Abstract
It has generally been accepted that the economic prosperity and growth rate of the Third World is heavily dependent on the growth rates in the world’s main industrialised countries taken as a whole.2 This is not surprising given that, even after considerable expansion of intra-trade among non-OECD countries, ‘industrial countries’ absorbed 63.6 per cent of the total exports of non-oil LDCs in the period 1973–80.
I am indebted to Tim Jenkinson who, as indicated in the text, is collaborating with me on the econometric aspects of the hypothesis maintained in this paper.
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Notes
For a succinct summary of the conventional wisdom, see Flemming Larsen, John Llewellyn and Stephen Potter. ‘International Economic Linkages’. in OECD. Economic Studies. No. 1. Autumn 1983. no. 47 and 49.
OECD, Economic Outlook, July 1982, pp. 134–5.
Sir John Hicks, The Crisis in Keynesian Economics (Oxford, Oxford University Press, 1975), pp. 23–4, and Arthur Okun, ‘Inflation: Its Mechanics and Welfare Costs’ in Brooking Papers on Economic Activity, 1975, No.2. The application of the flex-price versus fix-price distinction to the topic under discussion here is, in fact, fully spelt out by Lord Kaldor in ‘Inflation and Recession in the World Economy’, Economic Journal, December 1976. See also his return to this topic in the Lloyds Bank Review, May 1983.
Assar Lindbeck, ‘The Recent Slowdown in Productivity Growth’, Economic Journal, March 1983, p. 15. The estimates extracted here are those attributed to John Kendrick, in ‘Il 1983, p. 15. The estimates extracted here are those attributed to John Kendrick, in ‘International comparisons of recent productivity trends’, Contemporary Economic Problems (ed. W. Fellner), Washing 1981. They refer to real value added per man hour.
William Cline and Associates, World Inflation and the developing countries, Washington D.C., Brookings Institution, (1981), p. 243.
Lindbeck op. cit., pp. 13 and 18. Other commentators, such as Worswick in R.C.O. Matthews (ed) Slower Growth in Britain, (London, Heinemann, 1983) take the same view.)
See, for example, John Llewellyn, ‘Resource prices and Macroeconomic Policies: Lessons from two Oil Price Shocks’, in OECD Economic Studies, No. 1 Autumn 1983, pp. 197ff; and Douglas Purvis ‘Perspectives on Macroeconomic Performance in the 1970s’, OECD, Economic Outlook, Occasional Studies, June 1983.
Ibid. March 3rd 1984. It has also been advocated, in the U.K. by Sam Brittan in How to end the monetarist controversy (IEA, London, 1981), and in papers produced by some members of the L.S.E. Centre for Labour Economics, such as
D. Grubb, R. Jackman and R. Layard, in ‘Causes of European Stagflation’, Review of Economic Studies, 1982.
Michael Michaely, ‘Trade in a Changed World Economy’, World Development, May 1983.
In 1981 the combined GDP, in US dollars at current prices and exchange rates, for total OECD and OECD Europe respectively was $7,619 billion and $3,101 billion, imports of commodities were $587 billion and $340 billion respectively, and imports of commodities from non-OECD sources were $357 billion and $171 billion respectively (the latter figures have been based on the corresponding distribution by area of origin of commodity imports into EEC plus EFTA countries — which account for 93 per cent of the imports in question). The shares of total imports into these two groups including intra-OECD trade is, of course, very much greater, amounting to 26 per cent for OECD Europe, and 16 per cent including the other OECD countries. For the average OECD industrialised country, 45 per cent of total imports consist of ‘commodities’ (data from OECD Economic Outlook: Historical Statistics, 1960–81, pp. 17, 114, 120 and 122).
See, for example, George Perry, ‘Inflation in Theory and Practice’, in BPEA, 1980, No. 1; Economic Policy Review (Cambridge). March 1978, No. 4, p. 3, and Cambridge Economic Policy Review, April 1981. p’ 34.
See, for example, Philip Turner, ‘International Aspects of Inflation in OECD Economic Outlook: Occasional Studies, June 1982, p. 7; Michael Bruno, ‘Import prices and stagflation in the industrial countries: a Cross Section Analysis’, Economic Journal, September 1980, p. 487; The Economist, ‘Inflation is Down—but Not Out’, 7 May 1983; and Larsen, Llewellyn and Potter, OECD, op. cit., p.50.
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© 1986 Sanjaya Lall and Frances Stewart
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Beckerman, W. (1986). Stagflation and The Third World. In: Lall, S., Stewart, F. (eds) Theory and Reality in Development. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-18128-5_3
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