Capital Requirements in Economic Development: The Decade Ahead

The decade of the 1970s saw major external shocks to the economies of developing countries. Oil prices increased almost threefold in real terms in 1973–4, this was followed by a 9 per cent decline in real terms in 1975–8, and an increase of over 80 per cent in 1979–80. These events in energy markets were accompanied by a marked slowing-down of the rate of growth of industrial countries — a process which had started already in 1970–71. The growth rate of industrial countries averaged 3.3 per cent a year in the 1970s, down from over 5 per cent in the 1960s; there were major variations in annual growth rates both among countries in the group and for the group as a whole. Furthermore, there was a marked acceleration in inflation in industrial countries and it became common to talk about ‘double-digit’ inflation, as well as about ‘stagflation’.