International Conference on "Africa:
The Challenge of Economic Recovery and Accelerated Development"
Ahuja, Nigeria
~-19 !une 1987,',
AFRICA AND THE SOUTH: THE VIEW FROM LATIN ~lERICA
BY
NORBERTO GONZALEZ
ECONOMIC COMMISSION FOR LATIN ~1ERICA
AND TI1E CARIBBEAN (ECLAC)
Although ani histo ,
they are close in . to
obstacles to fran each ~l-~....,
and irrleed, ti exists, and it i
in this spirit invi tion of the ~ic
caumission for ty an:l the Afri
.DevelqJne!1t secretariat ith e initiative of ~lori
development together 'th ou timely conference on Afri The cmllenge of E;oonomic Reooy§ry ani Development .
t policies and their social
cost
For the last s' Y' , latin American and cari.bb?..an oc:x.mtries have suffered thl:'ou;h t..'1eir severest t protzacced recession since the 193OS, so JlI.lCb. so that per capita tplt in 1986 was still 8% below that of 19 C.
'lhus, the 19806 will turn out, to have a "lost" decade in tenns of e.cana:nic welfare for most of the re:;ion . 'rhis is a t of a combination of factors, including of course the debt crisis and the difficulties of cop' ;
with the ensuing dearth of f ign exchanqe and heightened inflation.
'!he wall kn.OWl'1 rl that led to re::ession and stabi1iza 0
policies in the OECD oountr~ eel da'1'tpeI1ed demand in world trade, higher
international interest ra a rsening of t..~e regionIs (non-oil) of trade. In san0 countriesI d e economi.c policiesI including overvalue exd1an;Ie rates, contribt to pital fli ght. In adell i n, unusual earn' of the net-oil .; . tries left the intemati - financial SV1i~tem
awash in liq..1idi_ , wi 'onal banks eager to let:xi their new ~ . resources to equally er capital s.... ed countries. The result was a
borroring spree +- latin America: most oil h-porters borrowed
to
naintain aggregate. deJ'l'laIrl, inc1 ' umpti on, i eri ng the crisis to a pass.irg' one, oil ~rters borru.ve:l to acce.lerate grcMt:h on the basis of their ture earn s , 'rhus the re:;rionIS current; a t deficit reached le level of 35% of its . rt.s in 1981-1982,in ndd-1982, the banks, jolted by Mexico's suspension of interest payments,
cut back.shaIpl y on their lendinJ.
Most countries of the region were thus forced to adopt stringen'c adjusbnent policies. I:Ue to t.heir ilITplementation, the current account deficit - was brought down to 5% of exports in 1984-1985, but at the cost of the aforementioned 8% decline in per capita output, a 30% drop in investment, and a doublirq of open unemployment. Moreover, continued high real interest rates .
am
deteriorati.rq terms of trade, coupled with adjustment wear:iness inmany
countries, have meant that adjust::ment, even nCM in the middle of 1987, is far fran CCi'l'plete, raising serious doubts as to the wisdom or feasibility of continuing along the current course,
In any case, tho experience to date leaves in'portant lessons regardi..nJ- the formulation of economic p::>licy. Indeed, adjustment is necessarily painful: for it entails reducing aggregate demand, be it consumption or investment. But it need not necessarily entail a loss in output or employment. '!he latter is a sign of erroneous policy or of excessively rapid and acute adjustment.
Adjustment proved to
re
costly in most of the region for two basdc reasons: in the first place, because the magnitude of the disequilibrium to be closed was so large, and the speed with which it had to be effected was so rapid when capital fluws collapsed. Hence, adjustment proved to be laJ:gely recessiorm:y, the volume of bnports falling 40% in two years. Not only were the lOOre easily postponable :iJtl;crts of consumeram
capital goods sharply cut back, but iIrports of interme1iate inputs vital for production as well.; fo"::' efficient adjustment entails not only a reduction of expenditure, rot a reallocation of resources in favour of exportable goods and i.Irport. substitutes - a process whic.h necessariJy ·r equires time. 'Ihus, while anti-inflatioruu:y programmes can operate efficiently, there can be no such thing as an efficient shock adjustment programme.In the secorx:l place, undue a't1phasis was placed on reducing deIraIrl, cuts ten:ied to be across-the-board rather than selective, therebY freeing l:eSOUrCeS from non-tradeable goods (e.g., construction), but failing to successfUlly transfer them to the production of exports or import substitutes. Hence, until 1983-1984, adjustment was accompanied by sharp rises in unemployment
am
plant. underutllization.Notwithstarrling these generalized problems, the crisis has also awakened some responses which have pzoved to be novef, , and in many ways, effective in meeting the crisis. The cases of Brazil, Colombia and Peru may be cited in this connection. '!he first b 70 (at least. between 1979 and 1985) have proven that the best adjustment is that which is gradual. The heavy foreign borrowing by both countries (up to 1982 when it was still possible) was used to increase investment in the expansion of export.s and reasonably efficient inlport substitutes. Hence coal and petroleum exports cane on stream in Colombia in 1986, arrl alcohol energy substitutes and petroleum output expanded in Brazil in the 1980s, along with metallurgical and other intermediat.e manufactured exports, on the basis of these timely investments. '!hus, adjus'bnent was far less recessionary in ;-llese two countries, based as it was not so much on inq:>ort compression as on previous wvesbnent in i..Inf'ort substitution and export expansion.
To k sh.a:rp devaluati . Yet here
too the more f tradit anal pn:'..scripti
They did agt.Jregate . t t raise
exportis and _ • Rather, up until early 986 y draw i y on a bread non-price t iyes t p te exports , ranging fram dra"roa and export idies t s L credi ar.d exporting corrpanies. In the c· of Brazil, the ensuirg 'ft in produ i has been such that a expo today account for two thLY'Cls of its CN 1 exports as opposed to slightly aver one third just 10 years ago.
Finally, a g.ccrlling consensus has been reached in the ion that the time is ripe to reverse priorities in the use of f rei excl'1arge. Ra tl nle.eting" inte...."'"f>..st paymerrt.s first, and ing ~ on the resi 1 exc nge left aver (as in most cases up to 1984-1985), countries are nCM ' i i.rYj on using scarce foreign exchange to meet mi.ni.rnum graw+-..h targets .
only then meeting interest payments with the resi . Peru was e this zespect., limiting interest payment.s to a certain percentage
exports. But overtly or covert.ly. unila lly or negot i ated, ot.her 1tr'es have moved in this direction. The Hexican agreement of 1986 fonna.lly establishes the principle that if grO""Jth fell bela., a . min . percentage, k 1 'ng Wi d automatically increase. To be I renewed capital :inflows do not guarant ee that the cris' il l be sol ved, for much deperrls on the evolution of the international eco 'fj (e.g., tenns of tzade, interest rates) over which debtors have no control. yet renewed ler.d i.nJ can gain valuable time for investments to mature and come on line . Shou.ld the intetnational economy not evolve favourably, both borrowers and lende....rs would be adversely affected, and t'1e cost of the debt pr ob l em would increasingly shift teMards the banks,
As for the futirre, it is cl.ear that there is - n t.o increase competitiveness of economic acti v i t i es. Yet it is not a question of disrriC'.ntling today's doroestic-market-oriented '.industri al base, as In orthodox progLarmnes, but of gradual l y red.irecti.ng it outwards into ~rts. It is equally clear tr>.a.t syste.'ilatic efforts will have to be made to evelop new productive activities, all of which requires a compkex mix of pol icies
am
institution building measures i:.m.ich require time to yield resul.ts. is the direction that will need be taken , as the dep ion in e pr.ices of basic commodities, which . 1 constzitarte the bulk of the region's export;s , become more pennanently depressed .
And in much the same way as qovernment, r was :required t irdustrialize by mer. f i rt subst.itution, several . in Latin America --and notably Brazil s-- suggests that. strong support from the public sector is needed to select:ively penetrate overs 5 Ji'.:ets and acquire the necessary quality and fi c i ency . Thus, if ,' ustriali zati o . based. n iI rt substitution \\TClS the rallying cry in the 1950 , e reori entat k f this established i..OOustri base to\\ra.rds exportis would eem to be th ion of the future. This nld est the virtues of 1!bining the of gl poliC'J instruments (export.s and dev luation) wit h industrializati.on ld selective policy appl i cat ion.
)
approached
.
Even
debt no:.
COUt..l:~\..
protect~onism
of trade
debt 'Ibis
:r:b the - ineXf)ClSi ng
in a t.e....--ms dh..b
Tra i .i
rep:ro:"
:rramun:in:3
spreads
additi
for insrt:al:'lCe
Adjustment .~ na.turities constitute 'Co1"1e
accepted .~ ara i.J:''l.:e:ma~tiotal
rationale of is strategy stE!!DS
"1iqu.:!. ty" blen cf b:'a':U':vll:1Uai.l.
solved in ea
case
when t.lY--. .il~ ntE~~the irrlividuaJ. adjusbnent plro;;;ramme~
lenders thernse.:,.ves do not exi:;,e.s;S:l·
gaining" ta: cs, judging conspf, .... 1y 11.
La in AInerican countrl.o<:' of crsdico ., .t they will II '!he lrJOrld has not commodities is oot gra.;in;j;
10'1/; interest rates , while caning
arrl protectionism is on the.
been such that the debt pre
roovi.:rr; i.11 the d.in!ction of
;'lOrld economic scenario whi • means a probabl e one.
on
needed-- would require by nco..;sut:lSt.:mtial a consequence, the ·'tiJne ~'Ln1n:t
postponiriq" strategy which recessively adjusted latin social
am
political risks.announced
i w
iJ:1abi l it:y to cope Since ie debt probl force..s onlyI debt z liefincreasingly stressed
k¥
the .I.Q\... Alt'Ifn:1.i::a11 c::c:.-..mt:r of the soluticn to the crisi3.debt burden: on the one hal those res ing fran the reducti-:m of the principal.
Some proposals in the in accordance .;til certain
and i..~a."'11ational financi Li... "':' 0...1""\"!r{,..".., .$: +.-\0,...e maxJ..II1U1'tl ...• """"l\Ount of GDP and to tl18 interl'lC\ti part of the IMF-Mexi.co a.g:t'laeJlrenrt of this principle has not capital izati of itr~-est
t.'1e grant ing 0 lnUltila
10'Rer -a of interest ch.av::w-'Q
"t any ateI cr -.:.t
v :re uctarrc to ao
finanoi.al, or.gc\L-uzations ha'e r ief.
scar e,
iOI) and j",") at i pn
Pass J en nG~.r to a
:t r dev
which , shall
developing coon Les , in 001 , always ed posi iv e and
, been all occasdonal. tende."'1Gy to
de..relopri1£".nt . .L could be
f 'ts of the precess its pot ia l in rn, es In tJ.'1.e path. of b'1.e region's
I
I
\
I
7
I t is, however, relevant to make soma camnel"'xts an
oUr
)?&St su.c.cassesam
failures, in order to extract some lessons from them. At t:.r£ beginn:L.ng of the 1960s, trade :between the latin American countries was only in its initial stages, arrl there was virtually no complementarity among thei r prOOuctive activities. In contrast., over the followi..-q years reciprocal trade grew into ti'.e lroSt dynamic segxrent of the region's external trade, ~"'d as a consequence
there was an increase in the levels of econcedc interdeperxienoa, particularly in the subregional processes m70lving countries with 1 an:} medium-sizEd eoona:nies. Thus, for Latin America as a ,.mole, reciprocal trade came to
represent l'nOl:9 than 16% of the region's total e..'CpOrts, 'While in the case of sana subregional , such as that of central America, the fig'..tl:'e wa..c;
higher than 25% in 1980. Intra-regional co-operation fourli :mat'QPother forms of expression. .in the dEN'e~opment of sectors of prcduction (mrong their production, technology arrl distribution arrangeme..'lts al1"101l;J f..'Ublio ani private enteIprises of different O)l111tries) ard of the physical infrastructure and in the creation of intergovet'I'lIlY3-t1tal institutions arrl subregional or regional associations repres-ent.ing a .variety of groups and inte....~.
'!he increase .in reciprocal trade paved the way for t.he exp:msion, diversification and modernization of i.'I'ldllStrial productdcn, 11 as for a certain degree of specialization of activities :t the subreg':'cnal level. In this respect., regional oo-operation
"JaS
functional for -deve lopment during the first ffiM decades after the war, in that it cont.ributed to industrialization and grO\\'tl1, particularly in the case of t.'1e smaller economies. Tn addition, the expansion.of markets and scales of production attracted r.ew am increasing flows of danestic and foreign Investmerrt., furthering a process of capital formaticn \>Jhich helped diversify and expand productive capacity.HGtleVerI regional co-opsratdcn, and more specifically formal i.nte:,p:ation processes1 also displayed short.ccm:i.rqs and gave rise to difficulties, particularly if the successes. achieved are contras with perhaps somewhat exaggerated. expectatiO:.¥)S of those' who ' .. - on the possibility of organizin:J a common market of e within a predetennined periexi.
For exa."1'ple, it beca..rne apparent that proqress could not necessarily be achieved in an uninterrupted manner, arrl still less i11 a linear one. '!he progress made ter.ded to be intenni.ttenti setbacks occasionally occurred, wle.
a number of pre-establis.~goals (for example, the establishment of a carmron tariff by a fixed date) were frequently set aside in the face of the' pressin;J needs of actual circumstances. 'Ibus, in the assessment of integration there came to be a oertain tendency to exaggerate the distance between the oontnitments originally agteed upon and the extent to which they were fulfilled, rather than judging the results by their own merits.
In addition to this trerrl, \\tlich has somewhat diluted the i.t'iitial support given by the different gove....">"!D.TI?.nts and organiZed private groups to L'1tegration, a cP...rtai..T'). retuctence to increase the scope of integration is also noticeable. Na'"I.SWOrt.~y examples of this are the distrust felt ";:;j goven-nnents ani by some groups as regards exposing national pro:fuction to competition frctct goods
from
other countries in the region; the unequal distribution of' the costs ani benefits of integration and, in generalr the difficulties of genP..rating reciprocity between countries with economies of different sizes anddif levels of deve1Of!t\$llt. Also, diffe..~...sof i.nt\?x'!.'SfC2
regards each count.z:y's relationships itlitll third countries, ~ ~
of the integratic:n schemes <Jel'1erally fin:i themselves In oanpe1~t:1.on
aoother; reluct.a.'"lCe
to
replace the e..xtre1rely varied ~ly oEf countries with the rather liVre li.m.iteS. ~y available in ....finally, oonflicts betwee..'l the canmi.tments accepted as part of agreements
am
the objectives of national ~e1opmentstxateg'i <.':The nd.::lility of prcducts on intra-regional k has also high transport costs. '!his has been particularly t....---ue 7...'1 manufactures, ~ich require services superior to those of tradit i.
transport.
Ffnally, two types of PJ,'1enOlTen.")n have &~ped the evolurdc. the integration • On the one hand, there are the. tangibl e }:P-4- .1.. ....,. and
costs for ea.c.;' CClUntry, which are difficult to measure, as oft.en associated with diffa...-ent methods of quantif'yi..--q the new trade ion flows, opened up (or, occasionally, ii'1p9ded)
"rf:i
co-cpezanlcn .on
the other harrl, i:..'1ere are also the int.angible assets, linked to ~ . of political support and
to
the oamnunity of interests sol i ow ~("hintegration may give rise within different gO'"Jennnents an~. scci 'es . As is obvioos, both of these p.~enanenainteract.
L"'ltEgrat i on , ,."",.c..rred ~c.o
X'eCe!ti: In this re....qpe.ct, the erosdon of the intangible assets of
which was partly the result of the "crisis of expe...~tiOJ.'1SlI
earlier, was cornpoun:ied by the deterioration In reciprocal years caused by tr..e contraction in the ()"\rerall levels of,dC'=-lu ::uM
fall in :i.~rtsf and the acute shoztaqe of foreign exch'
made itself felt in the level of liquidity of the ~1:'ioos l:'a_'vnumt:s established in t.i'}e. subreg-ional integration processes. Int...~··r~...\A- . . . measured L"1 terms of e>q:X)rts, declined even faSter than
precisely when it made most sense to pl.utect the installed 11'-.:ltil1Jtr~tl
of the region ani to save foreign exclV'l-rqe by developing SUlbs1:1t:u
on a subregional and regional basis. IIn other
'""''eros,
overthe trade flows ind'uced. by integration have displayed a mal:'lW:U
character.
Noi..-withstanding all of t."le above, it appears that in th~ preserre O::Xmolm
environment, different spheres of intra-regional co-operatii.on, -,-,'~.","".."""'~.
particular, the shar.in;r of ms.rkets \<1ithin the fra:meworl~ of agreements, are in fact nore relevant today than ever before. ~, .; . is in no 'Yay tlJ.e prcrluct of wishful th.i.nki."1g, but is b _, '1 awareness of the .L"lStrurnental role 'Which integration
reactivating' supply, enlarging the narrcM leeway o..Jr.t'eJ'1t..ly ~, ~'1"t 1 econani.c policies of all the countries, raising levels of savi: , can.)r:i
joint action it, a variety of areas, streng\:.l'1eni.'1g t.he intc..':1 .t" ~- i:"",X"ssenr...E:::
of the region and finallyt on the political level, forg.hYJ links of solidarity between gove.rnments.
1lxA~ all! the stL"1\U.l~ given to de:nar.d as a result of tl':. c.KPim!;~Cl!1
markets TNOUld help to ancrease effici.ency1 while Illodernizat:l.on would make it easier to adapt the prodUcti
new
ooniitions of regiona:L. and. international demand. COnS4~le!!tl:co-operation, as already pointEd out, would provide support for
9
1 countrieS·to achieVe ~es exports, allc:rwi.rq lWlTf ma:lium-sized or
~ci1'«Uld otherwise be ~ible.
, '!his awareness 8ppeaI'S to be shared by the regionIs goVernments.'
'Ihe+e
isclear
evidence of an increasin;J deqree of political StJR;X)rt for the idea of~tion, on the dual groun:ls of the urgent need to overcane , crist am the need to achieve ,a greater ty of interestS ,': .' , governments involved in the recent process of dem:x::ratization'in". .;~~ . p!aneer!rq agreements, such as those signed bebJeen Iu:gent.ina ~ ,. in 1986, attest
to
this fact. Although there a~ to be"a predilectidn.,at tiJne 'f or bilateral arrangene..'1ts. such as those mentioned, care has beento make th9se ~ements carpatible with existi.rg' nultilateral agreements.
d)
Food
poliqyAfrica has ~vedworld-wide attention in :recent 'years due
to
drc:suglb.tsam famines, em food policy no doubt is 0."'1 eNery policy maker's priori list. It might:: be useful to transmit to you sane e:xperiences culled fran.
efforts :made in Iatin America !U'rl the caribbean in this sphere.
Notwit.hstan:lin;J the vast; differences in the food systemS of the countries of the reqion, there are some recognizable featu..~ COI'l1OC)l"l t6:' ,the jeri of them, regardirrJ both the pro:'tuctive structure a1rl conStmption patterns. , e main feature of the pnrluctive structure of lOOSt focX:l
8Ystems
(Argentina is the na;t i.np%tImtexoeption) is the great heterogeneity in the sizeam
he technological levels of the units that o:mprise it. T'nis is so characteristic of'each and every one of the spheres of activity ""roch 'UP those systems {primary production, collection, agro-irrlustrial prooessdlllarketi.n;J} •
With respect to agricultural production, uriits smaller than 20 h~ , which represent 75% of the productive units, account for only 7% of the total
lam
arte, 'Nhich causes high Wexes of conce.ntration~ 'Ibis is ~Erl;technological dualism, t.m.~-e a small group of highly capital-' , inpIt-intensive enteJ:prises' (usUally,of considerable size)
wah
prOducebulk of ~le out:put;'¢r.of inputs for ·the products
' '-most
in demarrl ..."""1,-side by side with small,'"usuall y subsistence units, 'that haVe experi.enc~
little or no
progress
and where rural margir.al sectors are concentrate.:'i..,
With respect to agro-irrlustry, there is a similar situation of hi concentration an:i marked duality of production. In Mexico, for example, j I
recent ~, the medium-sized and large industries, which make up 8.5% of ,total·, number of establismnents, produce a.lnost 86% of the total cot' p.rt.
Whe.reas ,the production of family-type units, with 63% of the establi' ,:J. , did
not
even an'VUnt to 5% of the agro-industrial output. 1".oreover, t.lo:l.e larg few ent.el:prises prcx:iuc:Ed CNer one-qu.arter of that output.'!he same high levels of concentration are to befOUTXi in both \¥hol _ e and retail trade. In the former, 6% of the establishmentS accounted'
for
;O\rm.-60% of the sales,
am
in the latter, less than 1% (the big supennarkets) accounted for 42\' of oonsumer sales ....... ·
. With
reI1I'8Ct to
food ccnsuxrpticm, the mjority ofthe
CXIU1'1tr1es display 18Y8ls ofaggIa;ate
average.availability which exceed FAO;1'H) st8ndards. cut ofa
total of 22oountrles,
two were belCM 90' ~e anothersix were
arourr:l 95% of thcee l8Y8ls in 1980, b.1t this situaticn deterionlted AaI841at because of the ext:e:rnal finmx:ial crisis,as described
belCM •.Jlt:)m sericuJ than the pni>lem of ~te availability, hcwever,
is
theaccess
of fudliesto
the minilmJm nutritialal requirementssin::e, as a
%eSU1.t of thevery
un8qU8l.iDxna
distr:ib1ti.a'1pt8Vailin:J
in thereqicn,
in 1980 SClDe56
millim inhabitants
(16% of the regia'l's
pq:ulation)were
pmsllmably~ .
1bere
aria
also big differerx:es in food oonsunptionpattems, nat
allyas
regards the rnDDber of calories consumed by different social g%'Q.1pS, b.1t above all in the
cc:J,\ositia1
of different types of diets. ~to an estimate
JIIIde by the ISX:IACj'D.OJoint Agriculture oivisioo.,
~ thecliet
of the rural poor ~ 2 200 caloriesto
~te the 1 800 calori. consumed·by'thia
26% of the pq:ulatian,' the diet of therichest
5t ~ 8CID8 U 000 caloriesto
produce the 3 700 calories consumed•. A ffIW warda ~ focxl policy are in order. '!his polley haS usually bem the result of
a
widerarge
of specificmeasures
l-tUch have seldc.a been integrated ~a
globalam
ccilerent strategy. .rractically
all thea:nventianal
policl.eato
encourage production have beentried
in the diffenmtcauntrles
of theregicn:
su;p:>rtprices
for basic goods, the grant.irq of pzr:chasirq authorityto
PJblic bodies, lc:M-interest loens with or witha1t~ic;:n, subsidized irp.tts for
agriculture
an::} basic agro-i..rrlustty,etc.
1bm these policies have meant real i.nprovements in pxofitability, the pr:oducers have al.nast invariably resporrled rapidly, in most cases abardon:irq the less profitable
items
for the more profitable ones,...rather than ext:erxiirqthe
agriculturaltrontier or
adiingnew
lines ofproduction.
'!he fiscal
~
of subsidies ani the~fect
.ofpri~
productioninc.:EItives a'1 wage de.tnLu'rls have, in balance, made th$. real incentives
int:annittent
ani created a bias against the danestic pi:'ciduc:tioo of basic goods. Foodala am
short-term e<::rtparativeadvanta<Jes,
viewed in the light ofa
static criterien,often meant
that iltports were reqaJ:ded asan
easy waycut,
am thiscaused a
rapid increase in food deperde.tx:y, maJd.rqit
increasiJ'qly difficult to meet daDestic deInal'rl, given today's c:::cnlitions in which ext:ernalresources are severely
restrictai.'!he poJ.icies of subsidiz.in:1 basic goods an::Vor the neoessa:ry inpIts.
to
produce them, as TNell as other broad-rargm; measures (in teIms of potential beneficiaries), have turned
ciIt
to be very costly ani have had a limited effect en redistriblticm, sin:e in view of the great heterogeneity in types of producersem
~a1patterns,
these policies haveultimately
benefited producers and consumers 'Who in general did ·not need such aid.In:3eed,
frequently they.
have
benefited thelatter even rore
than ~ 'tbo needed thesubsidies
in orderto
maketh.6.1-r production
viable. ..As far as conventional policies to inprove the corxii.tions of acx::ess by
COI1SUDleI'S to basic foods are concerned, a wide variety of measures haVe been
tried
in the reg!en, ran:Jinq fran measures for generalizedapplication
11
(subsidized arxVor oontrolle.i prices for a given l1\.1lTbar
of
essential prtducts) to those d.ir.ec+-..ed to specific groups, usually babies, p women am nursin;J !ll:)th , p:re.sc1"..ool at'1d school-age d:u.lcLren, etc• .1. virtually no countJ:y in the region 't-Jhic.h. does not ~..ave a progra.~ of nut...""i.: •ona1 ~or inte-~ion of greater or l~ scope, sane of which even include the distrlliltion of l ~ e.¥).t'iched:foods of high nutritional value..
To a large extent, the prol i f er at i on of nutritional intervention
~ designed to have an . .ate inp,lct on vulnerable graJpS have .been
replacL"'q
't:llG
mre ambitious m..trition policies or ~ ",Moo were in vogue fran the early 1960s up to the mid-l970s rot failed to achieve the necessazy co-ordination bet'","ee1'l t..io}e food production sectors arx:l those responsible for nutrition.In the majority of t..'1e countries there are large or mall state enterprises respor,sible for supplying foed produces or production inplts.
Some of them, such as ooNA....emro In ~...xi.CO, cover a very broad area of activities, rangirq from' the inportation or domestic collection of basic prcducts ro the development of . vast ne'b.'Ork of warehouses and SUpermarkets for consumer sales, a.l"Jd inch: J also the .industrial proc.essing of
some
items.
Finally, :many iiutiatives have been taken at the 't~tanal ani subregional . levels in an at~ to acl:deve forms of co-operat.Lon to elSU..""'e focxi security.
'lhese include t..h$ efforts trade . the BoaJ:d .of the cartagena Agreement urrler' the ca."W'ention on Foc:..i Sealritv and Pre....~vation of the Enviro:ment; the Regional Food and Nl..'tritian strateqj of CA.1U~t; the strategy for SUbregional
self-6Uffici~"1CYin Basic Foods and I:)evelopment of Food Agro-IndustJ::y of the Regional Council for Agric.:u1tural co-oparatdon (OO'RECA)1 the est.lmlishment of the Action camni.ttee on Regional Feed security (C.~) by SEIA, arxi the
recently signed Arge.'1'tine-Brazilian Agreement which includes several protocols
wit~ an inpact. 0."'1 food security in both countries, which has aroused great
mterest
because. of-its eminently operationalnature.
e) 'nle pro~""Y91icalbehaviour q~ transnationals
It is fashionable these days to Invoke the need. for greater flO'it'S of private capital, and especially for direct private irnrestIrtent, as a means of mitigatirq the decreased levels of net public external fir.ancing. Without goirq into the more oorrcrcvers.lat aspeccs of overseas inves'bnent arrl its effect on domestic capital fonnation and owner.:'-..hi.p, I think it lilight be
relevant for tJ:'l..e African experie..rr-e if I Wt='-re to comme.l"lt briefly on the
distinctly pro-cyclical beha:viour that direct private invesbne.'lts have shCMn in latin America a..'1d the caribbean in recent; decades. This is especially pertine."lt given the increasirlgly important role that tLvoansnationals
are
playing in the world economy..
Latin Americm developmen'c has always been significantly influenced by foreign private irr....estme.nti first, in enclave-type export-oriented activities, and, more recently, in ~rt substitutL~ industrialization. At present, transnational ente...'t1Jris-o....s generate samet.'U_ng like 8% of the regionIs gross domestic product, absorb around 2% of the work force, and hold approximately 7% of gxoss fixed. ~':}ital investrrents. In addition, these fi.rws have played a
leading role In influencing prcduction, .str.ibution and'consumption patterns, having a disproportionate effect --in relation to r..heir quantitative participation in the econamies-- on the style of develcpno-nt of the majority of the region's countries.
nus
is not the place to a balance of the contributions made by transnationals to latin America's development. The ma.L"1 point I would like tomake is that during the past six years, and during t..'I1e prolonge:i recession tbat the resrion has had to e.l1dtrre, private capital flows have not helped stem t.he foreign exchange constraints; on the contrary, they have contributed to them. 'Ibis is another way of stating the rather wvious: that the behaviour of transnat.ional fims has been markedly procycl.Icat . In other words, external fi.."laIlcing -including direct overseas investment- flowe:i generously ~ it was less needed, and ebbed when t.'I1e need was critical. rr11US, dL.""eCt foreign :i.lwesbnent, ",mch amourrced to US$ 5.3 b:i.llio.'1 In 1981, fell to less than one
fi~~ that figure in 1983. Noreover, many international firms acquired external loans in the 19705 contributing to the debt problem of the 1980s. In fact, in more than one instance, governments of the region had to COlOO to the rescue of transnational firms In order to avoi.d insolvency on the part of
~'1eir donestic subsidiaries due to the impact, in local currency subject to rapid devaluation, of holding liabilities in dollars. SUffice it to point out, by way of illustration, that during the period 1983-1985, total amortization payments on Intza-conpany debt of United States subsi,diaries in the region were three times higher t1"'.an new private capital inflows in the fonn of equity.
The role of the transl"'.ationals is beLl1g re-examined critically in many of the countries of the region today. on t."1e one hand, coun'cries a-re literally starved for capital and are naturally interested. in attracting new investments. On the other, tha...-e is wide zeccqni.tion that it is not realistic to expect. a renewed fl~l of privat.e direct irrvest:ments as the principal means of reversing the trend of negative tzensrer:of fina.'1.Cial resources alluded to above. In addition to this, some epprehens.ions have persisted in many quarters regarding the not always unmitigated blessings associated with t.,l'>.is t'jpe of Investmerrc.
2. Joint initiatives undertake.~by EClAC and ECA for prornot:j.ng interregional co-operation
between latin America and Africa
I would like to close my rerrarks by referring to interregional co-operation,
, I
v.-'hichhas been a matter of concern fer the tv.'O regional comrrissions since 1977 wilen member states of ECA and ECIAC adopted resolutions 302 (XIII) and 363 (XViI), respectively, in February and May of that year. '!he common th:rust of said resolutions was the strengthenil1.g of exist~ t€rJu-'l.ical co-operation arrangements and the promotion of new programmes of technical co-operation amor.g the countri es of :both regions. P..lrsuant to these rna."Xlates, both secretariats started consultations for the design of concrete joint projects in a small nurr.ber of high-priority sectors, nalf.ely manpcwer development and utilization, interregional trade and science and technology.
13
'!he joint ECAjECIAC programme for prCAuotili9 interregional co-operatdon in the aJ::x:we-mP..:ntioned. sectors was endorsed by the respb...~ve o:mtl.i..ssio:nE: . March arrl April 1979 In J:esolutions 355 (XIV) and 387 (XVITI). 'l'he prograllD became operational In 1981 with resoun.;es ex:nh "ibut e:1 the TJnited Na.~· ).!15
Development: Progl7allilU:; (UNDP) in the framer, k of p ect . INT/SO/908. ;s project has been the key :Lnstn.1JOOl1't for joird: activities umertaken by the tt regional comnti..ssions. It has also been a pioneering tool in the Sj,.....'1ere ...::
interregional co-operatdon \vithin the United Nat.ions system.
From the start of the prcject., it W'dS evident that a k.ay obstal.":.le fo interregional co-ope.ration in the three priority sectol: ~>as the deep gap tha existed in the realm of mutual knowledg"e of thE: reali.ti es of the two. .ons, IJhis gap had to be filled through specific co-operatrlon-ortie..nted studies tha_ were undertaken with extensive data collection in the field, in a ect.OO nl.Ullber of countries LTl each reg-ion. Through 1981: sectoral reports produced by consultants and. expert.s worki.ng in each regiona "
ECIAC and EC'A prepared three reports each in th~ g~'1.eral area of TerX::.
'l re:
common features were the analysis cf the e.xisting state of interregional co-operation betv,reen the i:v:o r~iorlS , and the identification of exist.
institutions \tmich could be used to p.comote and serve as !tleChan.1.sms for EeL and T<.'DC. In addition, the studies emphasizei the well-knChJl1 obstacles · -t mitigate against increased co-operation between Africa and latin America!
including barriers in communi.cation and in financing.
'!he studies also underlined some key additional Lssues In the promotrlon of enhanced co-operation betvleen counb:ies of :'l\fr i ca and latin ~ica. 'Ihese issues include the role of the rural, sector: the development of trade In CClllPlementary raw materials and technologies for industrialization, the full utilization of manpower require1 for iroustrialization, the development of a suitable tr8l1S1XJrt and conemrnfcacdons system; the design and i.mple.-roentation of apPropriate science and t.echncfoqy pol.Lc.les and plans and
the
design anddevelopme.."'1t of appropriate techniques and toJls for tec-1mol~acquisition.
'!be culmination of project D-1T/80/908 was the Joint ]<!eeting f Governmental Experts from Afric3. and Latin America on Economic and Teahnica1 Co-q)eration, that was held at the headquarte....rs of EC'A, fram 1 to 4 June 19 .... on that occasion, tile parti.cipants adopted a number of action-orien . proposals aimed at collectively deVeloping' Cdpabilities and infrastructure<=;
essential for their economic and socaat d'.=velopment in t.~e three priorit areas that were covered by tl1e field studies. It may be worthw.ile to highlight some of the crucial proposals in this brief ovex:vie\'l of
interregional co-ope:raticn.
In the sphere of trade, the Metis Ababa meeting !=Cinted Ol'tt, inter a'"a, the need. to undertake deman:3.jsupply studies of selected prcrlucts wi'-- potential for t-.rad~ expansion between the b,,1Q l."Bgions; "to
institutions that specialize in marketing and standardization of expo
import gocrls; to plan pericdic Illeetings betWet:ffi tne chambers of ~
am
trade promotion organizations of both regioru.:;; to examine possibilit.ies of establishing multilateral agreements under the auspices of regional or subregional organizations sum as E~, CF'..AO am the Economic community of the Great Lakes (CE"fGL) in Af..Lea and SEll>,. and the Andean Grotlp in latin AnY::rica, and to e.stablish cc-oparat.Ion in the field of technolcgy and
related field of .;einaI)ce, 'the meeting also adq..'"'ted proposals for action such as those calling for the establish.-rnent of an appropriate finarcial f:ramework in order to support joLl"l.t deval.opmerrt; efforts and a study of the p:lSsibilitiel:.' of creating mechani.sms and. instruments for t..rade financin;
tlU'CUJh
mL "'Iarrangements between regional pay111<?nts systems and cammsrcial cleari.:·ngll O'.:lSES
in the 'h-ro regions.
with zespect; to scie..l"lce and technolcgy, the meetinJ stressed the need to identify areas for. co-operatrion with a view to streIJ:1thenil1g efforts for effective application of science and technology to socio-ecorsmic develcpnent;
with special reference to rural development and production; p ~
am
marketing of fa<::dstuffs and related products: the cha.l1Tlel1.i.rq of co-operatdcn exchanges through existing .African and Lat.-in American g:t'oups and institutions
am
the placing of emphasis on the acquisition of technolcgical capabilities in selected fields (energy, teclmical resources, waterresoui::'Ces,
fCA..id. 1 and t . 1 --~. 1 ....3 -hl, • ~
resources, nune....'O. resources raw rna. er~a S, .u~~ca JI\A .....c.:...~... sciences, housing and basic services, improved l:l.vestock a ~i ici<·' pasture lands, leather and leather prcduct.s irrlustries, integ-.cated devel~.nt
of arid and semi-arid zonesT basic pet.:r.cx::hemical in::lustries arc,
conanmicardcns) •
In respect of htnnan resources develqpment and utilization, accaon proposals were adopted in order t.o increase co-operat.Ion in activities such as the preparation of directories of education and 'trai.."1i..rg institutions; the provision of more fellCMShips for training
am
research in scdence, technology, industry, agriculture and manpower plarm:i.rq: the establishnwe:nt of education and training programmes for ~·'lOmen: t.'h.e exchange of e.xpe:riences in mass literacy ani basic and non-fonnal education prograItllreS; the promotion of training'programIl'eS in Portugue...~ and Spanish for African countries ar"":' ~.lEnglish and French for I.atin Arraric.arl counta-ies and the pronntion of linkag-ES arrl co-ordination of training and researcn proqramres in institutions of higher Learrrinq,
It can be seen from the above t..'lat the Addis Ababa meeting a--1 sed
Itself to a wide-ranging agenda of i.ssues
am
specific p-roposals for interregional co-operation. In this sense it provided the countries of the to.vo regions with a broad framework for concerted efforts in key sectors rela+..ed Jeo .their economic and. sccial development. '!'his framework largely exceeds the capabilities of any given reg"ional or subregional organization. It rather calls for a vast concerted effort of a broad array of institutior$/. organizations and agents at both the public and the private levels. The meeting also underscored the considerable potential of south-South co-operation between Latin America and the caribbean, on the one bani, a'rii Africa, on the other. still, much work is needed to adequately ~loit this p:1tential •. So far, it must be admitted that we have barely scratched t~surface.
It is in t.hat spirit, and ,\.,ithin the fralle'lOrk of the role that the regional economic conunission..s of t...."le united Nations system are suppose1 to play in horizontal co-operat.ion, mat we -ECIAC and ECA-
are
jointly exploring the feasibility of various projects in different activities, including the development of construction materials for 10"","-cost housi.ng;15
fertilizers and pesticides within the context of the African Develcpnent Decade; use of containers and multilno:ial transport; employment opportunities for rural youth; rural women's produetive and. developmental roles; trade infonnation and promotion of interregional trade; financing of trade; trade agreements and joint ventures; public sector purchasing power ard the role of state enterprisesi training in specific fields related to the deve1oplOOnt of mining resources; and interregional transport. It is hoped the selection of a . small rn.nnber of projects for implement.ation vIil1 foster the hoped for c0-
operation.
Before closing, I would like once again to thank the Eoonanic o:mni.ssion for Africa, the Organization of African Unity, the African Deve10pnent Bank, and our host, the Goverrnnent of Nigeria, for providin;J ECIAC with the rare opportunity of exchanging views and experiences on topics of supreme intez:est for all of us. May this interchange stirnulate us to conti.nue our joint endeavours .