CEPAL Review - Volume 1983, Issue 20, 1983

Now, as 1983 begins, there are few remaining doubts about the gravity of the international economic situation. Not since the Great Depression of the 1930s has the world known such a serious and prolonged crisis. Almost no society has managed to escape its pernicious effects, for the problems suffered by the countries of the developed North and the developing South, those of the socialist East and the West are all similar. The fact that this crisis affects all societies, whatever their ideological orientation, political system or economic model, is the best demonstration that we are in the presence of a universal phenomenon involving all nations.

The joint proposal which we are submitting at your request constitutes an urgent appeal for concerted action by Latin America. It proposes that, in the spirit of your important initiative, immediate decisions should be taken to enable the region, through development of its capacity for response and the strengthening of its co-operation systems, to stand up to the serious situation which it is currently experiencing.

On 11 February 1983, the President of Ecuador, His Excellency Dr. Osvaldo Hurtado, sent us a letter in which, after emphasizing the seriousness of the present international economic situation, he noted that “the world has not known such a serious and prolonged crisis since the Great Depression of the 1930s”.

The Executive Secretary of ECLA called together a group of leading Latin American personalities* in order to analyse, on a strictly personal basis and without implying that their views were shared by their respective governments or institutions, the impact of the international economic crisis on Latin America and possible solutions to this problem. The meeting took place in Bogotá from 19 to 21 May 1983 and was officially opened by the President of Colombia, Dr. Belisario Betancur.

Full understanding of the nature of the present crisis calls for an interpretation which is at once broad enough to cover both the centres and the periphery and deep enough to penetrate beyond the superficial manifestations of the problem to the very heart of its causes.

The present article is structured around several basic ideas. In the first place, attention is drawn to the twofold character of Latin American unity, with reference to the close interdependence between regional ‘inward-directed’ co-operation policies which foster development and ‘outward-directed’ concerted measures which reduce the region’s external vulnerability.

In 1982 Latin America began to encounter serious difficulties in servicing its external debt and by midyear most of the countries heavily in debt to the international private banks —their leading creditors— initiated negotiations to reprogramme payments.

This article takes as its working hypothesis the postulation that while the international recession makes it necessary to effect internal adjustments involving a lower level of activity, there are various alternative ways of tackling the situation, these options being partly determined by the structural characteristics of the economy, but also depending on the set of policies applied.

The monetary, financial and trade imbalances which have caused or aggravated the present crisis are being tackled in most of the Latin American countries through conventional adjustment policies.

The external debt is perhaps the most striking manifestation of the crisis through which the countries of Latin America are passing and is one of the problems whose solution is a necessary condition in order for these countries to be able to emerge from their present predicament.