A revealing chart hangs on the wall of the production manager's office at Kiltex Textiles here. It records efficiency in the state-owned plant's weaving department - the heart of its operation.

The bar graph shows that efficiency increased steadily from 1961 to 1968, when it peaked at 80 percent. The rating has dropped every year since, bottoming out at 41 percent in late 1977.

The numbers carry a harsh symbolic message. After decades of "progress" and economic development, conditions in many parts of the Third World are getting worse rather than better.

In the world's poorest countries for example:

Per capita income grew only $2 per year from 1965 to 1975. Per capita income in the richest countries - including the U.S. - grew $130 a year.

Unemployment almost tripled between 1960 and 1977, skyrocketing from 4 to 11 percent. Unemployment in the richest countries rose from 4.2 to 5.7 percent.

The rate of population growth jumped from 2.1 percent in 1960 to 2.7 percent in 1977, despite millions spent on family planning. The birth rate declined in rich countries.

In addition, the very poorest countries are barely holding their own - or falling further behind - on a series of other indexes, according to World Bank figures.

Illiteracy is actually on the rise in Pakistan. Food is scarcer in Africa than in 1970. Industrial productivity is decreasing in Tanzania.

Educational achievement, after dramatic advances during the 1960s, has leveled off. Enrollment in primary schools has increased only 1 percent since 1970; secondary school enrollment fell to a shockingly low 8.4 percent.

It's hard to know what yardstick to use in measuring progress in the Third World. On several fronts life has improved in the 38 poorest countries. Life expectancy, for instance, has risen from 38.6 to 45.7 years.

"Economists look at Pakistan and say, 'My God, what a mess,'" says one Western diplomat. "But it's my impression that the average person is better off than he used to be. He's got a transistor radio now. He didn't have one five years ago. He has shoes now. He didn't 10 years ago.

Many Third World nations also have made dramatic gains in the amount of food and industrial goods produced.

The World Bank reports that the gross national products of upper and middle income underdeveloped countries - a group that includes most of Latin America, South Korea, Malaysia and Rhodesia - grew at a much faster rate between 1970 and 1975 than the GNPs of the United States and other developed countries.

But too often, the meager gains achieved by the poorest countries have been wiped out by population increases and the capricious policies of unstable governments.

Between 1967 and 1977, for instance, what production soared 111 percent, in Pakistan. Rice production increased 100 percent. Cotton and sugar cane production were also up.

But population growth outstripped these advances, leaving per capita domestic production below the level of a decade ago. This year, Pakistan will need to import 1 million tons of wheat to feed its people.

"We all have to run as fast as we can to stay where we are," says Aftab Ahmad Khan, one of Pakistan's chief economic planners.

Things may get even worse.

"Success breeds success and riches breed riches. Poverty also breeds poverty," Tanzanian President Julius Nyerere has said. "Further, it has to be acknowledged that poverty breeds inefficiency, corruption and social unrest."

Few places illustrate this more vividly than Kiltex Mills. "We're hoping efficiency will go up this year," says production and training manager Muhamed Ramzan as he looks at the chart on his wall. "We're hoping to stop the decline."

The obstacles are daunting.

Plant equipment is old and worn. Much of it was purchased second-hand after its European owners decided it was outdated. Spare parts are hard to come by. The foreign experts, who ran every department in 1968, have gone. The company's 2,000 employes are part of Tanzania's first generation of industrial workers.

Mechanical breakdowns plague the mill, which takes raw cotton grown in the southern part of Tanzania and weaves it into fine cotton cloth. The day before I visited, the machines in the mill's spinning department operated only 63 percent of the time; 72 percent the day before that.

The plant is miserably hot and somewhat carelessly maintained. A heavy coat of grease coats the floors. Dozens of workers lounge about with nothing to do.

Production costs are high. Although the hourly wage in U.S. textile plants is 10 times higher than in Tanzania, the cost of producing one yard of cloth here is 40 percent higher than in the United States.

The government compounded the problems at Kiltex and other manufacturing plants, according to Sammy Mdee, President Nyerere's press secretary. In an attempt to reduce foreign imports, it banned importation of spare parts.

In theory, the country was supposed to make its own parts. In practice, hundreds of trucks and industrial machines sit idle all over the country.

The lack of competitiveness in the East African way of life is another problem. Kiltex tried to counter this by offering bonuses to anyone who operated his machine at 62.5 percent efficiency.

After a month, not a single employe had made it. Kiltex liberalized the system, but bonuses are still rare.

"Indiscipline is rampant in our country," inveighs an editorial in the state-controlled Tanzanian Sunday News. "People do not come to work on time. Those who do often have to wait for a supervisor. Some so define their briefs that the job at hand is the responsibility of the next person.

"There is also laziness. Many claim that because of socialism, they would not be coerced by anybody or reminded that they are talking too much and working too little."

The Tanzanian government appears to perceive, more clearly than many in the Third World, some of the problems that loom as major obstacles to development.

The unanswered question is whether it can find solutions.