Globalisation, Social Conflict and Economic Growth

L ET me begin with a confession: until about a month ago, when I began to prepare for this lecture, I had not read any of Raul Prebisch’s writings. I was of course familiar with many of Prebisch’s ideas – his intellectual leadership at ECLA and UNCTAD, the so-called Prebisch-Singer thesis on the deterioration of the terms of trade for primary products, and his advocacy of import protection as a way of speeding up industrialisation. But like most development economists of my generation, I knew Prebisch second hand and mostly as a label associated with a particular type of development strategy. It is no secret that this development strategy – import substituting industrialisation (ISI) – has now been out of favour for a while. By the late 1970s, neoclassical economists were pretty unanimous in their condemnation of the ISI strategy. And about a decade later, policy makers all over the developing world had converged on the same verdict. Prebisch’s name has become tainted by association with an apparently failed development strategy. Today’s conventional wisdom reverses the logic of Prebisch’s argument: those developing countries that took Prebisch’s advice and withdrew from the world economy, the new consensus goes, eventually floundered, while those that embraced trade prospered beyond expectations. Anyone who has read Prebisch more closely – and I am now happy to include myself in this company – would object that the usual characterisation of Prebisch as an advocate of protection ignores a lot of subtleties. Prebisch did not favour indiscriminate protection. He anticipated his later critics by recognising that trade protection on its own would not lead to increased productivity in manufactures, and might even result in the opposite. 1