World Bank President Robert S. McNamara yesterday severely chastised the rich nations of the world for erecting new trade barriers against goods manufactured by the less-developed countries.
In his annual speech to the joint meeting of the Bank and International Monetary Fund, which opened yesterday, McNamara warned that there is no way to boost the economic growth of the LCDs if the rich nations pursue protectionist programs.
He listed new restrictive barriers erected by the U.S., Great Britain, Canada, France, Australia, Norway, Sweden and the European Economic Community.
McNamara scoffed at the notion that LDC exports were cutting deep into jobs in the rich nations. The fact is that market penetration has been "miniscule," he said.
But he called on the wealthy nations to develop meaningful "adjustment programs" to deal with individual firms or product lines affected by imports. Too often, the rich nations merely have tried to keep their "weak and inefficient industries alive, rather than designing effective incentives for labor and capital to shift to more competitive and productive sectors," he said.
In reviewing the world scene, McNamara said that "a more realistic level of support for the developing nations" must include not only a reversal of the protectionist trend, but a sharp boost in financial aid.
Once again, he called on the Bank's member nations to approve a general capital increase in the next few months to avoid a cut in the lending program for the next fiscal year from $7.6 to $5.9 billion. McNamara has argued that to sustain an increase of 5 percent in the real level of Bank lending, the existing capital of about $40 billion must be increased to $70 to $80 billion.
Officials said they need a firm agreement by early next year to avoid an actual cutback in projected bank operations. This timetable was endorsed on Sunday by the Development Committee.
McNamara also is planning to start negotiations for the Sixth Replenishment of IDA (the International Development Association) in the next few months. IDA is the soft-loan affiliate of the Bank.
McNamara pointed out that doubling the Bank's capital would have little budgetary impact on member nations, because 90 percent is merely "callable capital," which probably never would have to be drawn. But callable capital, a contingent liability, stands as a guarantee to the Bank's creditors.
The bank president, in his 11th year at the head of the lending institution, also contended that private financial flows to the middle tier of the LDCs, and concessional aid to the poorer nations, should be boosted by 5 percent in real terms.
McNamara had some pointed advice, as well, for the group of poorer nations. He urged that the fruits of greater growth be distributed more equitably in order to reduce poverty.
This would mean getting away from "mere traditional welfare (and) redistribution of an already inadequate national income," he said. He acknowledged that a real attack on poverty by the LDCs would take "sustained political courage" and would "cut across many entrenched interests."