ABSTRACT

Advocates of New International Economic Order are aware that an internal gap divides the people of less developed countries (LDCs) into rich and poor. In general, they have thought of the internal gap as similar to, even paralleling, the international gap. Indirect government intervention occurs when policies such as taxation and interest rates change incentives, so that individuals and businesses behave differently from the way they would have behaved if left alone. Economists spend a lot of time discussing the origins of the gaps: whether they occurred in tribal and in preindustrial societies; whether they inevitably widen with economic growth or only sometimes. The internal gaps are perpetuated by the kinds of controls LDC governments already are able to exercise, and the internal gaps are associated with transfers from poor to rich. Many LDC governments provide infrastructure, loans, and even physical facilities to modern industries.