Structuralist economics

Structuralist economics

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Structuralist economics originated with the work of the Economic Commission for Latin America
United Nations Economic Commission for Latin America and the Caribbean
The United Nations Economic Commission for Latin America and the Caribbean was established in 1948 to encourage economic cooperation among its member states. In 1984, a resolution was passed to include the countries of the Caribbean in the name...

 (ECLA or CEPAL) and is primarily associated with its director Raul Prebisch
Raúl Prebisch
Raúl Prebisch was an Argentine economist known for his contribution to structuralist economics, in particular the Singer–Prebisch thesis that formed the basis of economic dependency theory. He is sometimes considered to be a neo-Marxist though this label is misleading...

 and Brazilian economist Celso Furtado
Celso Furtado
Celso Monteiro Furtado was an important Brazilian economist and one of the most distinguished intellectuals of his country during the 20th century. His work focuses on development and underdevelopment and on the persistence of poverty in peripheral countries throughout the world...

. Key to structuralist analysis is the idea that the structural features of developing economies need to be taken into account. Early structuralist models emphasised external and internal disequilibria arising from the productive structure and its interactions with the dependent relationship developing countries had with the developed world. The alleged declining terms of trade
Terms of trade
In international economics and international trade, terms of trade or TOT is /. In layman's terms it means what quantity of imports can be purchased through the sale of a fixed quantity of exports...

 of the developing countries, the Prebisch-Singer hypothesis, played a key role in this.

Dutt and Ros (2003, p55) argue that structuralist economists try to identify specific rigidities, lags as well as other characteristics of the structure of developing countries in order to assess the way economies adjust and their responsiveness to development policies. A normal assumption within this approach is that the price mechanism fails
  • as an equilibrating mechanism,
  • to deliver steady growth,
  • to produce a "desired" income distribution.

Nixson (p454) reports Bitar's (1988) argument that there had become a broad consensus on what amounted to the neostructuralist approach. This included the recognition of:
  • the importance of political and institutional factors in the analysis of economic problems.
  • of the need to raise the level of domestic saving in order to raise the rate of investment given that external sources of finance are likely to be hard to come by
  • inflation as a "social phenomenon" requiring for its elimination social, psychological and political-institutional changes, as well as orthodox moneraty and fiscal policies.
  • the false nature of dilemmas between for example ISI and EOI
    Export-oriented industrialization
    Export-oriented Industrialization sometimes called export substitution industrialization or export led industrialization is a trade and economic policy aiming to speed up the industrialization process of a country by exporting goods for which the nation has a comparative advantage...

     - planning and the market - agriculture and industry.
  • the need to strengthen the productive and technological base.
  • the importance of trying to improve the terms on which countries are integrated into the global economy and to improve international competitiveness.
  • structural adjustment as only one component of structural change.

More recent contributions to structuralist economics have highlighted the importance of institutions and distribution across both productive sectors and social groups. These institutions and sectors may be incorporated macroeconomic or multisectoral models.
At the macroeconomic level modern stucturalists would trace the origins of their approach to Kalecki's (1970) Problems of Financing Economic Development in a Mixed Economy. FitzGerald’s version of this model of an industrializing economy has three commodity markets (food, manufactures and capital goods), foreign trade and income distribution which underpin the specification of a financial-sector with savings, investment, fiscal and monetary balances. For multisectoral models Social Accounting Matrices (SAMs)
Social accounting matrix
A Social Accounting Matrix represents flows of all economic transactions that take place within an economy . It is at the core, a matrix representation of the National Accounts for a given country, but can be extended to include non-national accounting flows, and created for whole regions or area...

 (an extension to Input-Output Tables) are often used. Lance Taylor (2004) has provided both a technical introduction to a form of structuralist economics and critique of more mainstream approaches.