A. Policy Definition
I. A general policy paper entitled “Objectives and Nature of the Point IV
Program” has been prepared in close collaboration with an Interdepartmental
Advisory Committee and the twenty-six agencies active in the field. It is
attached for your approval.
II. Detailed policy statements are being prepared and reviewed on the
following additional problems:
B. Detailed Program of Technical
Cooperation
I. With the cooperation of the other agencies and departments experienced in
this field, we are preparing the detailed proposal for technical cooperation
activities to be submitted for your approval and for transmittal to
Congress. This proposal will be based on:
It is not planned to ask foreign governments or the United Nations and its
related agencies to submit formal requests for support of technical
cooperation programs before presenting a proposal to Congress. The program
presented to Congress, therefore, will be illustrative of the needs and
possibilities of technical cooperation activities, rather than a final
program whose detailed projects Congress would be asked to approve.
II. At the same time, a study is being made of private activities in the
international interchange of technical knowledge and skills; of the methods
whereby governmental measures can encourage and facilitate private
activities, and of the methods of obtaining coordination and mutual
reinforcement of private and governmental activities in this field.
C. Organization
A plan of organization will shortly be submitted for your approval, along the
following lines:
D. Legislative Action
Review is under way of (1) existing legislative authority, pursuant to which
existing technical, scientific and cultural exchange programs are being
carried out and can be expanded; and (2) the necessity for new legislative
authority to carry out an integrated and expanded program of technical
cooperation for economic development. A draft of proposed legislation is
being prepared.
E. Consultation with Private Groups
Advice in the development of the program is being obtained from private
groups in the following ways:
F. Consultations with Congressional
Leaders
The Department of State proposes to initiate consultations with Congressional
leaders on this technical cooperation program as soon as the present
memorandum receives the President’s approval.3
[Enclosure]
Objectives and Nature of the Point IV Program4
(This paper is intended to state the purposes of the Point IV Program and
some of the major results to be expected from it. It is intended for the
use of Government personnel in formulating answers to specific policy
and programming problems and not for publication.)
objectives
The Point IV Program, like the other three related courses of action
outlined in the President’s inaugural address, has the broad objective
of promoting peace by “strengthening the free world”, and thus “helping
create the conditions that will lead eventually to personal freedom and
happiness for all mankind”.
The Program aims to help attain the “nonmaterial ends” of peace and
freedom through “material means”, i.e., through improved living
[Page 777]
conditions. In the words of
the inaugural address, the aim is “to help the free peoples of the
world, through their own efforts, to produce more food, more clothing,
more materials for housing, and more mechanical power to lighten their
burdens. … This Program can greatly increase the industrial activity in
other nations and can raise substantially their standards of
living”.
The Program is broadly economic. It seeks the advancement of peoples of
underdeveloped areas through a continuing and balanced expansion of
their production and distribution of goods and services essential to
meeting their needs. Its emphasis is on helping the “peace-loving”
peoples of those great areas that have benefitted only indirectly from
our post-war programs of economic aid to Western Europe. It recognizes,
however, that by far the greatest impetus and contribution to their
economic development must come from the people themselves in those
areas.
The United States has had much experience, over many years, in many kinds
of cooperative action to foster economic development. It has learned
what great benefits it and all other cooperating nations can derive from
greatly expanded activities of these kinds. The President’s program is
“bold and new” in elevating this instrument of national policy to a
position of major importance, in coordinating these activities into a
vigorous and integrated program of action, and in seeking much greater
participation in such a program by the other countries of the world—by
countries supplying technology and capital, by countries receiving them,
and by countries cooperating in the technical assistance activities of
the United Nations and other international organizations, even though
they themselves be neither important suppliers nor recipients.
The Point IV Program may be expected to contribute, and should be
administered so as to contribute, to the achievement of the following
general objectives of United States national policy:
-
a)
-
Contributing to domestic economic stability
and productivity, by expanding international trade and
avoiding some of the readjustments in the domestic economy that
might result from a contraction of international trade. In the
absence of capital exports or continuing gifts from the United
States, such a contraction would appear inevitable, because
United States imports are unlikely to increase sufficiently to
maintain present export levels. Although an export surplus of
commodities is not considered necessary for the maintenance of
full employment, it is important in certain sectors of the
economy where decreasing exports would necessitate difficult
adjustments in domestic production. If capital flows abroad,
such adjustments can be avoided, at the same time that sources
of supply for materials needed in the United States are
developed. Productivity both at home and abroad can be expected
to increase as production is expanded along lines allowing the
greatest benefit to be derived from natural advantages.
-
b)
-
Strengthening our national security, by
building good will throughout the world and by strengthening
“freedom-loving” nations. Good will toward the Usnited States
and recognition of mutual interest can lessen greatly the
effectiveness of sabotage and subversion by unfriendly nations
and can unify our friends and make them more effective. Good
will will be greatly strengthened if concrete actions are taken
that nullify charges of “imperialism”, and if, in carrying out
programs in dependent territories their peoples’ aspirations for
national independence are kept in mind. Good will is
particularly important in areas of strategic economic or
military significance.
-
c)
-
Achieving a better balance in the world
economy. Most recent increases in production have taken
place in areas already well developed, without adequate
attention to the need to move ahead along the whole production
front. This Program helps fill that need. Increased production
in underdeveloped areas would not only benefit them, however,
but would also benefit other areas. The flow of capital to
underdeveloped areas would enable them to buy capital equipment
and other manufactured goods from both the United States and
Europe. Expanded purchases from Europe would increase Europe’s
income and hence her ability to pay for imports, from whatever
source. As underdeveloped countries increase production of raw
and semi-finished materials for export, Europe will be able to
import larger quantities from non-dollar sources of supply,
while United States raw material shortages will also be eased. A
better balance of export possibilities and sales opportunities
throughout the world would reduce pressures for autarchic
solutions of economic problems.
-
d)
-
Strengthening the United Nations system,
by supporting constructive international action for economic
development where this will help achieve the objectives of the
Point IV Program. Under the United Nations auspices
underdeveloped countries may be readier to undertake necessary
self-discipline and self-help measures and to adapt their
development programs to world needs; countries having
technological and capital resources would participate more
generally in coordinated technical cooperation activities; and
the cry of “imperialism” would find little response. The
prestige and effectiveness of the United Nations and related
agencies will grow, in turn, with the importance of the tasks
successfully carried out by them.
-
e)
-
Strengthening political democracy, by
giving the peoples of underdeveloped countries hope in a better
future, and quickening that hope by providing concrete evidences
of progress toward better levels of living.
-
f)
-
Promoting peace, by strengthening
political democracy, strengthening the United Nations, building
good will and strengthening our friends, helping Europe support
itself, developing sources of needed raw materials, expanding
international trade, and, finally, by showing that world
development can take place peacefully and with increasing
personal freedom, as the energies of the masses of the people
are released into channels of constructive effort aimed at
greater production, greater exchange, and greater consumption.
If international tensions are eased in this way, defense
expenditures should decrease, and both current living standards
and further economic development would then be able to benefit
from the additional resources thus made available.
[Page 779]
substance of the program
The possible international contribution to economic development has two
aspects: sharing knowledge and skills, and fostering their utilization
by encouraging investment in facilities and equipment.
Among the many ways in which knowledge and skills can be shared, the
following have been extensively and successfully used: basic studies of
economic problems, needs, and potential lines of development; expert
advisers or missions to advise governments, private organizations or
business enterprises; joint financing and administration of foreign
government operations (servicios) in particular
fields; research and experimental centers and laboratories;
demonstration projects; operations of business enterprises; on-the-job
training; provision and instruction in the use of sample materials and
equipment; consultation and advising with foreign visitors; publication
and translation of specialized reports; financial assistance to schools
and universities in this country and abroad; exchange of students and
teachers; conferences and seminars; United States libraries and film
services; and special technical staffs attached to diplomatic
establishments abroad.
To be really productive, improved techniques must be put to use.
Furthermore, the introduction of new techniques can advance economic
development most if capital investment is taking place at the same time.
The President therefore proposed that, “in cooperation with other
nations, we should foster capital investment in areas needing
development”. Most of the capital needed for economic development must
come from domestic sources; and measures to promote domestic capital
formation are needed if the Point IV Program is to be fully effective.
Important means of fostering capital investment, where foreign capital
is desired, would be the creation of political, social and economic
conditions favoring such investment, and the establishment of mutual
guarantees of fair treatment. Sources of foreign investment funds are
private, intergovernmental and governmental. It is particularly
important that agreements—either bilateral or multilateral—be sought
that would encourage the international flow of private investment
capital. It is contemplated that steps will be considered, as conditions
warrant, to increase the availability of foreign investment funds.
It is important, however, that neither technical cooperation activities
nor measures to foster capital investment be allowed to give an
impression that the United States Government thereby becomes obligated
to supply the funds needed to finance economic development. The US
cannot accept the ultimate responsibility for seeing that economic
development really takes place. This responsibility must continue to
rest unmistakably on the nations desiring development.
[Page 780]
Economic development means the development of productive resources,
whether these be natural resources, human resources or capital
resources. Improved practices and policies may be needed in both public
and business administration, and might include such diverse techniques
as fiscal practices and methods of handling materials. Specific areas
where the widespread improvement of techniques would be expected to
contribute importantly to the productivity of these resources include
the following:
- (a)
- Natural resources: soil conservation and utilization; plant
and animal husbandry; forest and fisheries management; water
control and use, including water supply, irrigation and
reclamation, waterways and power development; mining and
fuels.
- (b)
- Human resources: health, including sanitation and nutrition;
welfare, including social services and social insurance;
education, particularly fundamental, rural and vocational;
manpower training and utilization.
- (c)
- Capital resources: industrial technology, facilities and
equipment; organization of business and finance; housing;
transportation; marketing and distribution.
emphasis in the program
Culture patterns may affect the rate of economic development, for changes
in habits of thought and methods of work do not come about quickly.
Furthermore, the amounts of capital needed can only be accumulated over
long periods of years. Substantial changes in applied techniques and in
production in underdeveloped countries may take many years, and living
standards in those countries can therefore only rise slowly, especially
if a community chooses more capital investment at the cost of present
sacrifices in consumption or if production does not increase faster than
population. It is important to emphasize that this is a long-term
program in which spectacular results cannot be expected immediately.
Cooperation in such a program should be thought of as continuing for
many years, and long-range projects necessary for the most beneficial
development of each country’s resources must be included.
On the other hand, today’s needs are urgent. Without prejudice to the
long-range development aspirations of other peoples, top priority should
be given to requests for cooperation in connection with economic
development projects that can be undertaken promptly and that will make
the greatest net contribution to the national product within a
reasonable time period.
Cooperation in development efforts, to be most successful, must utilize
the operating techiniques best adapted to existing development needs.
Advisory groups are effective in some situations; in others
demonstration projects are necessary; in still others a wide training
program must be undertaken. To be most effective in achieving the
[Page 781]
several objectives of the
Point IV Program, operating techniques should be utilized that (1) reach
as many people as possible, and (2) get those people actually doing
something in a demonstration or training situation. Broad participation
is by far the most successful way of getting improved techniques
adopted, in most underdeveloped areas.
In considering possible directions of economic development, it is
important not to overlook inter-relationships. From the standpoint of
long-term development, it is not enough to help increase agricultural
production in an area if that area’s transportation facilities remain
inadequate to carry larger crops to suitable markets. Economic
development may be wasteful, in other words, if it takes place in bits
and pieces. There must be close integration of development projects,
both in the planning stage and in administration, and both within and
among different countries.
It should be borne in mind that there are no stereotyped patterns of
economic development, applicable to all or even to many countries; and
that this is not a “program of economic development”, which suggests
planned stages and time periods, but a “program of cooperation” while
economic development takes place. Different countries have different
needs and different possibilities, and the stages necessary for their
development may be quite dissimiliar. Proposed development projects must
take into account and, so far as possible, be adapted to local
resources, attitudes, social and legal structures, customs and
practices, and national aspirations. In general, however, in those areas
where “economic life is primitive and stagnant”, a basic improvement in
health and education may well be prerequisite to increased production
and improved standards of living. It is also likely that, among the less
developed countries, now predominantly agricultural, programs should
stress the improvement of techniques in agriculture, local credit
facilities, food and fiber processing, rural and small scale industry
and transportation, power, and mining where appropriate. Encouragement
of trading and entrepreneurial activities may be important both for the
economic and for the democratic development of such countries. For the
somewhat further developed areas, priorities are likely to be quite
different, with emphasis on governmental and industrial techniques, for
example, as the situation requires.
The Point IV Program’s emphasis on early and greater production in
underdeveloped countries should not be understood to imply that other
and sometimes competing objectives of these countries need be ignored.
Increases in production should be balanced, integrated, and tailored to
individual country needs and potentialities. Development activities
should attempt to harmonize the basic objectives of conserving natural
resources, of long-run improvement, of social welfare and current living
standards, of the economic benefits of international economic
[Page 782]
specialization, and the other
mutual long-run economic interests of all cooperating nations. Finally,
there should be a positive and cooperative effort to increase production
of commodities that are short throughout the world, which will
contribute to the flow of international trade and thus to the economic
well-being of all cooperating nations.
relationship to other programs
Many of the programs now conducted and the institutions supported by the
United States, such as the ITO and the
Reciprocal Trade Agreements Program, the ERP, WHO, FAO, ILO,
The International Bank for Reconstruction and Development, and
transportation agreements and conventions, have among their several
objectives the fostering of economic development and the raising of
standards of living. The Point IV Program must be coordinated with the
economic development aspects of these programs. At the same time, many
programs of educational, cultural, scientific, and informational
exchange, while not focused so directly on economic development, utilize
similar techniques and help achieve some of the same general objectives.
Similarly, existing programs of financial aid for the relief or economic
recovery of war-devastated or war-disrupted economies are in part
directly related to the Point IV Program, insofar as they stress new
development and improved living standards.
Furthermore, economic development requires much more than governmental
action. It would be very limited without the cooperation of private
institutions and other organizations, of business, finance, agriculture,
labor, scientific, educational and other groups and individuals both at
home and abroad, in improving the effectiveness of governmental methods
of helping get new techniques adopted and encouraging capital
investment, and in expanding their own many private activities that will
complement and reinforce the governmental program.
cooperative nature of the program
The United States will work with those nations who want its cooperation.
This program is not unilateral. Thus, cooperation in spreading better
techniques and in encouraging international capital investment is
available in response to the requests of other countries, under mutually
acceptable conditions. As the President said, “The old
imperialism—exploitation for foreign profit—has no place in our plan.
What we envisage is a program of development based on the concepts of
democratic fair dealing”. “New economic developments must be devised and
controlled to benefit the peoples of the areas in which they are
established”. Of course, international capital investment should not be
expected to flow without assurances both to the investor and to the
recipient. “Guarantees to the investor must be
[Page 783]
balanced by guarantees in the interest of the
people whose resources and whose labor go into these developments.”
This is a program of working with other people who are trying to make the
most of their own resources. This is not doing something for others. Outside participation makes it
possible for underdeveloped countries to do more for themselves. It is a “selp-help” program, in which the peoples
wishing economic advancement must expect to provide the principal
effort.
The cooperation is invited of other nations who are willing to pool their
technological resources or who have capital to invest abroad. The United
States has no monopoly of either technology or exportable capital, and
welcomes participation, by other nations in this joint effort. It is
anticipated that this cooperative endeavor will bring important direct
benefits to all participants, including the United States.
It is a special objective to work together with other nations through the
United Nations and its specialized agencies, in close coordination with
the Organization of American States and its specialized agencies,
wherever this will contribute to the success of the Program. This does
not preclude working through other international organizations having
objectives in common with those of the United Nations nor does it mean
abandoning successful bilateral projects or refusing to initiate new
ones. It does, however, mean planning and carrying out technical
cooperation activities through international organizations in preference
to bilateral arrangements, wherever the latter do not have special
advantages, and it means planning bilateral, regional and more broadly
international programs so that, insofar as possible, they complement and
mutually support each other.
conclusion
The Point IV Program, besides recognizing the desirability of economic
development aimed at higher levels of living as an end in itself, grows
out of a recognition that the instruments being used to accomplish the
objectives of national policy prior to the President’s inaugural address
were incomplete. The Program does not imply a redefinition of United
States policy objectives. Rather it means that cooperation in economic
development is now raised to a major role among the instruments for the
accomplishment of existing objectives.
Of even broader significance is Point IV’s new emphasis on the close
relation between popular aspirations and the will to freedom. This new
emphasis must be brought to bear on existing programs as well as new
programs, to ensure they are conceived and administered with full
awareness of this relation and in the light of the President’s statement
that “Democracy alone can supply the vitalizing force to stir the
peoples of the world.…”
