This fragility is exacerbated by violent movements of external capital in and out of national economies via liberalized capital accounts. Indeed, competition may have weakened in manufacturing sectors in which concentration of ownership has gone up in the wake of privatization. We think it is high time to synthesize a more comprehensive, empirically-based view of the performance of ISI2, comparing it with neoliberalism. This exercise will give us a more accurate view about Latin America's policy choices over the last 5 decades.
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As we shall see in the next section, by any number of measures Latin America did industrialize. The key question may be more along the lines of the quality and type of industrialization that took place, a question to which we shall return later. The caricature that critics of IP make of its "clear failure" in Latin America is presenting the image of the overblown and inefficient state-owned enterprise that is rife with corruption, political patronage, and cronyism, effectively punishing consumers for the political and economic gain of a small minority.
It's unfortunate that this caricature seems to pervade much of the economic analysis of Latin America's recent history, particularly by the international institutions that most affect external financing for the region. The 'Washington consensus' view of import substitution industrialization as a massive detour, a 'policy mistake' which could somehow have been avoided, is grossly ahistorical and inappropriate Its implicit view of the collapse of state-led industrialization as a manifestation of its own inadequacies is as inadequate as the Marxist prescription that capitalism would collapse because of its own internal contradictions Pure economic explanations are an inadequate route to understand both the excesses of state-led industrialization and also its demise.
The stereotype suffers from at least two basic flaws. First, it is based on prejudice, rather than analysis. There were a vast array of instruments used in industrial policy, and the effects of these are impossible to separate out, given the limited number of national cases and the intertwining of the instruments and a wide variety of constantly changing local, domestic, and international economic conditions and policies.
Second, there are an equally wide variety of experiences and types of arrangements with state-owned enterprises, not only in Latin America, but internationally. We think a comparison is particularly important because we would like to avoid simply criticizing economic policies in isolation, which is all too easy an exercise. While it is important to recognize that there are differences within the ISI and neoliberal periods, and across countries, each economic policy framework represents a fundamentally shared philosophy towards economic development.
Therefore, the more important the question is, what does the historical comparative record tell us about the optimal role of the state and protection for Latin American growth and equity? The answer to this question will give us a better idea of which policies make sense for Latin America given long-term constraints and patterns in economic policy conditions. We create criteria based upon the criticisms, both left and right, of the ISI2 and neoliberal periods, and then add a few additional measures of our own, as demonstrated in Table 1 below.
Since Latin American development occurs in a positive historical trajectory in a sense of absolute standards of living, we will be measuring improvement over the period. We define the ISI period as , and neoliberalism as Because consistent data sets are so limited, we rely on descriptive statistics to test whether differences exist between the two periods.
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Though LA is a region known for inequality from its origins obviously deeper-rooted than ISI , it is difficult to evaluate the effects of specific policies because of the paucity of data. The Gini coefficient is the standard measure for relative income inequality. Unfortunately, there are few consistent databases with Gini statistics. However, Table 2 below shows that according to the limited data available, there is no clear pattern in terms of relative inequality for the major economies in the region.
In the cases of Argentina and Chile, inequality increased, both in the initial ISI2 period and during neoliberalism. Brazil increased initially and has remained stable since the ISI2 period. Inequality in Mexico also increased during ISI2's initial phase, and then decreased. This index assigns weights to GDP per capita, life expectancy, and the adult literacy rate.
The historical index looks at changes from the median. Table 3 shows that standards of living actually declined in every case except Chile and Mexico where they were stable in the s, and the rate of improvement has not come close to the levels attained under the ISI period. In sum, the data on inequality show that ISI's record on inequality is at least as good, and probably better, than that of neoliberalism. We turn to macroeconomic variables, and economists' golden key of economic growth in Table 4.
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We do not need advanced statistical tests to see Table 4 demonstrating that the ISI2 period had markedly higher and more consistent growth rates across the region, except for Chile which began neoliberalism in This Table underscores the moniker "lost" for the s decade associated with skyrocketing external debt, yet it shows that growth has not really recovered in most of the region. It is important to note that poverty indices for access to education and health care have continued to improve over time and across economic periods in absolute terms.
It bears acknowledging that one would expect marginal gains to become more difficult as higher levels are achieved, also depending on overall population growth. Since we don't know how to separate out difficulties of a particular period from the overall trajectory, a regression or panel data analysis will not answer our questions. This idea is known as the Prebisch—Singer thesis. Prebisch, an Argentine economist at the United Nations Commission for Latin America UNCLA , went on to conclude that the underdeveloped nations must employ some degree of protectionism in trade if they were to enter a self-sustaining development path.
He argued that import-substitution industrialisation ISI , not a trade-and-export orientation , was the best strategy for underdeveloped countries. Baran in with the publication of his The Political Economy of Growth. Using the Latin American dependency model, the Guyanese Marxist historian Walter Rodney , in his book How Europe Underdeveloped Africa , described in an Africa that had been consciously exploited by European imperialists, leading directly to the modern underdevelopment of most of the continent. The theory was popular in the s and s as a criticism of modernization theory, which was falling increasingly out of favor because of continued widespread poverty in much of the world.
It was used to explain the causes of overurbanization , a theory that urbanization rates outpaced industrial growth in several developing countries.
The Latin American Structuralist and the American Marxist schools had significant differences but agreed on some basic points: [ citation needed ]. Technology — the Promethean force unleashed by the Industrial Revolution — is at the center of stage. The Center countries controlled the technology and the systems for generating technology. Foreign capital could not solve the problem, since it only led to limited transmission of technology, but not the process of innovation itself.
Baran and others frequently spoke of the international division of labour — skilled workers in the center; unskilled in the periphery — when discussing key features of dependency. Baran placed surplus extraction and capital accumulation at the center of his analysis. Development depends on a population's producing more than it needs for bare subsistence a surplus.
Further, some of that surplus must be used for capital accumulation — the purchase of new means of production — if development is to occur; spending the surplus on things like luxury consumption does not produce development. Baran noted two predominant kinds of economic activity in poor countries. In the older of the two, plantation agriculture, which originated in colonial times , most of the surplus goes to the landowners, who use it to emulate the consumption patterns of wealthy people in the developed world; much of it thus goes to purchase foreign-produced luxury items —automobiles, clothes, etc.
The more recent kind of economic activity in the periphery is industry—but of a particular kind. It is usually carried out by foreigners, although often in conjunction with local interests. It is often under special tariff protection or other government concessions. The surplus from this production mostly goes to two places: part of it is sent back to the foreign shareholders as profit ; the other part is spent on conspicuous consumption in a similar fashion to that of the plantation aristocracy. Again, little is used for development. Baran thought that political revolution was necessary to break this pattern.
In the s, members of the Latin American Structuralist school argued that there is more latitude in the system than the Marxists believed.
They argued that it allows for partial development or "dependent development"—development, but still under the control of outside decision makers. They cited the partly successful attempts at industrialisation in Latin America around that time Argentina, Brazil, Mexico as evidence for this hypothesis. They were led to the position that dependency is not a relation between commodity exporters and industrialised countries, but between countries with different degrees of industrialisation.
In their approach, there is a distinction made between the economic and political spheres: economically, one may be developed or underdeveloped; but even if somewhat economically developed, one may be politically autonomous or dependent. The importance of multinational corporations and state promotion of technology were emphasised by the Latin American Structuralists. Fajnzybler has made a distinction between systemic or authentic competitiveness, which is the ability to compete based on higher productivity, and spurious competitiveness, which is based on low wages.
The third-world debt crisis of the s and continued stagnation in Africa and Latin America in the s caused some doubt as to the feasibility or desirability of "dependent development". The sine qua non of the dependency relationship is not the difference in technological sophistication, as traditional dependency theorists believe, but rather the difference in financial strength between core and peripheral countries—particularly the inability of peripheral countries to borrow in their own currency.
He believes that the hegemonic position of the United States is very strong because of the importance of its financial markets and because it controls the international reserve currency — the US dollar. He believes that the end of the Bretton Woods international financial agreements in the early s considerably strengthened the United States' position because it removed some constraints on their financial actions. It was basically unquestioned by political authorities.
Suddenly, the health consequences and costs have become so high and so close to home that a major political response has occurred, in the form of demands for environmental clean-up and control. The second externalization, that of renewing resources, has also only recently become a major concern, the consequence of the sharp increase in world population. Suddenly, there is a wide concern about shortages — of energy sources, of water, of forestation, of products of the soil, of fish and meat.
Suddenly, we are worried about who uses what, for what purposes, and who pays the bill. The third externalization has been that of infrastructure. Products produced for sale on the world market need transport and communication, the costs of which have gone up as they have become more efficient and faster. Entrepreneurs have historically only paid a small part of the real bill for infrastructure. The consequence of all of this has been a political thrust for governments to assume directly some of the necessary costs of detoxification, resource renewal, and further infrastructure expansion.
To do this, governments must increase taxes. And, unless they wish to go bankrupt, governments have to insist on more internalization of costs by entrepreneurs, which of course cuts sharply into margins of profit of enterprises.
grupoavigase.com/includes/219/4894-mundo-anuncio-rd.php Finally, taxation has been going up. There are multiple political levels of taxation. There is also the private taxation of corruption and organized mafias.
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The size of private taxation has risen as the extensiveness of world economic activity has gone up and the structuration of state bureaucracies has expanded. Popular movements have pushed for three basic state guarantees — education, health, and life-long revenue flows. Each of these has expanded in two ways over the past years: in the levels of services demanded; and the geographical locales in which the demands have been made.
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