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Exports and Economic Growth in the Overseas Sterling Area: 1960-61 to 1975

Published online by Cambridge University Press:  26 March 2020

A. Maizels ,
L. F. Cambell-Boross  and
P. B. W. Rayment
A. Maizels
Affiliation:
National Institute
L. F. Cambell-Boross
Affiliation:
National Institute
P. B. W. Rayment
Affiliation:
National Institute
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Extract

The purpose of this article is twofold. First, to examine the export prospects over the coming decade of some of the principal countries of the overseas sterling area; and, second, to assess the implications of such export prospects for the economic growth of a selection of the less-developed countries of the area between now and 1975.

Type
Research Article
Information
National Institute Economic Review , Volume 38 , November 1966 , pp. 36 - 62
Copyright
Copyright © 1966 National Institute of Economic and Social Research

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Footnotes

This article presents, in summary form, part of the substance of a forthcoming book entitled ‘Exports and Economic Growth in the Overseas Sterling Area’, by A. Maizels, assisted by L. F. Compbell-Boross and P. B. W. Rayment, of the National Institute. The extensive discussion in the book of the macro-economic growth model on which the analysis is based is omitted here.

References

Notes

note (1) page 36 The statistical analysis was completed at the end of 1965, and the definition of the ‘overseas stering area’ relates to the position at that date. Thus Bur no longer in the sterling area—is included in the analysis

note (1) page 38 Since electric power represents the major single cost element in aluminium production, the price of aluminium in relation to all other prices (that is, its price in ‘real’ terms) should decline as the efficiency of electric power generation increases.

note (1) page 44 SITC 5, 6, 7 and 8 excluding leather, diamonds and precious stones, non-ferrous metals and jute goods. The discussion in this section relates only to goods produced in the exporting countries, excluding re-exports of manufactures from Hong Kong and (so far as possible) other countries covered. Exports of manufactures from Aden, Malaya and Singapore have been wholly excluded, since re-exports cannot be distinguished from domestic exports.

note (1) page 45 This index is simply a weighted mean of indices of the volume of world trade in each commodity, using the 1960-61 pattern of country exports as weights. Thus, if pi1 qi1 is the value of exports of commodity i in 1960-61 from any given country, and Pi1 Qi2/Pi1 Qi1, the corresponding volume index for world trade in 1975 compared with 1960-61, the projected ‘world export’ index for that country would be :

The ‘world export’ index for 1960-61 compared with 1953-55, W1, would be similar to W2, except that the term Pi1 Qi2/ Pi, Qi1 would be changed to Pi1 Qi1/Pi1 Qi0, where Pi1Qi0 refers to the volume of world exports in 1953-55 valued at 1960-61 prices.

note (1) page 46 Excluding Hong Kong from the comparison, because of the lack of a volume index of exports from that country.

note (1) page 49 For each country the world export index for 1975 repre sents the increase in the projected volume of world trade in that country's basket of exports in 1960-61, using the value of its exports of each item in 1960-61 as weights.

note (1) page 51 See Appendix, page 62, for references for the plans.

note (2) page 51 For Zambia the ‘Plan’ figures throughout this article have been taken from the Report of the UlV/ECA/FAO Economic Survey Mission on the Economic Development of Zambia, Ndola 1964. Details of Zambia's new Development Plan given in the Press (Financial Times, 1 November 1966) suggest that the Plan follows closely the assumptions and projections of the Survey Mission.

note (3) page 51 The Jamaican Government has signed recently an agree ment with three aluminium companies—Kaiser, Reynolds and Anaconda—for the construction of an alumina pro cessing plant with an initial capacity of 795 thousand (metric) tons. The plant is scheduled to start production in 1969.

note (4) page 51 The OECD totals for the net outflow of official capital include loans on commercial terms (5 per cent, or higher, rate of interest and 20 years' maturity or less) which would not normally be considered as aid. In 1963, about one-third of total loan commitments by OECD countries were on conditions approaching market terms, though the proportion would be considerably smaller (in the region of one-tenth) in relation to the total outflow of official capital. In the text, the term ‘aid’ is used, for convenience, as indicating the total net outflow of all official capital, whether on commercial or on concessional terms.

note (1) page 52 General Assembly Resolution 1522(XV). This ‘aid’ target (1 per cent of the combined national income of the developed countries) was re-affirmed by the United Nations Conference on Trade and Development in 1964 (FinalAct, Annex A.IV.2). Neither the numerator nor the denominator was made very precise. The numerator was meant to include private capital; however, this seems to be stretching the meaning of the term ‘aid’ too far, and here only official loans or grants are included.

note (2) page 52 See I. M. D. Little & J. M. Clifford, International Aid, London, 1965, for a detailed discussion of the policy objectives of aid.

note (1) page 53 The formulae used were as follows : Ai, Pi, and Qi represent the aid, population and GDP of a given recipient country i, and A, P and Q the corresponding totals for all OSA recipient countries. The three alternative distributions of aid are then : A1i = A Pi/P (1) A2i = A Qi/Q (2) For the third criterion, it is assumed that if all countries had the same GDP per head, they would receive the same aid per head, while deviations in their GDP per head from the mean GDP per head for all countries would be compensated (in the reverse direction). Thus : A3i = (A Pi/P) (Pi/Qi) (Q/P) (3) = (A1i)2/A2i Because of the squared term, the sum of A3i for all countries will not equal A (except fortuitously), so that a correcting factor is required, as follows :

note (2) page 53 See, for example, Little and Clifford, op. cit., p. 228.

note (3) page 53 Outline of the Third Five- Year Plan, Government of Pakistan, August, 1964, p. 20. The plan envisaged a pro gressive decline in foreign aid after 1975, to a figure of £120 million by 1985 . (All these aid totals are at 1964/65 prices, except for that for 1960/61, which is at current prices.)

note (4) page 53 The flow of financial resources to less-developed countries, 1956-1963, OECD, Paris, 1964, pp. 35-7.

note (1) page 54 The United Nations Index of the export prices of manu factured goods shows an annual average increase of 1.14 per cent between 1955 and 1964.

note (1) page 58 The assumption was made about earnings rather than prices, since data are not available for any satisfactory calculation of the effect on export volume of variations in the export price assumptions.

note (2) page 58 According to the United Nations' median ‘projections. The projection for Jamaica, exceptionally, shows a population growth-rate of only 1.5 per cent a year; this appears to have been made in 1957, and presumably assumes a relatively high level of emigration, which now appears unlikely.

note (1) page 60 These calculations assume that additional aid is divided between grants and loans in the same proportion as the total net official capital inflow in 1962 and 1963; and they make allowance for the additional interest payments which would be required.

note (2) page 60 The second case mentioned here corresponds in principle to the Horowitz Proposal’, made by Dr. D. Horowitz, Governor, Bank of Israel, in his second address before the UNCTAD Committee on Invisibles and Financing Related to Trade, Geneva, December 1965.

note (1) page 61 The effective import tariff on the value added in manu facture is higher than the nominal tariff so long as the nominal tariff on the crude material is lower than that on the manu facture in question (see Bela Balassa, Tariff Protection in Industrial Countries : an Evaluation’, Journal of Political Economy, vol. 73, No. 6, December 1965, for a theoretical analysis and practical application of the concept of effective tariffs).

note (2) page 61 Professor Balassa has estimated, for example, that if tariffs on imports of manufactures from developing countries into industrial countries were eliminated, the volume of such imports would rise by 38 per cent for the United States, 30 per cent for the United Kingdom and 28 per cent for the EEC (see Bela Balassa, reference in footnote (1) above).