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60 Years On, ECLAC Still Has Key Role to Play – By Daniela Estrada

SANTIAGO, May 7, 2008 (IPS) – Among the tasks facing the Economic Commission for Latin America and the Caribbean (ECLAC), which is celebrating its 60th anniversary this year, is to contribute to the design of a development strategy to make the best use of the region’s current bonanza.ECLAC, established on Feb. 25, 1948 as a regional commission of the U.N. Economic and Social Council, has been a source of important theories on Latin American development, as well as the target of numerous criticisms. Argentine economist Raúl Prebisch, who served as executive secretary of ECLAC from 1950 to 1963, postulated that the backwardness of the region could be explained by the unequal terms of trade between the “centre” (the industrialised North) and the “periphery” (economies exporting commodities).

Later on this theory became known as structuralism, or developmentalism.

Prebisch advocated industrialisation aimed at import substitution, in which the state played an active role — a reform he said was a practical reality before the concept arose, as it was the only way to move forward in the context of the ravages of two world wars, with the Great Depression in between.

French sociologist Alain Touraine, the keynote speaker at a seminar commemorating the anniversary, held on Apr. 28 in Santiago, said that since its inception ECLAC has been a tool for shaping public opinion, as well as adding to the knowledge that Latin Americans, and particularly decision-makers, need in order to analyse and guide policies for both the present and the future. As an ECLAC official from 1962 to 1979, former Brazilian President Fernando Henrique Cardoso (1995-2002), together with Chilean sociologist Enzo Falleto, took another stride forward when they formulated the dependency approach to Latin American economic development theory, which succeeded Prebisch’s structuralism.

According to the agency’s own account of its history, after the industrialisation that occurred in the 1950s, ECLAC proposed “reforms to facilitate industrialisation” in the 1960s, and the “reorientation of development ‘styles’ towards social homogeneity and towards diversification to promote exports” in the 1970s.

In the 1980s, ECLAC proposed “overcoming the external debt crisis through ‘adjustment with growth,’” and in the 1990s its watchword was “equitable productive transformation.”

This decade, ECLAC, which is based in the Chilean capital, has concentrated its attention on unequal wealth distribution.

Some outstanding documents produced by ECLAC include “Shaping the Future of Social Protection: Access, Financing and Solidarity” (2006) and “Social Cohesion: Inclusion and a Sense of Belonging in Latin America and the Caribbean” (2007). The former highlights the need to establish universal systems of social protection based on solidarity in the fields of pensions and healthcare by means of a fiscal covenant, that is, tax reform.

The latter proposes the elimination of inequalities in access to education, health, housing and information technology, as well as the strengthening of public institutions.

ECLAC’s first major contribution to the region was “questioning the premise, commonly believed in its early days, that economic development would follow fairly automatically if the markets were left to themselves,” former dean of the University of Chile’s Faculty of Economics and Business Administration, Joseph Ramos, told IPS.

“ECLAC emphasises structural factors that can prevent growth, such as concentration of land ownership, lack of entrepreneurial spirit, lack of human capital and exporting mainly commodities and not knowledge,” the expert said.

“The agency also contributes to empirical knowledge about Latin America,” said Ramos, who was head of ECLAC’s division of Production, Productivity and Management from 1992 to 1998. “Historically, ECLAC has made very interesting development proposals for the region,” Hugo Fazio, head of the non-governmental National Centre for Alternative Development Studies (CENDA), told IPS.

However, ECLAC has not been exempt from criticism. In the 1960s, the radical left viewed the structuralist theory as a “lifebelt” for capitalism, while rightwing sectors considered that it leaned too far towards overweening intervention by the state.

Fazio praised the contributions of Colombian economist José Antonio Ocampo, ECLAC’s executive secretary from 1999 to 2003, to the debate about the impact of globalisation on the region’s capital markets.

“In recent years, the role of ECLAC has been cut back, as have those of international financial institutions,” he said.

The present challenges are not negligible. The huge Chinese demand for basic products has benefited many Latin American countries, especially exporters of minerals, because of the improvements in the terms of exchange.

This year will be the sixth consecutive year of strong economic growth for the economies of Latin America. Given the circumstances, at this point many are waiting for ECLAC to map out possible development routes for the region over at least the next 25 years, while respecting the many political, economic, social and cultural differences between its countries.

The present executive secretary of ECLAC, José Luis Machinea of Argentina, has already indicated that there are plans for this to happen. At the Commission’s next session in June, the 44 member countries (all those in Latin America and the Caribbean, plus a handful from Europe and Asia) will discuss a document on “Productive Transformation, Twenty Years On: Old Problems, New Opportunities.” Machinea remarked that

Latin America must take advantage of its static comparative advantages: if countries are paid more for the products they export, they must produce more of them, but the income must be used to advance productive transformations and generate a more diversified product base. That, he said, is the great challenge for the region. But in his view, there are two key questions: “How can we appropriate the income from natural resources? And how can we invest our resources wisely?” He said that several countries are attempting to do this, and that in principle it is a good idea. Prices have changed to an extraordinary extent, and it is logical for countries to try to obtain a greater share of that revenue, he said.

But if mistakes are made — if the attempt to appropriate that income creates uncertainty for private investors — economic growth will be a problem. The income must be obtained, but incentives must remain in place for private investment, Machinea said, adding that the task was not easy, politically or economically.

Ocampo, who was also a speaker at the April seminar, said that ECLAC has been historically frustrated in its calls for “Latin American integration.”

For his part, Ramos said with regret that “ECLAC is no longer ‘the’ think tank of the region.”

“Unlike 60 years ago, when it was ‘the’ centre of excellence for economic analysis, there are now many high quality universities in the region, with more and better researchers,” he said.

“Because of this, ECLAC should concentrate on two functions, where I think it has competitive advantages: carrying out comparative analyses of what is happening, what works and what doesn’t work in the region, because the universities tend to focus on national issues; and acting as the nerve centre, the focal point, for different issues that are central to development, coordinating the best research centres,” said Ramos.

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