CEPAL Review - Volume 2004, Issue 84, 2004

This article begins with a brief evocation of the main features of the legacy left to us by Raul Prebisch. not only from the strictly intellectual point of view, but also as a model of humanism. It then goes on to deal with the present situation of the world, with special emphasis on trade, and highlights the return of a war economy mentality and the instability reigning in the oil market, both of which militate against the greater investment needed in order for the world economy to grow at a satisfactory rate. It notes that in spite of all this, in the present circumstances there has nevertheless been some recovery of growth and revitalization of trade. Finally, it analyses the structural changes which have taken place or are under way in the world trade system and, in particular, the extent to which those changes resemble those that Prebisch hoped for or fall short of his expectations.

The method that Celso Furtado used was essentially historical: his passion —a measured passion—was for Brazil. In the second half of the twentieth century no intellectual contributed more than him to the understanding of Brazil. He was committed to its development, frustrated with its incapacity to achieve it, and always acute in analyzing the economic and political challenges that the country successively faced. In order to demonstrate these ideas, this paper presents a broad review of Furtado’s work.

This paper examines Mexico’s main economic policies and problems during the last two centuries. Focusing on episodes of radical shifts in development strategy concerning the role of the market and the State, it argues that Mexico’s real obstacles to development have often been misperceived, and such misperception may be occurring today. This argument is tested, initially, by reviewing the causes of Mexico’s economic stagnation during most of the nineteenth century. The period of economic expansion between 1940 and 1981, which ended with the collapse of the oil boom in 1981 is also examined. A critical review is made of the radical shift in development strategy implemented in the mid-1980s in response to the external debt crisis associated with the apparent exhaustion of the strategy of import substitution and State-led industrialization. Finally, some thoughts are presented on the current challenges faced by the Mexican economy when, after more than 15 years of macroeconomic reform, it seems stuck in a low-growth situation.

This article gives a comparative description of three different general structural pension reform models applied in 12 Latin American countries, analysing their key concepts. In its main part, it analyses and suggests policies to deal with the 11 challenges that must be faced in such reforms: the decline in labour force coverage: the growing failure to pay contributions: the faults due to imperfect competition among pension fund management companies: the continuing high level of administrative costs: the accumulation of capital, yet without solid evidence that this has had a positive impact on national saving: the high and prolonged fiscal cost of the transition: the potential development of the capital market but a lack of diversification in the investment portfolio: the variable real returns on investment: the lack of evidence that pensions are higher under the private than under the public system: the accentuation of gender-based inequities, and the erosion of solidarity.

i n the light of the extent of global poverty and the challenge presented by the Millennium Development Goals for its reduction, this article analyzes one of the clearest and most effective ways of reducing poverty: trade liberalization —especially agricultural trade— by the industrialized countries. 75 percent of all the poor worldwide are in the rural sector of the developing countries, and the agricultural products that these countries could sell face protectionist barriers —tariffs, nontariff measures, subsidies— imposed by the industrialized countries. This article examines the topic in detail, both globally and as to specific products, and presents —based on several studies— the benefits that trade liberalization in industrialized countries would bring to developing countries, emphasizing the great impact that this liberalization could have on poverty reduction.

AIthough in Latin America public debt-to-GDP ratios continue to be generally lower than in other emerging countries, it has nevertheless not been possible to avoid liquidity problems, which some authors attribute to the low level and high volatility of public revenue, the weakness of domestic financial systems, and the mediocre quality of fiscal institutions. This article also emphasizes some exogenous factors, however. The combination of low economic growth rates and devaluations in a context of dollarized liabilities has given rise to a huge “snowball effect", which is what has come to be called ’original sin": the impossibility for an emerging country of borrowing abroad in its own currency. Although the effort to control the dynamics of the public debt will continue to be mainly at the internal level, the medium-term sustainability of that debt will depend on actions by international financial institutions aimed at improving the public debt conditions of emerging countries.

This article deals with the fiscal and financial relations between the national government and the provincial governments in Argentina during the last 15 years, identifying the factors which help to explain the high degree of conflictivity of those relations. In view of the institutional roots of the conflict, a historical review is made in order to place the recent problems and future discussion in a long-term context. First of all, the development of federalism in Argentina and the evolution of the various forms of autonomy of the provinces is examined, followed, in the central section of the document, by a review of the options that have dominated the changes in the functions and incomes of the different levels of government in recent decades. Those options have to do not only with the distribution of taxes but also with the process of decentralization and the changes in functions among levels of government.

Brazil is now one of the most decentralized federative countries in the world, with the special feature that its decentralization is not the result of an economic strategy, but of a political initiative of the 1988 Constitution. The distribution of income and expenditure between the different spheres of government —central, state and municipal— shows the considerable relative importance of the subnational levels of government. Decentralization has not prevented extraordinary progress in the structural reform of the Brazilian public finances in recent years. The Fiscal Responsibility Law consolidated a process of change in fiscal “culture”, reversing the tendency towards primary deficits and growing indebtedness. The central government has formulated dynamic social policies and shared programme execution with the subnational governments, particularly in fundamental education, basic health services and social assistance. What the Brazilian federation now needs to do is not to reconstruct itself, but to improve itself still further, through greater transparency in public actions and accounts and more investments to modernize management.

In the 1990s, around 90% of all new jobs in Latin America and the Caribbean arose in the tertiary sector. This article reviews the main theories about the expansion of this kind of employment, compares the recent evolution of the Latin American tertiary sector with global trends, and analyses the characteristics of the employment offered in the various branches making up the sector, as well as its underlying dynamics. The growth of employment in the Latin American tertiary sector is based on simultaneous processes of labour inclusion and exclusion. The firstnamed process reflects the growing role of some tertiary sector activities in systemic competitiveness and social reproduction, and is expressed in the generation of jobs of comparatively high productivity and quality. The second, however, is due to the pressures of the labour supply and gives rise to jobs that are usually of low productivity and quality.

This study seeks to answer two questions: how and why has the distribution of labour income changed in Central America? and why does Costa Rica display greater equity? In order to answer these questions, a technique based on the estimation of earnings equations is used. The direction of the changes in inequality is not uniform and depends on the indicator used. Although only Costa Rica and Guatemala show an unambiguous deterioration in the 1990s, there are some phenomena common to all the labour markets studied that have contributed to increasing inequality. The most important of these is the increased dispersion of the number of hours worked, caused by increasing proportions of part-time and overtime workers in all countries. There are two main reasons for the lower relative inequality in Costa Rica: education is distributed more equally, and wage differences between rural and urban areas are smaller. These results suggest that public policies that universalize primary education and provide economic and social infrastructure to rural communities contribute to reducing inequality.