Except for the poorest of the poor nations, the world's developing countries came through the economic "convulsions" of the 1970s in surprisingly good shape, leading to a hope that the scorecard for the 1980s will be no worse than that for the past decade, "and may . . . be somewhat better."
That is one of the key conclusions of the fourth annual World Development Report, published over the weekend by the World Bank. It was completed in the final stages of Robert S. McNamara's bank presidency, which ended June 30.
This year's report examined the international economy and how developing countries have adjusted to changes brought about by external factors. Chief among these are the problems caused by recessions in the richer industrial nations and by high oil prices imposed by the Organization of Petroleum Exporting Countries.
In essence, the report found that the richer nations -- the OPEC group as well as the "middle-income" developing countries with a per capita income exceeding $370 -- survived the pressures well, but that those below the $370 per capita mark are "being left behind and facing a further deterioration in their prospects."
One significant success story mentioned in the report is "China's remarkable achievement" in making the poorest of its population "far better off in terms of basic needs than their counterparts in most other poor countries."
Life expectancy in China, 64 years, was rated "outstandingly high" for a nation with a per capita income of $260. In 1950, life expectancy in China was about 36 years. By way of comparison, Indonesia, with a $370 per capita income, has increased its citizens' life expectancy from 35 to 53 years.
Helen Hughes, director of the World Bank's department of economic analysis, told a press conference that the 192-page report is susceptible to two interpretations. "Either the glass is half empty or it is half full, but it is more useful to see the glass as half full," she said.
Her rationale for choosing the more favorable description despite the precarious position of some poor nations is that, looking at the world as a whole, "we see no threat of a general financial crisis," despite two oil "shocks" and a series of recessions in the industrial nations that have impeded progress in less fortunate areas.
In fact, she said, the developing nations as a group had a better growth record in the 1970s than did the industrial nations, and achieved "remarkable" success in improving their ability to feed their populations. India, especially, was cited for a "dramatic change" in achieving self-sufficiency in agriculture.
"It shows that development assistance does work," Hughes said, "and without sounding self-serving, we would like to take some credit for it."
On the other hand, there was plenty in the report to support the "half-empty" description, especially in projections for economic growth in the 1980s. The outlook for economic growth in the industrial countries was labeled "somewhat worse" than was projected in last year's report. And for the low-income countries, average per capita incomes were projected to grow at only 0.7 percent a year in a pessimistic scenario, or 1.8 percent in an optimistic scenario.
"Both the relative and the absolute gaps between the richest and poorest countries will widen in years ahead, including the gap between middle- and low-income developing countries," the report continued. "If nothing better than the lower scenario can be achieved, the number of people living in absolute poverty, now 750 million, will increase by about 100 million."
In a foreword to the report, McNamara expressed concern that because of budgetary requirements, the developing countries would cut back on "human development programs," including health care and family planning. This point was also made in the body of the report.
Bank officials could not explain the seeming difference in emphasis between such concerns and Hughes' more optimistic evaluation, except to say that on her own she had chosen to emphasize the positive aspects.
The report deals separately with three key elements affecting the way nations adjust to external pressures: trade, energy and finance.
On trade, the central finding of the report was that despite protectionist tendencies, the international trading system "on balance" did not become less open in the 1970s. Hughes observed that to the degree protectionism did increase, it was a case of rich nation against rich nation, and mostly against Japan.
"Trade protection is an inefficient way to transfer income," the report noted. An example cited: To provide an additional $135 million in wages for the protected clothing industry in Canada, Canadian consumers shell out an additional $500 million in higher prices.
The "great success" for trade in the 1970s was the export performance of some of the more advanced developing countries, notably in Southeast Asia. "But most of the low-income countries have participated hardly at all in the growth of world trade or in the growing 'South-South' trade among developing countries: this is part of the explanation for their current plight," the report says. It also concluded that the poorest countries won't benefit much from trade unless they simultaneously get help on other fronts.
On energy, the story is the familiar one of the impact of high oil prices. About 40 percent of the increase in exports by the developing countries has, in effect, been wiped out by the higher costs of imported oil. Yet bigger problems may lie ahead, the report suggests, because until 1978 higher oil prices had only a modest impact on economic growth.
The subsequent second oil "shock" of 1979-80, however, "has produced unsustainable trade deficits" for oil-importing countries. For some, such as Brazil, Turkey, and India, oil imports absorb more than 50 percent of export earnings, the report said. Last year, the bank pushed for a new energy affiliate to finance development of a variety of energy sources in the Third World. The new report does not mention this, in light of the Reagan administration's opposition to the affiliate, now publicly elaborated in a Treasury analysis.
Instead, the World Development Report mentions that the need to boost supply will cost about $40 billion a year, in 1980 prices, over the next five years, and that "no investments show a greater coincidence of the economic and strategic interests of the developed and developing countries."
In the area of external finance -- the "bridge" that allows poor countries to cover their deficits while making the more basic adjustments necessary to reduce those deficits in later years -- the report predicts that borrowings will decline from the 4.9 percent of gross national product hit in 1980, if there are no new shocks.
Hughes said that the essential lesson relating to finance is that "the developing countries have learned how to borrow, how to build up their reserves and manage their debt." As the United States, Canada and Australia did in the 19th century, she said, the less developed countries are moving toward borrowing for investment, "not just for consumption."