4 SOCIAL SCIENTIST neighbourhood of 10 per cent for most of the time. Among these countries, the UK. has experienced the largest rate of increase while FRG has recorded the maximum amount of price stability. Thus, there is little reason to doubt that the world economic scenario turned sharply adverse in the 1970's, at least as far as the developed market economies are concerned. According to the UN, however, the picture is not modified qualitatively when the entire world is taken into account although the numbers are somewhat different. Thus, the average rate of growth for the period 1961-1973 for the world as a whole was 5.4 per cent while the corresponding rate for 1974-1979 was 3.6 per cent, including the oil-exporting countries and centrally planned economies. S^me Explanatory Hypotheses How do we explain this downturn of the 1970's? Initially, it was widely believed that the downturn was a product of the so-called 'oil shock'. There is little doubt that the several-fold increase in the price of oil did give a rude jolt to the economies of oil-importing countries. However, the extent of the loss in real income posed by the deterioration in the terms of trade for the industrial countries is given in Table I. TABLE I CHANGE FROM PRECEDING YFAR 1973 1974 1975 1976 1977 1978 1979 1980 1981 Developed industrial countries -1.5 -11.5 2-1-1 3 -3 -6.5 -0.5 SOURCE: IMF, World Economic Outlook, 1981, Appendix B, Table 7. This shows that the extent of overall change brought about by the increase in energy prices has been nowhere near as high as developed countries sometimes try to make out. In contrast, for non-oil developing economies, the situation has been far more serious. For the 1960's, the deterioration in the terms of trade was slow but steady; for 1970's the rate of decline has been much more pronounced (Table II). TABLE II COMPOUND ANNUAL RATE OF CHANGE 1962-72 1973 1974 1975 1976 1977 J978 1979 1980 1981 Non-oil developing -0.5 6.5 -7 -9 2 6.5 -5.5 -0.5 -3 -3.5 countries SOURCE: IMF, World Economic Outlook, 1981, Appendix B, Table 7.