The economic conditions, and the social conditions dependent upon them, are deteriorating in much of the developing world. For most of the countries of Africa, Latin America and the Caribbean, almost every economic signal points to the fact that development has been reversed. Per capita GNP has fallen, debt repayments have risen to a quarter or more of all export earnings, share in world trade has dropped, and the productivity of labour has declined by one or more percentage points each year throughout the 1980s. The developing world still depends on raw materials for the majority of its export earnings. But during the 1980s, real prices for the developing world's principal commodities (including minerals, jute, rubber, coffee, cocoa, tea, oils, fats, tobacco and timber) have fallen by approximately 30% below their 1979 levels.
With the fall in new commercial lending, consequent on the debt problem, and the inadequate and static levels of official aid, developing countries have no possibility to remedy their situation. Although it is still widely believed in industrialized countries that money is flowing from richer nations to the developing countries to assist in their struggle against poverty. This has not been true since 1979, at which time a net $40 billion flowed from the northern hemisphere to the nations of the south. In 1989, the southern nations are now transferring at least $20 billion a year to the north (taking into account loans, aid, repayments of interest and capital movements). If account were to be taken of the effective transfer of resources implied in the reduced prices paid by industrialized nations for the developing world's raw materials, then the annual flow from the poor to the rich might be as much as $60 billion per year.
Development's reversal cannot easily be captured by the media. It is happening not in any one particular place, but in slums and shanties and in neglected rural communities in different continents. It occurs not at any one particular time, but over long years of increasing poverty which cannot easily be reported in the media. It is happening not because of any one visible cause, but because of an unfolding economic drama in which the industrialized nations play a leading role, although the reversal of hard-won gains is largely invisible in those countries. The spread of hardship and human misery is now occurring on a scale and is of a severity unprecedented since the 1940s. Without restoring the forward momentum of economic development, it will become increasingly difficult to sustain progress against other problems, let alone to accelerate it. In many countries today, social advance is like trying to walk up an escalator which has begun to travel downwards. If per capita incomes continue to decline, then any progress will be eroded if not completely compromised.
Statistics fail to capture the psychological dimensions of what is happening. For several decades there had been forward movement in most countries. Even though poverty continued to be pervasive, more people were finding better jobs than ever before, and an increasing share of the population was gaining access to clean water, education, and medical care of some sort. Parents saw their children has having a better start than themselves. This has been brought to a halt. Indeed the physical deterioration in basic infrastructure, including schools and hospitals, and the mounting excess of unemployed and underemployed, will call for more than a weak increase in economic growth if hopes are to be rekindled. And these pent up needs continue to increase as investment remains depressed.
Economic progress continues in Asia, despite containing the majority of the world's absolute poor. Most of its nations are continuing to see average incomes slowly rising and average living standards slowly improving.