XN000022-1979-09-05 — Page 3

WEDNESDAY, SEPTEMBER 5, 1979

+ IT IS IMPORTANT ENOUGH TO HAVE BEEN TAKEN UP BY THE INTERNATIONAL MONETARY FUND IN ITS RECENTLY ISSUED ANNUAL REPORT AND BY THE WORLD BANK IN WORLD DEVELOPMENT REPORT 1979, + SAID MR. JORDAN.

+MR. MCNAMARA DEVOTED A LARGE PART OF HIS ADDRESS TO UNCTAD V TO THIS SUBJECT. MR. LONG, THE DIRECTOR-GENERAL OF GATT, RECENTLY SPOKE OF THE NEED FOR FREER, NOT MORE RESTRICTED, INTERNATIONAL TRADE. ECONOMIC STUDIES AND LEARNED ARTICLES ARE SUDDENLY PROLIFERATING.

+THEY ALL CONFIRM WHAT WE HAVE BEEN SAYING ABOUT PROTECTIONISM: THE CASE FOR IT IS WEAK- IT DOES NOT WORK- AND SO THE COSTS ARE MORE THAN THE APPARENT BENEFITS ARE WORTH, + HE SAID.

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HE QUOTED FROM A RECENT REPORT ON THE IMPACT OF THE NEWLY INDUSTRIALISING COUNTRIES THE NICS BY THE SECRETARY- GENERAL OF THE ORGANISATION OF ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD) WHICH SAIDI +IT SHOULD BE EMPHASISED THAT THE PAINFUL ADJUSTMENT PROBLEMS AICS THAT IS THE ADVANCED INDUSTRIALISED COUNTRIES HAVE RUN INTO SINCE 1973 OWE FAR MORE TO INFLATION, SLOW GROWTH AND DISPARITIES IN COMPETITIVE POSITIONS AMONG THEM, THAN TO THE COMPETITION FROM OUTSIDE CHANGES IN COMPARATIVE ADVANTAGE, AND NOTABLY

THE EMERGENCE OF THE NICS AS SUCCESSFUL EXPORTERS OF MANUFACTUREB HAVE NOT BEEN THE ONLY, OR EVEN THE MAIN FACTOR, BEHIND THE FINANCIAL AND EMPLOYMENT DIFFICULTIES OF DECLINING INDUSTRIES. TECHNOLOGICAL CHANGE, SHIFTS IN THE PATTERN OF DOMESTIC DEMAND AND IN RELATIVE PRICES AND COSTS HAVE TOGETHER PLAYED A MUCH MORE IMPORTANT ROLE.+

+THIS IS, I THINK, ONE OF THE MOST IMPORTANT POINTS IN THIS REPORT,+ SAID MR. JORDAN. IT MEANS THAT THE OECD SECRETARIAT HAS CONCLUDED THAT SO-CALLED LOW COST IMPORTS ARE NOT THE MAIN CAUSE OF THE TROUBLES OF DECLINING INDUSTRIES.+

THE MARKET PENETRATION OF THE TEN LEADING EXPORTERS OF MANUFACTURES AMONG THE NICS, IN RELATION TO APPARENT CONSUMPTION OF MANUFACTURES, WAS ONE-QUARTER OF ONE PER CENT IN THE EARLY 1960'S. IT HAD RISEN TO SLIGHTLY MORE THAN ONE PER CENT IN 1976-77.

+THE MOST OFTEN QUOTED EFFECT OF THE IMPACT OF THE NICS IS THE EFFECT ON EMPLOYMENT RATHER THAN, SAY, THE BENEFICIAL EFFECT ON PRICES,+ SAID MR. JORDAN, BUT THE OECD REPORT SAID, +THE NOTICEABLE REDUCTION IN THE LEVEL OF MANUFACTURING EMPLOYMENT IN THE ADVANCED INDUSTRIALISED COUNTRIES THE AICS AFTER 1973 CAN MORE THAN BE ACCOUNTED FOR BY THE COMBINED EFFECT OF SLUGGISH DOMESTIC DEMAND AND GROWING PRODUCTIVITY.+

AND THE OECD SECRETARIAT'S CALCULATIONS SUGGESTED THAT, BECAUSE OF THE AICS LARGE SURPLUS IN THEIR TWO-WAY TRADE IN MANUFACTURES WITH THE NICS, THIS TRADE DID NOT REDUCE, BUT ADDED TO, EMPLOYMENT IN THE AICS, SAID MR. JORDAN.

TURNING