Can the West Survive?

The article discusses the now universal process of macro economic reform or structural adjustment, and its implications for the growing importance of developing countries for the economic growth of the developed countries. However, a negative by-product of this growing integration of the two is seen as the decline in incomes of the lowest stratum of the workforce in developed countries and the increasingly unequal distribution of income, attributed to labour-intensive imports from developing countries. The Stolper-Samuelson theoretical explanation for this is discussed and assessed, along with the now substantial economic literature on the description and explanation of the declining incomes of the low-skilled. The article then discusses the significance of the growing role of services in the developed economies, arguing that developing countries are likely to be increasingly competitive in a growing range of labour-intensive services, without which technically more advanced activity cannot take place. Furthermore, the ageing of the developed countries’ population is likely to increase demand for services, particularly labour-intensive ones, and hence increase the dependence upon the youthful labour forces of developing countries. In sum, these trends seem likely to make the maintenance of the standard of living of the developed countries increasingly dependent upon the labour forces of the developing countries, making the old patterns of political domination impossible to sustain.