International Monetary Fund. External Relations Dept.
This paper highlights the sources of payments problems in less developed countries. Growth in the industrial countries has a direct impact on the current account of the developing countries through its influence on both the prices and volumes of their exports. An increase in the real effective exchange rate is clearly a fundamental determinant of a deteriorating current account since, other things being equal, it tends to raise domestic demand for imports and to reduce foreign demand for exports.
This article presents a summary of the second in a continuing series of World Bank reports designed to address the principal issues of development policy at the national and international levels. Many of the themes in this report have evolved out of the extensive discussion of the 1978 report. This year’s report focuses greater attention on development in the Middle-Income Countries, where the process of structural transformation is much farther advanced.