World Development Report - 1987.

World Development Report--1987

World Development Report 1987 is the tenth in the annual series of reports published by the World Bank to address critical areas in economic development policy. The main theme for the 1987 Report is the relation between industrialization and foreign trade.

The Report examines five issues: prospects for the world economy and the implications for growth and industrialization in developing countries; factors that determine the pace and efficiency of industrialization and in paticular the role of government in that process; the impact of different trade strategies on industrialization and economic performance in developing countries; lessons from trade policy reforms; and the international trading environment and the stake of developing countries in the Uruguay Round of multilateral negotiations.

High growth and low inflation in the world economy provide a conducive environment for both industrial and developing countries to undertake adjustments in their economies to accommodate change. Expanding trade and availability of capital would be beneficial to all countries, but particularly to developing countries. They need to undertake structural adjustments to make their economies more competitive, to generate and attract more capital, and to expand exports.

In contrast to the conditions that are conductive for adjustment and growth in the developing countries, the world economy has begun to slow down and imbalances in payments among the industrial countries remain large. For the industrial countries as a group, output grew by 4.6 per cent in 1984 then slowed to an estimated 2.5 per cent in 1986. Growth slowed in developing countries from an average of 6 per cent a year in the two decades before 1980 to 4.8 per cent in 1985 and to 4.2 per cent in 1986.

Accompanying the slowing of growth were imbalances in payments among the major industrial countries. The United States current account deficit remains large, almost matched by the surpluses in Japan and the Federal Republic of Germany.

Meanwhile the debt problems of the developing countries persist, real interest rates remain high compared with historical levels, and low commodity prices compound the difficulties faced by these countries in attempting to sustain growth. Nevertheless, there are two positive elements in the world economy today. Inflation rates are low in most industrial countries and falling in developing countries. And industrial countries have made...