By I. G. Patel (auth.)
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We may debate ad infinitum whether deficit financing or the inflationary gap is a better analytical tool, whether we are merely pushed into inflation by costs or pulled into it by excess demand; but the slip of the economy shows pretty soon when it strays into unbalanced behaviour. At the level of prescription, our latest recipe for bringing the tug-ofwar of inflation to an end is the so-called incomes policy. If an incomes policy means anything, it presumably means a policy for the distribution of income.
Neglect of the opportunities for trade that exist or could be created can be costly. But let us be clear also that poorer countries cannot seek their salvation largely through a preoccupation with international specialisation. If I may quote from my dissertation: 2 'One can change the entire pattern of colour and design in a kaleidoscope by shifting only one or two bits of glass. ' I wish I could say that questions regarding what might be fair or unfair in matters relating to trade policy or wage policy are also no longer relevant or important.
But quite clearly it does not make sense to say that export promotion or import substitution should receive encouragement over generation of electricity or provision of transport facilities. In the ultimate analysis, everything is either exportable or importable or is necessary for the production of that which could be exported or imported. If this is the case, I really do not see what concrete meaning we can assign to the 'infant industry' or the 'infant country' argument in the context of trade policy when this policy is considered in the macro or aggregative sense.