ECLAC's role in Latin American and Caribbean economic development

ECLAC

The Economic Commission for Latin America and the Caribbean (ECLAC)

The ECLAC was developed in 1948 as a network of many other UN regional commissions. The design was to stimulate the Latin American and Caribbean approaches to economic development by using studies and initiatives to promote projects.

ECLAC has been the main source of information and analysis with Latin America and the Caribbean. A subsidiary organization of the United Nations Economic and Social Council, it was founded for the purposes of contributing to the economic development of Latin America and to Reinforce economic relationships among the other nations of the world. Member states now stand at 39 with an additional 7 associate member states.

The organization is guided by rules that govern their purpose. These mandates include:

Reinforcing economic relationships among the member countries and with the other nations of the world;

Promoting economic and social development;

Gathering information -- organize, interpret, and distribute information about the region;

Providing advice to governments;

Promoting and executing cooperation for member country developments;

Organizing meetings, workshops, and conferences; and Communicating global concerns to the region, and regional concerns globally.

Social development was later included among ECLAC's primary objectives. Over the past fifty years, ECLAC has primarily provided research and analytical data on the social and economic state of Caribbean and Latin American countries.

ECLAC's research covers a huge range of issues. They have conducted research on topics from fishing to taxation. The ECLAC's commander-in-chief is the Secretary General, and consists of many different divisions, units, and offices for all types of information, research, and services.

Fundamental Problem

Latin American and Caribbean countries often suffer from poor economies, unaccountable leadership, and ill-prepared entry into the global marketplace.

For example, Luiz Inacio da Silva - Brazil's questionable President is viewed by the world's superpowers as a fumbling miscreant. Intemperate, socially unaccountable, and a poor international ambassador, many of the people who once saw him as Brazil's messiah now see him as Brazil's embarrassment.

Economic problems mount on a daily basis - consider the problems of the minimum wage and often socialist civil programs and policies. In order to raise a country's minimum wage, many ripple-effect factors must be taken into consideration. Typically, without a strong currency underflow, raising the minimum wage forces inevitable and catastrophic inflation. da Silva made this a campaign promise and the Brazilian raised the national minimum wage without majority approval. The results have been disastrous to the Brazilian economy.

The minimum wage is but one of several important indicia for the overall economy of a country, demonstrating a very important correlation - known in economics as indexation - between the minimum wage and per capita wealth of a country (i.e., gross international product, or GIP). In fact, the minimum wage is the result of job availability. Minimum wages are directly connected to the country's wealth. This direct correlation explains why, in some countries, the minimum wages are higher than in other countries; the wealthier the country, the higher the minimum wage valuation.

In Brazil, Jamaica, and other Latin American and Caribbean countries, the minimum wage also clearly demonstrates the disparity between private-sector and government pensions. Significantly, these governments spend more to collect taxes than what they receive. These two big operational and structural problems are part of chronic government deficits. For the government, therefore, an increase in minimum wages is synonymous with increasing the operating deficit.

History of Progress

During the beginning of the organization - and with Raul Prebisch as its initiator - ECLAC's research methods were developed to include using history as a reference. They concentrated in this era with industrialization policies that had to be started in order to overcome underdevelopment and poverty.

In the 1960's, reforms and changes were made on three of the major problems of that period; industrialization, vulnerability and dependency, and Latin American overall development.

The first problem addressed the problems of an industrialization process which had followed a course that did not manage to share the modern technical progress with most of the population.

The second problem was that industrialization had not eliminated vulnerability and dependency, but had only changed its nature.

The third problem dealt with the idea that both processes were an obstruction to the overall development of Latin American countries in the 1970's and 1980's. To combat this problem, industries and exports were strengthened and employed as a tool for dealing with the difficulties of international integrations to trade with Latin America.

Continuous warnings of the risks to the region's widespread debt and the liabilities of opening critical commercial and financial ports in Latin America's southern country fueled rumors that prevented growth.

During the 80's and 90's, the ECLAC recognized that much higher growth in Latin America and the Caribbean was needed in order to reach the goal of equity, with a simultaneous increase in productivity and wages. Paired with this recognition was the awareness that fiscal principals needed to be adopted into the Latin American pact. Principals to this awareness were fiscal adjustment consolidation, an increase in public spending productivity, transparency, promotion of equity, and the democratic institution emergence.

ECLAC extended its studies and focus of development, analyzing the impact of public policies in the varying countries and changes in international trade negotiations. The ECLAC created a new vision of the environment for developed countries, and helped bring in sources of financing for major developments. Those studies were prepared and presented for the Earth Summit in Johannesburg in 2002.

Today, the ECLAC has determined that a better integration with the rest of the world will be the best prevention against deterioration of industry, politics, social conditions, and education. With help and integration, the ECLAC's research and involvement in Latin America and the Caribbean will be a great success.

Critical Analysis

Founded in partnership with the United Nations, ECLAC is one of five similar regional commissions slated to improve the economic and social integration of Latin American and Caribbean countries. A biographical snapshot follows (see Table 1, following) designed to highlight the history of ECLAC and provide an easy method with which to compare intent with delivery.

ECLAC Appointment

Service

Country

ECLAC Accomplishments

Gustavo Mart'nez Cabanas

Executive Secretary

1948-1950

Mexico

Mr. Raul Prebisch

Executive Secretary

Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).

1950- 1963

Argentina

Visible Influence in International Economic Order

Jose Antonio Mayobre

Delegated Director

Resident Representative of UN Technical Assistance Board (Central America)

1963- 1966

Venezuela

Educator

Speaker

Carlos Quintana

Director of the Industrial Development Division

1967- 1972

Mexico

Conference Delegate

Enrique V. Iglesias

ECLAC Executive Secretary Undersecretary-General Deputy Secretary-General of the United Nations.

1972- 1985

Uruguay

Honorary Academic

Norberto Gonzalez

Executive Secretary Deputy Executive Secretary of Economic and Social Development

1985-

Argentina

Gert Rosenthal

Executive Secretary Director of the Mexico office

Deputy Executive Secretary.

1988- 1997

Guatemala

Jose Antonio Ocampo Gaviria

Executive Secretary Minister of Finance and Public Credit

United Nations' Deputy Secretary-General for Economic and Social Affairs

1998- 2003

Colombia

Jose Luis Machinea

Executive Secretary

2003-to present

Argentina

Speaker

Table 1. ECLAC Director History

Overview

No one would argue that the responsibility for heading and reporting on a project the size of ECLAC is a big job. Again, no one would argue that the visible positioning of working for and being accountable to the United Nations is not a daily, and even daunting, process.

This same 'no one' would not argue that scholarship is not important to the emergent democracies, autocracies, and other governmental structures known to the world today. This author would not argue the advantages of study, reflection, authorship, communication, education, dissertation, and the like.

The problem emerges when the purpose does not match the product. In every situation, the ECLAC director function appears to have been - and continues to be - reams of research, mounds of manuscripts, and piles of pontification concerning what should be done, what must be done, what will be done to assist these underdeveloped countries in their quest for a higher standard of living, global market positioning, and social intertwining with other countries and their cultures.

Following are statistics on several Latin American and Caribbean countries provided here to support the thesis that the ECLAC organization is but one more time, money, and resource behemoth which produces little more actual benefit that to those working for a place in literary or educative fame.

Jamaica

Jamaica's GDP exports are alumina, bauxite; sugar, bananas, and rum, has a -2% industrial growth rate, a 16% unemployment rate, and a national debt of 5.2 trillion dollars. For an island smaller than Connecticut with a population of slightly more than 2.6 million people, the ECLAC directives - and the country's welfare - would be better served through action, not scholarship.

Guatemala country slightly smaller than Tennessee, Guatemala is a burgeoning constitutional democratic republic. Corruption is noted as one of the most severe problems within this small South American country, followed by drugs and money laundering.

With approximately 60% of the Guatemalan population living at or below the poverty level, a 7.5% unemployment figure, 7.6% inflation ratio, and $4.5 trillion in debt, Guatemala is forced to rely on external factors to survive.

National exports are coffee, sugar, bananas, fruits and vegetables, cardamom, meat, apparel, petroleum, electricity and the 9/11 events in the United States have severely impacted tourist trade.

Venezuela

Venezuela is a federal republic with over 24 million citizens, 67% of which live in poverty and 14% are unemployed.

The GDP is made up primarily of services with petroleum, bauxite and aluminum, steel, chemicals, and agricultural products composing the primary exports. Tourism is impacted negatively by the events of terrorism and the typical 587,000 visitors each year has dwindled considerably.

Reasons for Failure

Why are these charter initiatives not being conducted? In a scathing commentary on the failure of Latin American economic reforms, Joseph Stiglitz, Nobel economics laureate and professor at Columbia University cites the "Washington Consensus policies of deregulation, privatization and liberalization of trade and capital flows promoted and pushed by the International Monetary Fund and its economists while often ignoring the roles of the market and the government, even under U.S.-style capitalism" as a primary problem.

Professor Stiglitz goes on to highlight the focused efforts of Raul Prebisch Executive Director of ECLAC from 1950 to 1963. Prebisch was concerned with the plight of Latin America, and to his worries about declining commodity prices several more have to be added, Stiglitz said.

According to Stiglitz, market tyranny, the unconscious perpetuation of poverty, and pro-cyclical reforms all contribute to a need for "those disenfranchised in the past... demanding a voice. The electoral democracies of the past have not improved their plight. That is what they know... [and] these are the failures of the reform process that have to be confronted."

Raul Prebisch and His Vision for ECLAC

Raul Prebisch -- credited with developing the 'dependency' thesis of economic development theory -- argued that Third World countries had not benefited from the "colonial enterprise and international trade" vision espoused by earlier economic theorists.

Forcing a dependent relationship upon underdeveloped countries, Prebisch worked against the 'center-periphery' relationship he saw emerging from the pseudo goodwill of major world powers of his day. According to Prebisch's argument, by encouraging Third World countries to produce the materials for First World countries to excel, the dependency was forged.

As defense, Prebisch fought for a state of 'protectionism' in trade and import, stating that "substitution strategies were acceptable, indeed necessary, if these [Third World] countries were to enter a self-sustaining development path."

Despite this author's derision for little more than scholarly involvement in the ECLAC charter, Prebisch's thesis was supported by his efforts to fund and direct such projects as global community involvement, onsite initiatives, and vocal debate whenever the issues presented themselves.

The UN's Involvement and Call to Commitment

On July 1, 2004, a call to arms was issued in a speech given by Mark Malloch Brown, UNDP Administrator. In this speech to hundreds of ECLAC and UNDP delegates, his UN challenge was one of meeting the initiatives put forth by ECLAC and other such UN-affiliated organizations.

Following are the steps outlined in Mr. Brown's mandate:

First, a disciplined alignment of all development activities in a country behind a well-rooted, broadly owned national development strategy that offers a serious path to achieving the globally agreed Millenium Development Goals (MDGs);

Second, radical simplification of our own programme procedures and cycles to keep up with best donor and national practice;

Third, focusing UN development activities where our comparative advantage lies, in ideas and institutions building;

Fourth, a determined effort to rationalize our country presence, both lightening and integrating it, so that you get the maximum value of UN support, and not see too much of it go to administrative costs; and Fifth, a strengthening of the RC and Country Team system to drive the strategic coherence and outcomes of these reforms.

Summary

Scholarship, research, dissertation, and education each have a key position in the process of change. If any existing condition is to be altered or improved, the necessary 'bookwork' must be done to prepare all participants for the looming alterations in the landscape.

Fifty-six years of such activity is - in this author's opinion - fifty-five years too long without accompanying production, reform, aid, on continent example, and appropriate interventions.

Emergent democracies have a challenging time working through inevitable issues such as election process, governmental structuring, corruption, insurgency, and the like. Add the well-meaning, but substance-less offerings of a well-funded and highly visible UN office and program agenda, and the problems merely multiply.

As with so many other UN initiatives, the ECLAC should be spearheaded by action, not rhetoric.

The world would be a much better place in which we can all move about with confidence and measures of freedom.