In a good news-bad news assessment, the World Bank yesterday reported that agricultural growth in the Third World has been exceeding all expectations, but that the general economic outlook for poor nations has worsened because of recession and high interest rates in the rich nations.
These were the main themes of the bank's fifth annual "World Development Report." It, and related reports by the International Monetary Fund, will be discussed at the joint annual World Bank-IMF meeting in Toronto early next month.
The gloomy side of the development report explored familiar ground, much of it a restatement of last year's analysis, except that the situation appears even worse. Thus, while the bank in 1981 predicted bleak growth prospects for the Third World for the decade of the '80s -- only 2.2 to 3.2 percent real gains -- this year it says the prospect is for a result closer to the lower figure.
But an in-depth assessment of agriculture was strongly upbeat, putting "the world food problem" in what it said is a new perspective. The general thrust is that there has been a remarkable transformation, or success story, in agriculture in the last three decades. Output has increased at almost twice the rate of earlier periods. And the correlation between agricultural growth and overall economic development has proved strong.
The report concedes that "hundreds of millions" in developing countries -- especially the lowest-income groups -- still lack enough food. Moreover, the failure of some countries to curb their population explosions has reduced the overall per capita benefits of the agricultural revolution.
But this situation is largely concentrated in Africa, where per capita output declined by 1.4 percent in the 1970s, after edging up 0.2 percent in the 1960s. Elsewhere in the Third World, notably in Southeast Asia and Latin America, per capita improvement in agricultural and food output has improved distinctly over the decade. In the so-called middle-income countries (per capita annual income over $410), absolute poverty has all but disappeared. This means that the gap between the very poorest and highest-income groups in these countries, such as the Philippines, Nicaragua, Thailand, Cameroon and Bolivia, has been substantially reduced.
"This is gratifying because most people thought a Malthusian crisis would be upon us by now," Montague Yudelman, the bank's director of agriculture and rural development, said in an interview. "From the supply side, the world, apart from Africa, is doing rather well in agriculture. "That doesn't mean we have eliminated hunger. But now that we are confident about the supply side of the food equation, we can pay more attention to demand -- that is, how to get it into the hands of the people who really need it."
The report says that the "world food crisis" in 1972-74 in the wake of a tripling of wheat and rice prices, and a sixfold jump in fertilizer prices that came with the first "oil shock," is not likely to be repeated. Among the reasons cited are greater production, closer monitoring of stocks and international agreements.
A key finding of the report is that "few countries have achieved economic growth without first, or simultaneously, developing their agriculture." Thus, of 23 countries whose total economy grew at annual rates above 5 percent in the 1970s, 17 registered agricultural growth better than a 3 percent rate. But 11 of 17 showing overall growth below 3 percent scored only 1 percent or less growth in agriculture. In all 40 countries, agriculture had at least a 20 percent weight in the economy.
One negative aspect of the agricultural picture, according to the report, is that rich nations have been erecting "protectionist walls" against agricultural imports to shore up their own deteriorating economies. The report singles out the European Economic Community for using protectionist devices to "become increasingly self-sufficient" in many food products. However, the report credits the rich nations for, surprisingly, maintaining relatively open markets for manufactured goods.
Bevan Waide, director of the bank's country policy development, said, "The world system by and large remains a free trade system," although in the present recession, protectionist pressures increase. Waide referred to this as one of two "silver linings" in an otherwise "dismal picture in the first few years of the 1980s." The other is the continuance of a high rate of investment in the Third World.