International economics-II

International economics 2Over the last two hundred years or so the world has witnessed tremendous progress in science and technology and a tremendous increase in productive capacity. Man’s inventive genius has shown remarkable resilience in meeting the challenge thrown up by an ever-growing population upon limited natural resources. Vast potentialities have opened up for the improvement of man’s material conditions. And yet these opportunities have been confined to a small part of the earth’s surface; the majority of the inhabitants of the world are still poor by any standard.

Inequalities of wealth and opportunity are ubiquitous in our society. Within national boundaries too, there are large inequalities between regions, between sectors and between classes. Conflicts between labour and capital, between rural and urban sectors and between progressive and depressed areas have been almost invariable concomitants of the economic growth of a nation. Nevertheless there has been a certain built-in institutional protection against any excess in these inequalities. Trade unions and similar political and always resisted cumulative tendencies to inequality by their insistence on wage adjustments, parity prices, grants and subsidies, etc. The result is that the process of what My real calls ‘national economic integration’1 has been in operation in more or less degree wherever economic development of any substantial measure has taken place.

‘National economic integration has increasingly been a process of social organization, in the course of which social and economic barriers were abolished and greater equality of opportunity realized. In this process a complex system of interference with the functioning of the price mechanism has played an important role.’2 It would perhaps be wrong to say of even the more advanced countries that they have altogether succeeded in solving their internal contradictions; if they had done so, the tension in international relations would be very much less than it is today. Yet who will deny that these countries have made enormous progress during the last fifty years or so towards a reduction of regional and group disparities in wealth and power? If the less developed countries are still under the pressure of traditional institutions and cultures and if the movement towards national integration is yet slow in these countries, the awareness is there, thanks at least to imported ideologies, if not to an inner urge. So international economics is most important.

While, however, the internal conflicts are capable of being resolved  and they are being resolved under the aegis of the State which has a controlling authority over contending parties, international economic integration is yet a far cry. If economic inequalities between regions or groups are tending to be reduced, those between nations are in the process of being accentuated over the years. As Professor Rosenstein-Rodan observes, ‘there is no doubt that after a hundred, even a hundred and fifty years of industrial revolutions and great technical progress, the degree of inequality of distribution of income as between different nations is considerably greater today than it was a hundred years or even hundred and fifty years ago. So international economics is most important.

In a study of the relative economic position of as many as sixty-four countries, whose national income figures are available, Paul Studenski brings out the enormity of the income inequality that prevails among the nations of the world.1 The per capita income of the United States of America is forty times as high as that of Burma and about thirty times as high as that of India. The average per capita income of the nine countries ranking highest in the list is

countries have a per capita income above $500 per year; the rest are below that level. Three countries have per capita income above $1000 per year, while there are as many as twenty-nine countries having less than $200. Putting the matter in another way, two-thirds of the world’s population share only about 15 per cent of the world’s wealth, whereas just about 18 per cent of the world’s population enjoy about two-thirds of the world’s wealth. So international economics is most important.

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