CEPAL Review - Volume 1983, Issue 19, 1983

A review of what happened in the Latin American economies during 1982 is a particularly useful step towards understanding the nature and causes of the serious economic crisis affecting the region, knowledge of which in its turn is indispensable for proposing measures whereby to cope successfully witih the situation.

This article is a summary of the document submitted by the ECLA Secretariat to the Committee of High- Level Government Experts (CEGAN) at the latter’s meeting in New York in December 1982. Its main aim is to outline the nature and causes of the crisis through which the region is passing and to suggest some lines of action which could be followed in order to tackle the problem at both the domestic and external levels.

The metalworking industry is passing through a phase of out-and-out transformation in the international scenario. The rapid development of Japanese production and its penetration into European and United States markets, the gradual consolidation of the position of several ‘newly industrializing countries’ (NIC) like Brazil, Korea or Taiwan as manufacturers and exporters of various products of the industry in question, the dramatic irruption of robotics as one of the latest steps in the increasing automation of the production process, and the more and more intensive use of microelectronics in several of its phases, but above all the feeling that the changes now brewing -in the spheres of technology, organization, international trade, etc.- are of considerable magnitude, make this industry an unquestionably attractive field for economic analysis.

The Andean regions of Latin America encompass a vast mountainous zone of alternating high peaks, hillsides and relatively narrow valleys; rivers and ravines form a large number of basins in this area inhabited by scattered population groups which exert heavy pressure on the fragile renewable resources to be found there.

According to OECD, the electronics complex will be the main pole around which the production structures of the industrial societies will be reorganized in the next quarter of a century. The dynamism of this complex in such societies, its impact on trends in investment and international trade, and the growing incorporation of its products and technologies in the Latin American countries are influencing to different extents and in different ways the national economies of the region. Among the potential repercussions of the electronics complex on Latin America, special mention may be made of increases in the differences of productivity with respect to the developed countries; changes in the comparative advantages of the various economies, in employment, and in ways of public administration; growing asymmetry in international information flows; and the threat to personal privacy and security, inter alia.

In this article the author analyses the real cost of external debt servicing and reaches the conclusion that the cost in question is different for the creditor and for the debtor, nie former will normally take into account his own country’s financial market as a basis for evaluating the alternative use of his resources. In contrast, the debtor will have to take into consideration the real resources that he needs to use in his own country in order to generate foreign exchange for paying the debt.