ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Financial Imbalances in the World Economy

The current account deficit of the US is by far the largest that the world has ever seen, equivalent to about 7 per cent of US national income and nearly 2 per cent of world income. The present situation relies on large capital inflows into the US, but the concentration of investment in the highest-income regions of the world is socially damaging, destabilising and prejudicial to the effective development of resources in the world as a whole. The US deficit can be contained in a less damaging manner only if the rest of the world contains its own surpluses and boosts investment in other regions.

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