Problems of Foreign Trade and Economic Relations of Developing Countries

A well-known scientist, Professor of Economics and History at the University of Texas Rostow

Walt Whitman postulated that societies had passed through five stages of economic development:

(a) the traditional society; (b) the pre-conditions for take-off; (c) the take-off, when growth becomes

a normal feature of the economy; (d) the drive to maturity; and, some sixty years after take off

begins; (e) maturity, reached in the age of high mass consumption. His classification has become

universally acknowledged. According to this theory, a developing country has not yet reached

the stage of economic development characterized by the growth of industrialization, nor a level of

national income sufficient to yield the domestic savings required to finance the investment necessary

for further growth. (Also referred to as Third World Countries.)

The attempt by developing countries to obtain significant increases in their real incomes has

been frustrated by the deterioration in their terms of trade and the rapid expansion of their populations.

Many developing countries are primarily producers, so their economies are vulnerable to

movements in commodity prices. Over 20 per cent of the gross domestic product of many developing

countries is derived from their exports of primary commodities. African and Latin American

countries depended at the end of the 1980s on these commodity exports for over 70 per cent of

their foreign exchange earnings. However, commodity prices fell in real terms — by about 10 per

cent in the 1980s, although there has been some improvement since. As a result, many developing

countries have accumulated large foreign debts. The interest payments on this debt and the repayment

of capital as it comes due takes up about 50 per cent of their export earnings. Many ideas have

been put forward to assist these countries bridge the gap between themselves and the developed

countries. Some developing countries, particularly in Asia have successfully embarked on economic

development and attracted a substantial growth in private capital investment in the 1990s

which has more than offset static or declining official foreign aid.

Commentary and Notes to Text 2.7.1.4

1. take-off — начало экономического подъема

2. growth becomes a normal feature of the economy — рост становится нормальной чертой

экономики

3. maturity — зрелость

4. high mass consumption — высокое массовое потребление

5. domestic savings — внутренние накопления (сбережения)

6. Third World Countries — страны третьего мира

7. the deterioration in the terms of trade — ухудшение условий торговли

8. prices... in real terms — цены в реальном выражении

9. the interest payment on this debt... — выплата процентов по этому долгу...

10. repayment of capital — платежи в счет погашения долга (кредита)

11. to bridge the gap — сократить разрыв

12. to embark on economic development — приступать к экономическому развитию

2.7.1.5. Read the text “Activities of the Nobel Prize Winner W. W. Leontief,” translate it orally