Courtesy Reuters

Aid, Trade and Economic Development

THE CHANGING POLITICAL CONTEXT

THE Sino-Soviet rift and the first improvements in Soviet- American relations affect not only relations between East and West but also between North and South. The problems of the Southern Hemisphere are predominantly economic. Policies of trade and aid pursued thus far toward the developing countries, evolving as they did within the terms of the cold war, have not yielded encouraging results. The developing countries can no longer be an object in world policy; they must become a subject of policy on an equal footing with others. In order to attain that status, however, they must be able to exploit fully their own resources, both material and human, International action can serve as a catalyst. But for it to do so successfully, there must be a thorough reconsideration not only of present aid policy but also of international trade and financial policy. China's challenge introduces new elements in this field. The new international economic policy should not rest on political alliances, pacts and blocs but must try to assist the transformation of the developing countries internally so as to promote their consolidation and stabilization.

II

In the fifties, the developing countries had an average annual rate of increase of the gross domestic product of 4.65 percent, while the industrialized countries in the same period had an annual increase of 3.70 percent. At first glance, this tendency provides a basis for moderate optimism, as well as the hope that the gap between the underdeveloped and developed countries may in time diminish. Unfortunately, however, this statistical trend conceals quite a different reality. For meanwhile the average annual rate of increase of population in the developing countries had reached 2.21 percent in the fifties, while it was only 1.16 percent in the industrialized countries. This means that the per capita annual rate of growth was about 2.5 percent in both parts of the world.

Thus we see that the value of the product per inhabitant in the developing countries is increasing annually by $3.40, while in

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