Prebisch, Raul (1901–86)

RAUL PREBISCH WAS an Argentine economist who became known both for his contributions to structuralist economics and dependency theory and for being founding secretary-general of the United Nations Conference on Trade and Development (UNCTAD), which was a position he held from 1964 to 1969. He also served as head of Argentina's Central Bank.

Prebisch's early work and thought were greatly influenced by the plight of Argentina and other South American countries, much of which remained mired in poverty despite theirs many apparent comparative advantages in terms of primary products. This led Prebisch and his followers to believe that the world was divided into a dual system in which core and periphery interacted on an unequal basis.

The core nations, which included the United States, the Soviet Union, and western Europe, operated at the center of economic and political systems in which the peripheral nations acted to provide primary goods to the core nations at preferential prices, dictated by the economic and political power of the core. Core nations used the primary goods to manufacture secondary goods, which could maintain their price levels even during economic recessions when the prices of primary goods decreased.

Consequently, peripheral nations are destined to remain in their subordinate situation. This influential stream of thinking suffered from the lack of empirical or conceptual evidence to support some but not all of its premises. However, the Singer-Prebisch theory (created with the German economist Sir Hans Singer) continues to receive attention among those working with economic development.

Structuralism and dependency theory ideas were subsequently used in the work of Immanuel Waller-stein, Andre Gunder Frank, and the World System Theory scholars. They are central to several ongoing debates on economic development, and Prebisch is considered one of the most eminent Latin American intellectuals of the modern world.

As founding secretary-general of UNCTAD, Prebisch was involved with establishing the body as an important intergovernmental forum for north-south issues. He also presided over the creation of the Generalized System of Preferences (1968), which required developed countries to grant greater access to their domestic markets to products from lesser developed nations. This would help exports of manufactured goods from the periphery to the core, which was one of Pre-bisch's policy prescriptions, resulting from his dependency theory work. Further, International Commodities Agreements were also brought established that were aimed at stabilizing commodity (primary product) prices.

Mostly because of Prebisch's leadership, the Economic Commission for Latin America became a center for radical economic thought and attracted many followers. Prebisch also became involved with the Import Substitution Industrialization (ISI) model of economic development that was so successfully used by countries such as South Korea. The ISI emphasizes the importance of restricting imports of consumer goods while doing all possible to industrialize manufacturing production to replace what consumer goods would have been imported, with additional policies to improve education at all levels and encourage savings.

Despite the evidence demonstrating the value of the ISI, most economists reject it because it does not adhere to economic theory. Prebisch advocated that the ISI for Latin America should also involve regional economic integration, thereby providing economies of scope and scale and lower transaction costs. These policies were put into practice in much of Latin America and received some initial success, but this was not sustained in the long run, as a result of various political issues and, ultimately, the oil crisis of 1973.

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