issue 168 - February 1987
The developed countries have created a powerful position for themselves
in the international marketplace - one which they are determined to
maintain by controlling trade regulations and financial institutions.
The export expansion of World Trade has largely come from manufactured goods. Sales of commodities like food and metals, in which developing countries tend to specialize, have lagged behind. The graph indicates the volume of world exports, taking 1960 as a base of 100 for all items.1
Countries often protect their balance of payments by imposing tariffs on imports. But equally effective are 'non-tariff' barriers - like setting quotes, or requiring that importers of certain goods have licences.
Developing countries are hit particularly hard by non-tariff barriers when they try to increase exports of manufactured goods. In 1984 the rich countries imposed such barriers on 21% of goods form developing countries but on only 11% of goods from other industrialized countries. This was primarily due to restrictions on clothing, textiles and footwear produced by developing countries2
The useage of non-tariff barriers by any country can be expressed as its 'coverage ratio' - an index which runs from 0 - 100. Australia and France operate a very extensive system of quotas and licenses. The high figure for the US reflects restrictions on the imports of fuels - for other goods the US average is a lot lower. The figure for Japan is suspiciously low - probably because there are many Japanese procedures not covered by this survey.
Those for a selection of countries in 1983 are indicated below.3
The Triangular Trade
Half international trade is between one Western nation and another. The Third World plays a smaller part. And nowadays it had to generate a trading surplus with the West in order to repay debt - mostly by reducing imports. The diagram shows the flow of exports in 1985. Each percentage is of total world trade.1
The Debt Yoke
The Big Bankers
Below are the top 10 international banks ranked according to their 1985 capital. Most of the assetts consist of money owing to the bank.7
This is a selection of other banks in the world's top 500.
*Capital is used here to mean the total group shareholders' funds
Give and Take
For developing countries which have been receiving credit from banks and international agencies the net flow of money has been reversed. As interest payments now exceed the inflow of new loans, the poor countries are now financing the rich.8
Country Credit Ratings
Bankers rate countries according to their credit - worthiness - with some interesting results. This list, which takes into account factors like political stability, record of debt payment, openness to international capital and economic prospects, is compiled by the magazine Institutional Investor. The maximum rating is 100.4
1 International Trade 1985/86, GATT 1986.
2 World Development Report, World Bank, 1986.
3 World Bank Economic Review, World Bank, September 1986.
4 Institutional Investor, June 1986.
5. Estimates as at Dec 1986, various sources.
6. World Military and social Expenditure, 1986, Ruth Leger Sivard, World Priorities Inc.
7. Euromoney, September, 1986.
8. UN Economic Survey 1986, United Nations.