World Market Imperfections and the Developing Countries

The comprehensive set of demands and proposals known as the ‘new international economic order’ that for over three years has been the object of concentrated Third World pressure in a variety of international arenas is intended to reform and restructure the international economy in such a way as to generate greater benefits for the poor countries. Implicit in the reform proposals is the view that the present international economic order functions imperfectly and, in particular, is inequitable in the distribution of its gains. Western economists, schooled in models of efficiently functioning market systems, are frequently loath to take the arguments of the developing countries too seriously, since their policy proposals often seem to challenge the market system itself. In beating back the Third World’s policy proposals, however, they rarely have dealt with the basic issue which underlies them: that the automatic functioning of world markets may indeed be highly detrimental to the interests of the developing countries.