We may need to remember that an intra-local equilibrium is no more than a “knife-edge equilibrium”, which is vulnerable to external shocks and falls short of stability and resilience. 14 In the ongoing Eurozone crisis, there has been injection of massive capital in pursuit of intra-regional equilibrium.
From the perspective of global equilibrium, however, for the faster recovery of world economy, capital should, by all the principles of economic structural adjustment, flow into economies with faster growth and higher productivity. As pointed out earlier, multiple local equilibria may be suboptimal rather than optimal given the external effects.