Lenin and Imperialism: An Appraisal of Theories and Contemporary Reality by Prabhat Patnaik

Author:Prabhat Patnaik [Patnaik, Prabhat]
Language: eng
Format: epub
Publisher: Orient BlackSwan Private Ltd.
Published: 0101-01-01T00:00:00+00:00

Source: IMF, World Economic Outlook (1982).

The role of the oil price-hike in widening the current account deficits of the non-oil Third World should not be overstressed, as the World Bank and the IMF are in the habit of doing. The 'non-oil developing countries' are a heterogeneous group, and the impact of the oil price-hikes is extremely uneven across countries. The bulk of low-income countries as well as middle-income primary producers consume very little oil, so the impact of the oil price-hikes on their payments was limited. Moreover, several countries, and even relatively heavy oil consumers like India, have gained in terms of exports and invisible earnings owing to the shift in the world distribution of income from the advanced capitalist countries to the OPEC. So the net impact of the oil price-hike on their payments is considerably less adverse than appears at first sight from the inflated oil-bills alone. In any case the widening of the deficit which has occurred in 1981 and thereafter cannot be attributed to any OPEC action, since oil prices declined in absolute terms in 1981. For most ol the Third World countries, therefore, it is not so much the direct impact of the oil price-hike as the events in the advanced capitalist countries in the wake of these hikes that underlie the acute payments crisis they face today. It is a remarkable fact that the advanced capitalist countries, which are the main oil consumers, have managed to close their current account deficits after successive oil price-hikes, while it is the Third World countries that are saddled with growing deficits. The advanced capitalist countries have managed to 'pass on' their current account deficits caused by the OPEC hikes either back to the OPEC (through reduced surpluses) or to the rest of the Third World.

The impact of the crisis has, until recently, not been significantly felt on the growth rates of a large segment of the developing countries (See Table 8.8). This is partly because for many of them growth- rates are determined largely by the performance of the agricultural sector. Besides, widening current account deficits financed by increased borrowing have gone into the sustenance of growth-rates. A third factor contributing to the sustenance of growth-rates has been a reduction of domestic consumption through high inflation rates which has enabled the tempo of domestic investment to be keptup.55 In other words, developing countries have until recently been able to maintain their growth-rates in the face of the crisis through increased borrowing and a squeeze on domestic consumption; the impact of the crisis has been not so much on growth as on inflation and indebtedness. But this picture changed in 1981, particularly dramatically for Latin America and the Caribbean.56 Increasingly, the developing world too is sliding into the grip of absolute stagnation.

Table 8.8

GROWTH RATES OF REAL GDP (AVERAGE ANNUAL PERCENTAGE GROWTH)

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