ASSUME MORE THAN A SMALL CONTRIBUTION FROM A CYCLICAL CATCH-UP OF SAY 1 % PER YEAR FOR TWO YEARS . INTENSIFIED MEASURES TO IMPROVE THE CAPACITY OF EXISTING CAPITAL STOCK , FOR EXAMPLE INVOLVING THE REORGANIZATION OF PRODUCTION AND WORKING TIME , COULD ENLARGE THE CONTRIBUTION OF CYCLICAL CATCH-UP AND ALLOW FOR AN EVEN MORE AMBITIOUS TARGET IN THE SHORT TERM .
AN AMBITIOUS IMPROVEMENT OVER CURRENT ECONOMIC PERFORMANCE IS SURELY A COMMON OBJECTIVE , ALBEIT ONLY QUALITATIVELY , OF ALL MEMBER STATES . TO IMPROVE ECONOMIC PERFORMANCE TO THE EXTENT SUGGESTED WOULD HOWEVER IMPLY A VERY STRONG AND RAPID REINFORCEMENT OF THE BEST FEATURES OF RECENT POLICY MOVEMENTS IN THE COMMUNITY . TO DESCRIBE SUCH MOVEMENTS MORE PRECISELY IS THE SUBJECT OF THE REMAINDER OF THIS REPORT , WHICH IS SUMMARIZED IN 16 POINTS .
TABLE 16
GROWTH AND INFLATION
* ANNUAL AVERAGE % INCREASES
* 1961 TO 1970 * 1971 TO 1980 * 1981 TO 1983 * 1984 TO 1985 ( 1 )
GDP
- VOLUME * 4,3 * 2,9 * 0,4 * 2,2
- PRICE DEFLATOR * 4,7 * 9,8 * 8,0 * 4,4
- NOMINAL * 9,1 * 13,0 * 8,4 * 6,7
( 1 ) FORECASTS ON PRESENT POLICES .
POINT 1 : THE COMMUNITY SHOULD AIM COLLECTIVELY AT CREATING THE CONDITIONS THAT WOULD PERMIT SIGNIFICANTLY HIGHER ACTUAL AND POTENTIAL GROWTH RATES AND LOW OR LOWER INFLATION RATES . A POTENTIAL GROWTH RATE OF 2,5 TO 3 % SHOULD BE ACHIEVED , AND , FOR A TEMPORARY PERIOD OF CYCLICAL CATCH-UP , A SOMEWHAT HIGHER ACTUAL GROWTH RATE OF 3,5 TO 4 % BUT ONLY ON CONDITION THAT POTENTIAL OUTPUT WERE SIMULTANEOUSLY IMPROVED . TO SUCCEED ALONG THESE LINES NECESSARILY MEANS A POWERFUL SET OF ACTIONS TO IMPROVE SUPPLY CONDITIONS IN ALL MARKETS - GOODS , SERVICES , LABOUR AND CAPITAL - OR ELSE THE FASTER DEMAND AND OUTPUT GROWTH WOULD SOON ENCOUNTER CAPACITY OR INFLATION CONSTRAINTS .
3.1.2 EMPLOYMENT AND INVESTMENT
WITH CURRENT HIGH LEVELS OF UNEMPLOYMENT , IT IS NECESSARY NOT ONLY TO SEEK HIGHER GROWTH RATES , BUT ALSO ENSURE THAT EACH POINT OF GROWTH YIELDS MORE IN THE WAY OF EMPLOYMENT . AS POINTED OUT ABOVE ( IN SECTION 2.4 ) , THERE IS NO SIMPLE OR FIXED RELATIONSHIP BETWEEN THE GROWTH OF OUTPUT AND THAT OF EMPLOYMENT ; NOR IS THERE ANY REASON TO BELIEVE THAT THE LOW PROPENSITY TO CREATE EMPLOYMENT WHICH HAS BEEN WITNESSED IN RECENT YEARS CANNOT BE IMPROVED .
THE VOLUME OF EMPLOYMENT HARDLY GREW EVEN DURING THE FAST GROWTH IN THE 1960S AND HAS DECLINED SLIGHTLY IN THE LAST DECADE . MEANWHILE , THE STOCK OF CAPITAL PER EMPLOYED PERSON HAS GROWN STEADILY , RISING AT AN AVERAGE ANNUAL RATE OF 2,5 % OVER THE LAST 10 YEARS . AN IMPORTANT FACTOR IN ENCOURAGING THIS CAPITAL DEEPENING HAS UNDOUBTEDLY BEEN THE PERSISTENT RISE IN REAL LABOUR COSTS IN RELATION TO THE RATE OF RETURN ON CAPITAL . AN IMPORTANT PART OF THIS MOVEMENT CAN BE