Poor nations suffering from the escalating price of imported oil are unlikely to recover without the assistance of a substantial additional infusion of direct private investment.
That is one of the main points of the annual report of the International Finance Corp., the World Bank affiliate created in 1956 to promote the growth of private investment in the Third World.
The annual report, released today, labels "the disappearance of cheap energy" as the "paramount problem of our times." It urges not only Organization of Petroleum Exporting Countries members but also the major industrial nations to speed the flow of financial assistance to poor nations.
The report says that the economic imbalances in the world today are more severe than they have been in the past few years, calling for new initiatives.
To speed the economic progress of developing countries, the IFC report stresses "the extent and the quality of private commitments of know-how and technology to the strategies chosen by the developing countries."
It notes, as did a recent study by Dr. Isaiah Frank for the Committee for Economic Development, that there has been a more receptive attitude on the part of many developing nations toward private business investment.
But just at the time that the Third World nations would welcome more private investment from multinational companies, the IFC said, "Rising uncertainties and financial restraints are keeping foreign private investors at home, so that in real terms, foreign direct private investment has stagnated in recent years."
Summarizing its own activities in the last fiscal year, the IFC said that its private sector investment operations -- equity and loans -- reached $681 million, up $256 million from the previous year's total of $425 million.
Half of the total went to countries with a per-capita income of less than $626 a year, with manufacturing projects (although still accounting for the biggest portion) less dominant then they used to be.
The total cost of the projects stimulated by IFC operations were estimated by the report at $2.4 billion, up from $1.7 billion in the previous year.
The report stressed the need for a much bigger involvement of private capital because "it is the corporation's view that even a massive new round of recycling of oil country surpluses to developing countries might not be enough."
It suggested that "from purely an investment viewpoint," the surplus OPEC countries could find it in their interest to co-finance productive ventures in the developing nations, and, by taking on some of the related investment risks, to share in the potential gains.
The IFC has in mind OPEC investments that would help the flow of know-how and technology to Third World countries. The best way to do it, the report said, is to establish "investment pooling mechanisms" that would finance particular Third World projects.
"Private investors everywhere must be shown anew that some of the most attractive growth opportunities lie in the developing countries," the report said.
"New large sources of foreign capital must be directly harnessed -- increasingly from the capital surplus of oil-exporting countries -- to complete the financing of ventures, to indirectly raise the proportions of domestic ownership and to give greater confidence to foreign technical partners.
"These objectives stand high on the development agenda for the 1980s and international agencies such as IFC give them the highest priority."