor country peasant growers are freed from centrally controlled economic policies, such as those that have hobbled much of post-colonial Africa, and allowed to develop an agricultural economy in which production is priced to market.
“One of the first things the populations of these countries will want is to improve their diet,” Paarlberg told reporters last week.
Another outside contributor to the report, Jonathan Aronson of the University of Southern California, argued that traditional Third World resistance to permitting the industrial countries to invest in high-technology services and communications industries in their countries would be especially harmful as world trade becomes more interdependent.
Specifically, Aronson suggested that multinational corporations are most likely to muster the advanced technology necessary to help pull poor countries up from their poverty.
Third World “service industries are not efficient or competitive,” Aronson wrote in the report. “Unless at least the financial and telecommunications sectors are made more efficient, long-term development prospects across all sectors will suffer.”
