r ,, f • ..-,r J'OR fflE PRESS For Release Press Release No. 137 7 A.M. (EDST) Thu·rsday, June 2, 1949 The International B~~ for Reconst:ruction and .Development,annoui1ced tod~~Y that it will collaborate with the United 1-Tations and the other inte~ national specialized agencies i~ the expanded cooperative Program of technical assistan~e for economic development. The Ba.pk alr.eady ha$ adeauate funds, derived from its opeJ-ating tncome, to cover the co~t of its own technical . assistance activities, but . it welcomes the prospectiye ~xpansion of the con~ ~ plementa~ activities,of other international o~ganizations~ • The Bank emphr.sized. the tnterdependence of tec.hnical knowledge and sound investment, Its experience has shown that deficiencie~ in technical skills and expel'ience are often ~n even more serious handicap to economic develoument than a lack of caT?i tal. It therefore believes that e·xpa.nded efforts to meet these needs are of great importance a.t this tj.me. As a <"..irect outgrowth of its financial respcmdbili ties, the :Ban.~ has increasingly been requested to assist its member goverilJ~~nts in ar+alyzing their development problems and potentialities, in form~lating practical development programs, in mobilizing their local resources and in strengthening their financial position generally. Up tQ April 30, 1949~ the B~ had sent missions ~o assist with development problems in l9 ·count:ries in Xia.tin Arrieric;:i., Asia and Africa, The Bank indicated that its teqhnical assistance would be of three general tynes. First, it is prepared to helu its member countries in making 4' eompreh,;msive surveys of their resources, tn wol'lcing out ani:,rouriate long-term 2 - investment programs, and in evolving necessary administrative and financial measures. In response to a request from coiombia for such comprehensive aid, a Ban..1{-sponsored mission will shortly proceed to that country. The :Bank: expects to undertake perhaps three or four missions of this type during the coming year. Second, the :Bank will work closely with potential borrowers in the analysis and planning of specific projects for B~.nk financing. It is expected that such assistance will be needed especially in the fields of industry, power l4~d trans• porta.tion, because these a.re not the responsibility of any other international specialized agency and because they involve particularly hea.vy investments of capital. Third, the Bank is prepared to assist in devising and p,,1.tting into effect • practical measures to strengthen the financial institutions and practices of its member countries and. to encourage produ.cti ve investment from other sou:r.:' --.:.$ro The Bank further emphe.sized the· importance of action by the less dev.e'.loped countries themselves to create a sound foundation for economic development and to build up an adecra.ate local supply of technicians and skilled workers. • INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington 25, D. C. The first comprehensive, inter·national program of technical assistance for the economic development of under-developed countries was outlined in a report made public June 2, 1949, at Lake Success. The report was prepared by the secretariats of the United Nations and eight specialized agencies and transmitted by the Secretary Ge.neral of the UN to the Economic and Social Council, in response to a resolution of ECOSOC. The ECOSOC resolution followed proposals for such a program in the fourth point of President Truman's inaugural address. The International Bank for Reconstruction and Development announced that it would collaborate with the United Nations and the other international specialized agencies in the cooperative program. The Bank's statement as it appeared in the report is as follows: Statement by the International Bank for Reconstruction and Development The concern of the International Bank with the provision of technical assistance to under-deveioped countries is a direct outgrowth of its financial responsibilities. The primary purpose of the Bank, as expressed in its Articles of Agreement, is" to assist in the reconstruction and development of territories of members by facilitating the • investment of capital for productive purpose, including . . encouragement of the development of productive facilities and resources in less developed countries". But in 1nany under-developed countries productive investinent is retarded not only by lack of capital but also (and in some cases primarily) by lack of knowledge and experience- for exam·ple~ inadequate info::rmat:ion about resources and markets, a shortage of the technical and entrepreneurial skills required to convert promising ideas for develop- m.ent into practical projects ready for financing, inadequate financial mechanisms to mobilize available savings, low standards of health and educationp and a shortage of skilled labour. Member Governments of the International Bank, seeking to surmount these diffi- cuities, have increasingly requested the Bank's help in obtaining technical assistance and advice in analysing their development problem.s and potentialities, in formulating practical development programmes adapted to their particular needs, an.d in mobilizing their resources and stre·ngthening their financial position. The technical assistance which the Bankmaythus furnish to under-developed countries, and the measures whic.h result, help to create a. sound basis for loans by the Bank and increase the contribution which the Bank can 1nake to balanced development~ Moreover, ·to the extent that this assistance contributes to improvement of conditions in the under-developed countries, it helps to make those countries m.ore attractive for privat~ investment and encourages a greater flow of capital from that source. Up to 30 April 1949, the Bank had sent missions to assist with development problems in nineteen countries of Latiri America, Asia and Africa, in additiol'l to its missions to the more highly developed European countries. Some of these missions • were undertaken mainly to investigate specific projects for possible loans; others have had the broader purpose of studying the general economic situation and prospects of the country; still others have been undertaken in response to a member Governrnent's request for technical assistance on some particular phase of development. In m.ost cases • these various purposes shade i:nto one another; most Bank missions study both economic conditions in general and the merits of particular projects, and these studies are normally followed by consultations with and advice to the member Government concerned. Thus, technical assistance furnished by the Bank provides a necessary foundation and supple- ment for its financial operations with under-developed countries. In its technical assistance activities the Bank has worked closely with the specialized agencies and with the United Nations, and will continue to do so in. order to take full advantage of their knowledge and experience in various special fields. The Bank will look to these organizations, for example, for assistance of the follow- ing types: (a) Advice on promising fields for investment or on other problems of develop- ment falling within their fields of specialization; (b) Help in obtaining technical experts to serve on mi'ssions sponsored by the Bank or to assist member Governments on projects for which Bank financing is desired. The respective agencies might make such personnel available either by assignment of experts from their own staffs or by recommending qualified technicians from other sources; (c) Help in securing, compiling and evaluating data on appropriate aspects of the economy of member countries, as background for the consideration of loan • applications or for the briefing of survey or advisory missions sponsored by the Bank; (d) Advice on the technical feasibility, and the cost and other requirements, of specific development projects or programmes in the fields of the respective agencies. Because the Bank's technical assistance programme is inseparably associated with its financial operations, it is impossible to draw any line between its normal activities in this field and the proposed expanded programme. Moreover, the technical assistance projects to be undertaken by the Bank cannot be programmed accurately in advance, since they willdependlargelyupon the receipt of requests for Bank financing, the situation of the countries making such requests, and the extent of technical assistance rendered by other agencies in countries and fields which are of interest to the Bank from a financial standpoint. It is not necessary, in any case, to present herein any definite budget for technical assistance by the Bank, since is expenditures for this purpose will continue to be financed out of its operating income. The general types of technical assistance in which the Bank may play a parti- cularly important role are outlined in the following paragraphs. 1. Assistance in formulating comprehensive development programmes In some countries the Government will be in a position to formulate a comprehensive development programme and establish appropriate administrative and financial machinery to carry it out. The initiative in working out such a programme must come from the member country and it must make the fundamental decisions. But outside help can be of substantial value in this phase of the development process. • • The International Bank can play a key role in providing this type of assistance . The nature of its responsibilities makes it necessary for the Bank to be concerned with tho.se aspects of a country's development programme which involve capital investment, wh.ether in the form of bank loans or from other sources. It must maintain close and continuous contact with conditions in the entire field of international investment, and the resultant knowledge and experience may be quite useful to under-developed countries in finding practical solutions to financing problems. which are often of central importance. Apart from its own loans the Bank may, in some cases, be able to help enlist private capital for certain types of investment. Finally, since the Bank is interested in the long .., term welfare of its member countries, it is in a position to provide continuing technical advice and assistance, where necessary, to ensure that the development plans are carried out successfully. The first step in a comprehensive development programme is usually a general survey of development needs, potentialities and problems to provide the basis for a long-term investment programme and to indicate what kinds of administrative and financial mechanisms and fiscal measures are necessary to carry it out. The Bank has been requested by some of its member countries to make surveys of this type. In response to one such request, a Bank mission will shortly proceed to Colombia for this purpose. In organizing this and subsequent missions, and in evaluating and implementing their conclusions, the Bank will solicit the assistance of other special- ized agencies in their respective fields. It is expected that the cost of these missions will normally be shared by the Bank and the country concerned, the Bank's share to be derived from its operating • income. For the immediate future the chief limit to the provision of this type of technical assistance by the Bank is not likely to be any lack of funds for the purpose, but rather the organizational problems of recruiting and supervising the missions, and the additional work involved in providing necessary background information and in evaluating the missions' conclusions. For these reasons the Bank does not expect to undertake more than three or four missions of this type during the coming year; in subsequent years the number may be increased. 2. Analysis and planning of specific projects In cases where it is proposed to seek International Bank financing for develop- ment, it is desirable, in order to avoid waste of time and effort, that the prospective borrower consult the Bank at as early a stage as possible on the definition of specific projects and the preparation of detailed plans to carry them out. In some cases the Bank's own economic and engineering staff may provide some technical assistance; normally, however, the Bank, upon request, will assist the country seeking a loan to choose qualified independent experts. In any event, such consultation will enable the Bank to work closely with both the sponsors of the project and the technicians who prepare and carry it out. In general, the Bank considers that this kind of consultation and assistance will be most important in the planning and execution of industrial, power and transporta- tion projects. The special concern of the Bank with these aspects of development arises from two considerations: first, that technical assistance in these important fields is not the responsibility of any other specialized agency: and second, that these • fields usually involve particularly heavy investments of capital, which frequently must come from external sources. • 3. General economic and financial measures The Bank's purpose of" facilitating the investment of capital for productive purposes" is not fulfiiled merely by making loans from its own resources. If such loans are really to serve as a significant stimulus to economic development they must be supplemented by investn1ent from other sources, foreign and domestic. The Bank's activities, in both the sphere of financing and that of technical assistance, are designed to stimulate a flow of private capital for development, in areas and enterprises where private investment is suitable, primarily through fostering a favourable atmosphere for investment. Progress toward this objective,. may frequently require assistance to member Governments in devising and putting into effect various measures to strengthen their financial ins.titutions, to reform unsound or ineffective practices, and to improve their general financial position. In providing technical.assistance to its members in these fields, the Bank works closely with the International Monetary Fund and other agencies having related responsiblities. · The Bank, like the other specialized agencies, furnishes technical assistance of all these various kinds in several ways--through advice rendered by its permanent staff in the regular performance of their duties, by means of special missions, by employing individual experts or consulting firms on a temporary basis to assist specific member countries with particular problems, and by recommending qualified economic or technical advisers to be employed directly by the countries desiring assistance. In order to be in a position to employ or recommend the best qualified experts, • in cases where its own small staff cannot furnish the help required by a member country, the Bank is undertaking to develop rosters of potentially available expe.rts in fields that are not covered by the other specialized agencies. This function is more than merely that of furnishing a name or panel of names. The Bank makes a thorough inquiry into the qualifications and experience of those whose names are suggested and endeavours thereby to find the particular man best qualified for a particular job. In addition, the Bank may often be able to assist in getting the designated expert released from his regular employment for the special assignment in question, in providing him with background information, and otherwise in facili- tating and reinforcing his efforts. June 20, 1949 •