home *** CD-ROM | disk | FTP | other *** search
- Newsgroups: sci.environment
- Path: sparky!uunet!europa.asd.contel.com!emory!rsiatl!ke4zv!gary
- From: gary@ke4zv.uucp (Gary Coffman)
- Subject: Re: Development policies
- Message-ID: <1992Dec18.164247.17939@ke4zv.uucp>
- Reply-To: gary@ke4zv.UUCP (Gary Coffman)
- Organization: Gannett Technologies Group
- References: <1992Dec14.162041.14406@vexcel.com> <724386200snx@tillage.DIALix.oz.au> <1992Dec15.155026.11786@vexcel.com> <1992Dec15.155957.12052@vexcel.com>
- Date: Fri, 18 Dec 1992 16:42:47 GMT
- Lines: 45
-
- In article <1992Dec15.155957.12052@vexcel.com> dean@vexcel.com (Dean Alaska) writes:
- >After some discussions here with Gary, John and Stein, I wanted to tie a
- >few ideas together. Readers might ponder why World Bank economists
- >did not realize that the huge export boom they promoted would not
- >lead to the commodity price plunge that occurred. Did they forget
- >about supply and demand. Also, just who was expected to absorb the
- >huge trade surpluses that would result? Export strategies appear to
- >be working for a few countries in Asia, but can they work for a large
- >number of countries or is this a zero-sum game? Is a strategy that
- >works for a few countries and fails for dozens to be recommended?
- >
- >What follows is an extended excerpt of the history of this policy in
- >Morocco.
- [deleted]
- >
- >In the early days of the export-oriented model, in the mid-1960's,
- >Morocco was able to finance most of its own modernization, but soon
- >external financing was called upon to pay for greater and greater chunks
- >of this policy. On the early 1970's the country depended on external
- >credit sources for 23% of the cost of its _politique des barrages_ (all
- >projects, not just the dams themselves). By the mid-1970's, as dependency
- >on outsiders for food and farm inputs grew and the prices of both
- >skyrocketed, the proportion of outside funds needed amounted to _half_
- >of the modernization bill. A huge gap between 1980 and 1984 brought the
- >external financial share to 76% - which meant an equally huge increase in
- >the national debt. Debt, which in 1970 was a bearable 18% of the GNP,
- >hit 110% of the GNP in 1984. Part of the debt explosion was also due to
- >the drastic drop in world market prices for phosphate, one of Morocco's
- >major exports.
-
- This type of increasing deficit financing would be seen as a red flag
- by any rational private investor. This kind of government borrowing and
- international (government financed) lending is a recipe for disaster as
- the above quote shows. The World Bank and the IMF have few success stories
- they can claim for their policies which are founded on collectivist and
- statist thinking by academic financiers playing with money for whose steward-
- ship they are not held responsible.
-
- The alternative, of course, is for countries to make themselves attractive
- for private foreign investment and development. This brings new jobs and
- income to workers, tax revenue to the government, and a climate of prosperity
- that fosters other investors, domestic and foreign, to start more businesses
- catering to the new found flows of wealth.
-
- Gary
-