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April 1973

General Meeting
March Calendar
President's Notes (Dee Lum)
Voters Service (Claudia Patil)
Membership Memo - Capitol Tour Report (Maury Muence)
Susie Orient Says... (Susie Orient)
Foreign Trade Page - Consensus Unit
Effects of Trade Policy on Economic Development (Robert McNamara)
Update - from "VISITS", U.N. Publication
Report from the Nominating Committee
Proposed Program
Proposed Local Program
Proposed Budget - April 1973 - March 1974
Seminar to Look at Hawaii Taxes


"Effects of Trade Policy on Economic Development"

The continued economic progress of less developed countries depends on their being able to increase imports from the U.S. and other advanced countries at a rapid rate. Most of their capital goods must be acquired abroad as well as a large portion of industrial raw materials, fertilizer, and other continuing requirements. In its plan for the Development Decade of the 1970's, the United Nations has proposed a target growth rate of GNP of 6% per annum for LDC's. World-wide endorsement of these targets is based in part on the premise that successful economic development of the LDCs is essential to their social well-being and political stability.

Manufactured exports offer the best opportunities to the LDCs for more broad and sustained growth. As they start from a small base, they have been able to register a rapid increase of 15% per year since 1962, and are becoming increasingly diverse.

Sources of foreign exchange come from export earnings, foreign aid, and private capital (accounting for 1/10th). These countries generally receive aid in the form of loans or grants provided by the Int'l Development Ass'n affiliated with the World Bank.

Export-orientation is essential for continued economic growth. This policy allows developing Countries to continue to import commodities that are more efficiently produced abroad, while exporting manufactured goods that utilize their abundant factor, LABOR as well as their domestic raw materials. In exporting manufactured goods, developing countries can also employ large scale production methods and participate in the international division of the production process by producing parts and components for assembly elsewhere.

Hong Kong, Taiwan, Korea and Singapore have reached rates of economic growth by expanding the exports of a variety of manufactured products that utilize their educated manpower but have also low capital requirements.

Traditional labor-intensive goods, such as garments, textiles, footwear and simple engineering products with their low labor costs make the developing countries competitive in these commodities, which account for another two-fifths of their manufactured exports.

Newer labor-intensive industries, including plastic and wooden items, rattan furniture, glassware, pottery and wigs, have made their appearance in recent years. While it is difficult to distinguish them from other categories, they may account for one-tenth of the total.

Processed primary products, such as vegetable oils, processed foodstuffs, plywood and veneer, pulp and paper products, metal fabrication. In the case of these products, the transportation cost of weight-losing materials gives the producing countries an advantage over the user markets. These goods presently account for roughly two-fifths of the manufactured exports of the developing countries.

Electronic and mechanical items: A few developing countries are beginning to export a wide range of more complex products of labor-intensive manufactured, largely parts and components for assembly elsewhere. Exports of radios, other electrical equipment, and machine tools have also been rising. These products may have reached one-tenth of the manufactured exports of the developing countries and their share is likely to increase.

Robert McNamara

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