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The report of the Group of Twenty-Four: A comment
The Report
of the Group of Twenty-Four: A Comment
ROBERT SOLOMON’” Gllc>stScholrrr, Tile Brookitlgs Itutitutiotl, It’crsllirlgtorl Ll. C.
The Group of Twenty-Four. reprcscnting developing countries, published in August lYS5 a report on “The Functionin g and Improvement of the International Monetary System.” It contains considerably more substance than the Group of Ten report. released in June IYS5. on “The Functioning of the International Monetary System.” Both reports xc scheduled to be considered at the April IYSh meeting of the Interim Committee of the International Monetary Fund. We shall discuss the G-74 report under the folloiving headings: ( I) the functioning of the present cxchangc-rate system. (2) IMF surveilIancc. (3) management of international liquidity and the SDR, and (4) transfer of resources.
I.
FUNCTIONING
the
clcbt
OF EXCt SYSTEM
problem
and
IANC;E-RATE
The report notes that experience with tloating exchange rata has not been LIP to original expectations. .since rates have been variable in terms of both short-term volatility and long-term misalignment. Volatility is said to have “tliscouraged invastment and trade by adding to financial risks” but no evidence or documentation is offered in support of this assertion. nor i5 any persuasive evidence available in the literature. The principle complaint put forward in the report is that vxiabi~ity of exchange rates has “especially hurt the developing countries.” Esporters and importers in these countries are said to be “exposed to high exchange risks in the absence of well-developed financial markets. especially forward cover arranpements.” Moreover. the “destabilizing uncertainties of floating rates” are said to have increased “the reserve and capital needs of developing countries.” Such problems must also have existed under the Bretton Woods system, when the par values
of industri;ll
countries were altrrcd from time to time. p;lrticularly in the 1961)s and lY7Os. Even accepting that eschanpr-rate variabilit> is no\\ industrial-country currencies among greater. ;IS it certainly is. \vhat is not clear is precisely what the enhanced risks are to traders in developing countries. Exporters and importers in those countries never had assurance that the relationship bettveen rlfcir countries‘ currencies and industrial-ccluntry currencies would remain stahlc even when cschange rates among indu>trial countries wcrc unchanged. Xlost developing countries have had higher rates of inflation than industri;il countric5. In some cases. 3 crawling peg rcason;lbly hut not fully predictable was adopted. In many casts. occasional large and eschange-rate changes occurred in discrete developing
countries.
Since
currencies
that must
matter.
is that what
\vcrc altxady
for
in
traders
higher
now.
exchange
llou
To improve tant objcctivc
of policy
policy
actions
is the cast
at present.”
the
refers
report
target
zones,
further “In
rates
is
this
in
clear.
the report
instead
cvcn
increase
is not should
risk”
are
states
that
be an impor-
of being ;I residual
of individual countries. ;I> And. in this connection.
favorably
although
own
exchange
countries
answer
the system.
of achange
of other
..hiph
serious
The
in their
the most one can S;I\
developing
risk?
Wability
it is risks
to
the
the proposal
proposal “needs
for to be
studied.” the
mechanism coordination
meantime.”
the
G-2-l
has to be devised
report
to enforce
say.
“;I
polic)
nmonp
the developed. especialI> countries.” There follows this “Policy coordination in observation:
the key currency. significant this
context
implies
that
monetary
policy
for
‘Former Advisor to the Board ot’ Governors of the Federal Reserve System. Author of T/I? Ir~rrrtrorio~l Alotrcmr~ S~srern. IY-IS-IYNI (London: Harper Ji Row. 1982).
1233
12.2
h’ORLD
DE\‘ELOP~lENl
exchange rate htabilit> \houlcl complement the use ~)i fiscal polic> ti> counter innationury 2nd detlationar~ pra\urc\ ;I\ u.t’ll as the IN of other polic) in5trument5.” for example. intervention in foreign rschange m,lrkets. Although some~~hat cryptic. thih statement on police coordination avoids the Lveakness of ;I number of other approaches to sreuter eschanprrate \tahility. It doe5 so by recogizing that if monetary policy is tc> be :iimed at stabilizing exchange rates, fiscal polic\ aill have to be relied on. in the industrial countries. to maintain economic protvth and to counteract tendencies tu\vard rscexsion and intlation. Some enthusiasts for tarpct zones fail to acknowledge thi5 important proposition. From the viewpoint of developing countries especially, it would be ;I pity if industrial countries achieved prcater eschangerate stability bv paying the price of greater macroeconomic’iristability. What the G-21 proposal would involve therefore is a fundameiit~d reform in the approach to fiscal policy in major industrial countries. Experience in recent years. in the United States. Europe, and Japarl demonstrates the need for such reform. Fiscal policy has been either perverse (Japan and some European countries) or intlcsible (the United States) or both. Yet the recommendation in the G-74 report would require that fiscal policy be adapted flcsibly to offset undesired movcmcnts in agsrcgate cicmarid stemming from ;iutonomous changes in private spending or from the effects of monetary policy when its pursuit of stable exchange rates intluenccd aggregate clemand in ;I way that is domatic:1lly destabilizing. The report goes on to propose ;I procedure for improving policy coordination. It envkipes ttic establishment of “indicators” that would suggest when “excessive short-term movements of one or more major currencies arc taking place, or that any major currency is already. or is in the process of becoming seriously misaligned.” This in turn iiiakcs it necessxy to measure misalignment. Although the report does not suggest how “equilibrium” exchange rates are to be identified. it does quote ;I paragraph from the IMF report of 1970 on the “Role of Exchange Rates in the Adjustment of International Payments” that “an authoritative definition of is said to provide the concept of fundamental disequilibrium.” The point of the quoted paragraph is that “fundamental disequilibrium” must be related to the general condition of a country’s economy and does not require that an imbalance must have developed in the balance of payments. If a country is keeping its international payments in balancr by depressing its output and imports, its
exchange rate ma) be in diquilibrlum: the concept of ;I c~cllcall~-adjll~t~d balance of payment> ~vould be relevant here. Another example is that “sub\tanti;ll or increaing ratrictions on trade could ~iell be ;I major symptom of sschangr: rate misalignment.” (ActualI). increabins restrictions on trxle could inilicxte mi~~tl1~nnieiit in either .direction.) These procedures for polic) coordination would be applied a> part of the bilateral and multilatcr:ll consultations - ‘rurvr‘illanct - that are alrexiy carried out hv the IXlF \vith it5 membtzrs.
3. IMF
SURVEILLANCE
Like the Group of Ten. the Group of TwentyFour proposes to strenghen the IMF surveillance process. Using language indentical to that in the G-10 report, it states that the effect of surveillance in inducing policy changes is much larger on dewloping countries than on major industrial countries, “which have adequate access to esternal financing anti do not require an IMF supported acljustmcnt program.” An improved surveillance process should reduce this asymmetry and “clwisc methods for coordination ot policies of major industrial countries for promoting world economic activity and trade espansion in 2 manner supportive of growth in developing countries.” To this end. the report su,,troests. surveillance should have ;I broader focus than exchange-rate policies: it should be explicitly recognized as suradjustment proveillance of the “international cess ,” based on coordinated national economic growth of po1icic.s. and “aimed at sustained output, employment. and trade of all countries” real rcsourcc’ transfers to &and “adequate vcloping countries.” The surveillance proccdurc \~oulcl involve multilateral discussion and negotiations in the IIMF “about ;I mutually-consistent set of objcctives, and ;i set of policies to collcctivel~ achieve for ;I few major industrial these objectives.” countries. These objectives presumably rates of gro\vth, intlation. currc’nt-account positions. though the report does not make this explicit would be compared \vith actual outcomes and the Fund would recommend policy measures when the two deviate. To increase the Fund’s leverage over the policks and economic performance of major industrial countries. the G-24 report recommends that the IMF “devise procedures for exercising ‘pressure’ on countries in the course of its consultations with them.” (This concept and
REPOKI‘
OF THE
GROrP
the term “pressure” come from the \\orli of the Committee of Twenty in lY72-74.) As it turn5 out. the proposed pressure is rather mild: the notict.5” Lvhen IXlF uould gi\e ..information policies diverse from those suggested. but these would not be made public, nor ikould an!; other aspects of IXlF consultation5 with inctlvidual member countries. When the G-IO report was under consideration. the United States proposed that “publicity” be given to I&IF consultation reports. That proposal was turned do\\n by other members of the Group of Ten. Now the Group of Twenty-Four also opposes such publicity. This seems to confirm the hypothesis that large countries like the United States feel that the! could ignore the publicized policy xlvice of the IMF while smaller countries do not have that confidence. The United States has obviously succeeded in ignoring advice from all quarters. including the IMF. concerning its budget deficit.
3. MANAGEMENT LIQUIDIT\i
OF INTERNATIONAL AND THE SDR
The G-7-l report, like that of the Group of Ten, observes that countries continue to show ;I demand for growing reserves. Large swings in exchange rates, sizable payments imbalances, and high interest rates are said to have led countries to hold substantial reser\‘es in order to protect thcmsclves against uncertainties. In particular. developing countries feel a riced for large reserves “to insulate themselves against frequent esogenous ‘shocks.’ cieterioration of terms of trade. protracted recession and increasing protectionism in industrial countries.” as well as to demonstrate creditworthiness. Credit from commercial banks is said to have provided ;I substantial source of liquidity for some developing countries but ;I large number of them had to rely on official finance. And. of course, bank lending has sharply declined since mid- 19s’. Meanwhile, commodity prices. and the prices of other developing-country exports. have fallen. as has official development assistance in real terms. And, in order to restore creditworthiness. nations first have to build up reserves. Thus. the report states. there is ;I case for SDR creation. This case is also supported by the fact that non-gold reserves have gro\vn more slowly than imports in the case of most developing countries. The prospective gro\vth of world trade will reduce this ratio further if new reserves are not created. The report argues that even substantial SDR creation poses no inflationary threat. On the
OF T\\‘EST\I’-FOLR
13.35
contrary, it is said. ‘-industrial countries should increase in export welcome a consequential demand from the dskrloping countrish. V.hich ~vould reduce the pressures created by their need to accommodate the improvement in the currentaccount balance of the developing countries.” This is a novel and compelling argument. and it is too bad that it is not spelled out more in the report. It does not depend on the spending of SDR allocations by developins countries. U’hat it says is that. if SDRs \\ere created and distributed. drvelopinp countries WNIJ. to that estent. need to try less hard to rclni the additional reserves that they need. Instead. they could use more of their esport proceeds to purchase imports from industrial countries. The latter should welcome such additional exports. Carried further, this argment also support5 the “link” proposal, but the report is far from strident in making this point.
4. TliE
DEBT
PROBLEM AND OF RESOURCES
TRANSFER
The G-2-l report describes the origin of the debt problem in reasonable terms, admitting that there were shortcoming in the policies of many developing countries that compou~~ded the difficulties caused by “esogcnous” shocks in the world economy. The “strenuous” adjustment efforts of borrowing countries are also stressed, Multi-year restructuring is recognized as “helpful” but it still Ieavcs debtor developing countries with ;I major resource transfer problem. Therefore. “urgent consideration may have to be given to evolving mechanisms that would roll over or refinance ii certain proportion of interest payments, i.e.. those above the long-term trend real rate of interest.” This sounds like one of the interest “capping” proposals. The report goes on to say: “Xlore broadly, the issue is whether heavilv-indebted countries can combine the attainment of satisfactory rates of growth with meeting debt service payments in full.” Among the elements that will determine this are: “(a) the future rate of growth of the major industrial countries: (h) the international level of interest rates and the dollar rates: (c) the access of developing countries’ exports to industrial country markets and the expansion of world trade; (d) the flow of resources to developing countries from financial intermediaries including international financial institutions; and (e) sustained adjustment efforts on the part of debtor countries over the medium term. coupled with reallocation of resources in favor of esports.” The debt problem is said to have arisen “to a
I?.~h
WORLD
DE\‘ELOP\lEST
considerable extent due to the absence of adequate sources of development finance which led many debeloping countries to resort to short- and medjum-term financing from internxional cupital markets.” (The term “capital markets” is cleurly intended to include bank credit.) Given the reduced availability of such funds and the problems it raises. “there is ;I need to design ne\\ financinp mechanisms for orderly resource transfer to developing countries. and, in this contest, the need to espund the resource base of existins financial iatitutions such as the k’orld Bank. the repional development banks and the IMF becomes all the more imperative to enable them to play a much larger role. in the years to come.” US Treasury Secretary Baker‘s proposals appear to be at least a part4 answer to this need.
The report ends with a strong plea for an increusz of official development assistance, particularly for low-income countries.
3. CONCLUDING
CO>lJIENT
All in all. the report of the Group of TuentyFour. although it is written from the viewpoint of the interests of developing countries. appears to come to grips \vith the problems of the world economy better than does the Group of Ten report. It deserves to be taken seriously b> policy-makers as \vell as by others bvho have an influence on policy in industrial. as \vcll as in developins, countries.
of the Group of Twenty-Four: A Comment
ROBERT SOLOMON’” Gllc>stScholrrr, Tile Brookitlgs Itutitutiotl, It’crsllirlgtorl Ll. C.
The Group of Twenty-Four. reprcscnting developing countries, published in August lYS5 a report on “The Functionin g and Improvement of the International Monetary System.” It contains considerably more substance than the Group of Ten report. released in June IYS5. on “The Functioning of the International Monetary System.” Both reports xc scheduled to be considered at the April IYSh meeting of the Interim Committee of the International Monetary Fund. We shall discuss the G-74 report under the folloiving headings: ( I) the functioning of the present cxchangc-rate system. (2) IMF surveilIancc. (3) management of international liquidity and the SDR, and (4) transfer of resources.
I.
FUNCTIONING
the
clcbt
OF EXCt SYSTEM
problem
and
IANC;E-RATE
The report notes that experience with tloating exchange rata has not been LIP to original expectations. .since rates have been variable in terms of both short-term volatility and long-term misalignment. Volatility is said to have “tliscouraged invastment and trade by adding to financial risks” but no evidence or documentation is offered in support of this assertion. nor i5 any persuasive evidence available in the literature. The principle complaint put forward in the report is that vxiabi~ity of exchange rates has “especially hurt the developing countries.” Esporters and importers in these countries are said to be “exposed to high exchange risks in the absence of well-developed financial markets. especially forward cover arranpements.” Moreover. the “destabilizing uncertainties of floating rates” are said to have increased “the reserve and capital needs of developing countries.” Such problems must also have existed under the Bretton Woods system, when the par values
of industri;ll
countries were altrrcd from time to time. p;lrticularly in the 1961)s and lY7Os. Even accepting that eschanpr-rate variabilit> is no\\ industrial-country currencies among greater. ;IS it certainly is. \vhat is not clear is precisely what the enhanced risks are to traders in developing countries. Exporters and importers in those countries never had assurance that the relationship bettveen rlfcir countries‘ currencies and industrial-ccluntry currencies would remain stahlc even when cschange rates among indu>trial countries wcrc unchanged. Xlost developing countries have had higher rates of inflation than industri;il countric5. In some cases. 3 crawling peg rcason;lbly hut not fully predictable was adopted. In many casts. occasional large and eschange-rate changes occurred in discrete developing
countries.
Since
currencies
that must
matter.
is that what
\vcrc altxady
for
in
traders
higher
now.
exchange
llou
To improve tant objcctivc
of policy
policy
actions
is the cast
at present.”
the
refers
report
target
zones,
further “In
rates
is
this
in
clear.
the report
instead
cvcn
increase
is not should
risk”
are
states
that
be an impor-
of being ;I residual
of individual countries. ;I> And. in this connection.
favorably
although
own
exchange
countries
answer
the system.
of achange
of other
..hiph
serious
The
in their
the most one can S;I\
developing
risk?
Wability
it is risks
to
the
the proposal
proposal “needs
for to be
studied.” the
mechanism coordination
meantime.”
the
G-2-l
has to be devised
report
to enforce
say.
“;I
polic)
nmonp
the developed. especialI> countries.” There follows this “Policy coordination in observation:
the key currency. significant this
context
implies
that
monetary
policy
for
‘Former Advisor to the Board ot’ Governors of the Federal Reserve System. Author of T/I? Ir~rrrtrorio~l Alotrcmr~ S~srern. IY-IS-IYNI (London: Harper Ji Row. 1982).
1233
12.2
h’ORLD
DE\‘ELOP~lENl
exchange rate htabilit> \houlcl complement the use ~)i fiscal polic> ti> counter innationury 2nd detlationar~ pra\urc\ ;I\ u.t’ll as the IN of other polic) in5trument5.” for example. intervention in foreign rschange m,lrkets. Although some~~hat cryptic. thih statement on police coordination avoids the Lveakness of ;I number of other approaches to sreuter eschanprrate \tahility. It doe5 so by recogizing that if monetary policy is tc> be :iimed at stabilizing exchange rates, fiscal polic\ aill have to be relied on. in the industrial countries. to maintain economic protvth and to counteract tendencies tu\vard rscexsion and intlation. Some enthusiasts for tarpct zones fail to acknowledge thi5 important proposition. From the viewpoint of developing countries especially, it would be ;I pity if industrial countries achieved prcater eschangerate stability bv paying the price of greater macroeconomic’iristability. What the G-21 proposal would involve therefore is a fundameiit~d reform in the approach to fiscal policy in major industrial countries. Experience in recent years. in the United States. Europe, and Japarl demonstrates the need for such reform. Fiscal policy has been either perverse (Japan and some European countries) or intlcsible (the United States) or both. Yet the recommendation in the G-74 report would require that fiscal policy be adapted flcsibly to offset undesired movcmcnts in agsrcgate cicmarid stemming from ;iutonomous changes in private spending or from the effects of monetary policy when its pursuit of stable exchange rates intluenccd aggregate clemand in ;I way that is domatic:1lly destabilizing. The report goes on to propose ;I procedure for improving policy coordination. It envkipes ttic establishment of “indicators” that would suggest when “excessive short-term movements of one or more major currencies arc taking place, or that any major currency is already. or is in the process of becoming seriously misaligned.” This in turn iiiakcs it necessxy to measure misalignment. Although the report does not suggest how “equilibrium” exchange rates are to be identified. it does quote ;I paragraph from the IMF report of 1970 on the “Role of Exchange Rates in the Adjustment of International Payments” that “an authoritative definition of is said to provide the concept of fundamental disequilibrium.” The point of the quoted paragraph is that “fundamental disequilibrium” must be related to the general condition of a country’s economy and does not require that an imbalance must have developed in the balance of payments. If a country is keeping its international payments in balancr by depressing its output and imports, its
exchange rate ma) be in diquilibrlum: the concept of ;I c~cllcall~-adjll~t~d balance of payment> ~vould be relevant here. Another example is that “sub\tanti;ll or increaing ratrictions on trade could ~iell be ;I major symptom of sschangr: rate misalignment.” (ActualI). increabins restrictions on trxle could inilicxte mi~~tl1~nnieiit in either .direction.) These procedures for polic) coordination would be applied a> part of the bilateral and multilatcr:ll consultations - ‘rurvr‘illanct - that are alrexiy carried out hv the IXlF \vith it5 membtzrs.
3. IMF
SURVEILLANCE
Like the Group of Ten. the Group of TwentyFour proposes to strenghen the IMF surveillance process. Using language indentical to that in the G-10 report, it states that the effect of surveillance in inducing policy changes is much larger on dewloping countries than on major industrial countries, “which have adequate access to esternal financing anti do not require an IMF supported acljustmcnt program.” An improved surveillance process should reduce this asymmetry and “clwisc methods for coordination ot policies of major industrial countries for promoting world economic activity and trade espansion in 2 manner supportive of growth in developing countries.” To this end. the report su,,troests. surveillance should have ;I broader focus than exchange-rate policies: it should be explicitly recognized as suradjustment proveillance of the “international cess ,” based on coordinated national economic growth of po1icic.s. and “aimed at sustained output, employment. and trade of all countries” real rcsourcc’ transfers to &and “adequate vcloping countries.” The surveillance proccdurc \~oulcl involve multilateral discussion and negotiations in the IIMF “about ;I mutually-consistent set of objcctives, and ;i set of policies to collcctivel~ achieve for ;I few major industrial these objectives.” countries. These objectives presumably rates of gro\vth, intlation. currc’nt-account positions. though the report does not make this explicit would be compared \vith actual outcomes and the Fund would recommend policy measures when the two deviate. To increase the Fund’s leverage over the policks and economic performance of major industrial countries. the G-24 report recommends that the IMF “devise procedures for exercising ‘pressure’ on countries in the course of its consultations with them.” (This concept and
REPOKI‘
OF THE
GROrP
the term “pressure” come from the \\orli of the Committee of Twenty in lY72-74.) As it turn5 out. the proposed pressure is rather mild: the notict.5” Lvhen IXlF uould gi\e ..information policies diverse from those suggested. but these would not be made public, nor ikould an!; other aspects of IXlF consultation5 with inctlvidual member countries. When the G-IO report was under consideration. the United States proposed that “publicity” be given to I&IF consultation reports. That proposal was turned do\\n by other members of the Group of Ten. Now the Group of Twenty-Four also opposes such publicity. This seems to confirm the hypothesis that large countries like the United States feel that the! could ignore the publicized policy xlvice of the IMF while smaller countries do not have that confidence. The United States has obviously succeeded in ignoring advice from all quarters. including the IMF. concerning its budget deficit.
3. MANAGEMENT LIQUIDIT\i
OF INTERNATIONAL AND THE SDR
The G-7-l report, like that of the Group of Ten, observes that countries continue to show ;I demand for growing reserves. Large swings in exchange rates, sizable payments imbalances, and high interest rates are said to have led countries to hold substantial reser\‘es in order to protect thcmsclves against uncertainties. In particular. developing countries feel a riced for large reserves “to insulate themselves against frequent esogenous ‘shocks.’ cieterioration of terms of trade. protracted recession and increasing protectionism in industrial countries.” as well as to demonstrate creditworthiness. Credit from commercial banks is said to have provided ;I substantial source of liquidity for some developing countries but ;I large number of them had to rely on official finance. And. of course, bank lending has sharply declined since mid- 19s’. Meanwhile, commodity prices. and the prices of other developing-country exports. have fallen. as has official development assistance in real terms. And, in order to restore creditworthiness. nations first have to build up reserves. Thus. the report states. there is ;I case for SDR creation. This case is also supported by the fact that non-gold reserves have gro\vn more slowly than imports in the case of most developing countries. The prospective gro\vth of world trade will reduce this ratio further if new reserves are not created. The report argues that even substantial SDR creation poses no inflationary threat. On the
OF T\\‘EST\I’-FOLR
13.35
contrary, it is said. ‘-industrial countries should increase in export welcome a consequential demand from the dskrloping countrish. V.hich ~vould reduce the pressures created by their need to accommodate the improvement in the currentaccount balance of the developing countries.” This is a novel and compelling argument. and it is too bad that it is not spelled out more in the report. It does not depend on the spending of SDR allocations by developins countries. U’hat it says is that. if SDRs \\ere created and distributed. drvelopinp countries WNIJ. to that estent. need to try less hard to rclni the additional reserves that they need. Instead. they could use more of their esport proceeds to purchase imports from industrial countries. The latter should welcome such additional exports. Carried further, this argment also support5 the “link” proposal, but the report is far from strident in making this point.
4. TliE
DEBT
PROBLEM AND OF RESOURCES
TRANSFER
The G-2-l report describes the origin of the debt problem in reasonable terms, admitting that there were shortcoming in the policies of many developing countries that compou~~ded the difficulties caused by “esogcnous” shocks in the world economy. The “strenuous” adjustment efforts of borrowing countries are also stressed, Multi-year restructuring is recognized as “helpful” but it still Ieavcs debtor developing countries with ;I major resource transfer problem. Therefore. “urgent consideration may have to be given to evolving mechanisms that would roll over or refinance ii certain proportion of interest payments, i.e.. those above the long-term trend real rate of interest.” This sounds like one of the interest “capping” proposals. The report goes on to say: “Xlore broadly, the issue is whether heavilv-indebted countries can combine the attainment of satisfactory rates of growth with meeting debt service payments in full.” Among the elements that will determine this are: “(a) the future rate of growth of the major industrial countries: (h) the international level of interest rates and the dollar rates: (c) the access of developing countries’ exports to industrial country markets and the expansion of world trade; (d) the flow of resources to developing countries from financial intermediaries including international financial institutions; and (e) sustained adjustment efforts on the part of debtor countries over the medium term. coupled with reallocation of resources in favor of esports.” The debt problem is said to have arisen “to a
I?.~h
WORLD
DE\‘ELOP\lEST
considerable extent due to the absence of adequate sources of development finance which led many debeloping countries to resort to short- and medjum-term financing from internxional cupital markets.” (The term “capital markets” is cleurly intended to include bank credit.) Given the reduced availability of such funds and the problems it raises. “there is ;I need to design ne\\ financinp mechanisms for orderly resource transfer to developing countries. and, in this contest, the need to espund the resource base of existins financial iatitutions such as the k’orld Bank. the repional development banks and the IMF becomes all the more imperative to enable them to play a much larger role. in the years to come.” US Treasury Secretary Baker‘s proposals appear to be at least a part4 answer to this need.
The report ends with a strong plea for an increusz of official development assistance, particularly for low-income countries.
3. CONCLUDING
CO>lJIENT
All in all. the report of the Group of TuentyFour. although it is written from the viewpoint of the interests of developing countries. appears to come to grips \vith the problems of the world economy better than does the Group of Ten report. It deserves to be taken seriously b> policy-makers as \vell as by others bvho have an influence on policy in industrial. as \vcll as in developins, countries.