Richard Weisskoff

Linkages and Leakages: Industrial Tracking in an Enclave Economy

The study of export-led industrialization in an enclave economy comes at the juncture of two long-standing controversies concerning developing areas. The first arises from the difficulties of poor countries in industrializing from a current comparative advantage in primary commodities, despite buoyant earnings of foreign exchange. The second turns inward and, looking away from trade policy, seeks the key to industrial development in greater interaction between domestically oriented sectors, rather than in greater export earnings. This paper is an analysis of the structural changes which have occurred during the industrialization of one country, Puerto Rico. Our objective is to study the apparent success which that growing economy has had in the simultaneous creation of both linkages between local sectors and leakages from those sectors to the world economy, in the creation of new industries and the displacement of others. We begin in Section I by reviewing briefly the broad developmental issues which revolve around the two controversies. In Section II, we examine the case history of Puerto Rico in the context of its steady and successful growth and its experience as a representative of a class of tradedependent, densely populated economies, similar to many small economies which are becoming integrated into the larger industrial metropolises. In order to evaluate Puerto Ricos growth in the context of the broader developmental issues, we propose in the third section a general sectoral * This research has been supported by grants from the Manpower Administration of the U.S. Department of Labor, the National Science Foundation and the National Bureau of Economic Research. The views reported here are in no way reflections on or of these agencies.

Trade, Protection and Import Elasticities for Brazil

UANTITATIVE models of import demand 9J have revolved around numerical estimates oemand elasticities for a number of theoretical and practical reasons. 1 Especially in Latin America, much of the stimulus and direction of postwar development is said to have originated out of reaction to the trade constraint.2 Perhaps the most widely-cited case of rapid, import-subs.tituting industrialization is that of postwar Brazil, a case almost unique among the Latin American nations for its rejection of quantitative controls and its reliance on the price mechanism to ration imports. The pieces of the Brazilian protective system, correctly assembled. and aligned, reveal a detailed chronicle of a market that has functioned to restrict and distribute imports under pressure of rapid growth and a severe foreign exchange constraint.3

The Paraguayan agro-export model of development

Abstract This study examines the performance of the Paraguayan agro-export model and the distribution of crops, land, and livestock that constitutes its successful expansion. The author associates the major staples — corn, sugarcane, cotton, soybeans, wheat, and cattle — with distinct farm sizes and suggests that these have supported different segments of the peasantry in the face of an extremely unequal land distribution and under the repressive conditions of the Stroessner era (1954–1989). It may be ironic that the success of the model has depended on export (cotton) and food crops (corn and manioc) which are the domain of the minifundia . As Paraguay now embarks on the transition to democratic government, it must grapple with the ecological and social imbalances which underlie the agrarian model.

The structure of income inequality in Puerto Rico

Abstract The Kuznets hypothesis predicts that the level of income inequality will rise, then fall during the course of economic development. However, empirical studies have found that for many countries inequality levels off after a certain stage of development and remains at this level for a long period of time. In this paper, one possible reason for the formation of such an ‘inequality plateau’ is suggested. Puerto Rico is used for our case study. Employing an augmented input-output model, we find that the 1963 Puerto Rican economy had reached such an inequality plateau, with a very narrow range of inequality levels permitted by its economic structure. We then investigate the relation between the inequality band and the degree of sectoral interdependence. We find that under certain assumptions one can show a direct correspondence between the two, with the equality range narrowing as the linkages increase. Once an economic system has reached a certain degree of sophistication in its linkage structure its inequality level may become immobile. The implication of this is that after a point the natural course of development will not result in further reduction in inequality. At this stage, the government might have to intervene directly in income determination to reduce inequality.

The growth and decline of import substitution in Brazil — revisited

Abstract Of all developing economies, Brazil in the early 1960s represented the most spectacular case of import substitution (IS) which, it was thought, had reached its final or ‘declining’ phases. This paper re-examines the theories of that period by applying econometric techniques to input-output and extended time series data. We trace the progress and regression of IS through different circuits and find the process to be reversible. Second, we find a dialectical relationship between the creation of inter-industry linkages and their destruction through leakages which undermine IS. Third, we identify a dialectical relationship between the ‘substitution of imports’ and the ‘importation of substitutes’, that is, the continual invasion of new imports which displace local products and create the need for IS, such as wheat substituting for tropical foods, plastics for woods and synthetic fibres for cotton.

A hydro-economic model of South Florida water resources system

South Floridas water infrastructure and ecosystems are under pressure from socio-economic growth. Understanding the regions water resources management tradeoffs is essential for developing effective adaptation strategies to cope with emerging challenges such as climate change and sea level rise, which are expected to affect many other regions in the future. We describe a network-based hydro-economic optimization model of the system to investigate the tradeoffs, incorporating the economic value of water in urban and agricultural sectors and economic damages due to urban flooding while also accounting for water supply to sustain fragile ecosystems such as the Everglades and coastal estuaries. Results illustrate that maintaining high reliability of urban water supply under scenarios of reduced water availability (i.e., drier climate conditions) may trigger economic losses to the Everglades Agricultural Area, which will likely become more vulnerable as competition over scarce water resources increases. More pronounced economic losses are expected in urban and agricultural areas when flows to the Everglades are prioritized. Flow targets for coastal estuaries are occasionally exceeded under optimal flow allocations to various demand nodes, indicating that additional storage may be needed to maintain the environmental integrity of the estuarine ecosystems. Wetter climate conditions, on the other hand, generally lead to increased flows throughout the system with positive effects on meeting water demands, although flood mitigation efforts will necessitate additional releases to the estuaries. Strengths and limitations of the hydro-economic model are discussed.

The decline of the U.S. footwear industry and the expected impact of a Free Trade Agreement between Colombia and the United States

Abstract This article traces the internationalization of the U.S. footwear industry in terms of the many changes affecting market structure, raw materials, technology, shoe styling, wages, transportation, and the unresponsiveness of U.S. manufacturers to the foreign challenge. The econometric findings of an import demand function fit to U.S. data from 1963–1991 reveal unitary and significant elasticities with respect to both activity and price variables, well within the range of other studies of the footwear industry reviewed here. Possible scenarios of the impact of NAFTA on the U.S., Mexican, and Colombian footwear industries are presented in the context of a detailed analysis of Colombias footwear industry, its exports to the world in general and to the United States. By examining the average unit prices of all Colombian exports and the U.S. tariffs specific to these products, we speculate on the potential for Colombian exports once tariffs are lowered.

Environmental infrastructure and socio-economic indicators in San Pedro Sula, Honduras

Access to water and sanitation was evaluated with respect to socio-economic factors for San Pedro Sula, Honduras (SPS), a medium-sized industrial city. A multidisciplinary analysis was conducted using socio-economic distribution and infrastructure assessments to determine the nature and extent of any existing inequalities. Although piped water access was nearly universal, socio-economic status did not always correlate with quality of service. Other notable relationships were observed with monthly expenditures, homes with dirt floors, and topography. Results indicate that SPS would benefit from improved operation and maintenance of existing infrastructure, implementation of groundwater disinfection and source water protection, and construction of sewage treatment facilities.