The external balance of the smaller industrial countries: international developments and national policies since 1968

This paper examines some salient features of the balances of payments of the developed countries outside the Group of Ten since 1968, first comparing their current accounts to those of the other main groups in the world, then relating their export performance to that of the OECD area as a whole and finally examining the financing of their current-account deficit and the resulting indebtedness. Despite the diversity of the countries in the ODC group, they have not generally suffered pronounced, prolonged external disequilibria as a result of autonomous disturbances, thanks to tight monetary policy and structural reforms. The policy reaction of ODCs to the two oil shocks has differed with regards to the financing of the consequent deficits (from reserves in the case of the first shock; by external borrowing in the case of the second), resulting high levels of indebtedness for some ODCs.