The increase in the international price of oil from $2.70 per barrel in October 1973 to over $8.00 per barrel from January 1974 has most profound and widespread implications for world development in the rest of this decade. The additional revenue of the 11 major oil exporting countries has been estimated to exceed 1973 total revenue by some $65 billion in 1974. Of this, some $55 billion is estimated to come from developed countries and the remaining $10 billion from non-oil producing developing countries. Although such estimates obviously only give us the rough order of the size of financial transfers involved, there is a risk of becoming so pre-occupied with margins of error that the magnitude is missed. Indeed the magnitudes are so large that their significance may be missed without some comparative figures. Total net official development assistance from OECD countries was less than $9 billion in 1972. Total net flow of private overseas investment trom OECD countries to less developed countries was $9½ billion in 1972. Total exports (including oil) from all less developed countries were only $74 billion in 1972. Thus the increase in export earnings of the oil producing countries in one year alone is almost as great as total Third World export earnings (including oil) two years earlier. As a shift in world income distribution arising from an increase in the price of a single item of world trade, and taking effect in such a short space of time, it is difficult to think of any change of comparable magnitude and significance.

In this issue of the bulletin we explore the background and some of the main implications of this "watershed" in international relations; particularly the extent to which it will affect the development prospects of poor countries and the climate of trade between poor and rich in the next few years.