Existing International Payments and Exchange Systems in Relation to Problems of Growth: II

My paper deals with a subject which is also being examined, though from a different angle, by Professor Weiller.1 I have not had the opportunity of seeing his paper before writing my own. But I propose to assume that the Conference has already had before it an analysis of the external monetary problems facing an individual country as a consequence of growth. The problems are connected with the equilibrium of the balance of payments. May I begin by pointing out that disequilibrium in the balance of payments is only to be found when the rate of growth in one country differs sub-stantially from that of its trading partners, when this difference of growth rate is not neutralized by other counterbalancing factors, and when the country in question has exhausted its foreign exchange reserves and its borrowing possibilities? In these days economic growth is undoubtedly affected — certainly in a majority of cases — by governmental activities and macro-economic decisions, not influenced exclusively by market factors. Thus it is frequently to be found that there are differences in growth rates, and that these lead to balance of payments disequilibria in those countries in which growth is highest, unless the countries concerned take steps to reduce or neutralize their deficits.