(1 September 2004) The continual search for a uniquely Latin America route to development is the principal legacy left by Raúl Prebisch, said Rubens Ricupero, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), during the master lecture entitled: The contemporary relevance of Prebisch: placing international trade at the service of development, on the occasion of the Fourth Raúl Prebisch Memorial Lecture, hosted by the Economic Commission for Latin America and the Caribbean (ECLAC). The need for this is clearer than ever, he added.
Ricupero underlined the importance of being able to approach imported theories and therapies and adapt them, using critical thinking. He said, "Prebisch' vision remains contemporary" in terms of the centre-periphery duality, the central importance of technical progress, the link between foreign trade and development, foreign investment, import substitution, interdependence, and commodity prices.
UNCTAD's Secretary-General referred to structural changes in the world trade system since the time when Prebisch had his great dream about technological progress. In Latin American countries, Prebisch expected this to spread to the rest of the economy through industrialization. "Now this phenomenon of rising manufacturing exports has occurred mainly in Asia, particularly China," Ricupero said.
He clarified that in his judgment it is no longer enough to produce manufactured goods, not even those with high technological content. Today, given the existence of enclaves with few links to domestic economies, the result of internationalization of production chains, what matters most is the value-added and manufactured index for export products, he explained.
Ricupero emphasized the importance today of the service sector as a motor for country growth: "In Latin America we have always failed and continue to fail to make the most of the service sector, we talk too much about manufacturing. India, in contrast, is a country that has done so and now exports US$15 billion annually under this item." Another new area worthy of more attention is government purchasing.
In terms of domestic economies, Ricupero recommended paying more attention to transforming production with equity: "We have still not achieved either the transformation of production or equity. We have advanced somewhat, but it is not enough. Because of this, in Latin America today there is a tendency to return to specializing in natural resource-based products," he said.
He also expressed concern about the proliferation of bilateral trade agreements, which in his opinion almost always ignore differences in developmental levels and impose a degree of reciprocity that is inappropriate for developing countries. Instead, he proposed a multilateral trade system, which eliminates discriminatory rules.
World trade will thrive in 2004, he said, with growth reaching almost 7% amidst optimism for next year. But he pointed to a paradox: the near paralysis of multilateral negotiations within the World Trade Organization, after the failure of Cancún toward the end of 2003. "The natural tendency would be toward facilitating trade, but this is not happening," he notes, suggesting this reflects political factors.
The latest round of international trade negotiations finally got off the ground in Geneva in late July, approving what Rubens Ricupero called an agreement "built on creative ambiguities," whose importance lies in having avoided the death of the Doha Round, but whose content is "minimalist". In any case, he was optimistic about the feasibility of advancing slowly and achieving moderate positive effects in the not-too-distant future, perhaps 2006.
The world outlook changed in 2001 and today a war economy approach has prevailed, which focuses on security from terrorism, and is affecting the globalization process. "We live in a period of permanent mobilization, in which conflict leads not to peace but to another conflict, amidst the movement of enormous resources," he said. He added that in the previous phase of globalization, borders were becoming increasingly irrelevant, but "if this obsessive concern for security continues for long, the obstacles will multiply," generating instability in the oil market and affecting investors.
In terms of Latin America, given the large disparities that persist with regard to income distribution, Prebisch' analysis of regional conditions continues to hold, said Rubens Ricupero. Quoting ECLAC studies, he noted that in 2003 there were 20 million more Latin Americans living in poverty than in 1997, while unemployment had reached 10.7%, and poverty affected 44% of the population.
However, he expressed confidence that the positive growth prospects for 2004 will improve these harsh conditions somewhat, and recognized that some countries are "hope-inspiring exceptions, which have significantly reduced poverty and grown thanks to solid macroeconomic policies, among them, Chile."
José Luis Machinea, ECLAC Executive Secretary presented the UNCTAD Secretary-General, noting that in September he will leave this post, having "generated a new dynamic, which gave enormous thrust and vitality" to the organization. He also listed three elements of Raúl Prebisch' thinking that remain timely: his critical approach to conventional interpretations, his ability to generate foundational ideas, and the fight for new utopias.
Rubens Ricupero became the fifth Secretary-General of this United Nations body in September 1995, after a lengthy career as a diplomat and minister in the Brazilian government.
The Raúl Prebisch Lecture Series was created in 2001, to celebrate the one hundredth anniversary of the birth of the Argentine economist who was ECLAC Executive Secretary (1950 to 1963) and contributed to the founding of the United Nations' Conference on Trade and Development (UNCTAD), as well as serving as its first Secretary-General (1964 to 1969).