Since the late 1970s there has been a fundamental change in economic policy, first in the industrial countries, and then in the developing countries. In the latter this change has affected not only macroeconomic policy, but also development strategy. Emphasis has increasingly been placed on a minimal role for the State, greater reliance on private initiative and market forces, and increased openness and greater integration into the world economy. It was thought that such a reorientation of policy was needed not only to attain a stable macroeconomic environment, but also to accelerate growth and more generally to raise living standards. Price distortions due to government interventions and resistance to opening up were assumed to be responsible for slow growth, unequal income distribution and widespread poverty. Growth based on global market forces, it was thought, would thus be more rapid and widely shared, allowing developing countries to catch up with the industrial countries, and the poor with the rich.

Related Subject(s): International Trade and Finance
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