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Development Policy and the Possibility of a “Livable” Future for Latin America*

Published online by Cambridge University Press:  01 August 2014

Robert L. Ayres
Robert L. Ayres*
Affiliation:
University of California, Berkeley
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Abstract

The legacy of problems associated with Latin American development policy in the postwar era necessitates the asking of some fundamental questions about the future of development in that region. Economic growth rates have been insufficient, and the employment and distributional problems have been worsening. This situation is in large measure attributable to specific policies pursued by Latin American governments, especially the array of policies included under the rubric of “import-substituting industrialization.” Such policies are critically analyzed as a prelude to the discussion of a suggested reorientation of Latin American development policy. The goal of such a redirected, poverty-oriented development policy is the creation of “livable” (if not “developed”) societies. The effort to fashion development policies aiming at “livability” entails, at the most general level, distributional and short-run emphases. But it also involves the need for major innovations in such diverse areas as technological, agricultural, regional, and educational development. Reorientations of international development lending would also be required. The economic problems of the livability approach are formidable, but recent findings indicate that poverty-oriented development strategies may be economically viable. The political problems are equally if not more formidable, and it is likely that their confrontation will involve new ways of thinking about “political development” and about the relationship of political regime types to economic development.

Type
Articles
Information
American Political Science Review , Volume 69 , Issue 2 , June 1975 , pp. 507 - 525
Copyright
Copyright © American Political Science Association 1975

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Footnotes

*

I would like to thank the Ford Foundation for providing financial assistance which enabled me to devote the entire 1972–73 academic year to this and other research. I would also like to thank the Center for Latin American Studies of the University of California, Berkeley for its generous support of my work.

References

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11 This conclusion must be tempered with the caution that much of the large incomes of the highly industrialized countries are more obvious than real when viewed in terms of real income or welfare of the people of those countries. On the side of the industrialized countries, that is, the “gap” is exaggerated by the inclusion of waffle irons and hot combs. On the other hand, it is exaggerated for the underdeveloped countries by the frequently cited underestimation of such things as personal services, family employment, and so forth.

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17 Prebisch, p. 94. It has been argued that these figures on industrial employment are misleading because previously they included artisan shops, work done at home, and similar things as “industrial employment.” I have been unable to locate statistical sources which confirm or deny this assertion about changes in the categorization scheme. The evidence with which I am familiar continues to point in the directions indicated in this paragraph. While factory industry may have greatly expanded its contribution to GNP, it has not proportionately expanded its contribution to the employment structure. An instructive article dealing with this point is Soares, Glaucio Ary Dillon, “The New Industrialization and the Brazilian Political System,” in Latin America: Reform or Revolution?, ed. Petras, James and Zeitlin, Maurice (Greenwich, Conn.: Faw-cett, 1968), pp. 186–201Google Scholar. The author explicitly notes (p. 197) that “the Brazilian industrializationhas been unable to absorb the growing urban population. It is interesting to emphasize that these tendencies have gone hand in hand with a high rate of growth in industrial production and with an increase in productivity.”

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26 Thus, one observer notes that “the differences in income distribution among different societies … at different ends of the political spectrum are just not dramatic enough. … It seems as if, in the long run, societies tend to gravitate towards similar income-distributional structures. …” See Bhagwati, , “Economics and World Order from the 1970's to 1990's: The Key Issues,” in Bhagwati, , ed., p. 20Google Scholar. The empirical study of the Cuban case leads to some very real questions about movements toward wage equality under the Castro regime. See Hernandez, Roberto E. and Mesa-Lago, Carmelo, “Labor Organization and Wages,” in Revolutionary Change in Cuba, ed. Mesa-Lago, (Pittsburgh: University of Pittsburgh Press, 1971), pp. 209–249Google Scholar.

27 These and others are discussed in Baer, Werner, “Import Substitution and Industrialization in Latin America: Experiences and Interpretations,” Latin American Research Review, 7 (Spring, 1972), 98Google Scholar.

28 Intercountry differences are substantial in this regard. Thus, the value of imports of goods and services as a percentage of GDP fell in Argentina from 11.2 in 1948–9 to 6.6 in 1967. But in Chile the coefficient actually rose from 11.5 to 15.7 in this interval, and for Latin America as a whole, the decrease in the coefficient was only from 10.2 in 1948–9 to 9.9 in 1967. Ibid., p. 103.

29 I am indebted to an anonymous reviewer of the first draft of this manuscript for making these challenging arguments.

30 Bergsman, Joel and Candal, Arthur, “Industrialization: Past Success and Future Problems,” in The Economy of Brazil, ed. Ellis, Howard S. (Berkeley: University of California Press, 1969), p. 47Google Scholar.

31 These observations have, however, been partially challenged by Hirschman, Albert O. in “The Political Economy of Import-Substituting Industrialization in Latin America,” Quarterly Journal of Economics, 82 (02, 1968), 2–32CrossRefGoogle Scholar.

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33 These assessments regarding Brazilian and Mexican agricultural policies are found in Little et al., p. 108.

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36 Ibid., p. 8.

37 Ibid., p. 9. The increasingly important exception to this generalization appears to be Brazil. Exports of manufactured goods have risen dramatically under the military government since 1964. While accounting for only 5 per cent of the value of total Brazilian exports in 1964, they accounted for about 20 per cent in 1971–2. See Fishlow, Albert, “Some Reflections on Post-1964 Brazilian Economic Policy,” in Authoritarian Brazil, ed. Stepan, Alfred (New Haven: Yale University Press, 1973), p. 98Google Scholar. This fact should not obscure the equally important fact that Brazil still depends on primary products for approximately 70 per cent of its export earnings. Furthermore, there is the question—crucial in terms of my concerns in this article—of who are the principal beneficiaries of Brazilian export expansion and diversification. A recent survey of the Brazilian economy concluded that multinational corporations accounted for some 40 per cent of Brazil's industrial exports in 1969. See the survey of the Brazilian economy in The Economist, 09 2, 1972, p. 47Google Scholar.

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40 Ibid., p. 243.

41 Hirschman, p. 29.

42 Many of these and other problems are discussed in Sloan, John W., “Dilemmas of the Latin American Free Trade Association,” Journal of Economic Issues, 5 (12, 1971), 92–108CrossRefGoogle Scholar. Also see Balassa, Bela, “Regional Integration and Trade Liberalization in Latin America,” Journal of Common Market Studies, 10 (09, 1971), 58–77CrossRefGoogle Scholar.

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49 An otherwise favorable report on the Brazilian economy was recently forced to conclude that “it is probably true that the purchasing power of the average wage declined by up to 45 per cent over the past decade.” The Economist, p. 34.

50 On this point, see Cline, pp. 11–13.

51 Lewis's arguments are found in Lewis, W. Arthur, “Objectives and Prognostications,” in Ranis, , ed., pp. 411–420Google Scholar. Streeten's rejoinder is found in the same volume, p. 423.

52 Wilber, Charles K., The Soviet Model and Underdeveloped Countries (Chapel Hill: The University of North Carolina Press, 1969), p. 92Google Scholar.

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55 Ibid., pp. 150–151.

56 Lewis, p. 412.

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58 The reader will note that I have paid little attention to population control in my discussion of livability. There are those who argue that such control is the essential element of any new development strategy. I do not have the space to engage in a thorough discussion of this complex issue here. Suffice it to say that: (a) There are numerous countries in the. Third World, and particularly in Latin America (e.g., Argentina, Chile, Colombia, Peru), which could support much larger populations than they presently do—if the requisite distributional and employment emphases were given to their development efforts, (b) The stabilizing of population growth is in any case a long-run matter; in the meantime, many new economic policies will be required to support the population that exists and that has a human right to live at greater than subsistence levels, (c) Too often the focus on population control is a remedy that prevents imaginative thinking on the sorts of questions addressed in this section. An unwillingness to think creatively about new directions in development policy easily leads to reliance upon the birth-control pill. If only the people would go away, the problems might too. All this is said without denying that some countries may in fact be in dire need of birth-control programs.

59 Tavares, M. C. and Serra, J., “Beyond Stagnation: A Discussion on the Nature of Recent Development in Brazil,” in Latin America: From Dependence to Revolution, ed. Petras, James (New York: Wiley, 1973), p. 97Google Scholar.

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61 Ibid.

62 Woodhouse, p. 23.

63 It may be that Brazil constitutes one “polar type” of Third World development, that of middle-level rich, inegalitarian dependence. Communist China may constitute the other, that of decently poor, relatively egalitarian independence. It would make an instructive exercise to contrast the two nations in terms of the relative emphases given to labor- and capital-intensity, equality and distributional indicators, agriculture and industry, growth and distribution, dependence and autarchy, and so forth. That the politics of neither type of regime may be particularly attractive is perhaps irrelevant. These may in fact be the political choices for the future of the Third World.

64 Morgan, Robert P., “Transfer of Technology,” in Chalmers, , ed., p. 145Google Scholar.

65 All of these and related suggestions are discussed by Morgan, pp. 147 ff.

66 These and related suggestions are contained in Reid, Escott, “McNamara's World Bank,” Foreign Affairs, 51 (07, 1973), 794–810CrossRefGoogle Scholar.

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70 Morgan mentions this possibility, p. 148.

71 See the report in The New York Times (10 12, 1973), 41Google Scholar.

72 This is Wilber's opinion, p. 92.

73 Ranis, p. xviii.

74 On this point, see Baranson, Jack, “Bridging the Technological Gap Between Rich and Poor Countries,” in Ranis, , ed., p. 302Google Scholar.

75 See, for example, the arguments in Diaz-Alejandro, , Essays on the Economic History of the Argentine Republic (New Haven: Yale University Press, 1970)Google Scholar.

76 On these roles for agriculture in the process of economic development, see Wilber, pp. 14, 30.

77 Prebisch, p. 3.

78 Some of these suggestions are discussed in Poats, Rutherford M., Technology for Developing Nations (Washington, D.C.: The Brookings Institution, 1972), p. 38Google Scholar.

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80 World Bank Operations, p. 20.

81 Ibid., p. 23.

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84 Ishikawa, Shigeru, “China's Economic Landscape: 1965–1995,” in Bhagwati, , ed., p. 336Google Scholar.

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89 World Bank Operations, p. 424.

90 For a revisionist, relatively favorable look at such marginal settlements, and for a discussion of the need for rehabilitation instead of eradication, see Mangin, William, “Latin American Squatter Settlements: A Problem and a Solution,” Latin American Research Review, 2 (Summer, 1967), 65–98Google Scholar. Also see Perlman, Janice Elaine, “The Fate of Migrants in Rio's Favelas: The Myth of Marginality,” (Ph.D. dissertation, M.I.T., 1972)Google Scholar.

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92 Agency for International Development (AID), Summary Economic and Social Indicators: 18 Latin American Countries, 1960–1971 (Washington, D.C., 1972), pp. 60, 66Google Scholar.

93 Blaug, Marc, “Education, Economic Situation and Prospects of India, 1971,” Bulletin of the Institute of Development Studies (Sussex), 3 (06, 1971)Google Scholar. Cited in Healey, 771.

94 Ibid.

95 World Bank Operations, p. 257.

96 Ibid., p. 265.

97 Quoted in Reid, pp. 794–795.

98 Ibid., p. 795.

99 For information on these and other projects in Latin America, see IBRD, World Bank Annual Report 1974 (Washington, D.C., 1974), pp. 41–57Google Scholar.

100 For a more thorough discussion of this issue, see Ayres, Robert L., “Political Regimes, Explanatory Variables, and Public Policy in Latin America,” The Journal of Developing Areas, forthcoming (10, 1975)Google Scholar.

101 Nash, A. E. Keir, “Pollution, Population, and the Cowboy Economy: Anomalies in the Developmentalist Paradigm and Samuel Huntington,” Journal of Comparative Administration, 2 (05, 1970), 111CrossRefGoogle Scholar.

102 On this distinction, see Kenworthy, Eldon, “Coalitions in the Political Development of Latin America,” in The Study of Coalition Behavior, ed. Groennings, Svenet al. (New York: Holt, Rinehart and Winston, 1970), pp. 103–140Google Scholar.

103 Nash, p. 126.

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