Economic and Social Survey of Asia and the Pacific

English
Frequency
Annual
ISSN: 
2412-0979 (online)
http://dx.doi.org/10.18356/91ce97b3-en
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The Economic and Social Survey of Asia and the Pacific monitors regional progress, provides cutting-edge analyses and guides policy discussion on the current and emerging socio-economic issues and policy challenges to support inclusive and sustainable development in the region. Since 1957, the Survey has also contained a study or studies focusing on a significant aspect or challenge relevant to the economies of Asia and the Pacific region.
 
Economic and Social Survey of Asia and the Pacific 1981

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English
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Author(s):
ESCAP
31 Dec 1981
Pages:
161
ISBN:
9789210599115 (PDF)
http://dx.doi.org/10.18356/2ff7b051-en

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This latest edition of the Survey analyzes current economic and social developments in the region against the background of events in the world economy. It also focuses on the serios problems of growth and transformation of the area's least developed and Pacific Island developing economies.

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  • Preface

    This Survey for 1981 is the thirty-fifth in a series of reports prepared annually by the Economic and Social Commission for Asia and the Pacific (ESCAP). It is wholly devoted to a review of recent economic and social developments and problems in the region, after noticing developments in the world economy which have had a direct effect upon the region’s recent progress.

  • Explanatory note

    The term “ESCAP region” is used in the present issue of the Survey to include Afghanistan, Australia, Bangladesh, Bhutan, Brunei, Burma, China, Cook Islands, Democratic Kampuchea, Fiji, Hong Kong, India, Indonesia, Iran, Japan, Lao People’s Democratic Republic, Malaysia, Maldives, Mongolia, Nauru, Nepal, New Zealand, Niue, Pakistan, Papua New Guinea, the Philippines, Republic of Kiribati, the Republic of Korea, Samoa, Singapore, Solomon Islands, Sri Lanka, Thailand, Tonga, Trust Territory of the Pacific Islands, Tuvalu, Vanuatu and Viet Nam. The term “developing ESCAP region” excludes Australia, Japan and New Zealand.

  • Abbreviations
  • The world economy

    The Third United Nations Development Decade has begun in the unfavourable circumstances of a world depression which shows little sign of improving in 1982. This depression, like the previous one, is characterized by rising unemployment and rising prices in advanced countries. It is also characterized by falling prices for primary commodities, in spite of world inflation, and by reduced demands for manufactured exports. These two features have adversely affected developing countries, although growth rate of real income has declined less for them than it has for advanced countries. Non-oil developing countries have also been badly hit by much higher payments for oil imports, due to big increases in the price of oil, but they are having less difficulty in financing them than was feared because multilateral lending agencies have enlarged their funds and loans have also been available from international capital markets. Inflation has reduced the real burden of their past debts, but the rise of world interest rates to extraordinarily high levels is adding to the real burden of loans raised currently. Very disappointing progress has been made in regard to international commodity agreements, or a Third Arrangement for the Multifibre Agreement which governs most of the world’s trade in textiles, in which some developing countries have come to participate substantially.

  • Major constraints on regional progress

    Three major constraints on the economic progress of most developing Asian countries have been food supplies, energy resources, and means of paying for necessary imports. Notwithstanding some successes in food production, associated more particularly with the “green revolution”, there has been little general improvement in food production per capita over recent years, and that can be halted or reversed by adverse weather conditions. Most countries, however, had a good recovery in 1981 from preceding bad harvests. Non-oil developing countries, still adjusting to the quadrupling of oil prices in 1973-1974, had a further economic shock from the 80 per cent rise of oil prices in 1979-1980. Measures for conserving oil and for switching to alternative fuels helped their situation; and the real price of oil declined somewhat in 1981. Some of these countries, too, have taken vigorous measures to find or exploit new deposits of oil or natural gas, and to develop other sources of energy. Oil-exporting countries, of course, gained from dearer energy, but were concerned about prospective depletion of deposits. The terms of trade for non-oil developing countries of the ESCAP region deteriorated by almost one fifth in 1980, and trading conditions did not improve for most of them in 1981. They had large deficits in their current balances of external payments, caused by the rise of oil prices, falls in the prices of other primary commodities, and depressed markets for exports of manufactures. These deficits were financed by larger drawings upon IMF, bigger loans from the World Bank and ADB, by larger borrowings on international capital markets, and by official flows, mostly from DAC countries. Official financial flows may have declined, in real terms, but there were large increases in the resources of multilateral agencies, and commercial loans were unexpectedly large, although at the cost of much higher interest rates.

  • South Asia and Iran

    Much better harvests, in 1980/81, helped India to make a full recovery from the economic set-back of the previous year, when its real GDP fell by more than 4 per cent. They also gave considerable relief to Bangladesh and helped Nepal to recover from its previous crop failures. Pakistan and Sri Lanka, however, had somewhat slower growth of real GDP, although their rates were still comparatively high. Recovery did not mean progress, as improvement of real incomes per capita is still disappointingly slow in south Asian countries; and five of them - Afghanistan, Bangladesh, Bhutan, the Maldives and Nepal - have been classed as “least developed” countries, needing far more economic aid to break out of low-level economic stagnation. Current difficulties are perhaps most acute with regard to balances of payments. Dear oil and domestic inflations have pushed up import bills, and world recession has impeded export growth. India, late in 1981, obtained a record credit of $ 5.8 billion from IMF, nearly half of which is to be used for its 1980/81 deficit. Pakistan has had to seek debt relief, and Bangladesh, like India and Pakistan, has had to raise expensive loans on international capital markets. Inflation has not been much worse than in the rest of the world, and has shown signs of abating, but is a further problem because of its effects on external trade, production, and the distribution of incomes. Abundant liquidity has been generated by large demands made on the banking systems by Governments or official entities, and by excessive credits to the private sector in nearly all these countries. Steps, however, are being taken to tighten credit conditions, to rationalize interest rates, and to reduce fiscal deficits, at least in the larger countries.

  • South-east Asia, Hong Kong and the Republic of Korea

    The five ASEAN countries and Burma had strong rates of economic growth during the late 1970s, at least twice the average for advanced countries, and Hong Kong and the Republic of Korea had even stronger growth rates. In 1980 these rates were maintained or improved, except in the Philippines and Thailand where they nevertheless remained high, and in the Republic of Korea, where disastrous harvests and other troubles led to a decline of over 6 per cent in real GDP. Although world recession in 1981 reduced the average growth rate for advanced countries to less than 2 per cent, growth rates in these south-east and east Asian countries and areas ranged from 5 per cent in the Philippines to over 10 per cent in Hong Kong, despite falls in the prices of leading export commodities and greater difficulties in marketing exports of manufactures. Economic conditions also improved in Democratic Kampuchea, Lao People’s Democratic Republic and Viet Nam. There were, however, some troubles over the balance of external payments in the Philippines, the Republic of Korea and Thailand, and these last two countries had to devalue their currencies. Indonesia and Malaysia had reduced export surpluses, but not enough to cause serious trouble. Except in Burma, inflation was a problem with rates ranging, in 1980, from 7 to 9 per cent in Malaysia and Singapore to 29 per cent in the Republic of Korea. Nor was there much reduction of inflation in the first half of 1981. There were large increases of liquidity to fuel these inflations, although monetary restraint was being attempted in most of these countries during 1981, together with efforts to reduce large over-all fiscal deficits.

  • China and its northern neighbours

    In 1980, China had a population approaching 1 billion and a per capita GDP of approximately $ 260. Real output grew by 6.9 per cent despite adverse weather conditions reducing growth in gross agricultural output to 2.7 per cent. Industrial output rose by 8.7 per cent. In 1981, it was expected that real output would grow by only 1.7 per cent, with gross industrial and agricultural outputs increasing by about 3.0 per cent. Energy output declined by 1.3 per cent in 1980, and a number of problems was affecting energy output prospects. International trade grew rapidly in 1980 but at a slower rate in 1981. Exports grew by 29 per cent in 1980 and by 13.2 per cent in 1981. Deficits in the balance of payments have been covered by increased foreign borrowing in 1980 and 1981. Strenuous and apparently successful moves have been made to reduce the size of budget deficits, to limit inflation and to attain restructuring objectives, including an increase in the share of consumption in output and increased emphasis in production in light industrial goods. Major fiscal problems, however, are reduced revenues due to the decline in State enterprise profits and the large increase in subsidies resulting from higher agricultural procurement prices since 1979.

  • South Pacific island countries

    Pacific island countries had come into economic difficulties during 1980. World prices fell for their major export commodities with the exception of sugar and, in that year, bad weather severely damaged the sugar crop upon which Fiji depends very heavily for its export receipts. There was some recovery in Fiji during 1981 due to increases of production, and in Papua New Guinea due to bigger outputs from the Bougainville mine and investment activities connected with the new Ok Tedi mine. Commodity prices continued to fall to the detriment of export receipts in all Pacific island countries, and Kiribati suffered a big loss with the exhaustion of the phosphate deposit on Banaba island. Higher prices for oil and other imports added to difficulties over balances of payments, as did the stimulus to imports of consumer goods from high rates of inflation. Samoa, despite a previous large devaluation, lost its free reserves of foreign exchange, and Solomon Islands had to devalue its currency. Except in Fiji and Papua New Guinea, inflation was associated with the financing of budgetary deficits and ranged, during 1980, from 11 per cent in Papua New Guinea to 23-30 per cent in Samoa and Tonga. Inflation moderated in 1981 in Fiji, Papua New Guinea, Samoa and Tonga, but accelerated in Cook Islands, Solomon Islands and Vanuatu. Conditions for the smaller island economies have deteriorated, and Samoa has appealed for aid to the United Nations Conference on Least Developed Countries, although some other island countries have no better economic prospects.

  • Some human problems

    The Survey concludes with brief, current reviews of major social problems in developing ESCAP countries. Population pressures are still heavy in most parts of the region, although there has been much recent progress in reducing them, especially by measures of family planning. Health problems, however, are not decreasing, and are strongly related to poverty through widespread malnutrition, and also through lack of access by poor people and rural people to adequate medical care. There is a need to reorganize health services so as to put more emphasis on preventive measures, and so as to make curative measures more widely and readily available in rural areas. Attention has also to be given, in this connection, to measures for arresting deterioration of the physical and the social environment. Although Asian countries have legislation against economic exploitation of children, this continues to be widespread and reprehensible – a dark aspect of industrialization and urbanization. Economic modernization is also damaging the extended family system, which has traditionally cared for old and disabled people, and the old are a rising proportion of the population. Alternative care of the old and disabled will increasingly require provision of appropriate measures of social security. There has been recent progress in reducing socio-economic handicaps traditionally imposed on women, but much remains to be done in this respect. Refugees have become another problem, serious for those directly concerned and an economic burden on the countries which have first to receive them. I f political tensions could be relieved, so would be these problems; for expenditures on defence and armaments might then be diverted to improving socio-economic conditions.

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