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Decent Work and Economic Growth
Erroneous theses on youth in the 1990s
Recent proposals aimed at furthering equality of opportunities for young people are often not backed up by detailed empirical information. This article takes issue with some contentions made in diagnoses on this subject especially regarding formal education and integration into work and contrasts them with recent information in this respect.
MERCOSUR and the new circumstances for its integration
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.
Mexico: The plan and the current situation
Two disequilibria are intertwined in the Mexican economy: incomplete modernization of institutions and production and external imbalances that have made the country unable to service its external debt. In a context of liberalization this combination has been conducive to sharp depredations as evidenced by recent events. The success of the adjustment exercise will depend on the progress of the retooling and expansion of production. This article analyses the main objectives of the National Development Plan for 1995-2000 and the policies that have been implemented to realize them and shows that the current situation is a patchwork of progress and setbacks.
Export processing in the Caribbean: The Jamaican experience
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.
Social structures and democracy in the 1990s
This article gives a broad overview of the social structures on which democracy will have to be based in the 1990s. These structures continue to be heterogeneous and the crisis has made them more unstable as previous aspirations are falling by the wayside and most of the groups are living in conditions of greater insecurity and poverty although some new possibilities of upward mobility are emerging even among the most seriously marginated strata. The political parties and movements are in a process of evolution and are unsure of the forces they will be called on to represent and the validity of their traditional ideologies; for the most part however they have attained a higher level of realism and a willingness co temporize with a view to the consolidation of broad social pacts at the cost of a reduction in their aspirations and an inability to offer their followers an inspiring mythology.
Econometric models for planning
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.
A pragmatic approach to State intervention: The brazilian case
This article examiaes State intervention in the Brazilian economy in an attempt to elucidate why the State ceased to play a decisive part in the country’s development. The primary explanation lies in the cyclical nature of State intervention. In the beginning intervention tended to be very successful especially when the country was launching its industrialization phase. Gradually however the distortions inherent in intervention without some form of market control began to accumulate leading the State into fiscal crisis. The current neoliberal wave and its success in advocating privatizations can be understood in these terms.
External events, domestic policies and structural adjustment
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.
Runaway inflation; experiences and options
Inflation was a major concern for Prebisch from his time in central banking np to the end of his career when he stressed the need for new thinking by Latin American economists about stabilization policy. The topic is of vital importance not only for Latin America but also for the world in general for specialists in industrialized countries have also been unable to elaborate policy recommendations for their governments that will resolve the dilemma between inflation and monetary restriction.
The old logics of the new international economic order
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.
Transnational corporations and export-oriented primary commodities
This article presents in some detail a general conceptual framework intended to provide guidelines for the study of negotiations between governments and transnational corporations in connexion with export-oriented primary commodities. If the developing countries have greatly improved their bargaining position vis-á-vis the transnational corporations during the past few decades this is due not only to changes in economic and political power relations at the world level but also to the pooling of increasingly detailed knowledge of all the factors which strengthen the hand of the governments in their dealings with the corporations.
Pension system reforms, the capital market and saving
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.
The dual currency bifurcation of Cuba’s economy in the 1990s: Causes, consequences and cures
In the 1990s there has been a growing split in Cuba’s economy between the traditional socialist peso-based component and the internationalized dollar-oriented and marketized component. This schism has been caused by a conjuncture of circumstances including the expansion of tourism and foreign and mixed enterprise; the contraction and loss of confidence in the socialist economy; the weakening of the monetary role of the peso (owing to the rapid inflation arising from the financing of the fiscal deficit through money creation) and a grossly overvalued exchange rate. This dual currency and structural bifurcation of the economy shaped the pattern of income distribution thereby influencing the economic behaviour of the Cuban people.
Aníbal Pinto Santa Cruz
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.
Indebtedness and fiscal stability: Is history repeating itself?
Public indebtedness -and especially domestic indebtedness- is steadily increasing in a number of countries of the region despite the major fiscal adjustment processes that have been carried out since the mid-1980s. This article analyses the main problems that this raises for public policy. It first reviews the question of the sustainability of public indebtedness. It then analyses the possible effects of privatization processes the accumulation of indebtedness against assets the increase in indebtedness not backed up by prior financing or contingent liabilities the sustainability of the debt in terms of the acceptable level of inflation the factors determining expectations regarding the sustainability oT fiscal policy and the effects of those expectations on interest rates and sustainable levels of indebtedness and the extent to which the management of the debt affects its sustainability and vice versa.
Economic policy, institutions and productive development in Latin America
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.
Foreign investment and competitive development In Latin America and the Caribbean
This article analyses the treatment accorded to foreign investment under the present development strategy. To this end it looks at the recent dynamics of both direct and indirect foreign investment including portfolio investment and quasi-equity operations the latter with reference to contracts for the transfer of production know-how. For this purpose the main resource flows and their directions are analysed together with the changes which have taken place in corporate strategies. It is concluded that it is necessary to put together an explicit development strategy in which the main objective of policy on the treatment of foreign investments should be that of enriching the store of technological knowledge of the host economics.
Restructuring of production and territorial change: A second industrialization hub in Northern Mexico
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.
Social rifts in Colombia
This article analyses the levels and evolution of social inequalities in Colombia over the last 25 years describing the main recent trends in Colombian social development comparing them with past periods and contrasting them with those of other countries. First of all a recent estimate of income distribution and the rest of the social indicators is given. Next trends in the distribution of monetary income over the period 1938-1993 are analysed the impact of social expenditure on secondary income distribution is examined and on this basis trends in the distribution of income effectively received by individuals are evaluated. The evolution of poverty and other indicators of well-being is then described and compared.
Education in basic skills and training for productive work
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.
Big Latin American industrial companies and groups
This article seeks to summarize the results of some studies on the structure and dynamics of the big domestically owned industrial companies and groups in five Latin American countries (Argentina Brazil Chile Colombia and Mexico) and presents supplementary elements for placing them in an overall perspective. The studies include individual analyses of 46 leading companies (in Brazil Chile and Colombia) and 15 economic groups with an industrial base (in Brazil and Mexico) together with aggregated studies of such groups in Argentina Brazil and Mexico.
Latin American families: Convergences and divergences in models and policies
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.
Export promotion policies In Central America
Ten years ago the member countries of the Central American Common Market (Costa Rica El Salvador Guatemala Honduras and Nicaragua) began to turn away from the “inward-oriented development” policy they had been applying for decades. They are now encouraging non-traditional exports by lowering tariff barriers unifying exchange rates and giving exporters access to intermediate and capital goods at international prices.
The public sector’s role In Latin American development
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.
The restructuring of the Brazilian industrial groups between 1980 and 1993
This article analyses the strategies applied by the Brazilian industrial groups during the period 1980-1993: that is to say before the Real Plan was put into effect. After some introductory comments regarding the debate on economic groups hypotheses are presented on the evolution of the Brazilian industrial groups in the 1980s and early 1990s; the main elements in the Brazilian economy which conditioned the restructuring strategies of the groups arc identified and these strategies are categorized on the basis of this analysis and of the hypotheses put forward in the introductory section.
Three forms of social coordination
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.
The importance of local production and small-scale enterprises for Latin American development
The generation of dynamic competitive advantages in Latin America and the Caribbean cannot be assumed to result automatically from the achievement of the necessary macroeconomic stability and the incorporation of part of the system of production into some dynamic segments (or niches) of the international economy. Recent empirical information on local economic development initiatives in the developed countries indicates that macroeconomic adjustment policies must be accompanied by other specific policies at the microeconomic and mesoeconomic levels.
The Cuban economy
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.
Convertibility and the banking system in Argentina
The system of currency convertibility has shown that it is effective in overcoming inflation in Argentina but its capacity for supporting a stable growth process and acting as a monetary and exchange-rate system which does not involve intervention and heavy costs on the part of the State is currently being questioned. The present article deals with this aspect on the basis of an analysis of the 1991-1995 period and identifies some key features of the functioning of the system: its reactions to movements of foreign capital; its interrelations with the domestic banking system; the extent to which it is capable of operating automatically without any need for a lender of last resort as claimed in the theory on which it is based; and the degree to which the currency issued really has effective backing to ensure its convertibility.
Trade and environment: Green light or red light?
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.
Protectionism and development
The new protecionist policy of the centres is nothing more than the insertion of new instruments and forms of restriction into a longstanding structure of trade relations. In the course of this process tariffs have been losing effectiveness and have gradually been replaced by non-tariff measures. From an analysis of 1051 tariff headings in the United States 479 in the EEC and 421 in Japan which together cover more than 10000 million dollars of Latin American exports to those markets the author is able to establish the adverse effect of that new policy on the developing economies which is worsened by the recent tendency of the industrial countries to arrange international trade in the form of “organized free trade”.
Changes In the industrial development of Latin America
Trade liberalization deregulation of economic activity the privatization of public-sector production units and much more careful management of the main macroeconomic aggregates are causing profound changes in the behaviour of the Latin American economies. A more competitive climate is gradually spreading through the countries of the region as companies markets and institutions adapt to a new micro- and macroeconomic scene. This article analyses the various types of modifications in the production structure of the industrial firms of Latin America the variations in productivity the systems of incentives and industrial organization as well as the organization of labour and the trends of the changes connected with the factors of production.
Marginality and social Integration in Uruguay
Within Latin America Uruguay stands out by its equalitarian income distribution the solidity of its democratic institutions and its level of social integration. Over the last decade however there have been signs of cracks in this desirable image which adversely affect the harmony of social relations. These cracks take the form of marginal behaviour: i.e. types of behaviour which are not governed by socially accepted patterns. In this study the explanation for these types of behaviour has been sought in the divergences between cultural goals the structures of opportunities for attaining those goals and the shaping of individual capacities for taking advantage of them. A central premise of the approach adopted is that the factors determining marginal forms of behaviour build up their effects in a cyclical manner throughout the different stages of individual lives and from generation to generation.
Reforms in the oil industry: The available options
In the 1990s a considerable number of countries of the region embarked on substantial changes in their regulations governing the oil industry with the aim of doing away with public monopolies promoting competitive markets and encouraging increased private investment under new forms of contracts. These reforms had a considerable impact on the economic stabilization programmes since they involved price corrections which helped to reduce fiscal pressures as well as leading to the restructuring and financial reorganization of public oil companies.
Swerves and skids by the Venezuelan economy
Now that the neoliberal economic model under whose sway Latin America is seeing out the present millennium has been in force for several years this is a particularly good time to take stock of the experience accumulated so far. Economists normally set about this task by breaking down and analysing the characteristics and components of the programmes applied in the various countries. An aspect which is often neglected in these assessments however is that of the social and political viability of the measures adopted which does not only depend on their technical merits.
Non-market valuation of natural and environmental resources in Central America and the Caribbean
An inventory and assessment was made of 15 non-market valuation studies in Central American and Caribbean countries. Most utilized the contingent valuation method to determine willingness to pay for drinking water or protected areas. The method used suffered from a reliance on open-ended bidding information framing and contingent scenarios lacking detail limited population samples and possible cultural-strategic biases associated with surveying local residents. Problems observed with respect to the single travel cost method study reviewed were a reliance on poor quality census data rather than visitor survey data and unrealistic assumptions regarding transportation cost estimates single-destination visitors and consumer surplus levels of international visitors.
Apparel-based industrialization in the Caribbean Basin: A threadbare garment?
In a world of some two hundred countries only a relatively few –mainly members of the Organization for Economic Cooperation and Development– can be identified as “winners” that is to say countries with high and sustained annual per capita incomes in the order of US$ 20000. Among other factors some of the principal features of winner countries are that: i) they have been through an intense industrialization process ii) they have projected that process into the international economy in the form of exports of manufactures and iii) the leading national companies which have exported manufactures have been transformed into transnational corporations (TNCs) in the process. Many developing Asian countries have used the apparel industry as a springboard to deepen their industrialization process especially by becoming suppliers of “full packages” to international buyers involving the complete manufacture of apparel according to the designs provided by their international clients. For many Caribbean Basin countries apparel exports represent their principal link with the international economy. In this case however since those exports stem from a low wageexport processing zone-special access package designed to help United States apparel TNCs to compete better in their home market against Asian imports they do not produce the desired developmental results in the Caribbean. The United States apparel TNCs employ only those factors that allow them to improve the efficiency of their international system of integrated production which are essentially the low wages paid in the case of the Caribbean Basin. Consequently instead of deepening the local industrialization process they truncate it. The exports do not represent the external projection of the local industrialization process but merely the assembly of imported components. The local apparel companies are not internationalized in the process but instead have their very existence threatened. Thus as part of a developmental trajectory these activities have worn threadbare and need replacement by something better.
Fiscal policy, cycles and growth
In Latin America macroeconomic fluctuations have been more frequent and more serious in recent decades than in other parts of the world and this volatility has adversely affected the development processes of the countries of the region. This article looks at the desirability of establishing economic policy rules particularly in the fiscal area to reduce the frequency and size of these imbalances.
Integrated water management from the perspective of the Dublin Principles
This article analyses the relationship betw een the Dublin Principles of 1992 integrated water planning and water law. The Dublin Principles were an attempt to concisely state the main issues and thrust of water management: fresh water is a finite and vulnerable resource essential to sustain life development and the environment; water development and management should be based on a participatory approach involving users planners and policy-makers at all levels; women play a central part in the provision management and safeguarding of water and water has an economic value in all its competing uses and should be recognized as an economic good.
Income distribution, poverty and social expenditure in Latin America
Great social inequality has long been a frustrating feature of Latin American economic development. Not in vain has Latin America been described as the region of the world with the highest levels of inequality of income distribution. Although the prevailing levels of poverty are lower than those typical of other parts of the developing world they are still extremely high and taking the region as a whole are higher now than they were before the debt crisis.
Competitiveness and labour regulations
This article analyses the relations between the competitiveness of an economy and the labour regulations in force in it. It is argued that economic theory is not conclusive regarding the impact of labour regulations on competitiveness since different schools of thought maintain opposing positions in many respects. Moreover empirical research has shown that the information provided with respect to these assumed linkages is not very relevant Various policy consequences follow from this: countries have a variety of strategies at their disposal and greater leeway that is usually suggested since many policies aimed at improving equity do not necessarily involve any restrictions on competitiveness.
Best practices, policy convergence and the WTO trade-related investment measures
International experience shows that cost-free replication and adoption of industrial best practices on a universal basis is a misconception. Rather it is a matter of a progressive and reciprocal adaptation between external and local practices in which learning costs and times are an essential factor. The potential for convergence of policies practices and institutions triggered by globalization appears to be greater at the macroeconomic than at the microeconomic level. This article first examines such issues in a general way and then focuses on the dilemmas facing the countries of the Association of South East Asian Nations (ASEAN) and other developing countries of Asia in their efforts to comply with the World Trade Organization’s Trade-Related Investment Measures (TRIMS) by the year 2000.
How non-traditional are non-traditional exports? The experience of seven countries of the Caribbean Basin
In the six Central American countries -C osta Rica El Salvador Guatemala Honduras and Nicaragua which make up the Central American Common Market and Panam a- non-traditional exports increased in the 1970s went down between 1980 and 1986 because o f macroeconomic imbalances armed conflicts and the crisis in the Central American Comm on Market but grew once again in the second half o f the 1980s and the early 1990s.
The ongoing history of a Chilean metal products and machinery firm
Processes of adjustm ent and restructuring of the production sectors to a new system of macroeconom ic incentives are slow costly and more inefficient than conventional microeconomic theory would lead one to suppose. In this article the authors explore the process of the restructuring of production of a Chilean metal products and machinery company and the way it gradually modified its operations from the 1970s onw ards adapting them to new macroeconomic and mesoeconomic signals. As is well known in the last two decades the system of incentives and the regulatory framework for production activities in Chile have undergone profound changes gradually moving -with advances but also setbacks-tow ards an organizational model more open to external competition more deregulated and with less public sector participation in the field of production proper.
First World and third World after the Cold War
This exposition is about the United States and the Third World after the Cold War. However this matter can only be understood in the light of the long history of the relations between the Western countries –the centre of the world system– and the periphery. This history began at the end of the 15th century when the Europeans after a thousand years of defending themselves against invaders from Asia and Africa embarked on their own era of world conquest.
Trade and growth in Chile
This study analyses the relations between the noteworthy performance of Chilean exports over the last two decades and the high economic growth rate of the country since the mid-1980s. It concludes that the Chilean experience may be described as a case of “export-led growth” rather than one of “growth-led exports”. What were the causes of Chile’s export success? Trade liberalization acted as an important stimulus but this success was also due to other policies both horizontal and sectoral: the exchange-rate policy followed since 1982 the introduction of drawback arrangements and export subsidies for exports of relatively minor importance in the mid-1980s the use of a debt conversion programme to stimulate new production activities for the export of specific goods after the debt crisis the active participation of the State in providing market information and the substantial subsidies provided for the forestry sector. The next stage in the development of Chilean exports will be more difficult however and will call for more complex policies than the previous stage. Among the issues that must be addressed by such policies are the solution of market flaws in key activities (training and education technical and marketing know-how and the provision of long-term resources for investments in new activities not previously undertaken).
Tariffs and the Plano Real In Brazil
This article analyses the economic rationale of Brazil’s tariff policy during the first two years of the Plano Real. To this end a study is made of the changes made in import duties for all the products traded. The tariff reform process in Brazil was begun in 1988 after the old Tariff Act had been in effect for thirty years and represented a marked intensification in the process of trade openness with the definition of a schedule of gradually decreasing tariffs which was further speeded up as from 1990.
Health management contracts in Costa Rica from a comparative perspective
This article analyses the recent establishment of quasi-markets in the field of public health in Costa Rica through the internal separation within the Costa Rican Social Security Fund of the functions of revenue collection financing purchasing and provision of services; the application of a new financing model; and the introduction of management contracts with hospitals and health areas as a key instrument for allocating and transferring resources in accordance with performance and fulfillment of goals.
On the conception of the centre-periphery system
Another view of the Latin American crisis: domestic debt
Closely linked to the external financing difficulties of Latin America is the problem of domestic financing and debt a problem less studied and understood but no less important. In many countries of the region this problem has helped to delay economic recovery and discourage the accumulation of capital and sometimes the steps taken to solve it can work against the programmes and policies designed to cope with the problem of the region’s foreign debt.