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Journal ArticleDOI

A preliminary overview of the Latin American economy during 1983

22 Apr 1984-Cepal Review (United Nations Publications)-Vol. 1984, Iss: 22, pp 7-38

Abstract: In this article, the Executive Secretary of ecla gives an overview of the evolution of the region’s economy during the past year, looking at production, employment, inflation, and especially the external sector.
Topics: External sector (57%), Inflation (55%)

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CEPAL
Review
Director
RAUL PREBISCH
Technical Secretary
ADOLFO GURRIERI
Deputy Secretary
GREGORIO WEINBERG
UNITED NATIONS
ECONOMIC COMMISSION FOR LATIN AMERICA
SANTIAGO, CHILE/APRIL 1984

CEPAL
Review
Number 22 Santiago, Chile April 1984
CONTENTS
A preliminary overview of the Latin American economy during 1983.
Enrique V.
Iglesias,
Executive Secretary, ECLA. 7
Latin American Economic Conference. 39
The crisis in Central America: its origins, scope and consequences. 53
Past, present and future of the international economic crisis.
Osvaldo
Sunkel 81
The burden of debt and the crisis: is it time for a unilateral solution?
Robert Devlin
107
Energy and the prevailing model of agricultural technology in Latin America.
NicoloGligo 121
Latin American commodity exports. The case of cotton fibre.
Alberto
Orlandi.
137
The global crisis of capitalism and its theoretical background.
Raúl
Prebisch.
159
Recent ECLA publications. 179

CEPAL REVIEW
No. 22
A preliminary
overview
of the
Latin American
economy
during
1983
Enrique
V.
Iglesias
Executive Secretary, ECLA
In this article,
the
Executive Secretary
of
ECLA
gives
an
overview
of the
evolution
of the
region's economy
during
the
past year, looking
at
production, employ-
ment, inflation,
and
especially
the
external sector.
In his 'Final Conclusions', the author notes that
the
profound crisis through which
the
countries
of
Latin
America
are
passing
has
forced them
to
apply adjust-
ment policies aimed
at
bringing
the
external sector
back into balance.
The
economic
and
social conse-
quences
of
these policies have been exaggerated,
however,
by the
fact that they have
had to be
carried
out
at a
time
of
worldwide recession, they have been
accompanied by
a
massive contraction
in the
net inflow
of capital,
and
they
are
based
on
instruments which
reduce demand
and
fail
to
take advantage
of
national
production capacity.
In order
to
reverse these trends,
the
countries
should orient their policies towards
an
'expansive
adjustment' based
on a
solid process
of
reactivation.
Among the main factors conditioning the achievement
of this objective,
the
author mentions
the
refinancing
of
the
external debt,
the
evolution
of
external trade
(both within
the
region
and
with
the
rest
of
the world),
the reduction
of
inflationary pressures,
and the re-
structuring
of
growth patterns
to
strengthen produc-
tion
and
export capacity
(in
this respect, see
the
Quito
Declaration
and
Plan
of
Action reproduced elsewhere
in this issue
of
C;EPAI.
Review).
The author stresses that
in
tackling these condi-
tions
it is
necessary
to
review both
old
ideas
and
some
newer ones. With regard
to the
latter,
he
reminds
readers
of
the serious consequences brought about
by
strategies based
on
extensive financial
and
trade links
with
the
exterior when
the
international parameters
underwent
a
sudden
and
prolonged change.
I
Introduction
The economic evolution
of
Latin America
in
1983
was
characterized
by two
main features.
The first was
the
aggravation
of
the crisis which
began
in 1981 and
which
by 1982 had
become
the most serious one experienced since the Great
Depression
of the
1930s.
The
second
was the
remarkable effort made by most
of
the countries
of
the
region
to
reduce
the
serious imbalances
that
had
been building
up in the
external sector
over
the
last
few
years.
In
1983,
as in 1982, the crisis affected almost
every country of the region
and
was evidenced
in
the deterioration
of the
main economic indica-
tors. Thus, according
to the
preliminary esti-
mates available to ECLA, which are shown
in
table
1,
the
gross domestic product
of
Latin America
as
a
whole dropped by
3.3%,
after having already
decreased by 1%
in
1982; as
a
result of this drop
and of population growth, the per capita product
fell by 5.6%
in
the region as a whole
and
declined
in
17 of the 19
countries
for
which comparable
information
is
available.
Inconsequence of this downward movement
and
of
the fact that
it had
also fallen during
the
two preceding years,
the per
capita product
of
Latin America
was
almost
10%
lower
in 1983
than
in
1980
and
was back
at the
level
the
region
had reached
in
1977. National
per
capita income
dropped even more sharply (-5.9%),
as 1983
brought
a
further deterioration,
for the
third
year in a row, of the terms of trade
for
the region
as
a
whole, and,
for
the sixth year
in a
row, of the
terms
of
trade
of the
non-oil-exporting Latin
American countries.
The
terms
of
trade
for the
latter showed
a
total decline
of
38%
by
compari-
son with 1977
and, for the
second year
in a row,
sank even below
the
level reached during
the
worst times
of the
Great Depression.
The slowdown
of
economic activity
was
accompanied
by a new
rise
in
urban unemploy-
ment rates
in
almost every country
for
which
relatively reliable data
are
available.
In
spite
of
this, inflation accelerated spectacularly, as
it had
over
the
last three years, reaching record highs.
The simple average rate of increase of consumer
prices climbed from 47%
in
1982
to
68%
in 1983
and the rate weighted by population soared even
more sharply, from
86% in 1982 to 130% in
1983.

CEPAL REVIEW No. 22 / April 1984
In its turn, the extraordinary effort made by
the region to adjust tp these problems was re-
flected in radical changes in the external sector.
Thus,
in 1983 Latin America achieved an unpre-
cedented merchandise trade surplus. Merchan-
dise trade, which up to 1981 had regularly shown
a negative balance, but which by 1982 had re-
corded a surplus of over US$ 9.7 billion, gener-
ated a surplus of almost US$ 31.2 billion in 1983
(see figure 1). This surplus was exclusively due,
however, to a new and spectacular drop in the
value of imports of goods, which went down by
Table 1
LATIN AMERICA: MAIN ECONOMIC INDICATORS"
Gross domestic product at market
prices (billions of 1970 dollars)
Population (millions of inhabitants)
Per capita gross domestic product
(1970 dollars)
Per capita gross national income
(1970 dollars)
Gross domestic product
Per capita gross domestic product
Per capita gross national income
Consumer prices
1
Terms of trade (goods)
Current value of exports of goods
Current value of imports of goods
Exports of goods
Imports of goods
Trade balance (goods)
Net profit and interest payments
Balance on currents account*
1
Net capital movement
Global balance
f
Global gross external debt
8
1975
263
303
868
867
3.7
1.2
-0.3
57.8
-14.0
-7.1
7.0
35.0
40.4
-5.4
5.8
-13.7
14.5
0.8
89.4
1977
292
318
916
918
1978
305
326
936
929
Growth rates
5.0
2.4
2.5
40.0
6.0
18.9
14.8
4.7
2.2
1.3
39.0
-10.9
7.5
13.8
Billion» of dollars
48.2
48.3
-0.1
8.6
-11.7
17.3
5.6
107.3
51.8
55.0
-3.2
10.5
-18.3
26.4
8.1
133.0
1979
326
334
974
972
6.6
4.0
4.6
54.1
4.4
34.3
25.8
69.6
69.1
0.5
14.2
-19.6
29.0
9.4
166.4
1980
345
343
1007
1009
5.9
3.4
3.8
52.8
4.2
30.1
32.3
90.5
91.5
-1.0
19.0
-27.7
29.9
2.2
205.2
1981
350
351
997
985
1.5
-0.9
-2.4
60.8
-7.3
7.0
7.6
96.8
98.4
-1.6
29.1
-40.4
38.0
-2.3
257,9
1982
347
359
965
938
-1.0
-3.3
-4.8
85.6
-7.0
-8.5
-19.9
88.6
78.9
9.7
36.8
-36.4
16.6
-19.8
289.4
1983
h
335
369
911
883
-3.3
-5.6
-5.9
130.4
-7.2
-1.3
-28.7
87,5
56.3
31.2
34.0
-8.5
4.5
-4.0
309.8
Source:
ECLA,
on the basis of official figures.
a
Product, population and income figures refer to the group formed by the countries included in table 2, except Cuba.
Consumer price figures refer to those 19 countries plus Barbados, Guyana, Jamaica and Trinidad and Tobago,
except in the year 1982, when Guyana is excluded, and in 1983, when Guayana and Haiti are excluded. The figures
for the external sector relate to those 19 countries plus Barbados, Guyana and Trinidad and Tobago, except for the
figures on the external debt, which relate to the original 19 countries plus Guyana.
b
Provisional estimates subject to revision.
c
Variation from December to December.
d
Includes net unrequited private transfer payments.
e
Includes long- and short-term capital, unrequited official transfer payments, and errors and omissions.
' Variation in international reserves (with inverted sign) plus counterpart entries.
« 1975 to 1980: includes officially guaranteed public and private external debt, plus non-guaranteed long- and
short-term debt with financial institutions reporting to the Bank for International Settlements. Does not include
guaranteed and non-guaranteed debt with other commercial banks nor non-guaranteed supplier loans. 1981 to
1983:
includes official estimates of the total external debt, which means that the figures have a wider coverage and
are not strictly comparable with those of the previous period.

A PRELIMINARY OVERVIEW OF THE LATIN AMERICAN ECONOMY DURING 1983 /
Enrique
V.
Iglesias
9
Figure 1
LATIN AMERICA: MAIN ECONOMIC INDICATORS
—¿7^
1
^
Gross
domestic
product
3
i 1 I 1 1
Gross
domestic
income
3
V
1
J^^J^0^^ ~"\
1 1 1 1 1
\v
X
1 1
^v
1
-
-
-
Net movement of capital
cd
\
10
8
6
4
2
0
-2
-4
Balance on current /
account'
Net factor payments
X
J L J L
X
J
L
40
20
0
-20
-40
1970 71 72 73 74 75 76 77 78 79 80 81 82 83
Source:
ECLA,
on the basis of official information.
3
Annual growth rate.
b
Weighted percentage variation from December to December.
c
Includes short-, medium- and long-term capital, unrequited official transfer payments and errors and
omissions.
d
Billions of dollars.

Citations
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Book ChapterDOI
01 Jan 1988-
Abstract: The relationship between foreign investment and unilateral transfers is a multifaceted one. It is necessary to analyse this relationship because it is one of the most important and least examined relationships determining long-term economic development in Latin America.1 Unilateral resource transfers are a pernicious disease afflicting major segments of the society, economy and political system of the majority of Latin American countries. The pervasive presence of unilateral transfers in developing countries is a critical factor that separates them from the present day developed countries during their corresponding early stages of growth. While the discussion of capital and interest rates formed the foundation of classical economic thinking, it is the origin, size, and distribution of unilateral transfers that implicitly form the, or at least a, major foundation of modern development thinking.

3 citations


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