Structuralist School

THE STRUCTURALIST school emerged in the late 1940s, and reached its heyday in the 1950s and 1960s, as a school of thought that addressed the problems of development in the Third World, putting itself in the Marxist tradition and against the neoclassical theory. Its focus has been mainly on Latin American countries, although it was later embraced to tackle underdevelopment in African and far east Asian countries as well. The founder of the structuralist school is considered to be the Argentinean economist Raul Prebisch. He was the director of the Economic Commission for Latin America (ECLA), founded in 1948, which can be seen as the economic organization where structuralist theory was developed. Other main exponents of the school are the Brazilian economist Celso Furtado, the German-born Hans Singer, the Chilean economist Osvaldo Sunkel, and the English economist Dudley Seers.

The structuralist analysis starts by observing that underdevelopment does not depend on lack of savings and of capital accumulation, as maintained by the neoclassical theory. Rather, it depends on the combination of lack of inducement to invest and lack of foreign exchange, which are determined by structural characteristics of underdeveloped economies. The main aim of the theory is then to identify the structural characteristics that prevent countries to develop and, as a consequence, to recommend policies apt to change them. The key features of the structuralist approach to development theory can be paraphrased from D. Hunt, as follows.

Economic growth does not imply economic development, as reiterated by C. Furtado. Economic development requires not only an increase in output, but [Page 1032]also a change in the sectoral composition of output: there must be an expansion in the number of industries that use advanced technologies, so that labor productivity will be maximized.

Underdevelopment is the result of the historical process of incorporating underdeveloped countries into the world economy. In the international economic context, the role of underdeveloped countries (UDCs) is that of suppliers of raw materials and of markets for mass-produced goods. The path toward development previously followed by advanced countries cannot be replicated because of the position of UDCs in the current international economy: advanced countries have never been underdeveloped, but rather undeveloped—they did not have to compete with other advanced countries once industrialized.

As a consequence, underdeveloped economies are characterized by a dualistic structure: a traditional agricultural sector and a modern sector, owned by foreign capital and with a high degree of openness, which imports capital goods and produces primary products for export.

Development cannot be sustained externally: a necessary condition to create development is for underdeveloped countries to generate their own growth dynamic. Export production must generate sufficient internal demand to induce a process of sustained investment.

Inflationary pressure and balance-of-payments (BOP) crises do not depend on easy monetary policy, as maintained by the monetarist theory. They are rather the results of economic structures of underdeveloped economies: inflationary pressures are mainly due to low internal elasticity of supply, and BOP crises are often the result of low external income elasticity of demand for primary products combined with low internal price elasticities of supply and demand for primary and manufactured goods. The role of the government is fundamental to achieve the structural transformations necessary for development. It must give incentives for both the implementation of import substitution policies and the creation of a common market among underdeveloped countries.

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