^{Page 471 note 1} The tragedy of university education in economics is that students are rarely told how to start answering these questions, or even introduced to this way of looking at an economy.

^{Page 472 note 1} This is a figure to be used with very great caution, not least because the changes in productive structures needed to provide a general living standard in this region would take a decade or two. But it does indicate the not-so-long-term potential.

^{Page 472 note 2} To put the matter purely in economic terms may appear the typical callousness of those who stick closely to their professional last. Let me add therefore that I too feel ashamed that our generation has sunk to such primitive depths that it has produced instruments, which are kept ready for use, capable of human extermination.

^{Page 473 note 1} See Surendra, Patel, ‘The Economic Distance Between Nations’, in The Economic Journal (London), 03 1964.Google Scholar Since the progress of any economic Unit must be judged in large part by what has happened to its modal income, and increasing inequality is usually considered a deterioration, one could argue that economic progress in the past century has been negative. The positive aspect is that the world is now in a better technical position to solve its problems— if it is sufficiently interested to do so.

^{Page 473 note 2} D. Seers, ‘A Model of Comparative Rates of Growth in the World Economy’, ibid. March 1962.

^{Page 473 note 3} Other economists, notably Dr Raul Prebisch, base the same conclusion about increasing inequality on an alleged long-term tendency for the terms of trade of the same countries to deteriorate. Such a tendency is very doubtful.

^{Page 473 note 4} This contrast has been argued by Dr Gunnar Myrdal in a number of publications; my approach here is basically similar to his.

^{Page 474 note 1} Rowntree, B. S., Poverty: a study of town life (London, 1901);Google Scholar cf. Rowntree, B. S., Poverty and Progress: a second social survey of York (London, 1941),Google Scholar and Rowntree, B. S. and Lavers, G. R., Poverty and the Welfare State (London, 1951).Google Scholar

^{Page 474 note 2} Booth himself had made considerable use of the reports of school board visitors, appointed to check truancy after education became universal.

^{Page 475 note 1} There were of course occasional reversals, such as temporary reductions in income tax; I speak of the longer perspective. Naturally this account is far from complete. I have not mentioned the role of writers (Dickens, Galsworthy, Shaw, Wells come at once to mind) in breaking down rigid thought patterns by, for example, making social snobbery an object of ridicule.

^{Page 475 note 2} The problem of measuring aid is discussed in my appendix, “The Definition of Aid”, p. 488

^{Page 477 note 1} Figures of the relative sizes of aid through different channels are given in The Flow of Financial Resources to Less Developed Countries, 1956–1962 (O.E.C.D., Paris, 1964).Google Scholar

^{Page 477 note 2} Members have also to belong to the International Monetary Fund; this in effect excludes Communist countries (even if they are interested in joining); the Fund's prohibition in principle of exchange controls is virtually incompatible with a fully planned economy.

^{Page 477 note 3} This is not however true of the Bank affiliate, the International Development Association, though this has at present only limited resources.

^{Page 477 note 4} E.g., Report by the Secretary-General of the United Nations Conference on Trade and Development, E/CONF. 46/3, p. 149: ‘The proportion of international financial resources in each country's investment programmes must become smaller in the course of time as domestic savings capacity draws strength from the economic development process itself.’

^{Page 478 note 1} See Nyerere, Julius K., McDougall Memorial Lecture on F.A.O. (Dar es Salaam, 1963).Google Scholar Other references are Tinbergen, Jan, Shaping the World Economy (New York, 1962),Google Scholar and Dr Gerda Blau, ‘International Commodity Arrangements and Policies’, E/CONF. 46/61, prepared for the Geneva Conference.

^{Page 479 note 1} This is essentially the main source of finance suggested by Rosenstein-Rodan, Paul in ‘International Aid for Underdeveloped Countries’, in Review of Economics and Statistics (Harvard),05 1961,Google Scholar supported by Tinbergen, op. cit.

^{Page 479 note 2} The volume of air travel grows at about so per cent a year. The greater part of air travel is in planes of members of I.A.T.A., which could be the main collecting agent.

^{Page 479 note 3} There are other possibilities. Where physical capacity (in steel or ship building or farms, for example) is lying idle, it could be mobilised by the international aid agency in the interests of development. This could be done by requiring governments to contribute a certain percentage of the potential output of such capacity.

^{Page 479 note 4} One interim possibility would be to count in some way (perhaps fractionally) bilateral and multilateral grants towards international fiscal obligations.

^{Page 479 note 5} This is the criterion suggested in Rosenstein-Rodan's article mentioned above; it is not supported by Tinbergen.

^{Page 480 note 1} The intellectual ancestry of this doctrine in its present form is Professor W. W. Rostow's ‘stages of growth’ theory. Most such attempts involve implicitly or explicitly the criterion that countries with a high marginal propensity to save are the most aid-worthy. But, apart from all other considerations, the marginal propensity to save is the most difficult to measure of all coefficients, even in developed countries.

^{Page 480 note 2} A related but not identical criterion would be the severity of the unemployment problem. The Roberto Campos committee recommended this, though adding the condition that the country concerned was doing its best to mobilise its own resources to this end—see Employment Objectives in Economic Development (I.L.O., Geneva, 1960).Google Scholar

^{Page 480 note 3} There are precedents in national finance. Thus the University Grants Committee in the United Kingdom makes part of the grants to universities available only if used for the expansion of particular faculties.

^{Page 483 note 1} It is reasonable to believe that the developed countries would have a faster growth rate themselves if their capital goods output grew at a rate continually and significantly faster than their own needs.

^{Page 483 note 2} The clearest illustration of the advantages of specialisation plus compensation is the case of Australia. Because protected manufacturing industries were being concentrated on the eastern seaboard, Western Australia once threatened to secede, even though she received grants from the Commonwealth Government. Part of the problem was that the level of the grants was decided annually and in a way that reflected political pressures rather than any rational Criteria. Then an arrangement was made under which the poorer states automatically received each year an amount calculated by formula (in brief, enough to enable them to enjoy the same level of social services, if they levied the same taxes, as the average in the eastern states). Since the time this formula was adopted, the secession of Western Australia has not been a serious possibility.

^{Page 485 note 1} Julien Benda's La trahison des clercs drew attention in the 1920's to the way in which European intellectuals allowed nationalism and political doctrine to dominate in their thinking. This charge could be made with still greater force today.

^{Page 486 note 1} The G.A.T.T. study, Trends in International Trade, produced by a committee of experts under the chairmanship of Professor G. Haberler, is a preliminary and small-scale version of part of what is needed.

^{Page 487 note 1} This is particularly important in the case of scholarships; some countries have, in view of their needs for qualified manpower, what is almost certainly too high a proportion of this élite, overseas, in many cases engaged on courses which are not of high importance to the country, perhaps not even appropriate to its problems.

^{Page 488 note 1} Based on data from O.E.C.D.'s report, The Flow of Financial Resources to Less Developed Countries (1964).

^{Page 489 note 1} An attempt at quantifying the true aid content in this sense was made in Review of Economics and Statistics, November 1963, p. 361.