Search

In this chapter we examine two international institutions, OECD and UNCTAD, often mentioned in the press, but whose cost seems to exceed their benefit. They are known for their tendency to broach numerous subjects of a general nature. This is particularly true of the UNCTAD.

The first part of this chapter deals successively with early monetary cooperation, the European Monetary System, and the monetary union established by the Maastricht Treaty. The second part gives an appraisal of the EC’s activity.

Still following the same pattern, this chapter will deal with the origins of the North American Free-Trade Agreement (NAFTA), its most important provisions and details of operation, concluding with an appraisal.

On the same pattern as that used for the IMF, this chapter deals first with the principal provisions concerning the International Bank for Reconstruction and Development, and with its functions and significance. Its origins have already been outlined in the previous chapter. We then go on to discuss the Bank’s two affiliates — the International Finance Corporation and the International Development Association.

The liberalization of persons, services and capital and the EC external relations as well are discussed in this chapter, but its main part refers to the economic policy of the Community and its coordination with the policies of the member countries.

The Belgium-Luxemburg Economic Union (BLEU) has never created much interest. The few articles devoted to it are not of very recent date. The best known is the short survey by J. E. Meade (1962). In this paper I shall consider successively — after a brief introduction — the characteristics of the Union, the nature of the monetary association and the dangers threatening this association, namely substantial capital movements and a persistent deficit on current account. A comparison with the European Community (EC) is followed by a concluding commentary.

This chapter deals with the Council for Mutual Economic Assistance, established as a parallel to the OEEC by the Eastern European countries. The commonest English abbreviation for this organization is Comecon, but we shall use the officially preferred CMEA. The CMEA was abolished in 1991 and was to be succeeded by the Organization for International Economic Cooperation (OIEC). But at the time of writing no decision was yet taken. This chapter examines first the CMEA, then, briefly the envisaged OIEC.

As the Organization for Economic Cooperation and Development (OECD) is the successor to the Organization for European Economic Cooperation (OEEC), we should study the latter as a preliminary to any discussion of the former.

SUMMARY The present article deals with some of the most important claims of underdeveloped countries. Especially are considered: Stabilization and promotion of exports, stimulation of industrialization, the problems of financial aid. Additional measures to be taken by an underdeveloped country itself (improvement of education and inter-regional co-operation) are also taken into account. Many of these claims, as it became evident at the Geneva conference on trade and development (March/June 1964), are proposed under wrong assumptions and expectations or are just irrealistic; for instance immediate removal of european and american protectionism in agrarian questions and concession of far-reaching export-guarantees for underdeveloped countries cannot be expected to be carried through at once. In connection with the problems of financial aid it is also often overlooked, that economic development cannot be realised by capital only. In spite of the often irrealistic claims, the result of the Geneva conference was nevertheless rather disappointing. The only resolution of some importance, the foundation of a new international organisation, cannot be expected to be useful, as long as the co-operation of existing institutions does not work.

SUMMARY Having defined the terms of trade, the author deals with the restrictions resulting from their use, for instance, in their statistical application, and, he gives a survey of the theories on the subject. He goes on to examine the various views on the terms of trade between primary commodities and manufactures and on those between developed and developing countries. However, generalizations on the matter are difficult. The widely di-vergent opinions are due in great part to uncomplete and defective statistical material. The trend of the terms of trade between primary commodities and manufactures and between developed and developing countries (which is not necessary the same) has but little significance. It is therefore to be regretted that economic policy recommendations are based on the assumption that the terms of trade will deteriorate. This is in fact what happened in numerous papers prepared for the two UNCTAD-conferences. There is no relationship between the terms of trade and economic development. The author concludes that the use of the terms of trade is to be avoided, except, in the last resort, for the study of a specified country and for a period not longer than some years. Moreover, an appropriate comment, for instance, on the productivity trends and the quantities traded, is necessary. The developing countries have, therefore, no interest in giving priority to the terms of trade.

The implementation of a multilateral trade and payments system was facilitated by the establishment of the Fund and the Bank. It proved more difficult to reach agreement on the reduction of customs duties and the abolition of quantitative restrictions and discriminations, partly owing to the fact that these matters were more closely bound up with balance-of-payments equilibrium. In order to avoid a recurrence of the protectionism of the 1930s vigorous efforts were necessary to dismantle these various kinds of trade barriers. This chapter is devoted to the action taken in this respect within the framework of the General Agreement on Tariffs and Trade.

On 8 April 1965 the member states of the three European Communities signed the “Merger Treaty” for the amalgamation of the three European “Executives” — the High Authority of the European Coal and Steel Community (ECSC), the Commission of the European Economic Community (EEC) and the Commission of the European Atomic Energy Community (EAEC or Euratom) into a single Commission of the European Communities. At the same time the three Councils of the three Communities were merged into one. Hence, since 1 July 1976 when the Merger Treaty came into force, the unified Commission of the European Commission has taken the only executive authority. Western European economic integration, however, started much earlier in the fifties, on a sectoral level.

Since the theory of the consumer’s behaviour is founded mainly on Gossen’s ‘laws’ or on the indifference curves, these are discussed first, followed by demand and the consumption and saving functions.

Still following the same pattern, this chapter will deal with the origins of the European Free Trade Association (EFTA), the most important provisions in its Convention and details of operation, concluding with a brief appraisal.

This chapter deals successively with the equilibrium level of national income, inflation, the quantity theory and the cash-balance theory.

Before examining in the next chapter how economic theory influences economic policy, it is worthwhile to dwell upon this relationship in the past. What were the repercussions of economic doctrines upon the policies of their times?

In this chapter, marginalism and two of its basic assumptions will be discussed. Finally, some comments will be made on price interdependence and the laws of supply and demand.

This chapter deals with the Council for Mutual Economic Assistance, established as a parallel to the OEEC by the Eastern European countries. The commonest English abbreviation for this organization is Comecon, but we shall use the officially preferred CMEA.

In this chapter, we will discuss the theory of comparative cost, the Heckscher-Ohlin theory, the theory of purchasing-power parity and the modern theory of balance-of-payments equilibrium.

After a digression upon welfare theory, a branch of economics concerned with efficiency, the most important contemporary economic theories and their impact upon economic policy are dealt with. Finally, we describe the main causes of disagreement among economists.

As a rule, economic growth is not measured against production capacity, which is very difficult to estimate, but against national production. In this chapter, we define economic growth as a sustained increase in the net real national product (or income) per inhabitant.

The customary theory of distribution is greatly influenced by marginal theory. According to this theory, the first principle underlying demand for factors of production is that the factors’ marginal productivities should be in proportion to the sums paid for them. In the demand for a given factor, therefore, the price of the other factors must be taken into consideration if an optimal combination of factors is to be realized.

The following section deals with the commodity agreements. The one after that concerns UNCTAD, not only because this organization seeks to coordinate negotiations regarding these agreements, but also because it has attracted attention by its tendency to broach numerous subjects of a general nature.