Reduced Inequalities

In this paper the author analyses some of the difficulties encountered by monetary authorities when they are operating in a situation of international capital mobility; more specifically, he focuses on how two of their monetary policy objectives -controlling inflation and maintaining a stable exchange rate- may conflict.

For those o f us who shared many years offriendship and professional collaboration with Pedro Vuskovic, the news of his recent death in Mexico has been the cause of great sorrow, not only because of the circumstances of his death, following a cruel disease that gradually sapped his physical -but not intellectual- strength, but also because it signifies the loss of a great Latin American, of a teacher who helped shape so many generations of young people in our region, and of a companion during so many days of intellectual strivings and political struggle.

After having reached a turning point some time ago, the political, economic and social processes of the countries of the region are currently in the midst of a transition. Now that the wave of change which elevated the market and private enterprise to a position of unrivalled supremacy has passed, amore thoughtful evaluation needs to be made of the virtues and responsibilities, shortcomings and excesses of these factors.

Since the onset of the debt crisis, officials in both creditor and debtor nations have declared that commercial banks would resume making new loans to developing country borrowers once the debtors completed their macroeconomic adjustments and restored their creditworthiness. However, the commercial banks’ long-term business interests may no longer coincide with Latin America’s debt service and investment requirements.

This article discusses the changes observed during recent years in the social, demographic and occupational fields in the rural world, which, when they are added to the centuries-old problems of the sector, foreshadow severe imbalances in the context of the new modalities of functioning of Latin American economies that arise from the present crisis. It advances the thesis that in most of the countries of the region the solution of the problem of the peasantry and the achievement of a higher degree of equity in rural society, as well as between the rural and urban societies, constitute inescapable imperatives for any viable strategy of national development in the 1990s.

In the decade of the 1980s, Cuba has confronted a worsening debt problem in terms of convertible currency and in the context of its participation in the world economy. Before 1985, the debt problem appeared to be manageable, indeed it did not seem to be seriously damaging to Cuba’s macroeconomic growth performance, which was strong from 1981 to 1985 in contrast to most other developing country debtors, which underwent profound economic contraction in this period.

The central problem in macroeconomics is to determine to what extent variations in aggregate demand will fall exclusively on prices, or whether they will also have an impact on output. The Phillips curve was one answer to this question, but when this attempt at synthesis failed, the issue was reopened.

This article analyses the evolution of the macroeconomic concepts which have prevailed in Latin America from the 1950s until the present. Two main concepts —structuralism and monetarism— have kept up an ongoing counterpoint over this period. The author analyses the main arguments of both currents of opinion and appraises their impact on the design of macroeconomic policies in the various stages of the region s development.

The principte stated in the title of this article was adopted for the first time at the latertiational level in 1972, by the Organization for Economic Cooperation and Development (OECD). Basically, it postulates that those responsible for pollution must pay the cost of the measures needed to prevent or reduce such pollution in order to comply with regulations and measures on environmental quality.

Industrial restructuring is a response of the industrial sector to a dynamic world. In open market economies, industries continuously adjust to technological change, to changes in fashion, and to changes in relative prices. It is a process that Schumpeter referred to as “creative destruction,” i.e. the replacement of outmoded products and production techniques with new products and techniques.

This article analyses the evolution since the middle of the past decade in the integration process between Argentina and Brazil which subsequently gave rise to MERCOSUR.

Export processing, also known as maquila, is a widespread activity in Mexico and Central America and is becoming increasingly important to economies in the Caribbean. Countries of the subregion have successfully attracted both foreign and domestic investment in offshore data processing and in the assembly and manufacture of garments, footwear, electrical and electronic equipment, toys and other goods for export. Investors are attracted by low labour costs, freedom from foreign exchange controls and bureaucratic restrictions, and by the promise of exemption from all taxes, including taxes on profits and duties on imports of equipment, raw materials and intermediate goods used in production for export.

The use of models in planning is almost as old as formalized planning itself, initiated in Latin America in the 1960s. Planning models were developed and used at both government and international agency levels, generally as simple analytical structures derived from the Harrod-Domar growth equation.

This article examines the drop in the per capita product of the region from 1981 onwards due hotli to the stagnation of per capita production capacity and the fact that the effective product was less than the potential product. Production capacity stagnated because investment fell to levels which were not high enough to ensure growth in the potential per capita product. This decline in investment, in turn, was due basically to the net transfers of resources abroad caused by the debt crisis and the severe deterioration in the terms of trade as from 1982.

The institutional environment of international economic co-operation is based on harmony between national and international interests. Conflicts between those interests can be expected to arise, however, in a period of major industrial transition marked by changes in international competition and in production technology, such as that of recent years. The factor of power, so often neglected in the discussions of international economic co-operation, comes up distinctively when a country tries to change the international rules to maintain its competitive position as an industrial power. This article analyses in particular the relations between Brazil and the United States in this respect.

Pension system reforms seek to combine and reconcile both economic and social functions. On the basis of both conceptual aspects and the actual experience of Chile, this article illustrates the difficulties encountered in trying to make reforms fulfill both types of functions. These difficulties stem from two factors: i) the need to consider the reform of the pension system as a whole, where, parallel with the capitalization component, it is necessary to develop another unfunded component to finance the costs of the transition from one pension system to another, minimum pensions, and social welfare pensions; and ii) the need to distinguish between financial saving and real saving (or national saving in the national accounts sense) and to study the financial sector’s capacity to intermediate financial saving towards real investment. The Chilean experience confirms this view.

Aníbal Pinto Santa Cruz, Director of the Review since 1986, died on 3 January. His death fills us with profound grief and leaves a deep vacuum in this organization.

ECLAC has submitted an overall assessment of the economic reforms implemented during the past 15 years to the Governments of the region and, based on that assessment, a proposal for strengthening the development process. The central message that emerges from this analysis is that the region needs to work towards forming closer linkages among its macroeconomy, microeconomy and institutional structure by reinforcing the complementarities between macroeconomic and microeconomic sources of competitiveness and fortifying the institutional framework for the development of production activity. Without jeopardizing existing macroeconomic sources of competitiveness -low and declining inflation, incentives for saving and investment, and a competitive exchange rate- the region needs to design microeconomic policies that will open the way for new sources of competitiveness: training and productivity, technological dissemination and innovation, investment abroad and infrastructure.

This article takes the view that the restructuring of industry in Mexico is taking place in two different territorial environments which, to some extent, have independent development paths: on the one hand, there is the territorial environment shaped in accordance with the logic of northern border industrialization, while on the other hand there is the territorial environment of the industries set up during the import substitution industrialization phase, concentrated in the metropolitan areas of Central Mexico. In the authors’ opinion, these arc parallel but different industrialization paths, with different processes and forms of social organization of production in their territories: consequently, in order to understand the true significance of the restructuring of production it is necessary to study the logic of the industrial sectors and that of the territory simultaneously, since the course of events with regard to industrial restructuring is strongly affected by regional and local dynamics.

The success of global policies and strategies aimed at training for productive work depends to a large extent on the level of development of basic skills among the work force and, likewise, training costs will vary according to the level of general preparation of those entering on the process. In view of the close relationship between the structure of the school system, the development of basic skills and actual training, different options are available for attempting to resolve imbalances between training for productive employment and previous basic education. These range from expanding and upgrading formal education to hiring persons with a low level of education and compensating for their weaknesses through training, with a number of variants that lie somewhere between those two alternatives.

The structure, functions and everyday practices of families have changed considerably due to the impact of the demographic, social and economic transformations which have taken place in Latin America. This article begins by describing the complexity and diversity of urban families, on the basis of quantitative data. It then analyses the material conditions through which families have passed and the new approach to these changes. Particular emphasis is placed on such matters as female heads of household and poverty, intra-family violence, and the economic contributions of women and children to the household and to society.

The public sector’s role in the development of the Latin American countries is undergoing a big change. The system of State action and intervention which arose after the Second World War cam e to an end in the early 1980s, when the debt crisis forced the end of a cycle and the beginning of a process of adaptation to new circumstances. This article seeks to outline the main changes that have taken place in the State’s role and to analyse the causes giving rise to the public sector’s new operating model. The availability and reactions of the financial markets were of decisive importance both in the external adjustment process and in the phase that followed it, when the region regained its access to credit.

Modernization brings with it a rapid process of differentiation which increases the dynamism of society but also aggravates the phenomena of disintegration and fragmentation. These opposing sides of the process give rise to uncertainty and a sense of defence-lessness. The protective aura of the State fades away, while at the same time the very notion of society becomes empty and unsubstantial. There is a general feeling of uneasiness, in which all evils tend to be blamed on “bad government” and the imperfections of social life are seen as the direct consequence of political ineptitude. However, the natural concern to tackle the (very obvious) problems of governance may prevent us from seeing the real underlying conditions.

At the end of the 1950s, Cuba’s economic structure was marked by serious technological lags and insufficient industrial development. The growth rates of production and investment were low, while income distribution displayed a notable bias towards concentration. Over the period from 1959 to 1989, the product grew at an average rate of around 4% per year and economic policy gave the State a leading role in the production of goods and services, with a marked predominance of planning over the market mechanisms in the regulation of economic activity.

One aspect of globalization that Latin American and Caribbean countries will have to confront is the increase in trade restrictions on environmental grounds. Not by chance, the first dispute judged by the new Appellate Body of the World Trade Organization that began to function in February 1996 was an environmental dispute involving the United States and Latin American countries. Two trends -more open economies and rapid growth in international trade, on the one hand, and, on the other, the broader acknowledgement of “environmental responsibilities” by the international community, as expressed in a number of new multilateral environmental agreements- have brought to the forefront two questions: are trade restrictions an effective instrument for implementing environmental policy? and to what extent are environmental restrictions changing international trade and competitiveness? Policy-makers are in fact replying to these questions in contradictory ways, as empirical studies to assess the impact of environment-related trade measures and trade-related environmental measures are only beginning.