Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

132. Note by the Secretariat of the Organization for Economic Cooperation and Development¹

C(66)133

Paris, December 6, 1966.

WORK PROGRAMME OF THE DEVELOPMENT ASSISTANCE COMMITTEE FOR 1966–67

The attached text was approved by the Development Assistance Committee at its meeting of 20th September, 1966.²

With regard to paragraph 6, the Committee met on 29th-30th November to consider Secretariat proposals for a work programme on Food and Agriculture, as set out in DAC(66)31.³ The Committee concluded that:

(a) with regard to the question of food aid, it should not, at this stage, undertake a substantive programme of work but should be kept informed of the results of studies proceeding in other bodies;

(b) that it should concentrate initially on making a carefully prepared review of the policies and programmes of aid donors in providing capital and technical assistance for agricultural development in developing countries. The object of this review would be to ascertain the ways in which aid for agricultural development could most usefully be extended and rendered more effective in the future. It would focus on issues common to a number of donors in this sector, where an exchange of experience might be productive of results;

(c) that, having conducted such a review, the Committee would then decide whether it wished to proceed to an examination of agricultural policies and aid needs in selected developing countries; and, if so, how such an examination might be organised.

In addition to the above, the Committee will be holding in December some preliminary discussions on three specific matters—namely, the F.A.O. proposal for a Food Production Resources Programme, the situation of the World Food Programme, and the Development Centre study on “Population Control and Economic Development”.⁴

Attachment

WORK PROGRAMME OF THE DEVELOPMENT ASSISTANCE COMMITTEE FOR 1966/67

A. Procedural Priorities

1. The major forum for a comprehensive review of aid policies within D.A.C. is the Annual Aid Review. The first priority must be to continue the Review and, where possible, improve it. When the remaining 1965 country aid examinations have been completed this autumn, there should be a thorough reconsideration in D.A.C. of the desirability of further changes to increase its impact on policies. While the statistical record must always be on an annual basis, it might be possible to examine selected aid policies in greater depth at less frequent intervals. Further consideration should be given to the problem of publicity of the results. It is also proposed to examine how the Review, and other D.A.C. work, can be organised so as to take more fully into account the special problems of countries with small and medium-sized aid programmes.

2. The D.A.C. has certain major responsibilities with respect to UNCTAD. Preparations for the second UNCTAD Conference, provisionally scheduled for Summer 1967, give a special urgency to substantive examination of a number of subjects. These include consideration of the results of the I.B.R.D. studies on Supplementary Financial Measures and on Export Credits,⁵ of the expert group study on the “Horowitz Proposal”,⁶ and of the discussions in UNCTAD of the Adequacy of Rates of Growth.⁷ Beyond this, D.A.C. Members are concerned to seize upon the constructive possibilities of the UNCTAD discussions. It may be possible through them to move toward a common sense of purpose and shared understanding of economic and technical problems between the economically advanced nations and the less-developed countries.

3. These procedural priorities to some extent determine the degree of attention to be given to the various subjects to be covered in the work programme in 1966–67. A number of the subjects listed below will be brought forward in the Annual Aid Review or in the preparation for items on the agenda of various UNCTAD bodies. Other criteria which have entered into the determination of priorities are the intrinsic importance of the subject with respect to accelerating economic development, the relation of the subject to necessary decisions by governments, and the likelihood that progress can be made in furthering the areas of agreement among D.A.C. Members.

B. Subject Priorities

4. Volume of Aid. It is agreed that the volume of aid falls short of what is desirable. This is partly the result of limited efforts by D.A.C. Members. It also reflects the difficulty which developing countries have in making effective use of aid provided under various conditions and in various forms. The Committee proposes to continue this work along the following lines, largely through its Working Party on Assistance Requirements:

(a) further examination of problems of defining and measuring relative assistance efforts, with a view to securing a greater measure of agreement on principles for burden sharing;

(b) examining what can be done to remove factors which limit the capacity of developing countries to utilise external assistance effectively, either through appropriate policy measures by those countries themselves, or through adjustments in aid policies and practices (e.g. more extensive non-project aid, meeting of certain local costs of aid projects, closer linking of capital and technical assistance, project preparation);

(c) study of the amounts, causes, and impact of private capital flows to the less-developed countries. In the first stage of this work, attention will be devoted to the improvement of statistical information on such flows, for which a Group of Experts on Private Capital Statistics has been created. In addition, a pilot study on the transfer of skills through the operations of foreign business enterprises in developing countries is in process with the co-operation of B.I.A.C. At a subsequent stage, when a better statistical basis has been laid, studies could be made of the various consequences which appear to result from external private investment in developing countries;

(d) consideration of requirements in the technical assistance field and of how the supply of such assistance can be improved. A report prepared by an Expert Group, covering main sectors to which technical assistance flows (agriculture, education, public administration and industry) will be submitted in early autumn; the policy implications of the report should be examined.

5. Debt Problems and Terms of Assistance. It is recognized that the growing debt servicing problems of many developing countries create a series of priority problems. D.A.C. adopted in July 1965 a recommendation of Financial Terms and Conditions which, for the first time, set numerical targets for aid terms.⁸ The Annual Aid Review provides a means of keeping individual Member’s progress in the achievement of these targets under examination and the Working Party on Financial Aspects of Development Assistance will continue to make regular comparative analyses. The Working Party has been instructed by the D.A.C. to concentrate its work during the next year on the following issues:

(a) further exploration of problems related to harmonising the terms of aid extended to particular less-developed countries;

(b) the advance identification of potential debt servicing difficulties. While action has been taken to improve the data on existing debt situations, the problem remains of how to evaluate the data and of agreeing upon ways and means of carrying out preventive action to forestall those difficulties;

(c) consideration of the forthcoming I.B.R.D. report to UNCTAD on export credits in relation to debt servicing problems of developing countries—in particular, the respective responsibilities of developed and developing countries for avoiding excessive recourse to such credits.

6. Food and Agriculture. This is a new priority subject for D.A.C. and provides the first occasion for full consideration in the Committee of the problems of a particular sector of aid. The Committee has not yet set out in detailed form its work programme in this field. The Recommendation adopted at the High-Level Meeting described the problem and recommended that the D.A.C. should:

(a) keep itself informed on the food situation in the less-developed countries;

(b) review from time to time the activities of its Members in providing capital and technical assistance with a view to increasing its effectiveness; and

(c) consider general issues of policy relating to interim food aid or long-term agricultural development wherever it appears that a more co-ordinated approach among its Members would contribute to meeting the problem of food supply in the less-developed countries.

At its meeting on 20th September the D.A.C. agreed that the Secretariat should canvass the Members and present suggestions on topics for consideration and appropriate organizational arrangements.

7. At the High-Level Meeting, several speakers emphasized the need for a closer working relationship between the Committee and other bodies of the Organization. During the past year, there were a number of points where intra-secretariat co-operation took place, but the D.A.C. itself was directly involved with another O.E.C.D. body only on the subject of export credits. It is clear that during the next year there will be an involvement with the Committee for Agriculture and with the related activities in this field to be carried out by the Secretary-General. However, there are many other areas of possible mutual interest such as trade and commodity arrangements, balance of payments problems, capital markets, invisibles, industrialisation, manpower and education, technology, and the Greek and Turkish Consortia. Consideration should be given during the year to ways and means of developing effective inter-Committee co-operation wherever appropriate.

8. Other Subjects. Since new problems are continually arising and old ones shifting in importance, and since government decisions may be required in various international settings, particularly UNCTAD, it is important to maintain some flexibility in D.A.C.’s work programme, though this should not be at the expense of the priority items. Members have expressed interest in a number of other subjects not included on the above priority list. Depending upon the degree to which it may be possible easily to obtain background material and the extent to which experts from Member countries would be available for meetings, it may be feasible to consider some of them during the year without interfering with the priority work programme outlined above. These subjects include such broad areas as the relationship between aid and trade, and population policies; and various questions such as aid-tying and the encouragement of activity by voluntary agencies. In addition, as in the past, there may be problems of assistance policy with respect to particular less-developed countries where a number of Members may feel that an ad hoc meeting of those particularly concerned would be useful.

1. Source: Washington National Records Center, RG 286, DAC Material: FRC 70 A 5922, Program (DAC Work Program) 1966–67. Restricted.
2. A text (DAC(66)19(4th Revision)), September 27, identical to the attachment below, is ibid.
3. Not found.
4. Not further identified.
5. These two IBRD studies have not been found but are summarized in Current Economic Developments, Issue No. 744, January 4, 1966, pp. 11–12. (Washington National Records Center, RG 59, E/CBA/REP Files: FRC 72 A 6248, Current Economic Developments)
6. Reference is to the proposal developed by David Horowitz, Governor of the Bank of Israel, for development financing. Under his plan international institutions would borrow money at commercial rates from private investors, with government guarantees of principal and interest, and lend the funds on “soft” terms. An interest equalization fund maintained by annual appropriations by the developed countries would be used to make up the difference between the market cost of borrowing and the charges on loans. (Ibid., p. 13) The expert group report on this proposal, prepared under the direction of the UNCTAD Secretariat, has not been found but is summarized ibid., pp. 11–12.
7. Not further identified.
8. See Document 123.