Problem

Faltering structural adjustment in the world economy


Experimental visualization of narrower problems
Other Names:
Inadequate economic integration
Failure to restructure economic relations between countries
Economic imbalances among countries
Retardation in economic structural adjustment
Faltering adaptation of economic agents to accelerating pace of structural change
Policy-making delays in response to accelerating structural change
Lag in results from economic restructuring
Nature:

The decade of the 1970s witnessed a retardation of structural adjustment at a time when the need for structural change was greatest owing to rapid shifts in patterns of comparative advantage, especially as regards the increased export competitiveness of a number of industrializing developing countries and a certain developed countries. In addition, the severe recession of the 1980s has had a serious impact on structural adjustment. In general, adjustment costs tend to be higher in stagnant than in fast-growing economies as, for example, the prospects of alternative employment are unlikely to be very bright for the adversely affected factors of production when growth is sluggish.

Incidence:

[Developing countries] In the less developed countries with a low level of industrialization, the mere integration of market through the removal of trade barriers, without substantial effort to expand production capacities through joint or harmonized programmes, has achieved very little. The real test of progress for economic integration schemes in developing countries is the extent that the member states are able to coordinate and harmonize their economic activities, most especially in those critical sectors -- transport and communications, hydroelectric power, river basins development and heavy industries -- where joint effort is the very basis of success. Such effort at coordination and harmonization also assumes that the member states are able to reconcile whatever divergences may arise from their separate pursuit of national economic policies.

 

Claim:

The number of economic integration institutions has continued to grow over the past few decades almost concomitantly with the decline in their effectiveness. The old obstacles inhibiting the process of integration have hardly been eased and, on top of these, profound new changes have taken place. The meagre results that have been achieved has created widespread disappointment and disillusionment in the ranks of the developing countries. Indeed, the present situation has been characterized as a "crisis in economic integration". While there is no lack of understanding about the reasons for slow progress nor about the major goals that need to be pursued to speed up the process, there is general agreement that much stronger political will would have to be mobilized.

Related Problems:
External debt crisis
Problem Type:
F: Fuzzy exceptional problems
Date of last update
12.06.2018 – 00:38 CEST