The capital goods industry: Situation and challenges

This article attempts to provide an overview of the situation of the production and supply of capital goods in Latin America, the trends over the last few years and the challenges facing the reactivation, restructuring and expansion of this industry during the 1990s. The capital goods industry has often been considered, in the theory and practice of development, as a strategic industry, owing to its links with the other productive sectors and its function in the process of technological innovation. Because of the crisis affecting the economies of Latin America, which has been expressed in violent inflationary processes, in a marked decline of investment in most of the region, and in a contraction of the demand for capital goods, the industry that produces these goods faces serious difficulties and in some countries its very survival is threatened. There are also structural and long-term obstacles to development of an industrial activity which is intrinsically complex because of its markedly technological character, which makes it necessary to conceive of development with a long- range view. This article is based on the results of a regional co-operation project which ECLAC carried out together with UNIDO under the auspices of UNDP.