Economic Policy Making and State Capacity

Abstract

Economic growth was interrupted in every industrial capitalist country beginning in the early 1970s. Annual productivity rates dropped to about one-half of their 1960s average by the mid-1970s in nearly every country within the Organization for Economic Co-operation and Development (OECD). Creeping inflation turned into runaway inflation over the same period. And intensified international competition, fuelled by the flight of capital to low-cost production zones throughout the world, undermined attempts by nation-states to simultaneously regenerate domestic production, maintain employment growth, control inflation, and limit trade and public sector deficits.