The World Economy since the Second World War

Abstract

Changes in the world economy over the last half century have been phenomenal. For much of the period world output and trade have grown faster than in any comparable period in history, though the growth of output has faltered in recent years. At the same time, the development experience of individual countries has been widely different, ranging from the dismal to the spectacular. Many developing countries continued to be mired in poverty while others forged ahead. A great ideological divide appeared early on: a number of countries opted for a system of central planning which achieved extraordinarily high rates of economic growth, at least as measured by their own standards. In the end, the collapse of the system turned out to be even more dramatic than its earlier achievements. Shocks abounded. The system of fixed exchange rates, elaborately built up early on, broke down half-way through the period; a dramatic increase in oil prices threw the international economy into turmoil; prices of other commodities soared and then fell to historic lows, taking the fortunes of many countries with them; the debt crisis burst onto the scene. But fundamental changes had also been taking place in the world economy. The lifting of capital control and the advent of information technology gave rise to huge flows of funds at great speed across national boundaries. Growing trade and investment flows bound national economies closely together.