Evening star., 1962-09-18
Under-DeveIoped Countries Urged
To Encourage Private Capital
By LEE M. COIN
Star staff Writer

CbaA otaAA WAAsCA
The United States warned
the underdeveloped countries
today that hostility to private
capital will slow their economic
growth.
While disclaiming any desire
to force capitalism on socialist
nations, Undersecretary of State
George w. Ball lectred them
on the dangers of appropriation
and other policies that dis
criminate against private in
vestors.
Foreign aid loans and grants
by governments viii not go on
forever and cannot do the de-
velopment job alone, Mr.. Ball
said in a major policy speech
to the annual meeting of the
World Bank at the Sheraton
Park Hotel.
Therefore, he advised. the
under-developed countries
"must consciously foster the
economic stability and the in
vestment opportunities that
will remove the incentive for
capital flight"
No Gases Cited
Furthermore, he continued,
these countries must create
conditions that are conducive
to private external investment,
including assurances against
discriminatory treatment and
appropriation"
Mr.. Ball mentioned no spe-
cific cases, but appropriations
and other hostile acts against
private investors in Latin !,
America and elsewhere have
upset the United States during
the past year.
in several areas Of the world
recently" he said, "the inflow
Of private investment from
abroad has been drying up at
an alarming rate because
the recipient countries are pur-
suing national policies that
make private investment pre-
carious and unrewarding." Il
II politicians in the under
developed countries insist on :
treating private investors un- :
fairly, he warned, "they viii !
find themselves falling farther $
and farther back in the march I
Of progress" ?
IndOrses Black Plea
Mr.. Ball said the effectiveness t
Of economic development pro- v
grams also depends greatly upon
the win of the people to pro- ]
gress, the intelligence and ded-
ication Of their leadership and s
"the willingness Of the tradi- Ie
tionally favored few to yield I
some of their special privileges" s
Mr.. Ball indorsed a plea by
Eugene r. Black, retiring pres
ident Of the World Bank. for
urgent study of the need for
big new contributions by the
industrial countries to the lend
ing capital Of the International
Development Association.
The meeting, without dissent,
authorized the study proposed
by Mr.. Black. Z
Mr.. Black. an American, L
heads the IDA and the Inter-
national Finance Corp, along ]
with the World Bank.
He made his call for funds /.
In a speech to the annual meet
ing Of the three affiliated or
ganizations, held in conjunc- L
ton with the International
Monetory Funds meeting at
the Sheraton-Park Hotel.
IDA viii commit all Of its !
$765 million of usable funds to
economic aid projects by mid
1868, about two years ahead Of
schedule, Mr.. Black said.
But unless new capital is
supplied, he warned. the asso-
citation will have to stop max
ing loan commitments at that
time.
Helps Backward Nations
IDA makes loans on very
lenient terms to underdeveloped
countries that cannot afford to
pay the higher interest rates
charged by the World Bank for
shorter-term loans. The IFC
makes loans and buys stock to
promote private development
projects.
Mr.. Black said underdeveloped
countries must obtain increased
aid over long terms at low in
terest rates, because otherwise
they will mortgage" their
future export earnings. Fur
thermore, he said, aid provided
by multi-nation agencies is
healthier" than bilateral aid.
Aid provided by individual
countries, he said, often is
wasteful and "at the mercy Of
the variable winds Of diplo-
macy"
Mr.. Black said the association |
is the ideal vehicle for multi
lateral aid on easy terms.
Plea by Ball Expected
United States officials are
known to sympathize with the
need for additional contribu-
tions to IDA resources. Under
secretary of State George Ball
was expected to support Mr..
Blacks plea in a speech later
today.
Mr.. Black said industrial
countries have been saving
money on the falling prices |
Of raw materials produced by
the underdeveloped countries
and so can afford to increase |