Restrictive macro-economic policies

The setback to development in the 1980s was largely induced by the deflationary external economic environment resulting from the restrictive macro-economic policies of the major market economy countries. Such policies did not even serve the interests of those countries, which had reduced inflation, but had triggered high unemployment rates, external imbalances, growing trade tensions and, above all, negative growth rates. It was however the developing countries that were hardest hit, particularly the poorest and least developed. For them the crisis meant collapsing commodity prices, worsening terms of trade, intensified protectionist and discriminatory measures, contracting financial flows, unstable exchange rates and monetary markets, and the burgeoning debt problem.