Can domestic expansionary policy succeed in a globally integrated environment? An examination of alternatives

Publisher Website
Google Scholar
Abstract
Introduction For roughly the past 25 years, the advanced economies have experienced a significant decline in their average growth rate relative to that experienced in the first quarter-century after World War II. Output growth in the countries of the OECD (Organization for Economic Cooperation and Development) averaged 4.8 percent from 1959 to 1970, the latter phase of the post-World War II “Golden Age” stretching from 1945 to 1970, while during the more recent “Leaden Age,” running from the early 1970s to the present, output growth in the OECD has averaged 2.8 percent (1994 is the last year for which we have full data). This Leaden Age growth experience in the OECD is closely associated with changes in employment conditions. In Western Europe, high average unemployment rates have emerged concurrently with the growth slowdown, while in the United States, slow growth has been associated with a sharp long-term decline in average real wages for nonsupervisory workers. Employment conditions have also been worsening in developing countries. As Singh and Zammit write: The employment situation in the South, particularly in Latin America and Sub-Saharan Africa, is dire. There are not only current high rates of urban, especially youth unemployment, but there is also the necessity of providing productive jobs for a labor force which is growing at approximately 3 percent a year. On the basis of past relationships between economic variables, to create jobs at this rate in order to meet the employment needs of new entrants to the labor force, the economies of these countries need to grow at a rate of about 6 percent per annum (1995, 94).

This publication has 0 references indexed in Scilit: