Many nations fail to join the global economy
Many nations fail to join the global economy
JAKARTA (JP): Key developing countries have led global
economic integration over the past five years, but many other
developing nations have failed to open up to the world economy,
according to the latest issue of the World Bank's Global Economic
Prospects and the Developing Countries 1996 report.
The report, issued in Washington yesterday, notes that there
have been severe disparities and the threat of a permanent gap
between fast and slow integrating economies.
Though developing countries on the whole have kept pace with
the world rate of trade integration, the ratio of trade to Gross
Domestic Product actually fell in some 44 out of 93 developing
countries observed over the past 10 years, says the report, a
copy of which was made available to The Jakarta Post yesterday.
The World Bank observes that the distribution of foreign
direct investment was also skewed as eight developing countries
accounted for two-thirds of capital inflow in 1990 to 1993 while
half of all developing countries received little or none at all.
"But globalization also demands more of governments," the
report says, noting that as firms face more intense international
competition their need for clear rules, a stable environment,
access to imports, efficient infrastructure and freedom from red
tape increases.
Moreover, the report adds, greater reliance on private sources
of finance makes it essential to retain the confidence of
international capital markets.
The World Bank says successful integration will depend on
fundamental economic reform, requiring difficult policy decisions
that often lead to painful, yet manageable costs.
"Openness to external trade and investment is often the
necessary first step to solid, sustainable economic development,"
the report notes.
Charting out the prospects for the world economy, the report
observes:
The next 10 years will see an acceleration in the pace of
international integration. Real interest rates will be moderate
and growth of world trade is likely to exceed 6 percent a year in
volume terms.
The growth of developing countries is likely to accelerate.
Still, if current policies continue, large differences in
performance in developing countries will persist. Countries with
bad policies will tend to lag in integration and are likely to
see only a mild rise in per capita incomes. (vin)