Industry, Innovation and Infrastructure
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 1,051 tariff headings in the United States, 479 in the EEC and 421 in Japan, which together cover more than 10,000 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.