NOVEMBER 13, 1975
Canada and the Third World
AN ADDRESS BY Paul Gerin-Lajoie, Q.C., LL.D.,
PRESIDENT, CANADIAN INTERNATIONAL DEVELOPMENT AGENCY
CHAIRMAN The President,
H. Allan Leal, Q.C.
Dr. Gerin-Lajoie, ladies and gentlemen: We welcome Dr. Paul Gerin-Lajoie on his return visit to this club, since he appeared on a joint panel with his Ontario counterpart, the Honourable William Davis, in 1965. Dr. Gerin-Lajoie is a man with many talents. I mean that in both its ancient and modern significations! He was born in the Province of Quebec and, having reached the pinnacle of academic achievements in both the classical tradition at the College Jean-de-Brebeauf in Montreal and then in law at the University of Montreal, he went to Oxford as a Canadian Rhodes Scholar after World War 11 and took his D. Phil. degree in social studies with special emphasis on constitutional law.
In this field in the nineteen fifties, he gained for himself an enviable reputation as a scholar, author, professor and legal practitioner and, when the opportunity for public service came, he was endowed, well equipped and eager for the fray.
It will be for historians, and not for us, to assess the true dimensions and impact of the cultural, social, educational and economic reorganization and adjustment that took place in the Province of Quebec during the Lesage administration of the 1960's--a period of social, political and economic change that has been dubbed "la revolution quiete". We know that Paul Gerin-Lajoie played a major role in those events.
He was elected to the National Assembly in 1960 as the Liberal member for Vaudreuil-Soulanges and retained that seat until his resignation in 1969. First as Minister of Youth and later as first minister of the newly-formed Department of Education, having enjoyed unparalleled success in the educational system, he radically transformed its structure in Quebec and in 1964 was appointed Vice-Prime Minister.
Our distinguished guest left Quebec political life to become Vice-Chairman of the Prices and Income Commission of the Government of Canada at Ottawa, presumably accepting the good advice of Tennyson's Northern Farmer who counselled his son, "do not marry money but go where money is".
He was appointed President of the Canadian International Development Agency in November, 1970, the office he now holds. He is a board member of several important organizations active in the field of international development: the Export Development Corporation, the International Development Research Centre, the World Bank, the Inter-American Development Bank and the Caribbean Development Bank.
It is a privilege for me to invite Dr. Gerin-Lajoie to address us on the subject "Canada and the Third World".
Mr. Chairman, members and guests of the Empire Club: when your executive first asked me to speak to The Empire Club of Canada, I approached the idea with some hesitation. For a wise man once counselled speech-makers to put themselves in the shoes of their audience; to build a bridge to the listener who lives on an island of his own interests. And one doesn't have to search far today to determine the preoccupations of our business community: the irritations of the national postal strike, and the losses it entails for business small and large; the critical stage of labour-management relations; and first and foremost, the threat of inflation so tenacious it endangers the stability of our entire economy.
You may well ask, why not get on with our "war on inflation" and let the poorer nations of the world sort out their own problems?
The facts are, as you all know, that we cannot isolate ourselves from the realities of today's world. The inflation that plagues us in Canada is a world-wide phenomenon. First, our economy was shaken by sharp price increases in world markets for foodstuffs, petroleum and industrial raw materials, benefiting some Canadian producers but harming others.
Boom became bust in many parts of the industrial world and Canada suffered directly from the recession in other nations, as demand for Canadian products lagged, output fell and unemployment increased.
Granted, the Canadian economy suffered less than those of some other industrial nations. And the sacrifices it has forced upon us are minor compared with the immense impact upon the poorest nations of the world. Nevertheless, the very strength of the Canadian economy helped to create serious problems in our international trade patterns. Imports have continued to outstrip exports. Since November 1975 our trade balance has been in almost continuous deficit.
Canada's interest in fostering a buoyant and growing economy for all the world's nations has never been greater; never before, since the end of the Second World War, have our international relationships assumed greater importance; and never before have our relations with the developing countries been more vital to our own well-sexbeing.
The responsibility and opportunities for the Canadian business community are my concern today.
Tools of Development: International Development
Canada's relationships with developing countries have historically focussed upon "foreign aid" or international development programs, an often-misunderstood dimension of our foreign relations.
Since the first shipment of Canadian food aid to India 25 years ago, Canada's international development program has become an integral part of the fabric of Canadian life. Let us examine, for a moment, the current year's program. The Government of Canada has allocated some $900 million dollars to our development assistance in the current fiscal year. The Canadian International Development Agency, charged with the administration of these programs, spends an additional 2.5 per cent in administrative costs. The program is made up of loans and grants to support international development institutions and to pay for the goods and services poorer nations need and Canada can provide.
CIDA, as a department of government responsible to Parliament through the Secretary of State for External Affairs, is a co-ordinator or broker for Canada's international development program. We help to ensure that the specific needs of developing countries are identified and that the particular resources of Canada, both human and physical, are brought to play, in order to help meet those needs.
The benefits which the Canadian economy derives from our international development program are a consequence, not an objective. Yet, the range of involvement throughout Canada is remarkable.
Of the total budget of some $900 million, about $600 million is spent for the purchase of Canadian goods and services, providing jobs for thousands of Canadians. Almost 1,000 Canadians are working abroad under contract to CIDA, plus many hundreds in firms holding CIDA contracts.
Canadian experts play a significant role in agricultural research and development all over the world. Our doctors, educators, architects, economists, public administrators, managers of private business and other talented Canadians are found in more than seventy countries, sometimes playing a leading role, sometimes a humble role, in economic and social development and training.
In addition to large quantities of food items, some of them processed, large amounts of commodities and a great variety of manufactured goods and equipment flows to developing countries, with CIDA financing. A wide diversity of expert services is supplied by Canadian enterprises: industrial firms from Canada are involved in establishing plants or improving the operation of existing plants in developing countries; Canadian consulting firms are engaged in improving transportation systems and have assumed the central responsibility for building large hydroelectric dams, or setting up power plants using other sources of energy. In all, we have some 2,700 contracts with Canadian firms for supply of manufactured goods and equipment, plus 140 contracts with suppliers of commodities ranging from grain to newsprint to copper and asbestos. CIDA hardly operates in splendid isolation, as some critics would suggest.
Indeed at the present time we have 65 contracts for development assistance activities with federal departments or agencies, 22 with provincial departments or agencies, 50 with universities and 135 with consulting firms. If I may single out one government sector for special praise it is the Canadian Forces. For, over the past few years, our armed services have played a crucially important role in the delivery of emergency relief and other supplies urgently needed by developing countries.
International Development: The Rationale
Clearly, international development programs are good business. Yet few Canadians would disagree with me, I believe, when I say that the first purpose of our program of international development is sheer international justice.
I say without hesitation that we should apply at the international level the principles of distributive justice that we apply within our own nation.
A second justification for international development cooperation is that more than ever it is recognized as an essential component in any concept of international peace and security. In calling for basic structural reforms in the world's economy, through a "New International Economic Order", the developing countries have recognized the special role of "foreign aid". They urge a continuation and strengthening of aid flows, particularly to the poorest and weakest members of the world community.
Arguments over whether "sharing" is a moral obligation or something rich nations do from selfish interests are making way for a new realization that we have a common interest in maintaining a buoyant world economy and fostering social justice on a global scale. If development cooperation continues to be a moral imperative for the rich, it is more than ever before a political and economic necessity.
International Development: New Concepts
It is against this background that the Government published, on September 2, A Strategy of International Development Co-operation--1975-80. For the first time, the Government has made a comprehensive declaration of our intentions toward the developing countries and established guidelines for future policies and programs.
I will refer briefly to its five basic themes.
1. A continued sharing of wealth through net transfers of resources to the poorest members of the human family.
2. A need for developing nations to count, first and foremost, upon their own resources--the basic principle known as self-reliance.
3. The importance of innovation: a searching for new solutions to the new problems of our age.
4. The establishment of new kinds of relationships between developed and developing nations, based on mutual respect and equal partnerships.
5. And finally, participation in the development process by the greatest possible number of individuals, including, of course, those in the business sector.
In pursuit of these intentions, our development assistance program will develop in significant new ways: we will concentrate assistance increasingly upon the poorest countries and upon major world problems such as agriculture and rural development, basic education, public health and population, shelter and energy; we will favour partners who show a real willingness to mobilize their own resources and we shall seek new forms of cooperation with countries which are reaching the middle-income level.
Our approach entails a much broader concept of development co-operation than we have ever known before. We call it a "multi-dimensional approach" for it involves a commitment to move on a number of fronts to lessen the disparities between developed and developing countries. This will require an examination of Canadian policies, both domestic and international, which have a bearing on the interests of the developing nations, and a willingness to take constructive steps to achieve a more just distribution of world resources.
Trade and Investment: An Engine of Progress
Developing countries recognize the importance of aid flows, particularly for the poorest among them. At the same time, the benefits of trade and investment far outweigh those of aid. We as Canadians know the results of shipping most of a nation's raw materials abroad for processing, with consequent loss of employment and earnings.
Developing countries now are looking forward to much greater industrial development through co-operation with industrialized countries. This desire has been expressed most clearly in a number of international forums. The most recent were the Second General Conference of the United Nations Industrial Development Organization (UNIDO), meeting in Lima in March, 1975, and the recent Seventh Special Session of the United Nations. In both cases, the industrial development of the Third World was specifically pinpointed as one of the seven or eight blocks of major objectives to be considered as part of what is now called a "New International Economic Order".
After the acrimonious debate about multinational corporations during recent years, the call by developing countries for co-operation in industrial development may appear contradictory or cynical. Such is not the case. Developing countries want a new framework of cooperation. They say that the various components of industrial development--capital, know-how, foreign staffing for a period of time, training of nationals abroad--can be provided in full respect of both the concept of government control in developing countries, and a satisfactory financial return to private firms from industrialized countries. Already, some Canadian firms have indicated their interest in participating in such new types of arrangements.
CIDA has had for some years a program of assisting Canadian companies to enter into joint ventures in developing countries. This program has enabled a number of Canadian firms to explore the possibility or feasibility of investing abroad and establishing plants which would serve the interest of host countries, as well as strengthening the position of the Canadian firms in overseas markets.
CIDA, in co-operation with the Department of Industry, Trade and Commerce and other departments of the Canadian Government has, for some months already, given very close attention to the question as to how the Government of Canada can play a larger role of broker, facilitator and bridge-builder between the Canadian industrial sector and Third World countries, in order to help develop the latter's industrial infrastructure. The "turnkey project" formula whereby Canada builds and equips a plant, trains the staff, and then turns the project over to the host countries, is one already being explored. The Minister of Industry, Trade and Commerce has created a special working unit to further these studies.
There is also a wide diversity of ways through which the Canadian private business community might participate in the supply of various components of industrial development. These include financing, transfer of know-how, management and training, development of market or special arrangements through which some component parts of major equipment might be manufactured in developing countries.
At the moment only 7% of the world's manufacturing capacity is situated in the developing countries. For these nations to become more self-reliant, 25% of global manufacturing capacity should be installed in the developing countries within 25 years. That is the United Nations' official target.
This will not be done by governments of industrialized countries but by private enterprise. Progressive developing countries welcome foreign private involvement as long as it takes place on a mutually beneficial basis. In such countries hundreds of profitable partnerships are based on respect on the part of government for the need of any business to make a satisfactory profit, and on the part of private business for the national development priorities of the host country. Some far-seeing businessmen have already taken advantage of this climate of cooperation and are far ahead of their competitors.
When 25% of the world's manufactured goods come from the Third World 25 years from now, who is going to share in the profits? One way of closing the gap between the rich and the poor is to take from the rich and give to the poor. Another way is to help the poor become more productive and get a fair share of their own labour. There is no doubt about the method you and I prefer.
It has been said time and again that the development of the less favoured nations of this world and international co-operation towards that objective are the most difficult challenges facing us today, calling upon the human capacity for innovation and organization. I cannot stress too much, however, that the challenge does not address itself only to governments either in industrialized parts of the world or the developing countries; it does not address itself only to scholars and to individual experts; it also addresses itself to the private industrial sector.
I am aware of the initiatives taken by some Canadian firms along such lines. I must confess, however, from my contacts in other industrialized countries as well as in the Third World, that Canada does not appear to be in the forefront of industrialized countries already participating in the expansion of the industrial base of Third World countries, particularly those having reached what is commonly called the take-off point.
I have never tried to hide the concept I have of my own role, as President of CIDA, in promoting the interests of developing countries within the framework of Canada's foreign policy. At the same time, however, I try to make the point that international development co-operation should be looked at, in the long term, as a question of mutual interest.
In my view, the interests of private business in a free market economy should not be seen to be in opposition to the interests of developing countries, whether they have a free market or a planned economy. The challenge is to develop new types of arrangement that will match the interests of the parties involved. This is the challenge which I invite the private sector of Canada to take up jointly with CIDA and other interested government departments or agencies, such as the Export Development Corporation.
I have no doubt that the economic vitality of Canada in the coming decades will depend to a significant degree on the prosperity and state of development of the Third World, and on our ability to engage in trade and investment of mutual benefit.
I am pleased to say that CIDA has already started its home work. We are looking forward to acting in closer cooperation with those elements of the private sector interested in taking up the same challenge in the same spirit.
Canada, and in particular our business and industrial community, has much to offer developing nations. We have "know-how"; we have experience; we are sensitive to the problems of private foreign investment and we have built up a tradition of co-operation with developing countries of which we can be proud. For these reasons, we look forward to a future in industrial development cooperation which is bright in promise, diverse in opportunity and rich in potential.
Our distinguished visitor and speaker was thanked on behalf of the audience by Maj. Gen. Bruce J. Legge, Q.C., C.St.J., E.D., C.D., a Past President of The Empire Club of Canada.