PeacefuL settl,ement of disputes should be strengthened and adjusted to present needs, and all States should be encouraged to nake full use of then. 144. While describing the arms race as a najor factor adversely affecting thesociaL, econonLc, political, industrial and t€chnological optlons of all countriesthe 1977 report also indicated the need for further anafyses of hon these consequences make thenselves felt in countries at different levels of developNnent. This report attempts to show that the current economic downswing is fiore than acyclical phenomenon and that military expenditures, even the present rate6 of gror.tth of nilitary spending, constitute a heavier economic burden, not to speak ofthe additional socio-econonic penalties likely to acconpany still higher levels ofnllltary consumption. For the nark€t economies, probLe[6 like lnflation and unemployment have been exacerbated by large nilitary outlays. Alao, a strong coincidence betneen huge allocations to nilitary R and D and loner rates o.f,productivlty in the civillan sectors has becone all too evident. In the centrally planned economies, supply-side constraints on econornic growth, rrhether due toIabour shortage or bottle-necks on capltal fornation have, to a certain e:(tent, A/37/386 Ehgl ish Annex Page 66 been aggravated by rnilitary outlays. Besides being adversely affected by the extent of their own nilitary spending, the developrnent process among the develoPing countries is also suffering frorn a s lorF-down in the process of econonic grovrth ln the developed world. The goals of the lnternational developnent strategy' based upon assumptions of a stable economic perforrnance by the developed world, face the painfut prospects af being revised downwards at a time when their acceLerated attainment is crucial for the national well-being of the developing countries. A slriki.ng feacure of the period under review is the growing evidence that underdevelopnent, Iack of develotrment or rnaldeveloFlent constitute a major source of insecurity for the developing countries. Many of then are facing greater
**Analysis**
The text discusses the impact of the arms race on the economy, focusing on the consequences of military expenditures on economic growth, inflation, unemployment, and productivity. It also mentions the effects of underdevelopment and lack of development on the security of developing countries. These themes suggest that the text is primarily concerned with economic development and its relationships with other factors.

**Category**
Economic development, International trade