This paper analyzes the effect of rapid inflation on a country’s international position. The paper highlights that when prices and costs in any country rise rapidly, goods produced in the country soon become more expensive than similar goods produced abroad. Unless the exchange rate changes, this encourages imports and discourages exports. As prices in a country rise more rapidly than in the rest of the world, individuals in that country tend to turn from buying these increasingly expensive products of their own industries to the relatively cheaper foreign goods.
After working on the wartime administration of exchange control with the Bank of Canada, Graeme Dorrance was a lecturer at the London School of Economics and Secretary of the London and Cambridge Economic Service. He is Chief of the Fund’s Financial Studies Division and has published a number of articles dealing with the role of financial policy in encouraging economic advance in postwar Britain and in developing countries.
C. P. McMeekan was born in New Zealand and holds Doctorates from the Universities of New Zealand and Cambridge. He was Professor of Agriculture in the University of New Zealand, and for 20 years Director of the Ruakura Animal Research Station. After retirement from these posts he joined the staff of the World Bank in 1962.
David L. Gordon, who has been Deputy Director, Development Services Department of the World Bank since 1963, is an American citizen. He was educated at Princeton and New York Universities and was in the U.S. Government service before joining the Bank in 1953.
Jean van der Mensbrugghe, an economist in the IMF Institute, graduated from the University of Louvain. He was formerly on the staff of the Royal Institute for International Affairs, Brussels. He has published Les Unions Economiques: Réalisations et Perspectives (Brussels, 1950), as well as several articles.
After receiving his Doctor’s degree from The Johns Hopkins University in 1942, William Diamond worked for the U.S. Government both at home and abroad. He joined the World Bank in 1947 and since 1962 has been Director of the Development Finance Companies Department of the International Finance Corporation.
Rudolf Kroc, a graduate of the Graduate School of Commerce in Prague, is Assistant Treasurer for Operations of the Fund. He joined the Fund in 1947 and was previously with the National Bank of Czechoslovakia.
FUND PAMPHLET SERIES
The Fund issues from time to time pamphlets explaining various aspects of its work. The following have already been issued, and may be obtained gratis on application:
Introduction to the Fund. A general survey of the Fund’s responsibilities and procedures, together with a glossary of the principal specialized terms for its activities. (Available in English, French, and Spanish.)
The International Monetary Fund: Its Form and Functions. A more detailed description, by a Deputy Director of the Research Department, of the structure of the Fund, of its responsibilities, and of its day-to-day work. (Available in English; French and Spanish versions in preparation.)
The International Monetary Fund and Private Business Transactions: Some Legal Effects of the Articles of Agreement. An explanation, by the General Counsel of the Fund, of the meaning of some of the Articles of Agreement, and of their significance for ordinary business transactions. (Available in English; French and Spanish versions in preparation.)
Address requests to:
INTERNATIONAL MONETARY FUND
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REPORTS OF WORLD BANK GENERAL SURVEY MISSIONS
The Economic Development of Kuwait, 1965, 194 pp., $6.50
The Economic Development of the Territory of Papua and New Guinea, 1965, 480 pp., $8.50
Both studies contain comprehensive analyses of all sectors of the economies concerned and recommend measures for future development. The problems of each differ widely: Kuwait, possessing about a fifth of the world’s oil resources, has one of the highest per capita incomes in the world and has been able to pursue vigorous internal development and export capital to other Arabic countries in important amounts. Papua and New Guinea, which are administered as a union by Australia, are heavily dependent on the Commonwealth for financial assistance and skilled manpower.
A central theme of the Kuwait report is that the country would benefit from a more diversified economy and recommendations are concentrated on government action to achieve this goal and so to improve the life of the people.
While Papua and New Guinea have considerable natural resources, mainly in forests and arable land, it will take several decades to achieve economic viability in any meaningful sense. Major emphasis must be given to the stimulation of production and the advancement of the indigenous people through education and training so that they can play an increasingly important part in the economy and government.
Available from bookstores and The Johns Hopkins Press, Baltimore, Maryland 21218, U.S.A.