Latin America and development

Ivonaldo Neres Leite ivonaldo.leite at
Sun Dec 19 17:25:50 MST 1999

Latin America is a much more diversified and dynamic reality than the image
presented in the First World. It also is more complex than the image presented
by any academic analysis, for example: the dogmatic version of dependecy theory.
Until themid-1970s Latin America's major conutries' growth rates were not far
away from those of East Asia. It was the "lost decade" of the 1980s, as a
consequence of the debt crisis and of deterioration in terms of trade, that set
back Latin America. Even countries with higth export performaces such as Brazil
had to use their earnings to cover their financial obligations, being forced to
cut imports and public speding at a critical moment when international
competition and technological revolution required the modernization of the
productive structure. By Manuel Castells, taking the lon-term view, it is
possible to say that Latin America has struggled in the half-century after the
Second World War to make the transition along three distinct, albeit
overlapping, models of development. The first model was based on eports of raw
materials an agricultural products, withim the traditional pattern of unequal
exchange, trading primary commodities for manufactured goods and know-how from
mos advanced regions in the world. The second model was based on
import-substituition industrialization, along the policies designed and
implemented by United Nations-CEPAL economists (most notabily Raul Presbisch and
Anibal Pinto), coutring on the expansion of protected domestic markets. The
third was based on an outward development strategy, using comparative cost
advantages to win market shares in the global economy, trying to imitate the
successful path of Asias's newly industrialized countries. The first model
deteriorated in the 1960s, the second was exhauted by the end of the 1970s, and
the third failed by and large in the 1980s as a critical period of restructuring
in the relationship of Latin America to the new, "global economy". Latin
America, with all the singularities of such a diverse continet, was in the 1990s
in process of being integrated into the "new economy global economy", albeit,
again, in a subordinate position. Foreign investment has pured into countries,
particulary Mexico, Chile, Brazil, and Argentina since the early 1990s. Even
Peru, which was literally in a process of economic disintegration during the
1980s, reversed its decline in 1993-1995, under impact of massive foreign direct
investment flows and fast expandig trade, once Fujimori established some sort of
political stability and imposed the Fujishock do regain the good reputation with
IMF that country had lost under Alan Garcia. Hower, since massive foreigns
investment, both in stocks and in real estate assets, is an essential part of
new economic dynamism in Argentina, Peru, Bolivia, Mexico, and to some extent
Brazil, we may be observing an artificial increase of the wealth of these
economies, by labeling as investiment what is basically a transfer in ownership
of existing assets, particulary in privatized state companies in strategic
sectors. Thus, some of the region´s new prosperity could be a financial mirage,
subject to reversible capital flows relentlessly scanning the planet for
short-term profitability, as well as for positioning the in estrategic sectors
(such as telecommunications). The competitiveness of expot-oriented gap which
Latin American still, Furthermore, the social and environmental devastation of
IMP - inspired policies of the 1980s has not been reversed by a new model of
economic growth that gives proritary to fiscal austerity and external
competitiveness over any other criteria. Therefore, widespread poverty shrinks
potential domestic markets, forcing eonomies to survive in the global
competition by cutting costs on labor, social welfare, and environmental
protection.   Ivonaldo Neres Leite

More information about the Marxism mailing list