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SPECIAL REPORT: Seeking a New World : Case Study / The Poor : Third World Have-Nots Fear Falling Farther and Farther Behind : Mozambique and other struggling countries seek new, sometimes surprising, economic alliances as the superpowers lose interest in competing for their favor.

December 11, 1990

MAPUTO, Mozambique — The leaders of this Indian Ocean nation were once among Africa's most fervent Marxists--fierce enemies of the racist regime in South Africa next door, and fierce social equalizers at home.

But after 15 years of famine and war, Mozambique, once a paradise of endless beaches and giant prawns, has deteriorated sadly. Its 15 million people earn an average of $100 a year, making Mozambique the poorest country in the world. Thousands of its children are without schools, most of its industries have virtually stopped functioning and many of its highways have melted back into rural paths. Even the prawns, decimated by Soviet trawlers, have disappeared.

So, in desperation, Mozambique's onetime Marxists have hit on a startling solution: democratic capitalism and economic integration with their longtime enemy, South Africa.

"We count on South Africa," confesses Luis Bernardo Honwana, Mozambique's minister of culture and one of Africa's leading writers. "Unless we succeed in constituting (an economic) bloc, our role in this new century is going to be determined by others."

Mozambique is not alone in its plight. The end of the Cold War; the rapid, but uneven, distribution of technology and economic integration have created a similar nightmare for much of the developing world: the fear not merely of being left behind, but of possibly being forgotten entirely.

For decades, underdeveloped countries could extract aid and favors from the superpowers because the global rivals competed for influence in the humblest of capitals. Now, with the U.S.-Soviet rivalry ebbing and the industrialized countries preoccupied with their own economic competition, the poorer nations may be ignored in the stampede for greater wealth.

There are about 4 billion people in what used to be called the Third World, and their position in the global economy is the most vulnerable of all. Entire continents are in danger of being dropped from an economic competition that hinges less and less on natural resources or cheap labor--the only real selling points for some developing countries--and more on high technology.

"What is to become of Latin America and Africa?" mourns Arturo O'Connell, a former director of Argentina's central bank. "Are we going to become the shantytowns of the world while Japan, the United States and the industrialized nations thrive?"

Like Mozambique in southern Africa, Argentina and other Latin American countries are seeking economic salvation by turning to free-market economics and forming a regional free-trade zone. Similar experiments are under way in Southeast Asia and the Indian subcontinent. But the new trade blocs may have little effect. "It's no good belonging to a poor man's club," warns Harvard economist Jeffrey Sachs.

In fact, a growing number of analysts in the industrialized countries already believe the Third World is no longer of much importance.

Mark Falcoff, a foreign policy expert with the American Enterprise Institute in Washington, contends that with the superpowers no longer jousting for influence, most local wars in distant parts of the world will hold little attention in the United States or the Soviet Union.

The conflict in the Persian Gulf is unusual because it affects the flow of Middle Eastern oil, Falcoff argues. Few Third World conflicts involve an outright invasion of one country by another, and fewer still imperil global oil supplies. The value of Third World countries "as pieces on the strategic and ideological chessboard has depreciated," he says.

As a result, many analysts expect that the superpowers will lose much of their interest in sending either aid or troops overseas. Says a senior Bush Administration official: "My guess is that we would get involved in fewer and fewer (Third World countries)--other than as part of the civilized world trying to encourage civilized standards of behavior."

But others argue that the poor countries' travails will continue to force their way onto the global agenda--if only because wars, terrorism and mass migrations have a way of spilling over. "There may be an inclination to try and forget the Third World . . . but the problems which dog Third World governments will not always respect borders or be quietly resolved," says Augustus Richard Norton, a professor at the U.S. Military Academy at West Point.

In fact, the Third World no longer exists as a coherent unit, if indeed it ever did. Increasingly, it is becoming divided between those countries that are competing successfully and those that are not.

World Bank figures show the division starkly: During the 1980s, the newly industrialized economies of East Asia--including the "tigers" of South Korea, Taiwan, Singapore and Hong Kong--grew at a rate of 6.7% a year. During the same period, the economies of black Africa shrank, in per capita terms, by 2.2%, while those of Latin America shrank at a rate of 0.6%. In short, some of the poor got richer, but millions got substantially poorer.

The prospect is for that trend to continue. Investment is pouring into the growing economies of Southeast Asia, which are becoming a new world manufacturing center. Thailand and Malaysia have become major producers of computer components (although most of the companies are American and Japanese). Africa and Latin America are seen by worldwide investors as having comparatively little to offer.

The World's Poorest Countries Country / GNP per capita Mozambique: $100 Ethiopia: 120 Chad: 160 Tanzania: 160 Bangladesh: 170 Malawi: 170 Somalia: 170 Zaire: 170 Bhutan: 180 Laos: 180 Nepal: 190 Source: World Bank "World Development Report 1990"

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