CEPAL Review - Volume 1999, Issue 67, 1999

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.

The allocation of expenditure on training for the small enterprises of Latin America is a matter which requires clear guidelines. Increasing resources for this purpose is a necessary but not of itself sufficient strategy. The shortage of resources, their faulty allocation and the inefficiency in the use of those currently assigned to this class of enterprises are factors which make it necessary above all to take measures to ensure better use of the available resources, especially those of public origin. Likewise, it is necessary to find new sources of financing for training and upgrading the labour force, making use of suitable incentives. At the same time, it will be necessary to develop training techniques in keeping with the conditions of the countries of the region, to reform the existing institutions, and to establish new forms of relations among the actors concerned.

This article analyses the impact of public investment on private investment. Apart from purely ideological aspects, two opposing interpretations may be distinguished with regard to the relationship between these variables. The first is that there is competition between public and private investment, so that the former “crowds out” the latter. The second is that public investment is complementary to private investment in so far that, by generating positive externalities, it creates favourable conditions for the latter. In view of the relative scarcity of empirical studies on this matter, this study deals with the case of the Brazilian economy in the period from 1947 to 1990. Its main conclusions are that private investment is indeed crowded out by public investment in the short term, but in the long term the cointegration vector coefficients indicate that these two variables complement each other.

This article looks at the bases, objectives and results of the “lateral” trade policy adopted by Chile in the 1990s. In particular, it seeks to give a clearer idea of the role of bilateral agreements and to incorporate into the discussion the empirical evidence observed in the case of Chile. It concludes that the criticisms levelled at this policy, especially by those who advocate unilateral trade openness rather than other options, are based on an incomplete analysis of basic international trade theory. It is therefore argued that the economic concepts taken into account in evaluating the economic and political rationality of this strategy must be expanded to acknowledge the complementarity of the available options and to incorporate the analysis of game theory, the existence of economies of scale, the transaction costs existing in the functioning of international markets, and foreign policy elements. Through this multidimensional strategy, Chile has sought to overcome various problems and to stimulate the areas of its economy which have been most dynamic in the 1990s: exports of products with greater added value, services and capital. By traditional standards of appraisal, the results obtained do not reflect any negative impacts but they do show positive effects.

The economies of Latin America have undergone important transformations during the past years. Yet, while there have been many studies on the macroeconomic changes that have taken place in Latin America, studies on the microeconomic changes are relatively scarce. The purpose of this paper is to provide evidence that leads to a better understanding of how firms respond to new circumstances. The research on Latin American manufacturing firms presented here shows that the new state of the economic environment has led to a substantial change in firms’ behaviour. Innovative firms have adopted flexible forms of behaviour and are upgrading their production and marketing capabilities, and they have introduced significant changes in terms of vertical integration, input procurement, technological innovation, incentive pay systems and management techniques, training, subcontracting, distribution and retailing. At least for the most innovative consumer goods manufacturing firms, their core activities have shifted from being mainly concerned with production to combining the manufacture of goods with their distribution, and often also the distribution of other domestic and imported goods as well. This provides them with a better chance of simultaneously increasing their profits and defending their market share. Finally, the investigation also showed that uncertainty surrounding economic policy leads to a substantial decrease in investment by firms. Such uncertainty explains why more firms do not change, or why they do not change faster. It has a twofold negative effect on entrepreneurs’ decisions to modernize their firms: they are uncertain about what they should do, as well as about the sustainability of the economic policy. There is therefore an important role for policies that redound in programmes that seek to encourage firms to upgrade. At the same time, it must be stressed that the most important role for policy is that of creating a stable economic environment in which firms can plan long-term investment.

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$ 20,000. 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.

This article analyses the export offensive made by Mexico, Central America and some Caribbean countries since the mid-1980s. Notwithstanding the differences between them, in all the countries in question this offensive has been aimed mainly at the United States market, has been stimulated by import tariff privileges and other incentives, and has been based on poorly-paid assembly operations: i.e., it involves the in-bond assembly or “maquila” industries. This study seeks to determine whether these industries contribute to local technological development. The answer, based on a questionnaire sent to 75 maquila firms in six countries, must be “yes”. The maquila industry uses production techniques close to the best international practices –something matched only in a very few domestic manufacturing firms– and it helps to train human resources and introduce modern concepts of organization and management. Moreover, it makes intensive use of unskilled labour. Consequently, in order to progress towards sustainable development with social equity it would appear to be necessary to turn the maquila industry into an increasingly competitive activity by increasing its productivity and the added value of its products. The evolution of maquila industries in the direction of activities using a more highly skilled labour force is perfectly possible, as the case of Mexico shows, and it will become unavoidable when pressures on the labour market cause real wages to rise, as in Costa Rica. This will not happen automatically, however, and even less so in countries that lack institutions to support that process.

This article looks at the strengths and weaknesses of the policies proposed in the Argentine National Multi-year Science and Technology Plan, 1998-2000, within the conceptual framework of the National Innovation System (NIS) approach. In the light of a severe diagnosis of the weaknesses of Argentine efforts in this field, the new public policies are designed to promote the interaction of the many agents and institutions involved in those efforts, to change the rules governing the allocation of public resources to research, to promote strategic plans and evaluation mechanisms in public bodies in this field, and to induce greater voluntary spending by the private sector through fiscal credits for technological research and development and a Technological Advisers Programme, in order to give better attention to the demands of small and medium-sized enterprises. However, there are very profound and severe shortcomings in the ability of the Argentine financial system to provide finance for longterm investments in intangible assets, in the capacity of the educational system to link up with the needs of the production sector, and in the ability of the scientific institutions to interact with the educational system and the production sector. Although these shortcomings are mentioned in the Plan, they are not given the amount of attention needed to begin to reverse them. The long and frustrating past history of science and technology policies in the country, which have registered more failures than successes, and the partial success of the laissez-faire policy applied in the 1990s, which was considered to be a good policy by most of domestic and foreign big business, militate against the success of the initiatives under way. At the same time, and in spite of its stimulating suggestions, the approach taken by the NIS reflects serious ambiguities in its normative and conceptual aspects which limit its practical applicability.

The Latin American railways faced serious competition from another means of land transport for the first time in the 1930s, and one of the results of this was a significant loss of income from the transport of products of relatively high unit value. This income had covered their fixed costs in terms of management and infrastructure. The financial difficulties of the railway companies drove them to seek aid from the State sector, but in subsequent decades governments gradually lost interest in them because of their financial deficits and dwindling importance in the national economy. The services with the least volumes of freight and passengers were steadily eliminated, and rail services had already become quite sparse when governments decided to return the railways to the private sector as from the late 1970s. The growing tendency of railways to devote themselves to the transport of bulk cargo between a limited number of points means that in corridors without navigable waterways almost the only competition comes from heavy trucks. The subsidies for the transport of goods by such trucks have been reduced, but not impeded, by the granting of highway management concessions. Within a few years it will be technologically feasible to charge heavy trucks tolls that really reflect both the external costs of their operation and those deriving from the wear and tear on the infrastructure. In the meantime, rail and road transport could be placed on an equal footing in terms of competition by compensatory subsidies for the former. This would channel each type of traffic towards the means of transport that could move it at lowest cost. In order for the benefits to be received by the community in general rather than by the private-sector concessionaires of railways and highways, however, the policy on compensatory subsidies should be laid down before the award of the concessions.