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World Economic Survey 1987

Current Trends and Policies in the World Economy

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The modest expansion that characterizes the world economy during most of the first half of the 1980s persisted in 1986. Inflation has decelerated considerably and industrial countries are entering their fifth year of expansion, though at a slow pace. The world economy appears to be set in a slow growth path, which is likely to delay the great adjustments required at the national and international levels. The continuation in 1986 and early 1987 of the trade imbalances of the larger industrial economies has added to the strains on the world financial and trade systems.

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Unemployment in developed market economies: The policy dilemmas

One of the major socio-economic problems of the developed market economies since the early 1970s has been the rising level of unemployment. There has been a steady upward drift in the number of unemployed and in their share in the total labour force. At the same time, marked differentials in unemployment levels by region, age group, sex and economic sector have emerged. Unemployment is a social and economic scourge at any time and, because of its sharp rise after a prolonged period of comparatively low unemployment, it might have been expected to become an acute policy concern in developed marked economies. However, the high levels of unemployment in industrial countries in recent years have in most cases not dominated the political agenda as much as lower unemployment did in the past: the reasons are not entirely clear. It may be widely believed that Governments cannot do much to reduce unemployment without touching off renewed inflation and balance-of-payments deficits. This chapter is largely addressed to precisely that issue.

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