José Antonio Ocampo

Growth and policy in developing countries : a structuralist approach

Economic structuralists use a broad, systemwide approach to understanding development, and this textbook assumes a structuralist perspective in its investigation of why a host of developing countries have failed to grow at 2 percent or more since 1960. Sensitive to the wide range of factors that affect an economys strength and stability, the authors identify the problems that have long frustrated growth in many parts of the developing world while suggesting new strategies and policies to help improve standards of living. After a survey of structuralist methods and post-World War II trends of global economic growth, the authors discuss the role that patterns in productivity, production structures, and capital accumulation play in the growth dynamics of developing countries. Next, it outlines the evolution of trade patterns and the effect of the terms of trade on economic performance, especially for countries that depend on commodity exports. The authors acknowledge the structural limits of macroeconomic policy, highlighting the negative effects of financial volatility and certain financial structures while recommending policies to better manage external shocks. These policies are then further developed through a discussion of growth and structural improvements, and are evaluated according to which policy options-macro, industrial, or commercial--best fit within different kinds of developing economies.

Latin America's Growth and Equity Frustrations During Structural Reforms

This paper argues that Latin Americas market-oriented reforms, together with increased monetary and fiscal discipline, were successful in bringing down inflation, inducing export growth and diversification, and attracting foreign direct investment. Nonetheless, economic growth was frustratingly slow. Pro-cyclical macroeconomic policies generated, in turn, strong business cycles in the face of unstable access to international capital markets. Higher productivity in leading firms and sectors failed to spread throughout the economy and led to increasing productive sector dualism. Furthermore, despite the democratic dividend reflected in increased social spending and coverage of social services, weak economic performance and additional distributive tensions led to disappointing results in terms of employment generation and poverty reduction. Overcoming these frustrating outcomes would require counter-cyclical macroeconomic policies, open-economy productive development strategies and mainstreaming social objectives into economic policies.

Beyond Reforms: Structural Dynamics and Macroeconomic Vulnerability

The book is organized in two parts. The first part looks at issues of long-term growth and development patterns, and the second part focuses on issues of macroeconomic vulnerability and its social effects. Chapter 1, looks at the determinants of dynamic efficiency in developing countries, which is seen as the result of two basic processes. Chapter 2, looks at the same issue from a slightly different angle: the combined effect of the technological gap relative to developed countries and the propensity to import. Chapter 3, takes as its starting point the inverted-U pattern followed by the share of manufacturing in total employment as a result of the process of structural change generated by increases in per capita income. Chapter 4, analyzes the social effects of structural reforms. Chapter 5, considers the determinants of business cycles. Chapter 6 explores a case of destabilization. Chapter 7, discusses debt sustainability issues; and the last chapter, deals with divergence and growth collapses, and serves to tie together the issues analyzed in both parts of the book.

Capital-account and counter-cyclical prudential regulations in developing countries

The association between capital flows and economic activity has been a strong feature of the developing world, and particularly of emerging markets, for a quarter of a century. This highlights the central role played by the mechanisms that transmit externally generated boom–bust cycles in capital markets to the developing world, as well as the vulnerabilities they engender. The strength of business cycles in developing countries, and the high economic and social costs they generate, are thus related to the strong connections between domestic and international capital markets.

New developments in trade theory and LDCs

Abstract This paper surveys the new literature on international trade relevant to the North-South controversy. In the first part, two types of North-South models are considered: the ‘unequal exchange’ theory of Lewis and Emmanuel, and the models of dynamic interaction of Findlay, Taylor and others. The analysis focuses on the determinants of growth, the terms of trade and relative employment in the world economy. In the second part, the paper reviews the empirical literature on South-North and South-South trade, and the theories of North-South technological gaps, intra-industry trade and external economies. Finally, we analyze the literature on exports and economic growth, and the neo-classical, Keynesian and disequilibrium approaches to the theory of import controls.

A Broad View of Macroeconomic Stability

This paper recommends a broad concept of macroeconomic stability, whereby “sound macroeconomic frameworks” include not only price stability and sound fiscal policies, but also a well-functioning real economy, sustainable debt ratios and healthy public and private sector balance sheets. These multiple dimensions imply using multiple policy instruments. The paper elaborates a framework for developing countries that involves active use of counter-cyclical macroeconomic policies (exchange rate, monetary and fiscal), together with capital management techniques (capital account regulations and prudential rules incorporating macroeconomic dimensions). It also explores the role of international financial institutions in facilitating developing countries’ use of counter-cyclical macroeconomic policies.

Globalization and Development : A Latin American and Caribbean Perspective

This book presents an analysis of the opportunities that are open to the developing world, but it also examines the asymmetries and risks entailed in this process, which may hinder development unless suitable institutional frameworks are put in place at the national, regional, and global levels. Although the conceptual considerations explored in this volume are based on one particular region of the developing world, Latin America and the Caribbean, the analysis is undertaken in a broader spirit and may therefore be relevant for other regions as well. The first of this books five chapters focuses on the multidimensional nature of globalization; describes the current phase of the process within its historical context of global economic internationalization; and briefly examines its social, political, and cultural dimensions. Chapters 2 and 3 look at how the economic facets of the globalization process have evolved. Chapter 2 explores trends in international trade and in the new global production structure, and chapter 3 analyzes the international mobility of capital, within the framework of the various macroeconomic regimes of the world economy, and of labor. Income disparity trends and the underlying asymmetries of the current global order are discussed in chapter 4. The fifth and final chapter proposes an agenda for the global era. As part of this proposal, and on the basis of certain fundamental principles, such as global institutions that respect diversity; complementarity among global, regional, and national institutions; and equitable participation by the countries based on suitable rules of governance, this chapter outlines the national, regional, and global measures that are needed to achieve the three foremost objectives of a new international order: a supply of global public goods, the gradual correction of international asymmetries, and the progressive construction of a rights-based international social agenda.

The Instability and Inequities of the Global Reserve System

This paper argues that the current global reserve system is inherently unstable due to the use of a national currency as the major international reserve currency, and the high demand for “self-insurance” by developing countries. The latter is due to the mix of highly pro-cyclical capital flows and the limited room to maneuver that developing countries have to manage counter-cyclical macroeconomic policies. Both features imply that the system is also inequitable. An important insight of the paper is that such inequities feed into the instability of current arrangements. Any meaningful reform of the system must therefore address these two interlinked features.

Subregional financial cooperation: the South American experience

This paper reviews the experience of South America with subregional financial cooperation. It shows that this experience has been one of the most successful in the developing world, though uneven in terms of country coverage and services provided. The Andean region has been particularly successful in developing multilateral financial institutions, and development financing has been broader in scope than monetary cooperation. The two most successful institutions, the Andean Development Corporation (CAF) and the Latin American Reserve Fund (FLAR), have shown the capacity to provide services to member countries in a timely way, with countercyclical effects and on a large scale relative to other forms of multilateral financing. The strong sense of ownership of these organizations by member states, preferred creditor status, and professional management is reflected in very healthy portfolios, even in the face of default by member countries. The services of these institutions could be broadened to support, among others, the development and integration of the physical infrastructure and macroeconomic policy coordination.

The dual divergence: growth successes and collapses in the developing world since 1980

This paper argues that developing countries’ growth successes and collapses tend to cluster in specific time periods—and that only the existence of a global development cycle can explain this. The cycle reflects the external factors that affect all, or large clusters of developing countries, and thus constrain their growth possibilities. Nonetheless, country-specific factors—particularly patterns of specialization—play a significant role in determining growth dynamics. From this perspective, the paper shows a very large difference between the economic growth of developing countries diversifying into higher technology manufacturing exports and those experiencing success in natural resource intensive sectors.