Industry, Innovation and Infrastructure

This paper argues that the recent boom in the Latin American economies can be explained by the conjunction of two external factors not found together since the 1970s: strong commodity prices (more so for hydrocarbons and mining products than for agricultural commodities) and exceptional external financing conditions. Concerning the latter, the key development was the massive influx of capital during two periods of “exuberance” in international financial markets (between mid-2004 and April 2006, and between mid-2006 and mid-2007), particularly the second. It also argues for the importance of spreading and consolidating Latin America’s two great (and complementary) macroeconomic policy innovations of recent years: countercyclical fiscal management (still confined to just a few countries) and active intervention in currency markets. Such intervention needs to be based on a growing recognition that the real exchange rate ought to be an explicit goal of macroeconomic policy.

This research assesses the effectiveness of the Brazilian public health system and of private insurance in Brazil in providing financial protection in health care. The determinants of catastrophic health expenditures are estimated by probit regressions with Heckman selection adjustment controlling for health-care need. Findings show that the public system provides a significant reduction (47%) in the probability of a household having catastrophic health expenditures, and that private insurance makes such expenditures more likely by 36%. Recommendations include improvements in the quantity, accessibility, quality and reliability of public providers, more appropriate provision of drugs by the public system and tighter regulation of private insurance.

This lecture discusses the features of the colonial situation in Latin America that conditioned the region’s economic and social performance in the nineteenth and early twentieth centuries. It deals in particular with Argentina, looking at the events following the First World War through to the beginning of the Second World War. Those events were formative in the education and experience of Raúl Prebisch, who 30 years later would give ECLAC its fundamental characteristics. The lecture examines the ideas that ECLAC contributed to the debate on Latin American development and the evolution of the countries that applied those ideas. It also looks at the external and internal circumstances that changed the context in which development policies were implemented from the middle of the 1970s onwards. Lastly, it identifies the most recent changes in the world economic situation, and the role of ECLAC in defending the ideas of freedom, well-being and tolerance, which are the essence of modern civilization.

One of the characteristics of globalization has been the marked volatility of financial flows. The realization that this was affecting growth and equity induced the International Conference on Financing for Development, held in Monterrey in 2002, to adopt a global commitment to deal with the issue of development financing. Since then there has been a mixture of progress, backsliding and inaction. This article conducts a brief review of financial globalization and the current global crisis. It then examines the Monterrey Consensus, the evaluations by the United Nations Secretariat of compliance with the commitments accepted, and the financial system reforms needed to make globalization more equitable. It then proceeds to a stocktaking of the progress made under a North-South collaboration initiative, Action against Hunger and Poverty, in applying “innovative financing mechanisms” that can contribute to attainment of the Millennium Development Goals and help developing countries cope with critical situations like the current global recession. It concludes with proposals for dealing with the challenges that remain.

The social cost of the crisis of the 1980s and the consequent application of adjustments to the economy has been giving rise to a number of problems in the region which, together with the marked regression in the main vital indexes, are causing fresh social tensions in the systems of institutions as weli as taking other forms of expression too, despite the substantial advances made in the exercise of representative democracy in recent years.

This paper posits the need for a study in greater depth to identify the special features of the structurai heteroge* neity of the Latin American economies. Such a study is needed regardless of whether this phenomena is defined ultimately as the presence of marked inequalities in the productivity of labour between different sectors of the economy or whether the heterogeneity of the economies of Latin America is understood fundamentaliy as a significant relative lag of agriculture compared with other sectors of the economy.

This article seeks to answer the question posed in the title, which refers in particular to men in the lower-class urban sectors. The statistics reflect a type of behavior marked by an avoidance of the obligations connected with the formation and maintenance of a family, leading to an increase in rates of illegitimacy, in the proportion of adolescent pregnancies, and in the rates of abandonment of families with children.

The neoliberal view is that outward orientation and general liberalization should result in efficient factor allocation and thus in the formation of competitive economic structures. Its policy recommendations are therefore generally in the “get prices right” mould.

This article analyses the relationship between growth and income distribution. The existence of a conflict between these two variables depends on a country’s level of development. Such conflicts arise during intermediate stages of development, when growth is led by savings, and tend to disappear when growth becomes a knowledge-led phenomenon. Part of the reason for this is that saving is much more concentrated than education and technology are. The author contends that the conflict is not insuperable, however; in practical terms, it can be corrected by means of fiscal and educational policy measures.

The Central American countries have a 40-year tradition of cooperation based on bilateral and multilateral treaties, the most important of which is the General Treaty on Central American Economic Integration, under whose terms the Central American Common Market (CACM) was established in 196b. Nevertheless, the industrial policies pursued by these countries since that time are notable for their lack of uniformity.

The study of the political economy of the crisis of the State and its role in the trajectory of Latin American development is an urgent political task which could also contribute to the historical and theoretical debate about industrial development in late evolving capitalist economies.

This paper presents several hypotheses on the social and political context of the application of the so-called structural adjustment policies and their effects on the social organization and patterns of conduct of the collective actors involved. The central idea put forward here is that, quite apart from the crisis (economic, social and sometimes political) which precedes and generally accompanies the application of these policies, they ultimately bring about profound and lasting changes in the social structure of the countries implementing them.

This article explores Latin America’s prospects with regard to international finance and trade in the 1990s. It is concluded that the external environment will probably be unfavourable, although there will be some opportunities for supporting the region’s structural adjustment processes.

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.

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.

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.

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.

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.

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.

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.

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.

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).

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.

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.

This article is a summary of a longer study by the author which was commissioned by ECLAC, on the financial situation of social security in 20 Latin American countries. These countries are grouped according to their social security situation, and their similarities, differences and trends with respect to financing and financial equilibrium are examined Of the wide variety of topics covered in such a vast area of study the author focuses on the historical evolution of social security, problems of coverage, benefits, financing and costs and the impact of social security on development.

In this article the author analyses the situation of Chile’s agriculture and economy in tw o periods. In the first, from the end of 1973 to June 1981, the economy grew at a high rate, in flation fell, wages rose, fiscal surpluses were achieved and reserves builtup. In contrast, unemployment grew sharply, investment and saving fell, income distribution deteriorated, and the private sector’s debt reached very high levels. The balance-of-payments deficit, the worsening of the terms of trade, the higher interest rates and the very large foreign debt acted as detonators of a crisis which stamped its mark on the second period. This period, from 1981 on, is characterized by the introduction of various adjustment measures designed to correct the imbalances w ithout altering the essential nature of the adopted model.