Structuralist economics


Structuralist economics

Structuralist economics originated with the work of the Economic Commission for Latin America (ECLA or CEPAL) and is primarily associated with its director Raul Prebisch and Brazilian economist Celso Furtado. Key to structuralist analysis is the idea that the structural features of developing economies need to be taken into account. Early structuralist models emphasised external and internal disequilibria arising from the productive structure and its interactions with the dependent relationship developing countries had with the developed world. The alleged declining terms of trade of the developing countries, the Prebsich-Singer hypothesis, played a key role in this. [ Palma, J.G. (1987). "structuralism," "", v. 4, pp. 527-531.]

Dutt and Ros (2003, p55)argue that structuralist economists try to identify specific rigidities, lags as well as other characteristics of the structure of developing countries in order to assess the way economies adjust and their responsiveness to development policies. A normal assumption within this approach is that the price mechanism fails
* as an equilibrating mechanism,
* to deliver steady growth,
* to produce a "desired" income distribution. [Dutt, Amitava Krishna and Ros, Jaime (2003) Development Economics and Structuralist Macroeconomics: Essays in honor of Lance Taylor, Edward Elgar]

Nixson [Colman, D. and Nixson,F. (1994) Economics of Change in Less Developed Countries, Harvester Wheatsheaf] (p454) reports Bitar's (1988) [Bitar, S. (1988) Neoconservatism versus Neostructuralism in Latin Ameria, CEPAL Review, No. 34.] argument that there had become a broad consensus on what amounted to the neostructuralist approach. This included the recognition of:
* the importance of political and institutional factors in the analysis of economic problems.
* of the need to raise the level of domestic saving in order to raise the rate of investment given that external sources of finance are likely to be hard to come by
* inflation as a "social phenomenon" requiring for its elimination social, psychological and political-institutional changes, as well as orthodox moneraty and fiscal policies.
* the false nature of dilemmas between for example ISI and EOI - planning and the market - agriculture and industry.
* the need to strengthen the productive and technological base.
* the importance of trying to improve the terms on which countries are integrated into the global economy and to improve international competitiveness.
* structural adjustment as only one component of structural change.

More recent contributions to structuralist economics have highlighted the importance of institutions and distribution across both productive sectors and social groups. These institutions and sectors may be incorporated macroeconomic or multisectoral models.At the macroeconomic level modern stucturalists would trace the origins of their approach to Kalecki's (1970) Problems of Financing Economic Development in a Mixed Economy. [Kalecki, M (1970) Problems of Financing Economic Development in a Mixed Economy. ] FitzGerald’s version of this model of an industrializing economy has three commodity markets (food, manufactures and capital goods), foreign trade and income distribution which underpin the specification of a financial-sector with savings, investment, fiscal and monetary balances. [ FitzGerald, E. V.K. (1990) Kalecki on Financing Development: An Approach to the Macroeconomics of the Semi-industrialised Economy Cambridge Journal of Economics, vol. 14, issue 2, pages 183-203 .] For multisectoral models Social Accounting Matrices (SAMs) (an extension to Input-Output Tables) are often used. [Taylor, L (1983) Structuralist macroeconomics: Applicable models for the third world, Basic Books, New York] Lance Taylor (2004) has provided both a technical introduction to a form of structuralist economics and critique of more mainstream approaches. [Taylor, L (2004) Reconstructing Macroeconomics: Structuralist Proposals and Critiques of the Mainstream, Harvard University Press.]

Notes


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