Commodity Agreements and Aid to Developing Countries

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Recently there has been a renewed interest in international commodity agreements as a mechanism for assisting less developed countries. This has come about in considerable measure as a consequence of the change in United States government policy toward commodity agreements, as evidenced by the willingness of the Administration to participate in the International Coffee Agreement which was signed in i962, and ratified by the United States Senate on July i, i963, and to consider sympathetically various proposals for other individual commodity agreements and compensation schemes for decreases in export proceeds. It is the purpose of this paper to analyze the relationship between commodity arrangements of various types and direct economic for the promotion of economic development in the low income regions of the world. But before dealing with specific types of commodity arrangements, we shall discuss briefly the relationship between problems and external assistance for developing countries.. There has been a tendency on the part of both economists and public officials to treat international policies and foreign economic assistance as two separate though related areas of concern. Some years ago trade not aid became a popular slogan in the United States in both private and governmental circles, but it was gradually suppressed by economists who pointed out that and were not substitutes for one another, especially in the case of countries that lacked the resources for expanding their productive capacities sufficiently to meet both their export and some consumption requirements. It is quite likely, however, that the economic development economists have gone too far in emphasizing external assistance as against policies in their prescriptions for economic growth. External assistance without opportunities for export cannot achieve viable economies. There are many spokesmen for the less developed countries, especially Latin Americans, who regard efforts to increase the prices and expand markets for their coffee, cocoa, bananas, and mineral exports as having a far higher priority than external capital and technical assistance.