Neo-structuralist theory in economics appeared in Latin America in the 1980s as an alternative to the neoliberalism of the Washington Consensus. Its main objective was to seek new solutions to the lack of development suffered by the region with an approach focused on achieving greater equality, economic dynamism and national autonomy..
The antecedent of this theory goes back to the years after World War II. At that time, ECLAC (United Nations Economic Commission for Latin America and the Caribbean) and authors such as Raúl Prebisch founded the structuralist school. After this, in the 1960s and 1970s, the dependentista school emerged.
Neo-structuralism tried to renew the approaches created by the structuralists. The intention of its authors was to achieve equity and social justice in a completely democratic framework.
With the support of ECLAC, an organization founded to promote the development of the Latin American economy, the neo-structuralists focused on the informal sector, which they proposed to support with policies that would improve production. They also criticized industrial policies, which for them had been a failure.
Chilean economist Fernando Fajnzylber is considered the key figure in the emergence of neo-structuralism.
Fajnzylber had conducted research on the economy in Southeast Asia and compared it to the Latin American experience.
These works led him to criticize the neoliberalism implanted in the region and the myths that the economists of that current had propagated about the ISI (Industrialization by import substitution) strategy..
The economist came to the conclusion that it was necessary to adapt the first structuralism to the new context in order to eliminate its errors.
Fajnzylber's work as part of COPAL resulted in an alternative analysis of the crisis in Latin America to that developed by the Washington Consensus. This had consisted of a series of neoliberal economic directives promoted by the United States government and had been imposed on several Latin American countries..
For the members of ECLAC, the reason for the crisis in Latin America was due to the fact that a rentier system had been adopted to improve the development of the region. In addition, they concluded that industrialization did not reach the necessary strength, that there had been excessive external indebtedness and an increase in inflation..
With the data collected, ECLAC published in 1990 a report considered fundamental for neo-structuralism: Productive transformation with equity. In addition to containing the alternative analysis to that of the Washington Consensus, it contained several recommendations to solve the economic problems of the region.
One of the novelties introduced by the neo-structuralists was to begin to see the advantages that globalization could bring. It was about recognizing that the economy was already inevitably global and that it was absurd to oppose it on principle.
Neo-structuralist theory maintained that during the ISI era, the Latin American economy had been too local and they advocated participating in globalization despite its risks.
Fajnzylber argued that the structuralists had over-idealized the role of the state. However, they did not take into account that, at times, state measures can be harmful.
For this reason, the neo-structuralists were not in favor of excessive state intervention in the economy..
This, however, did not mean that they agreed with the neoliberals. The neo-structuralists, although they advocated ending interventionism, did not think that the State could not participate to improve economic development.
For this theory, the State had to be active, something very different from what is defended by the neoliberals. Among other powers, the State had to regulate political activities related to the social market economy..
Likewise, it had to promote structural reforms, such as the reduction of customs taxes. Finally, it was essential to approve measures so that industrialization will be oriented to certain markets, whether external or internal..
One of the novel characteristics of neo-structuralism was the relationship they established between their economic measures and the need to strengthen democracy and defend human rights..
The slogan chosen by neo-structuralism was "productive transformation with equity." It was about adapting the original structuralist method to the new historical context.
The neostructuralists, like other economic currents, sought an increase in productivity. The main difference was that they proposed to improve it by introducing new techniques and not by depreciating wages..
This was closely related to his vision of industrialization as a fundamental element to improve productivity. From his point of view, the industry should be connected with other sectors, such as agriculture or services.
The neo-structuralists' proposals for transformation went beyond economics. According to its postulates, this transformation should be in line with the improvement of the educational system, infrastructures and social aspects, such as relations between workers and employers..
Another field that should also be taken into account for the supporters of this theory was ecology. The development they advocated could not harm the environment.
Among the theoretical contributions of neo-structuralism is the conviction that the competitiveness necessary for the economy to grow had to be necessarily linked to equity.
To make productive transformation with equity a success, regional integration should be favored. The protagonists of this integration would be the institutions, companies and associations.
On the other hand, the neo-structuralists tried to find solutions to the possible delay in the effects of equity in the most disadvantaged sectors. His proposal was to promote redistributive policies, both fiscal and business development and support for training.
Unlike some theorists of neoliberalism who did not contemplate the need for democracy in their economic postulates, the neo-structuralists argued that productive transformation with equity could only occur in a democratic system.
Although it did not deny the role of the state, neo-structuralist theory asserted that state intervention in the economy should be different. The main objective was for their participation to increase the efficiency of the economic system.
This state intervention did not mean that more public companies had to exist, nor did it mean that they should be reduced. Yes, instead, I had to focus on finding new ways of planning.
Among the advantages of the neo-structuralist theory, he highlighted the control of inflation. In addition, it allowed to increase direct foreign investment.
On the other hand, the increase in productivity did not cause the environmental problems that it could cause to be neglected. Thus, an attempt was made for this economic development to be environmentally sustainable, although not always with success..
Despite the good intentions of the supporters of this theory, the growth of the economy was quite limited, in addition to presenting enormous instability. Furthermore, exports were not diversified enough.
The other great failed element of the theory was presented in one of its main postulates: that of equity. Despite their claims, income remained highly uneven.
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