Tuesday, December 23, 2008

Fernando Ignacio Leiva's Latin American Neostructuralism

I read Fernando Ignacio Leiva's Latin American Neostructuralism: The Contradictions of Post-Neoliberal Development. It is certainly worth a read, so I added it to the side bar, but it is also frustrating in some ways.

The basic argument is that the Economic Commission for Latin America and the Caribbean (ECLAC in English) created "neostructuralism," which successfully replaced dogmatic neoliberalism in Latin America in the 1990s. However, despite its pretensions at being an updated version of Raúl Prebisch's ideas, it really is too oriented toward transnational capital and therefore does not challenge existing power structures. As such, it falls fall short of expectations, especially in terms of being truly inclusionary. It is, he says, simply "an enlightened version of modernization theory" (p. 31).

It offers an excellent analysis of ECLAC's intellectual development, and the ways in which the organization struggled to learn from the failures of ISI and thereby to challenge neoliberalism. It also has a very keen critique of the model ECLAC ultimately produced, and what its limitations are, in terms of reducing poverty and inequality, effects of more flexible labor markets, and general protection for the workforce from the whims of the market.

I had two main questions about the book:

First, there are case studies of Brazil and Chile, which are useful. However, the book concludes with the argument that Venezuela and Bolivia offer solid developmental alternatives (particularly in terms of uprooting existing power structures) yet does not discuss either case in detail. I want to see how the Venezuelan case in particular offers a concrete model that non-petroleum exporting countries can follow. There are also many differences between Bolivia and Venezuela that aren't explored. In sum, what concrete "model" is there in counterpoint to neostructuralism?

Second, Leiva acknowledges that he focuses only on ECLAC, and that the "evident risk has been neglecting important undercurrents, nuances, and debates gathering momentum in the periphery of the institution" (p. xxxiii). The problem is that ECLAC's influence can vary greatly, and not every policy paper will get a high-level audience. So the book is limited solely to ECLAC's version of neostructuralism. He makes a good argument for the connection between Chilean policy makers and ECLAC, but the Chilean case often defies easy generalizing.

Nonetheless, the book is useful for a better understanding of the debate about development, and it is a very incisive criticism of the status quo. I recommend the tables, which complement the text well for outlining the key aspects of economic policy in Latin America. They could actually be good for classroom use.

13 comments:

Justin Delacour 8:35 AM  

I want to see how the Venezuelan case in particular offers a concrete model that non-petroleum exporting countries can follow.

But how could it be a "model" for non-petroleum exporting countries if it's a petroleum exporting country?

To be sure, any Latin American country could find some policies in Venezuela that are worth emulating (and some that aren't worth emulating), but the notion that the standard against which we should hold Venezuela is whether it constitutes a general "model" for the rest of Latin America is completely bizarre.

Countries must adapt their policies to their own unique economic conditions. In the words of Chilean President Michelle Bachelet, "countries and their realities are different, so you are going to find leaders who may have the same objectives but who have completely different solutions."

The notion of a one-size-fits-all "model" is an outmoded form of thinking characteristic of early modernization theory.

Gabriel 4:10 PM  

Sounds like an interesting book. But Venezuela as a model of development? It's not even a model of what oil exporters should do? If you are looking for a model to follow in Latam, how about Chile?

Rule number one for any country tha has problems borrowing and a lot of macro volatility (which means most of Latin America): Save during the good times!

Greg Weeks 4:27 PM  

The book is a critique of the Chilean model (which is why it's used as a case study) and advocates looking at the Venezuelan and Bolivian models, hence my question about what those models really mean.

I just happened to see that he has a similarly titled article in the latest issue of Latin American Politics and Society. I have not had a chance to look, but it may provide a condensed version.

Gabriel 8:16 PM  

There's probably plenty to critique about any model but how can anyone sane think that Venezuela or Bolivia are better economic models than Chile?

I'm sorry, I hate to prejudge a book I haven't read but if that's really the purpose of the book I can't imagine it being too useful. But I'll take you look, you've piqued my curiosity.

Justin Delacour 12:49 AM  

If you are looking for a model to follow in Latam, how about Chile?

Some people don't think that a country with some of the highest levels of social inequality in Latin America is any kind of "model" for the region either.

Call us crazy.

That said, Chile does have some enviably low levels of violent crime.

Gabriel 9:43 PM  

I won't call you crazy.

But anyone who thinks that Venezuela or Boilivia have better social equality than Chile, or that either country represents a better long term opportunity for its people, doesn't know anything about Latin America or Economics.

The Venezuelan model is tradiotional Latin economic policy: spend like there's no tomorrow and pray the good times never end.

Justin Delacour 6:01 PM  

But anyone who thinks that Venezuela or Boilivia have better social equality than Chile... doesn't know anything about Latin America or Economics.

Uh, CEPAL shows that Venezuela has a lower Gini coefficient than Chile. In 2006, which is the last year for which CEPAL has Gini coefficient data for both countries, Chile had a Gini coefficient of 0.522 and Venezuela had a Gini coeffient of 0.441. In other words, by the most common measure of economic inequality, the level of economic inequality in Venezuela is significantly lower than that of Chile.

The point is not to assert that one or the other country is any kind of "model" for the region but rather that you should do your homework before spouting nonsense.

Gabriel 7:00 PM  

Unlike you, I've worked doing field work and wouldn't trust those numbers too much.

Let me ask you a basic question, have you ever been to El Alto? Ever seen the shantytowns as you drive from La Guaira to Caracas?

I'm guessing not.

Like I wrote, anyone who thinks Bolivia or Venezuela provide a better future for their citizens than Chile doesn't know anything about Latin America.

Gabriel 7:12 PM  

I will point out that measurement issues aside, anyone who thinks the distribution of income by itself is a good way to measure social progress has a strange and warped sense of reality.

Justin Delacour 11:05 PM  
This comment has been removed by the author.
Justin Delacour 11:26 PM  

I will point out that measurement issues aside, anyone who thinks the distribution of income by itself is a good way to measure social progress has a strange and warped sense of reality.

Actually, Gabriel, nobody here has stated that the Gini coefficient data is the only measure relevant to an assessment of the general quality of life of a nation. That's just a strawman argument that you use to divert attention from the fact that, while you boldly asserted that Venezuela does not have "better social equality than Chile," the CEPAL data indicates otherwise.

Why don't you just admit that you didn't do your homework on the question of social inequality, Gabriel?

I give you data. You give me anecdotes about some barrios in Caracas that no economist anywhere would regard as a substitute for hard data.

What are you gonna do when the World Bank data comes out and corroborates the CEPAL data? Tell us about some barrio in Merida too?

Gabriel 11:27 AM  

Justin,

If we are going to get all technical about this then I should point out that this was not just about Venezuela, it also included Bolivia. And the data you link to shows Bolivia is a more unequal society than Chile. So at best, you are only half right. Will you start by accepting that? It seems it's not just me who did not do their homework.

Also, the Gini coefficients are not calculated by CEPAL based on their own fieldwork. They use the household surveys from national authorities. So maybe we need to address just how reliable Venezuela's numbers are. As I recall you are the one who did not know that Argentina lies about its inflation numbers (apologies in advance if mistook you for someone else). For example, do you know that Venezuelan authorities no longer publish private investment numbers? Do you know why?

As for the strawman argument, after I asked why not follow Chile as a model YOUR response was "a country with some of the highest levels of social inequality in Latin America is [not] any kind of "model" for the region either. " It was YOU who claimed that having an unequal society was why we should not look to Chile as a model for the region, not me. Of course, even that is false since your own numbers show there are several nations with higher coefficients in the region. And we haven't even adressed the issue of measurement error and whether the stated differences are significant.


The bottom line remains the same. Venezeula and Bolivia do not have sustainable economic development models. They only work if the price of oil remains high forever. Chile, while it still has plenty of problems, should be a model for the rest of Latin America. It's an example of what happens when you have (relatively) strong institutions and sensible macro and fiscal policies.

Anyone who, like apparently the author of the book referenced here, thinks Bolivia or Venezuela are better economic and social development 'models' than Chile doesn't know what they are talking about.

Justin Delacour 1:32 PM  

If we are going to get all technical about this

Oh, I see. So if you claim that Venezuela does not have "better social equality" than Chile and I point out to you that the data available indicates otherwise, I'm getting "technical."

Okay, big fella.

It was YOU who claimed that having an unequal society was why we should not look to Chile as a model for the region

Indeed, part of the reason I don't think Chile should be considered a "model" is its level of inequality. That's completely distinct from saying that the Gini coefficient is the only measure relevant to an assessment of the general quality of life of a nation, but I'm not surprised that you fail to understand the distinction.

More broadly, though, I think this whole notion that we could somehow locate the model for Latin America in the experience of one particular country is completely misguided and Quixotic.

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