Three major constraints on the economic progress of most developing Asian countries have been food supplies, energy resources, and means of paying for necessary imports. Notwithstanding some successes in food production, associated more particularly with the “green revolution”, there has been little general improvement in food production per capita over recent years, and that can be halted or reversed by adverse weather conditions. Most countries, however, had a good recovery in 1981 from preceding bad harvests. Non-oil developing countries, still adjusting to the quadrupling of oil prices in 1973-1974, had a further economic shock from the 80 per cent rise of oil prices in 1979-1980. Measures for conserving oil and for switching to alternative fuels helped their situation; and the real price of oil declined somewhat in 1981. Some of these countries, too, have taken vigorous measures to find or exploit new deposits of oil or natural gas, and to develop other sources of energy. Oil-exporting countries, of course, gained from dearer energy, but were concerned about prospective depletion of deposits. The terms of trade for non-oil developing countries of the ESCAP region deteriorated by almost one fifth in 1980, and trading conditions did not improve for most of them in 1981. They had large deficits in their current balances of external payments, caused by the rise of oil prices, falls in the prices of other primary commodities, and depressed markets for exports of manufactures. These deficits were financed by larger drawings upon IMF, bigger loans from the World Bank and ADB, by larger borrowings on international capital markets, and by official flows, mostly from DAC countries. Official financial flows may have declined, in real terms, but there were large increases in the resources of multilateral agencies, and commercial loans were unexpectedly large, although at the cost of much higher interest rates.

Related Subject(s): Economic and Social Development
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