Integration and Interdependence of the World Economy
The economic integration of the Western democracies has proceeded apace ever since, at the end of the 1950s, they set themselves firmly on the path of trade and payments liberalization. Whether the governments of Western Europe and North America fully anticipated the extent of the market’s reaction to these liberal policies is, however, doubtful. The growth of international transactions has been formidable in all spheres of economic activity1 and lately appears to have escaped the control of national governments. Will they accept this loss of control, or will they attempt to reassert their power? There is no historic precedent. In the laissez-faire, laissez-passer days of the late nineteenth century the free play of market forces presented no direct challenge to the autonomy of the nation-state, since the latter had not yet assigned to itself a predominant role in economic affairs. In the late twentieth century the right—or duty—of the state to govern the economy is widely (though not universally) recognized. It is certainly a fact that government intervention is practised in all market economies to a greater or lesser extent. The fact that a large and growing volume of national transactions should be conducted with the outside world, and that national control over these transactions is slipping, therefore reduces the state’s power of action in the economic sphere.
KeywordsFree Trade Custom Union European Economic Community Free Trade Area Multilateral Trade
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- 1.See Richard N. Cooper, The Economics of Interdependence: Economic Policy in the Atlantic Community (New York: McGraw-Hill, 1968).Google Scholar
- 3.See Bela Balassa, The Theory of Economic Integration (London: Allen & Unwin, 1962), p. 79, or Jan Tinbergen, International Economic Integration (Amsterdam: Elsevier, 1965), pp. 70–3.Google Scholar
- 7.James E. Meade, Problems of Economic Union (London: Allen & Unwin, 1953), p. 9.Google Scholar