Evening star., 1950-11-13
Truman Statement Groys Recommendation for ECA Extension


| Of stimulating development is more
complicated and slow than that Of
assisting recovery In developed
countries to absorb capital.
Wide variations in local internal
conditions, as well as in resource
potential and in vulnerability tc
aggression. require diversity In
method and fiexibility in admins
tration. Each type of stimulus
private investment, public loans
technical assistance, and grants
has significant role to play.
The following recommendations
are intended to increase the scope
and improve the effectiveness OF
these forms of assistance. Taken
together, they are intended to con-
stitute the outlines of a total pro-
gram Of development assistance that
is both possible and necessary to
achieve the objectives of the United
States foreign policy.
Role of Private, Investment.
Z. Private investment should b<
considered as the most desirable
means of providing capital and it.
scope should be widened as far a.
possible. II normally carries with
it the chronological and administra-
tive skills which are an essentia
ingredient for effectiveness. There
should be constant re-evaluation OF
the role which 1t can play and the
burden of public lending should bt
correspondingly adjusted.
Further study should be given tt
the desirability and possibility o.
promoting private investment
through tax incentives, in area.
where economic development will
promote mutual interests, but
where political uncertainty nov
handicaps United States private
investment. The possibilities o.
measures to improve the United
States market for sound foreign
dollar securities also should be
studied. The following steps shoult
Immediately be taken, although the
uncertainty of their effectiveness ir
many areas must be recognized ir
the light of present world condi.
tions.
(A) The negotiation of invest
ment treaties to encourage private
investment should be expedited.
(B) The bill to authorize Gov.
ernment guarantees of private in.
vestment against the risks of non.
convertibility and appropriation
should be enacted as worthwhile
experiment.
8. Under present conditions q
heavy reliance on public lending
must be recognized as essential TO,
an aggressive development program
This will require continued vigor.
Gus efforts by the international
Bank for Reconstruction and De-
velopment, supplemented by the
Export-Import Bank, and co-ordi-
mated with effective technical as
sistance activities.
Their combined efforts should
aim at a net outflow of capital tc
underdeveloped areas in the range
of $500 to $500 million a year, Of
which half or more should be sup
piled by the International Bank
from sources other than the United
States Treasury. With respect te
United States Government lending
the following steps are also needed
| (A) The lending authority of the
Export Import Bank should be in
creased from the present $31s to q
total Of IS billion, in order to make
advance planning effective.
CD A general policy Of permit
ting United States loans to be
spent outside as well as within the
United States should be adopted
In this way, loan recipients can
buy goods wherever they are cheap
est, and other industrial countries
will have an opportunity to expand
exports and dollar earnings II they
are sufficiently competitive. This
would also be In the interests of
the United States; it would tend to
help relieve infiationary shortages
at the present time, and in the
longer run to support export mar
kets for United States goods which
are likely to be most readily avail
able.
Co In selected cases loans should
be permitted to finance some of the
local costs Of development projects
even though these costs do not
involve imports and therefore do
not directly require foreign ex-
change. Such local costs frequently
cause an indirect foreign exchange
drain, which may handicap or pre-
vent successful development.
Grants Proposed.
0. In some cases, grants may ap-
propriately be used for development
and technical assistance, where de-
velopment programs urgently need
ed from the standpoint of United
States objectives cannot be soundly
financed by loans, and where grants
will be an effective spur to economic
development. Furthermore, ou,
present technical assistance pro.
grams In underdeveloped area,
should be expanded in scope and
made more effective.
The United States therefore
should make further limited funds
available for q program Of grants
for technical assistance and de-
velopment. It seems probable that
a needed, feasible, and effective
program would require funds of ur
to about $500 million a year for
several years, apart from emer-
gency requirements arising from
military action. This compares with
present funds Of about $50 million
a year for these purposes.
10. The administration of pro-
grams to stimulate development In
underdeveloped areas - including
loans. technical assistance, grants