Towards a change in the economic paradigm through the experience of developing countries

Outside the conventional economic paradigm, chronic and recurrent bottlenecks are treated as pathological disorders instead of inherent problems in the growth of developing nations. Bottlenecks are either an insufficiency of foreign exchange to purchase an item needed to carry out production, or a shortage of a raw material. A new kind of recessive inflation occurs when markets provoke a regressive distribution of income to reduce bottlenecks and clashes with social pressure for higher wages. The trend toward bottlenecks in primarily exporting countries results in chronic and cumulative foreign indebtedness, recurrent stop and go cycles, and conflicts about income distribution which are solved through recessive inflation. Any balancing action on bottlenecks implies changes in relative prices entailing transfers of income to suppliers of scarce items. Investments should be stimulated by governments at the international level according to a global plan. A network of the largest world banks should be stabilized for most important raw materials and foodstuffs. This would encourage investment and discourage excessive price changes. If a rule were adopted whereby each country would have to live with its own oil deficit, the individualist/opportunism would disappear.