Prebisch, Raúl (1901–1986)

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Prebisch, Raúl (1901–1986)

Argentine Raúl Prebisch was the most influential Latin American economist of the twentieth century. As theorist, statesman, and policymaker, he had a major impact on Argentina, Latin America, and the Third World generally.

Born in Tucumán in 1901, Prebisch studied at the University of Buenos Aires. The young economist quickly gained favor with political leaders, organizing research in the government bank, and then heading the country's first central bank, beginning in 1935 and ending in 1943, following a military coup.

Thereafter, Prebisch's principal instrument for developing his ideas was the United Nations (UN) Economic Commission for Latin America (ECLA), which he directed from 1949 to 1962. The most famous ECLA thesis appeared in Economic Development of Latin America and Its Principal Problems (1949; English edition 1950), of which Prebisch was the sole author. In this work, Prebisch sought to explain the secular deterioration of the relative prices of primary goods in the world market, a trend documented in a UN study in 1948. Prebisch argued that the world was organized into an industrial center and an agricultural periphery, and that gains in productivity for the half century before World War II had been greater in industrial than in primary products. He held that such gains were absorbed by the center during recessions, when labor contracts kept wages high; meanwhile, wages fell in the periphery, where agricultural labor remained unorganized. Prebisch also pointed to monopolistic pricing for industrial goods at the center as a cause of unequal exchange.

Prebisch's analysis pointed to negative features in the periphery's economy: structural unemployment, external disequilibrium, and deteriorating terms of trade—all of which a properly implemented policy of industrialization would help eliminate. Industrialization could be achieved by substituting domestic manufactures for previously imported goods. A storm of criticism arose quickly about the terms-of-trade argument, and the debate about its validity has lasted fifty years. In the early twenty-first century, the export profiles of the more advanced Latin American countries are largely composed of industrial goods, making the terms-of-trade argument increasingly less relevant. Nonetheless, this thesis was a point of departure for a "structuralist" school of development studies that emphasized macroeconomics, the role of institutions (especially the state), interdisciplinary approaches, and long-term changes. Meanwhile, Prebisch took a direct hand in promoting Latin American economic integration, and in creating the UN Conference on Trade and Development (UNCTAD), of which he was the first secretary general (1964–1969).

Dependency theory arose in the mid-1960s to address the problems that industrialization by import substitution had engendered or exacerbated. In particular, stagnation in per capita incomes was associated with the increasing capital imports needed to continue industrial development. Secondly, income concentration was accompanying industrialization. Finally, manufacturing was absorbing less labor than ECLA had anticipated.

In Capitalismo periférico (Peripheral capitalism, 1981), Prebisch offered a non-Marxist interpretation of dependency. He contended that the structural features of peripheral countries prevented the full development of capitalism, owing to the share of income appropriated by the privileged classes, "unequal exchange" with industrial countries, and extramarket "power relations" between center and periphery.

See alsoDependency Theory; Economic Commission for Latin America and the Caribbean (ECLAC); Economic Development.

BIBLIOGRAPHY

Prebisch, Raúl. Capitalismo periférico: crisis y transformación. Mexico City: Fondo de Cultura Económica, 1981.

Prebisch, Raúl. "Five Stages in My Thinking on Development." In Pioneers in Development, edited by Gerald M. Meier and Dudley Seers. New York: Oxford University Press, 1984.

Love, Joseph L. "Economic Ideas and Ideologies in Latin America since 1930." In Ideas and Ideologies in Twentieth Century Latin America since 1870, edited by Leslie Bethell. Cambridge, U.K., and New York: Cambridge University Press, 1996.

United Nations Economic Commission for Latin America. The Economic Development of Latin America and its Principal Problems. Lake Success, NY: United Nations Department of Economic Affairs, 1950.

Additional Bibliography

Grinspun, Pablo Ariel. Crisis argentina y globalización: La vigencia de Raúl Prebisch. Buenos Aires: Nuevohacer, Grupo Editor Latinoamericano, 2003.

Iglesias, Enrique V. The Legacy of Raúl Prebisch. Washington, DC: Inter-American Development Bank, 1994.

Love, Joseph L. Crafting the Third World: Theorizing Underdevelopment in Rumania and Brazil. Stanford, CA: Stanford University Press, 1996.

Piñeiro Iñiguez, Carlos. Herejías periféricas: Raúl Prebisch, vigencia de su pensamiento. Buenos Aires: Nuevohacer, Grupo Editor Latinoamericano, 2003.

                                                    Joseph Love