In the 1970s the severe inflation and recession that afflicted the industral countries had repercussions on developing countries throughout the world. The industrial countries and the oil-importing developing countries aslike suffered from higher oil prices. Both the oil shock and inflation in industrial countries accelerated domestc inflation in most developing countries. Wider commodity price fluctuations increased uncertainly for exporters of raw materilas, inflation eroded the real value of development assistance, and the ensuing recession reduced export opportunties. But inflation also reduced the real burden of the developing countries' external debt. and some donor nations (especially OPEC members) increased their folws of development assistance.

The authors of this book investigate of the sharp cyclical shocks of the early 1970s on developing economies by econometric tests of both aggregated and national data relating to the extraordinary international inflation of 1973 and 1974 and the following recession. Willliam R. Cline analyzes the real economic effects of international inflation and Surjit S. Bhalla its nominal effects on inflation in developing countries. Supplementing these generalized examinations are studies of Brazil, by Cline; India, by Bhalla; Guatemala and El Salvador, by Gabriel Siri and Luis Raul Dominguez; and Malaysia, by R. Chander, C.L. Robless, and K.P. Teh. Their discussions focus on the capacity and inclinatiom of the various countries to respond to externally induced economic problems. The case studies are guides to the needs of different kinds of economics-large and small, open and closde. The broad analysis points to the apporiate policy response of developing countries facing international shocks, and to the global responsibilities in industrial countries in determining their own macroeconomic policies.