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World Bank says countries that open up do better
By Alver Carlson
WASHINGTON, May 7 (Reuter) - Countries that turn their
backs on the global economy, erecting barriers to investment,
trade and new ideas, often pay a steep price in slow growth
and increased poverty, the World Bank said on Tuesday.
Economic integration has accelerated dramatically over the
past five years but many countries missed the boat, the Bank
said in its annual Global Economic Prospects report.
"Too many developing countries are failing to open up to
the world economy, creating severe disparities and the threat
of a permanent gap between fast and slow integrating
countries," the report said.
By some measures conditions look dramatically better, it
said. From Africa to Eastern Europe and the former Soviet
Union, developing countries have joined or applied to join the
World Trade Organization, regional trade agreements are
proliferating and capital investment is rebounding from the
impact of last year's Mexican peso crisis.
But a closer look shows a number of problems, the report
said. While developing countries as a group have kept pace
with the world rate of economic integration, trade as a
percentage of the their total economy has fallen in 44 out of
93 such countries over the past 10 years.
"Indeed, three-quarters of the increase over the past
decade was accounted for by just 10 countries," the report
said, citing China, South Korea, Thailand, Malaysia, Mexico,
Saudi Arabia, Argentina, Brazil, India and the Philippines.
Economic integration, as measured by the Bank, is made up
primarily of trade, access to private capital markets and
so-called foreign direct investment. But it is more than that.
Bank officials noted, for example, that communications are
part of the picture since they can bring the world closer. And
in some countries it can take years just to get a telephone.
The report saw a direct correlation between growth and
integration with the rest of the world. The fastest growing
regions over the past five years -- East and South Asia and
Latin America -- also showed the greatest integration.
Sub-Saharan Africa, the Midde East and North Africa
advanced their integration the least and grew the slowest.
Looking ahead, the Bank said the next 10 years could be
similar in pattern to the past decade, only more so. The pace
of international integration will accelerate and world trade
will grow at better than six percent per year, faster than any
time since the 1960s. Interest rates should be moderate.
It said the global economy will grow by 3.1 percent
annually in 1996 and 1997 and 3.1 percent annually between
1996 and 2005. Developing countries are forecast to grow by
4.8 percent in 1996-97 and 5.3 percent annually through 2005.
"Still, if current policies continue, large differences in
performance among developing countries will persist," the
report said. "Countries with bad policies will tend to lag in
integration and are likely to see only a mild rise in per
World Bank Chief Economist Michael Bruno said a small
increase in per capita incomes would not be enough to stop the
growth of poverty.
Hungarian News Agency
Business Information Service