6:11 AM Feb 29, 1996

INDUSTRY: UNIDO HEAD STRIKES UPBEAT NOTE

Geneva 29 Feb (Chakravarthi Raghavan) -- The head of the Vienna-based UN Industrial Development Organization, Mr. Mauricio de Maria Y Campos expressed confidence Thursday that his organization would be able to preserve the basic thrust of its work and the priorities in promoting industrialization of developing countries despite the financial gap suffered by the US withdrawal from the organization.

Maria Y Campos, a Mexican by nationality, speaking to newsmen here, said that UNIDO had been able to start the restructuring programme ahead of the UN bodies and had been able to achieve the streamlining and staff reductions to enable it to continue in operation in its basic tasks.

When he took over the agency, he noted, it had over 1200 staff, and it had now effected a 40% reduction and had a staff of 750. It was not that the organization earlier had a bloated staff. It was just that many technological changes -- computers, informatics etc -- had enabled them to improve efficiency and reduce staff that was not possible when UNIDO had begun, he stressed.

The US withdrawal from UNIDO would mean the organization would lose the 25% US contribution. But because of the steps already set in motion, "we would be able to do more with less," Maria Y Campos said. The US withdrawal would be effective at the end of 1996, which would mean a 12-1/2 percent reduction of contributions over the 1996-1997 biennium. The US owed UNIDO a $40 million in arrears, and the US administration has advised him that it would be able to indicate by the end of March how and when it would discharge this liability.

With the US withdrawal, 49% of the budget of $187 million over the biennium would come from the EU and 26% from Japan. In addition to the regular budget, there was an annual 120-130 million dollar extra-budgetary resources for programmes of which about 30 million came from government sources.

In terms of the future, UNIDO had seven priority areas:

* strategies and policies and institution building for industrial development in the global economic situation -- for e.g. the policies that even the successful industrializing countries of South-East Asia would need to follow in the new situation;

* environment and energy as related to industry - an area where there was increasing demand on UNIDO not merely from the developing countries and transition economies, but developed countries too;

* support to small and medium industry;

* support in form of information and other activities to enable quality improvements of industry in developing countries to enable them to face international competition;

* information on investments and technology for industrialization -- UNIDO believes that developing countries should not only promote investment and technology transfer, but create the necessary support conditions, including infrastructure, for industrialization; * rural development and rural industry; and

* besides the general priority for least developed countries, focus on sub-Saharan Africa and its industrialization.

The UNIDO head said that within the overall world economic environment, and the stress on private resources, deregulation and other policies and programmes being promoted, UNIDO believed that in promoting industrialization, the State had a role to play, even an active one in establishing the basic infrastructure and helping industry.

Experiences in Africa as well as in the transition economies have shown the need for adjustments, but have also shown the importance of the State role. He referred in this connection to the fact that in 10 out of 18 African countries surveyed by UNIDO, industrial production was down and Africa's share in world manufacturing value added and in trade in manufactures had gone down.

"Our view is that there is a role for the State and governmental actions to reverse this process, as well as need for international actions," he said.

"The view that markets and the private sector can deliver everything is not a correct one and there are many areas where the markets don't work well -- for e.g. on environment and equity," Mario Y Campas said. Even the major corporations setting up industries or seeking openings in Africa, he noted, realized the need for State role in infrastructures, and several of the private sector corporations in fact cooperated with UNIDO in such programmes, he added.

The UNIDO head said that in the overall pursuit of UNIDO's objectives and programmes, he was seeking and getting cooperation from other UN specialized agencies, particularly in areas where they had expertise. He cited in this connection the cooperation achieved at field levels with International Fund for Agricultural Development (whose expertise on rural development and financing for these was drawn up by UNIDO in its African programmes) as well as cooperation plans with UNCTAD and its expertise in various areas.