Economic Progress
Poverty and Abundance: In Latin America, as in Southeast Asia, economic progress has become a part of the drive for national independence and dignity; industrialization seems to be Aladdin's lamp,...
...Percentage Distribution of the Labor Force ManutacturCountry Agriculture ing 6 Mining Construction Services Unknown Haiti IIA 6.6 0.8 11.5 3.7 Honduras 75.7 8.1 1.9 11.0 3.3 Guatemala . . 74.8 8.4 2.0 11.6 3.2 Nicaragua 69.7 11.6 2.5 16.2 — Dominican Republi c 69.7 8.1 2.7 17.5 2.0 El Salvador . . 64.2 11.3 2.8 18.5 3.2 Bolivia 63.3 14.9 2.5 18.4 0.9 Brazil 61.1 13.5 3.9 21.2 0.3 Peru 58.8 16.9 2.9 19.6 1.8 Paraguay 58.3 15.6 2.7 20.8 2.6 Mexico 57.8 13.2 2.8 21.8 4.4 Colombia...
...Only the last three nations can be described as agricultural-industrial...
...Countries with higher than average per capita output were: Argentina ($85), Venezuela ($59), Mexico ($41) and Colombia ($39...
...This difference in description suggests different approaches to the fundamental problem which the area is facing...
...In brief, Latin America today is neither "poor" nor "underdeveloped...
...The present share of the area in the world industrial economy is rather modest...
...A very different pattern appears in the distribution of national income by industrial origin...
...With reservations for a considerable margin of error and some appalling inconsistencies (for example, the high per capita income in the Dominican Republic and Guatemala as compared with Mexico, or in Cuba and Colombia as compared with Brazil), per capita income for Latin America averaged $240 in 1950, the last year for which more or less comparable data are available...
...Rather, it should be described as an unevenly developed area, with the villages lagging far behind the big cities...
...Nevertheless, agriculture still absorbs more than three times as many workers as manufacturing and mining combined...
...The UN Statistical Office estimates that per capita industrial production increased 40 per cent in Latin America from 1948 to 1957, as compared with 42 per cent for North America, 75-30 per cent for Europe and about 150 per cent for Asia and the Middle East...
...However, Chile ($29) and Brazil ($25) were somewhat below the average...
...When the freemarket exchange rates are used, national income appears too low...
...The period 1948-55 brought gains of 20 to 25 per cent in real per capita income in Brazil, Mexico and Colombia, practically no gain in Chile and a net lo&s of 11 per cent in Argentina...
...Moreover, it should be pointed out that the growth of manufactures has been very unevenly distributed in Latin America...
...Agriculture employs from 50 to 70 per cent of the force in most Latin American republics, more than 70 per cent in Haiti, Honduras and Guatemala, and less than 30 per cent in Chile, Argentina and Uruguay...
...America, the gross product of the area was distributed by economic sectors as follows (in percentages) : Agriculture 24.5 Manufacturing and mining 22.5 Construction 4.6 Services 44.4 Housing, rent 4.0 The disparity between the shares of agricultural and non-agricu'ltural pursuits in employment and national product is described by the UN Commission as a difference in productivity of labor...
...The net per capita value of industrial output (value added by processing) for the whole area was close to $35...
...Out of its total population of 8.5 million, about one million live in Lima, which in 1950 absorbed about 55 per cent of the national income and had a per capita income close to $445, as compared with $50 in the rest of the nation...
...According to the Economic Commission for Latin II...
...But Latin America differs from Southeast Asia in historical and cultural background and in the level of its economic development...
...Peru is among the poorest countries of the area in terms of per capita income, but Lima is among its most glamorous capitals...
...Industrialization: Most of the people in Latin America make their living in agriculture and husbandry, but the distribution of the labor force by broad economic sectors is changing gradually...
...Employment in manufacturing, construction and especially services (including trade) is growing more rapidly than employment in the villages...
...Generally, rich people in Latin America enjoy about the same comforts and luxuries as the rich in the United States...
...we drove along it, but were advised by local friends not to trespass in that world of misery...
...the Middle East...
...Many cities are encircled by indescribable slums...
...This is one of the causes of the striking contrast between the rich and the poor in this area...
...Per Capita Income: Averages fail to give a clear picture of the living conditions of Latin American people...
...Yet the latter method has been accepted by the United Nations Commission for Latin America, and I have used it in Table I below...
...56.2 50.7 Manufacturing and mining . . I5.I 15.7 Construction 3.1 3.7 Services 23.2 27.6 Unknown and not specified . . . 2.3 2.4 Source: UN Economic Bulletin for Latin I Anicrica, Sautiago, Chile, February 1957...
...The poverty of the people is hidden behind the glittering fa?ade of magnificent Latin American cities...
...According to the Statistical Office of the United Nations, all of Latin America accounted for 3.4 per cent of world manufactures in 1953 (the total excludes the countries of the Soviet bloc), as compared with 3.5 per cent for Italy, 3.6 per cent for Canada, 4.6 per cent for France, 7.9 per cent for Western Germany, 8.4 per cent for the United Kingdom and 54.0 per cent for the United States...
...Perhaps it would be advisable, for practical reasons, to start with industry and shift later to agriculture...
...industrialization seems to be Aladdin's lamp, the cure for all evils...
...Some countries have no reliable statistics...
...There one sees large factories equipped with the most modern machinery...
...This contrast might seem to justify the efforts of local governments to promote rapid industrialization: They believe that, in order to catch up with the more prosperous powers, their countries must start to run before they have learned to walk...
...In general, Latin America presents all economic patterns, from primitive hoe-agriculture and colonial-type plantations to modern capitalism...
...If they have less cash, they employ more servants...
...Changes in national income reveal a similar pattern...
...Along with eloquent champions of the Indians, we met experts who claimed that the natives do not count in the national economy because they create nothing, save nothing and invest nothing but simply consume the produce of their soil...
...Around Buenos Aires, the slums are separated from the city by a fortress-like wall...
...The conclusion is inescapable that Latin American countries have not been too successful in their attempt to start running before learning to walk...
...The problem, they assured us, is how to keep these people outside the city limits, letting in only those needed for economically sound purposes...
...On the other hand, it lagged far behind per capita income in Western Europe, the United States, Canada and Australia...
...The distribution of the labor force among economic sectors varies widely from country to country...
...What is characteristic of Latin America is not low average income (which might be the result of technical backwardness), but extreme contrasts in the distribution of the social product among different groups of the population (which is a social, rather than technical, problem...
...According to the Economic Commission for Latin America, the labor force in the area has been distributed in the following percentages: 7945 19 55 Agriculture...
...Despite the predominance of agriculture in the economy of Latin America, some regions in Brazil, Mexico, Argentina and Chile have reached a high level of industrial development...
...This may be a gap in their economic system, but it is by no means as serious as the backwardness of local agriculture and the misery in the villages...
...sometimes they are lost in swamps between fertile hills where orchards and gardens surround lovely haciendas...
...But, since the present characteristic of Latin America is the striking contrast between abundance and poverty, its most urgent task is to reduce this contrast by stimulating the development of the most backward sectors of its economy...
...In the northwest part of South America—Colombia, Ecuador, Peru and Bolivia—misery overflows into the central parts of the cities from adjacent native markets and streets, where Indians in rags trot with heavy loads on their shoulders and women carry their children like bundles of potatoes...
...All the others should be classified as primarily agricultural countries...
...56.4 15.9 3.1 21.1 3.5 Costa Rica . . 56.4 10.9 4.1 25.7 2.9 Panama 54.9 7.2 2.6 25.7 9.6 Ecuador 50.9 23.5 2.2 19.1 4.3 Cuba 43.8 16.0 2.7 36.6 0.9 Venezuela 41.2 12.7 5.4 32.3 8.4 Chile 29.8 23.3 5.5 37.6 3.8 Argentina 24.7 23.4 6.1 43.7 2.3 Uruguay 21.7 23.9 4.3 46.4 3.7 Source: DN Economic Bulletin for Latia America, Santiago, Chile, February 1957...
...Apart from Peru, where industrialization started from a very low level so that its percentage gain in production is meaningless, per capita industrial output rose at an annual rate of about 5 per cent in Brazil and Mexico in the 1947-57 decade and 2.5 per cent in Chile, while it steadily declined in Argentina...
...if preferential rates are accepted, it may be overstated...
...Moreover, a large part—probably two-thirds or three-fourths—of the income originated in agriculture is consumed in the cities as the profits of absentee land owners...
...Sometimes, not far from the capital, poverty-stricken villages hang on rocky slopes along a verdant valley dominated by proud castle-like mansions...
...This amount compared favorably with Eastern Europe, approached the level of Italy, and was four to five times that of India and f. Per Capita and Total National Income, 7950 Countries Per Capita Population National Income, Income in Millions in Millions of $ Venezuela Argentina Uruguay Chile Cuba Colombia Panama Brazil Dominican Republic Guatemala Ecuador Costa Rica, El Salvador, Honduras Mexico Peru, Haiti Paraguay, Nicaragua, Bolivia...
...It could more properly be interpreted as an indication of the exploitation of rural areas by the cities...
...If it were an underdeveloped area like India, its immediate task would be to develop all sectors of the economy, without giving particular priority to any one of them...
...These rates are fairly high in comparison with those for Asia or Africa, but very low in comparison with the United States ($600) and Canada ($440...
...However, with full sympathy for the efforts of Brazil or Mexico to become great industrial powers—which they most certainly will become some day—and with an understanding of the less ambitious dreams of industrialization of Chile, Colombia and some smaller Latin American countries, one may doubt whether rapid industrialization is their most urgent need...
...Thatched huts and cave-like adobe dwellings are as characteristic of the local scenery as the ultra-modern skyscrapers of Sao Paulo, Rio de Janeiro, Buenos Aires and Mexico City...
...In other parts of the area, the rate ranged between $10 and $20...
...Latin American economists are, of course, aware of the poverty of the indigenous population but disagree among themselves as to what to do about it...
...Here misery is veiled by a psychological curtain: The city people do not notice it, and the tourists record it as part of the local color...
...Rate of Progress: How far have the Latin American nations succeeded in their efforts to accelerate industrialization...
...What they lack are factories to produce the finer articles which only the wealthy minority of their people can afford, and the mills to produce machinery for such factories...
...others, such as Brazil, Argentina, Chile and Colombia, have different exchange rates for various transactions in foreign currency and there is no accurate way to convert local money into U. S. dollars...
...While the total labor force increased by 13.1 million between 1945 and 1955, only 4.1 million additional workers were absorbed by agriculture while 9 million found occupation in non-agricultural pursuits...
...In terms of per capita income, single Latin American nations range from a standard of living nearly as low as India's to a level similar to that of France...
...Peru illustrates this point...
...On the other hand, industrial activity in remote corners of Latin America is concentrated in small shops reminiscent of the 13th-century workshops in the United States and Western Europe...
...To appraise the depth of poverty in Latin America one does not have to go to remote villages in the uplands of the Andes or in the jungles of the upper Amazon...
...After all, most of them have learned to process the staple articles consumed by the masses of their population...
...480 $395 $395 $350 $290 $255 $240 $210 $165 $150 $130 $125 $115 $ 95 $ 90 4.9 17.2 2.4 6.1 5.5 II.I .8 51.9 2.1 2.8 3.2 4.1 25.8 11.6 5.5 2,400 5,070 710 2,120 1,600 2,850 190 10,560 350 420 410 510 3,000 1,100 480 Source: UN Statistical Yearbook, 1957...
...Thus the rate of industrial growth in Latin America has just about kept pace with that in the United States, a nation that is no longer in the phase of progressive industrialization but has entered the stage in which industrial expansion lags behind the growing production of services...
Vol. 41 • November 1958 • No. 43
