Restricted growth in export markets

Economic growth and the expansion of exports of manufactures are, to some extent, interrelated. An adequate rate of expansion in exports of manufactures depends partly on the pace of economic growth, for exports can be continuously expanded only if industrial capacity is steadily enlarged. On the other hand, the pace of industrial growth depends partly on the dynamism achieved in export earnings; for the ability to expand industrial capacity is related to the ability to import technology and capital equipment. But this interrelationship is flexible and, at many points, it may be considerably modified by the nature of the policies pursued in both developing and developed countries. Of particular concern are the restrictive business practices of transnational corporations whose cartel activities, and subsidiaries exports limitations are obstacles to the growth of markets for the developing countries.

[Developing countries] A rapid rate of growth in export earnings of the developing countries is of strategic importance for their economic development; but most appear to be far from reaching this goal. Over the last 20 years, the share of developing countries in world commodity exports has declined, while their share in world commodity imports has increased.

Their declining share in world trade reflects the heavy dependence of developing countries on exports of agricultural and certain primary commodities for which demand has grown only slowly. Developing countries tend to find it increasingly difficult to find suitable markets for their primary commodities. Moreover, the prospects for increasing exports of these products appear limited in view of the low elasticity of demand, the decrease in the raw material content of industrial products which is the result of technological progress, and the rising production of both natural and synthetic materials in the developed countries. This is due in part to the growth in primary production in the developed countries (in consequence of a rise in productivity and protection of domestic production), to the increasing production of synthetics and other substitutes which displace natural materials, and to restrictive import, tariff and excise policies of the developed countries.

The scope for increasing exports has also depended on the state of world markets. The lagging recovery of western Europe from 1980-1982 recession has favoured the major exporters of manufacturers vis-à-vis commodity-exporting countries. Since the exports of manufactured products are generally not subject to limitations affecting primary products, the main emphasis will increasingly need to be placed by developing countries on expanding and diversifying exports of manufactures and semi-manufactures. An important question, however, is whether such transformation of the export structure will take place at a pace sufficient to ensure an adequate rate of economic growth.