World Development Report 1984
World Development Report 1984
World Development Report 1984
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TABLE 3.4<br />
Current account balance and its financing in developing countries, 1983 and 1995<br />
(billions of constant 1980 dollars)<br />
All developing countries Low-income Asia<br />
High Low High Low<br />
case case case case<br />
Item 1983a 1995 1995 1983' 1995 1995<br />
Net exports of goods and nonfactor services -10.8 -69.5 -29.0 -8.9 -17.4 -14.0<br />
Interest on medium- and long-term debt -48.7 -52.1 -58.0 -1.7 -3.1 -3.1<br />
Official -9.7 -16.0 -17.5 -0.9 -2.4 -2.4<br />
Private -39.0 -36.1 -40.5 -0.8 -0.7 -0.7<br />
Current account balanceb -55.8 -109.5 -78.1 -1.3 -12.1 -9.3<br />
Net official transfers 11.0 16.6 14.3 1.7 2.4 2.1<br />
Medium- and long-term loansc 57.2 74.0 49.1 4.1 8.1 6.0<br />
Official 17.5 35.0 26.6 3.9 7.3 5.8<br />
Private 39.7 39.0 22.6 0.2 0.8 0.2<br />
Debt outstanding and disbursed 592.0 914.9 656.2 47.5 89.6 67.9<br />
As percentage of GNP 26.7 21.9 17.1 8.7 8.9 7.2<br />
As percentage of exports 121.4 80.3 71.3 99.5 85.0 78.7<br />
Debt service as percentage of exports 20.5 12.7 13.7 9.9 7.0 7.1<br />
Note: The table is based on a sample of ninety developing countries. The GDP deflator for industrial countries was used to deflate all<br />
items. Details may not add to totals because of rounding. Net exports plus interest does not equal the current account balance due to<br />
omission of net workers' remittances, private transfers, and investment income. The current account balance not financed by official<br />
transfers and loans is covered by direct foreign investment, other capital (including short-term credit and errors and omissions), and<br />
changes in reserves. Ratios are calculated using current price data.<br />
The major exporters of manufactures, already and investment needed to service loans on comaccounting<br />
for 80 percent of the developing coun- mercial terms is particularly painful. Yet, provided<br />
tries' exports of manufactures, would see their policies are reasonable, the returns to investment<br />
manufactured exports grow at about 10 percent a in poor countries can be very large indeed. Conyear.<br />
Some of them-such as the Philippines and cessional assistance is needed partly to finance the<br />
Thailand-could do much better than others. development of human capital and to strengthen<br />
Other middle-income oil importers would expand institutions-programs for which economic<br />
their manufactured exports at about 9 percent a returns are high but delayed. Because the potential<br />
year. Meanwhile, low-income Africa would have of the low-income countries will not be realized<br />
its manufactured exports grow at about 9 percent a until these programs are in place, the role of conyear,<br />
starting from a very low base (see Table 3.3). cessional aid in promoting development is vital.<br />
To do this, however, it would have to reduce its Moreover, because the returns to these investreliance<br />
on western European markets and to ments are high, aid can contribute significantly to<br />
diversify its exports, expanding into manufactured development in the low-income countries and help<br />
products. to raise the global efficiency of investment.<br />
Under the High case, loan disbursements plus<br />
The contrast between the Low and the High case<br />
is not merely quantitative. It amounts to a qualitaofficial<br />
transfers to developing countries would<br />
rise from a peak of $83 billion in 1981 to $91 billion<br />
tiedfrnc aswl,bauehe paety<br />
tive difference as wetl, because the apparently<br />
insurmountable obstacles of the past ten years<br />
in 1995 (in constant 1980 dollars-see Table 3.4), a would steadily diminish if High-case growth were<br />
rise in real terms of only 2.5 percent a year from achieved-or, under the Low case, would become<br />
1983-slower than the projected rate of growth of even more entrenched. With a continuation of<br />
industrial countries. eve moeetece.Wt. otnaino<br />
slow growth, millions of people in many develop-<br />
Low-income countries would also obtain a grow- ing countries will become progressively poorer;<br />
ing inflow of capital in the High case, largely with faster growth, almost everybody in the world<br />
through the expansion of concessional loans from will enjoy some increase in real income. The prize<br />
governments and international institutions. With that the High case offers is considerable. The queslow<br />
income levels, the sacrifice of consumption tion is how to win it.<br />
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