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There are dangers in such agreements. They could become inflationary if they set price floors but not ceilings, as some LDCS would like. Many Western governments also fear that commodity agreements would tempt some poor countries to lock themselves into one-commodity economies rather than pursue diversification. Yet for the foreseeable future, Ghana will be dependent on cocoa and Zambia on copper — and wild price swings make it impossible for them, or similar one-commodity countries, to do any rational economic planning. Moreover, industrial nations always seem to lose more on the inflationary run ups in raw-materials prices than they gain on the subsequent drops. Peterson, usually an ardent advocate of free markets, is willing to explore the idea that the industrial nations should join stabilization agreements "on a few selected and sensible commodities where specific rules and clear implementation mechanisms not only might be negotiated but might work."
Industrial countries could also adopt the plans of West Germany, Sweden and Denmark to forgive some of the debts owed to them by the poorest of the poor — not Brazil or Mexico, certainly, but nations like Togo and Bangladesh. Insisting on collection only makes further aid meaningless: it goes largely to pay interest and principal on the debts, and is thus in effect given by the rich countries to themselves.
These vital steps would not remove the need for more outright aid in the form of large grants rather than loans. The amounts should be coordinated among the givers; for example, West Germany and Japan, with their bulging reserves, could give far more than others. A summit of wealthier nations could set goals for giving, and the World Bank could coordinate the projects.
The givers should agree to stop bank rolling showcase projects like the steel mill that every nation seems to consider a symbol of pride. Instead, they should insist on a large expansion of help to agriculture: rural cooperatives, extension services, development of simple technologies.
Industrial aid should be directed toward making use of the recipient's special resources. Desert countries are ideal for solar-power projects; the technology developed there would help the industrial countries too. Jungle-covered nations have the rain fall to generate cheap hydroelectricity, which could be used to power aluminum smelters and cement manufacture. It might make more sense for the rich but energy-short nations to finance such factories in the LDCs — and contract to buy large shares of their output at stable prices— than to build those energy-gulping plants on their own territory.
How much would all that cost? The World Bank reckons that much progress would be made if the 17 leading industrial na tions, which now give $13 billion a year in official development aid, would add $15 billion more. That is a huge sum — the U.S. spent only $12 billion in four years under the Marshall Plan — but hardly beyond the ability of industrial nations.