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fairer international economic relations 99 6. Fairer International Economic Relations From Aid and Mutual Interests to Global Solidarity • Development Assistance • International Trade • Transnational Corporations and Foreign Direct Investment • Globalization • Conclusion The UN was far ahead of the curve around 1950 in conceiving a system of international economic relations that would serve all countries of the world well. It issued three major publications: National and International Measures for Full Employment (1949), Measures for the Economic Development of Under-Developed Countries (1951), and Measures for International Economic Stability (1951).1 Each report was written by a small group of prominent economists from different parts of the world with support from the UN Secretariat—an early example of the Second and the Third United Nations working together. These publications and their recommendations were ahead of their time, particularly in the international domain. Among the recommendations at the international level, the most striking were the following: • Establishing a new structural equilibrium in world trade as soon as possible • Creating measures in industrial countries to encourage capital flows to developing countries in order to encourage their rapid growth of production and increase in real incomes • Lifting the institutional constraints on economic development by diminishing through land reform the high concentration of land ownership, discrimination in banking systems, and other factors that hindered the mobility of resources • Attacking short-run fluctuations in the prices and terms of trade of primary products through the negotiation of international commodity agreements • Using the World Bank’s potential for countercyclical action by securing a substantial increase in the flow of lending to developing countries in the event of a recession 100 united nations ideas changing the world • Introducing more flexible arrangements to the International Monetary Fund so it could respond more promptly in the event of a recession to overcome the temporary difficulties of member states This was almost sixty years ago. The reports display a bold confidence. They use logical economic analysis to show how to tackle the issues of instability and growth in an international framework. At the time, the use of an international perspective was indeed pioneering and contrasted sharply with the narrow and nationalistic economic analysis of the 1930s. The reports also recognized how underdeveloped countries had an even greater stake in stability for their longterm development than industrial countries. Finally, they showed how action for the so-called underdeveloped countries could and should be combined with global action to avoid instability and recession. However, the pioneering dimensions of international perspectives and proposals largely fell on deaf ears. Little action was taken in the light of these reports, in spite of the ways they identified specific international policy measures to make possible national action for countries in economic difficulties. The recommendations also ran into a brick wall at both the World Bank and the IMF. The tragedy of neglecting these recommendations was that no broader economic plan was put in place. Yet the powers of the time, mostly the United States with support from the United Kingdom and a handful of other developed countries, could have mobilized support for a broader international economic regime if they had had the vision or the wish to do so. In The UN and Global Political Economy, John Toye and Richard Toye carefully analyze the various reasons—ideological, economic, political—why what became described as an “extreme Keynesianism” of intervention in the international economy was not acceptable to the United States, neither to the government in Washington nor to the majority within the economics profession throughout the country.2 The retreat from regulation and intervention in the international economy was reinforced by the needs of the United States as it rearmed for the Korean War. Ironically, U.S. spending removed any immediate danger of recession. In the absence of early global action to foster balanced economic growth in developed and developing countries alike, the global failures of the 1970s and 1980s were predictable. Fluctuations in the international economy returned with a vengeance, following the breakdown of the Bretton Woods system in 1971 and the oil shocks of 1973–1974 and 1979. More than twenty years after the publication of the three UN reports, UNCTAD called for a common fund to support a range of commodity agreements, much as the report had recommended , as had John Maynard Keynes in the 1940s when he recommended such a strategy as the third leg of the Bretton Woods system. Without an international economic regime for balanced growth, the instabilities and higher oil [3.144...

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