THE EMERGENCE OF POST-WAR DEVELOPMENT STRATEGIES

THE EMERGENCE OF POST-WAR DEVELOPMENT STRATEGIES

Many of the ideas, techniques, and institutions that have shaped the development strategies of the past twenty years were evolved in the post-war recovery period. In western Europe, the movement towards economic integration fostered by the Marshall Plan assumed tangible institutional forms in the case of steel and coal and atomic energy, and, by the end of the 1950s, in a full six-nation common market. More generally, the momentum generated in the determined reconstruction effort in the second half of the 1940s was sustained by a number of loosely connected forces and circumstances--some fortuitous and transient, others more purposeful and permanent--through the 1950s and into the 1960s. 

In the early part of this period, the backlog of demand was gradually released on the market and the backlog of technological innovations was absorbed into the civilian industry. The latter process continued throughout the period; indeed, the accelerated pace of technological change has become one of the essential characteristics of the contemporary world. Many problems have been eased or solved as a result, but the task of decision making has also been complicated, especially in the low-income areas where the relevance of many of the innovations is difficult to determine. Less tangible but no less significant was the advance made in the science and art of regulating a national economy. Formally, as in the case of the 1946 Employment Act in the United States, or informally, Governments had adopted "full employment" as a prime national goal and in varying degree had begun to use their fiscal and monetary powers much more actively as instruments for affecting the pace and direction of overall economic growth as well as for maintaining internal and external balance in the economy.  

This movement towards more deliberate economic management of national economies was strengthened by international consultation and confrontation procedures designed in the first instance to facilitate reconstruction, then to guard against the transmission of deflationary tendencies and finally--in line with the greater degree of interdependence of the world economy-to subject national measures to the test of their implications for partner countries and the rest of the world.

While few countries were able to commit themselves to a specific full employment target--that is a specific limit to the rate of unemployment--many did, in fact, bind themselves to a code of behaviour in the field of trade relations. Under the General Agreement on Tariffs and Trade (GATT), contracting countries set about liberalizing international trade, and the process of negotiation and confrontation, begun in 194-7, continued to exert a positive influence on the course of trade throughout the 1950's, culminating in the so-called Kennedy Round of tariff reductions concluded in 1967, Given the generally favorable demand trends and the division of labor flowing from the increased pace of technological change, the scaling down of tariff barriers helped to promote a continuous and rapid increase in international trade.

In addition to the consultation forum provided by the United Nations and the negotiation machinery provided by GATT, the institutions created at Bretton Woods furnished banking-type mechanisms which greatly facilitated adjustments when ordinary payment arrangements got out of line. Thus, notwithstanding the serious ideological split in the world economy and the recurrence of active hostilities in various times and places, the degree of co-operation among nations was notably greater after the Second World War than after the First. The impact of domestic economic policies on the rest of the world has been taken into account much more systematically and seriously: the world has enjoyed relative freedom from the sauve-qui-peut attitude towards economic imbalances that precipitated the Great Depression at the end of the 1920s.

One aspect of this enlarged awareness of the interdependence, of the world economy, as evidenced in a heightened concern about disparities in income, both within countries and between countries. The increased interest in the problems of economic dynamics and growth took on a special form as previously non-self-governing territories achieved political independence and began to, adopt policies designed to accelerate the pace of their economic development. 

The more advanced countries, which, in the Atlantic Charter and then in the United Nations Charter, had committed themselves in a general way to strive to raise world levels of living, began to organize more specific programs of technical assistance, such as Point Four in the case of the United States and the Colombo Plan for cooperation in southern and south-eastern Asia in the case of the United Kingdom. In the second half of the 1950%, as the imports of the developing countries rose and their export prices and foreign exchange reserves declined from high post-war levels, this assistance took on more of a financial nature: the movement of private capital was supplemented by a flow of official lending, both bilaterally and through international agencies, mostly to finance investment projects.