Economic Commission for Latin America and the Caribbean (Eclac)
Economic Commission for Latin America and the Caribbean (Eclac)
The Economic Commission for Latin America (ECLA) was founded in 1948 by the United Nations Economic and Social Council. It was given the task of facilitating development and strengthening economic ties within the region and between the Latin American countries and the rest of the world. The main venues for promoting these goals have been seminars, the funding and broad dissemination of developmental research and policy options, and the compilation of an ongoing and comprehensive database on region-wide and individual-country economic performance.
The name of the commission was officially changed to the Economic Commission for Latin America and the Caribbean (ECLAC) in 1984, when the Caribbean subregion was added to its mandate. One of the United Nations’ five regional commissions, ECLAC is also frequently referred to by its Spanish acronym, CEPAL (Comisión Económica para América Latina). Headquartered in Santiago, Chile, it also maintains subregional offices in Bogotá, Brasilia, Buenos Aires, Mexico City, Montevideo, and Port-of-Spain.
During its first fifteen years of existence, ECLA was directed by the Argentine economist Raúl Prebisch, who had authored a highly influential work titled The Economic Development of Latin America and its Principal Problems (published in English by ECLA in 1950). Frequently referred to as the “structuralist manifesto,” Prebisch’s work addressed the growing gap between the core of wealthy industrialized countries that dominated the world economy and the much larger group of poor, underdeveloped countries that sat on the global periphery. For Prebisch, this asymmetrical relationship between rich and poor countries in the global economy was due to the very structures of trade and technological adaptation that distinguished these two groups of countries, as well as to the self-perpetuating nature of the relationship between North and South.
Prebisch and his ECLA colleagues argued that the phenomenon of chronic underdevelopment within Latin America was due to the predominant reliance of countries within the region on exporting primary commodities to the United States and western Europe. In turn, Latin America was highly dependent on these northern industrial trading partners for the import of manufactured and technology-intensive goods. Over the first half of the twentieth century, commodity-exporting countries in the South were plagued by price volatility, demand fluctuation, and periodic natural disasters that adversely affected their ability to export. At the same time, the northern industrial countries were experiencing a steady upward price for the manufacturing goods they were exporting to Latin America, as technological innovation and labor productivity rendered this group of countries ever more competitive.
Throughout the 1960s, ECLA analysts defined this tendency for Latin America to pay increasingly more for imports from industrial countries and to earn less for primary exports as a problem of unequal exchange. Although subsequent economic analyses have shown these particular ECLA claims concerning unequal exchange between North and South to be exaggerated, this diagnosis stands as the overriding theoretical contribution made by ECLA. Given the heavy weight afforded by ECLA to these structural bottlenecks, a major policy prescription was to restructure the region’s terms of trade with the North by laying down a viable and competitive industrial base.
The heyday of Latin American import substitution industrialization, whereby countries such as Argentina, Brazil, Chile, Mexico, and Peru raised tariffs on industrial imports and offered generous state subsidies to spur domestic manufacturing production, coincided with the ECLA paradigm up through the 1970s. However, ECLA’s main contribution was more the diagnosis of the underlying causes of underdevelopment and less the actual policies for rectifying it. In its early years, for example, ECLA was quite prescient in identifying such causal factors as the pattern of oligopolistic ownership within industrial-country markets and an adverse shift in the international division of labor, both of which worked against the ability of the developing countries to catch up with the North. But, in the end, the kinds of industrial policies that were pursued to counter these barriers and the specific sectors targeted for success were more a matter of domestic politics and policy choices within countries in the region.
ECLAC: A RESPONSE TO CHANGING THE TIMES
By the 1980s it would have been difficult for even the most sympathetic ECLAC analyst to put a positive spin on Latin America’s efforts to industrialize via import substitution during the post–World War II era. With the advent of the 1982 Latin debt crisis and the plummeting of growth across the region, the shortcomings of this model were all too apparent. Over time, government-sponsored subsidies and high industrial tariffs had spawned powerful urban coalitions across sectors that succeeded in sustaining the import-substitution model despite its obvious failure to promote productivity, growth, and higher living standards across Latin America. As fiscal and exchange-rate policies favored urban manufacturers over rural producers, the agricultural sector languished, and resource-rich countries like Argentina, Mexico, and Peru could only meet domestic needs by importing food.
As import substitution collapsed under the weight of the debt crisis, ECLAC’s emphasis shifted in the 1980s. The agency concerned itself with macroeconomic recovery and the kinds of social policies that would do the most to cushion Latin America’s poor from the impacts of a decade-long recession. With the widespread structural reforms and restoration of growth that finally occurred in the early 1990s, ECLAC became an important advocate for greater technological adaptation and the need for enhancing competitiveness in the region. Interestingly, ECLAC’s earlier misgivings concerning the role of free trade and comparative advantage in the development process were eclipsed as the agency became a tripartite partner, along with the Inter-American Development Bank and the Organization of American States (OAS), in promoting the negotiation of a Free Trade Area of the Americas that would include all thirty-four democratically elected countries in the region.
ECLAC’S INTERNATIONAL SWAY
While the original analyses conducted by ECLAC at its inception were specific to Latin America, the academic literature on other developing countries in Asia and Africa has clearly borrowed and been enriched by the ECLAC paradigm. From the application of theories of unequal exchange to the structuralist critique of industrial-bloc dominance of international commodity and labor markets, ECLAC has left an indelible print on the fields of development economics and area studies.
SEE ALSO Import Substitution; Macroeconomics, Structuralist; Prebisch, Raúl; Prebisch-Singer Hypothesis; Taylor, Lance
Love, Joseph L. 2005. The Rise and Decline of Economic Structuralism in Latin America. Latin American Research Review 40 (3): 100-125.
Prebisch, Raúl. 1950. The Economic Development of Latin America and its Principal Problems. New York: United Nations Economic Commission for Latin America.
Sikkink, Kathryn A. 1991. Ideas and Institutions: Developmentalism in Brazil and Argentina. Ithaca, NY: Cornell University Press.
Taylor, Alan M. 1998. On the Costs of Inward-Looking Development: Price Distortions, Growth, and Divergence in Latin America. Journal of Economic History 58 (1): 1–8.