WORLD ECONOMIC CONJUNCTURE 5 Furthermore, it is the developed countries which have earned service incomes such as banking charges as well as benefited from the recycling operations. It is, therefore, difficult to make out the case that the 'oil shock9 has served as the principal causal factor which changed the entire scenario, although in a certain long-run sense, it may have had a more serious impact, by pointing towards the need for conserving scarce non-renewable resources. An influential group of economists has made the point that the real problem has arisen with the breakdown of the Bretton Woods system and its replacement by ad hoc floating arrangements. This argument may be more substantial than the one referred to earlier. However, it should be remembered that the decision to abandon the Bretton Woods system was undertaken by the most important market economy, i. e., the USA, because it felt that the system was constraining its domestic option in regard to growth with stability. Furthermore, France had never been happy about the US hegemony reflected in the Bretton Woods arrangement. Thus, it is not clear why the use of floating exchange rate system should, in itself, lead to a slowdown in the growth performance, especially for the developed countries with very well developed financial arrangements. A third important reason that has been frequently cited is the slowdown in the rate of growth of real output per employed man-hour. Here the argument seems to be on a somewhat firmer ground. However, there are important problems that must be borne in mind. First, there have been significant differences between the experiences of different countries. Secondly, the shift to the 'service sector' which is said to be partially responsible for productivity slowdown reflects a number of very distinct developments. First, the so-called 'income elasticity9 argument is in favour of services. A part of the shift may be attributed to the growth in real income per head experienced over the 1950's and 1960's. But this is not all that there is to the expansion of services. Some of the expansion may reflect the fact, especially in the US and the UK, that service sector expansion was a buffer, reflecting in itself the fact that manufacturing output growth v/as slowing down because of a serious demand problem. This takes one to the next point, whether an increase in productivity growth would have provided an answer to the problem. If the economy were competitive in character in its essential functioning, then possibly downward pressure on prices exerted through cost reduction would have led to market widening and hence raised the rate of growth to some extent. However, in the absence of positive intervention by the State of a demand-stimulating nature, this need not be a correct inference for the economies of mature capitalist country. This takes us to the additional explanation that the government