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World Economic Survey 1990

Current Trends and Policies in the World Economy

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The dramatic political upheavals that occurred in 1989 marked the end of a long period of intense international dispute over the appropriate organization of modern industrial societies. However, the transition that has been set in motion has so far generated much political turmoil and economic crisis. World output grew by 3.1 per cent, compared with 4.4 per cent in 1988. The problem arising from the external debts of the developing countries persisted.

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International finance and the net transfer of resources

The level of investment and consumption in a country partly depends on whether domestic production is supplemented by resources from abroad or whether some domestic production is transferred to other countries for their use. Although many mechanisms exist for transferring resources, including those embodied in the changing prices of traded commodities and in inter-affiliate transactions of transnational corporations, especially large transfers have taken place in the 1980s through international flows of capital and capital servicing. The economic effect on nations has been marked and has provoked substantial interest at the United Nations in monitoring trends in net international financial transfers, especially as they affect the economic growth and development of the developing countries.’ Trends in net international financial transfers are also important to other groups of countries and they call for policy actions pertaining to all the major country groups. Thus, international financial transfers are the focus of the present chapter.

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