Contemporary revolution in Latin America; Latin American Economy, part 2

The following program is produced by the University of Florida's school of journalism and communications a grant from the National Educational Television and Radio Center in cooperation with the National Association of educational broadcasters. The University of Florida presents the Latin American economy point to the struggle for industrialization. The eighth in a series of recorded documentary reports on the contemporary revolution in Latin America. Your reporter is the distinguished American journalist and editor of The Christian Science Monitor the kana. As do most other underdeveloped areas of the world Latin America has an overwhelming desire to industrialize almost without exception leaders in these countries have designed special policies to implement or to speed

industrial growth. Why this urgency to industrialize certainly part of the answer is nationalism. The feeling that a nation has not arrived in the world scene until it has its own iron and steel mills. Another reason stems from what the economists like to call the demonstration effect. The newness of an advanced and wealthy country such as the United States has had a great influence on the tastes of many Latin Americans. Exposure to American magazines Hollywood movies and now television to a smaller degree all have contributed to opening the eyes of the average Latin American to a new way of life a life where even the average citizen wears shoes owns and drives automobiles. Leaders of the poor Latin American countries feel that generally lower standards of material well-being are caused by their reliance on the export of primary products foodstuffs and raw materials. This reliance on one or two commodities to finance the government

can be disastrous. Since primary products are subject to wild price fluctuations Thus many Latin American economists and political leaders see industrialization as the only way out of this dilemma. They seek to throw off the yoke of what they consider a colonial or semi colonial economy. This is Radio Center REPORTER Well Lois. You're listening to the sound of an automobile assembly line near Selma Paulo Brazil. And every year of the last 10 industrial production and sound Paul has increased 30 percent. The city is now the eighth largest in the world. Foreign capital has done much to make this possible capital such as that which helped put up this automobile plant. Willis overland of Brazil is only 51 percent by Brazilians. Majority of the remainder by us Kaiser industries the plant's

operations director is Robert Jesperson. He explains to us the nature of this joint venture. The. Company is a joint venture program between the American capital and Brazilian capital the American capital was made an investment was made in the form of machinery equipment and tools and that eyes to produce eye to motor vehicles in Brazil. The Brazilian capital was the necessary funds required to build the local facilities the building to acquire the land build the buildings and install the machinery equipment necessary to carry out the program to obtain the local capital. Willys overland over Israel has sold approximately 15 million dollars of shares to 45000 Brazilian shareholders. There are very few. Foreign companies which have

come to Brazil and taken in local partners. The advantages are many. The first advantage is that. It reduces the amount of capital required from abroad. Number two it. Makes the Brazilian public part owners of the business and which in itself helps to create a market for the products. Secondly Or thirdly it helps to establish the right political climate in which the company can work which is very important because the company is not viewed as a foreign company but as a Brazilian company. There isn't any country where there are impoverished people. A certain underlying current of nationalism and certain feeling that the foreigners are coming into the country to take money out and take the resources of the country away and that they're there for

exploitation. If we have a large group of people here in the country who own a part of the company then the company is viewed not as a foreign company and it helps to defeat the feeling of psuedo nationalism that many people have. Our guide for this program the last of two programs on the Latin American economy is professor of economics at the University of Florida Dr. Robert W. Bradbury. Thank you Mr. Cannon particularly since the end of World War 2. The governments of Latin American republics have demonstrated a universal desire to industrialize leaders in these countries have design their political policies to implement programs for industrial advance laudatory as their efforts have been. The government planning agencies in the eyes of many economists have been guilty of assuming that industry must mean having our basic industry the iron steel mills criticism of the stamps from the fact that the raw materials needed for such plants is

lacking. A good example is the lack of coal in Brazil. That's the basic reason for having this industry in the first place. The reduction of foreign imports is mitigated for costly imports of raw materials often necessary to run the plants. We put this question to an American factory owner in Cali Colombia. Mr. James eater which does Latin America need first light or heavy industry. That's a very difficult question to to answer. You have to develop society on a broad range because you have to have people capable and in all lines if you made only steel and you didn't have any small industry to use it you'd have nothing except steel to export. And you can't export. Most manufactured products today if you have just a small industry such as

ours which is making some tubular furniture and and steal desks and filing cabinets and that sort of thing you could really do a better job in helping the country limit their potations. But even there we run into this problem. There are industry starting at about one thousand forty we had say a hundred workers but they were producing probably on the at the rate of about 5 of maybe 10 workers in the United States. So the raw materials that they imported were for practically nothing. Today we have 400. Our efficiency is almost that of the United States and our importations are enormous. So consequently we are a drain on the importation allowances of the cut that the country can give us we use an awful lot of dollars for making off for making our furniture. So someday the country will have to have this large industry that you speak of such as a

rolling mill for steel. So I really couldn't answer that question which is more important. The bigger the lender stree it all has to come at what we put the same question to a Chilean born economist now assistant editor of industry. Here's what sort of hero does it do I thinks. Well on this subject which is quite controversial by the way. I could say perhaps that you have to approach this problem from two angles. First of all is the government side in each country and on the other side perhaps is the economist or even a third side the businessman. Now governments as a rule are not so much concerned with the short run but they are concerned with long time planning.

If you take the government's viewpoint of long run planning and independence all the local economies worldwide fluctuations let us let us say for example last year in this country we had a very large strike in the steel industry and let us assume the Brazil that you just mentioned would be completely dependent for their automobile manufacturing operations. On this American Steel what would have happened to their economy. All the car manufacturing activities would have had to be stopped because of a lack of raw material to produce them. Now the government this case I agree has to import coal. I have very high cost but I would feel that the advantages that they get by from having a local supply offer of materials for their medium and small size industries more than. Overcomes

the dis advantages of having the steel industry in Brazil. On the other hand if you take of course the law in the short run there are many economists who do feel that what the underdeveloped countries should do at the very beginning at least is to increase the productivity. All those factors or elements in their economy that are already developed let as a say agriculture. One reason Latin America looks to industrialization as a way out of its economic dilemma is the problem of employment for its expanding population. Clarence Sr. of Columbia University however says that industrialisation will not put enough people to work. He points to the recent experience the government of Puerto Rico had in building industrial plans for the first five plants of the industrialization program were built by the government. The five plants were built at a cost of

something over 11 million dollars. How many people do you suppose how many workers do you suppose went to work in those five plants. The number was nine hundred and ninety two because nowadays with modern technology modern efficient machinery it does not take very many people to produce quite a lot of goods. A study recently has been published of the industrialization experience of the recall with some attention paid also to that of Mexico. This study was done by one of my colleagues at Columbia University Dr. A. Jeffy and was published under the title people jobs and economic opportunity. In that book after a very thorough analysis of various aspects of the industrialization process in both Puerto Rico and Mexico Dr. Jeffrey

reaches the conclusion that it is possible for the underdeveloped areas of the world today to double or triple their per capita income and not an add to one single person to the workers employed in industry or agriculture or commerce or services. Now this is a tremendously startling and disconcerting idea and conclusion and it comes after such a thorough study. That it must be brought to the attention of the persons in charge of industrialization programs throughout the world. They cannot neglect either population pressure or the population explosion because both population pressure and a high rate of population increase means a drain on the economy.

So I feel no room while the day is the day after bells see Io's or American representatives as such he is a foremost authority on the labor movement in Latin America. We ask him what role he thought the labor union will have in the industrialization of Latin America. Begin with your next Labor lead in America and still make a decision which is going to be made in some countries. They are going to use me but in my opinion must the benefit of the concept of a class. They must eliminate from their immediate goal or future goal. They plan on substituting d private enterprise system with the collective ownership. You know other words if they wonder at a whoosh then they don't know really what it is to bring down as fast as possible but I some social order and to know I don't know what they call the Mex human the policy and the practices of the collective society whether it is communism or socialism or a nation and

National is whatever they call it evenly on that hand. Organize only makes up as my as they I would making now in a number of countries that is but I'm going to function is doing pretty nice. The purchasing power of the people. The standard of living of the workers to get better wages and better working conditions. Then they left to adopt what I call the constructive approach to industrial getting together with government of consumer and the employee to find a way and means to Stern going to industry doing good he's a productivity and therefore whenever you increase the profits to have a better share of the profits for themselves. Why this is but you can not industrialise unless you have an expanding market. It sounds complicated by this at the same time it's easy also. You can not build mass production industry if you don't have a market to absorb the product of this mass production and just let this market after we ended up spending it in order to do so you need an

increase of purchasing power within the party to the people. This can only be obtained by an intelligent constant intervention of the trade union. So today they will not provide to the industry out of the market by demanding excessive wages but at the same time they should not tolerate the wages when an industry can pay more because by tolerating lower wages they retard the increasing our approaches in power to people when they get out of industrialization. Industrialization in Latin America has generally meant expanded government activity in the functioning of the market processes. Frequently through a government Development Corporation the Chileans for example have been carrying out developmental plans through their corporation for reconstruction and development since 1939. This government intervention coupled with the desire of Latin American governments to have basic industries and services publicly owned has been criticized by segments of the United States business

community. We interviewed the assistant secretary of the tracery John Levy on this subject at the time of the interview. Foreign Investment in Latin America had dropped off from previous levels. We asked Mr. Liddy if there was any connection. Well I would doubt very much whether foreign investment declines in Latin America are due to actions taken throughout the whole of Latin America I think the activities the actions in Cuba have had a dampening effect on the flow of capital to Latin America and of course American capital will not go where it sees your expropriation nationalization or where it believes that there will not be an atmosphere conducive to growth. I think its wrong to say that there is a trend in Latin America toward government. Takeovers government control government keeping private industry out of

business I think this has been true in limited cases. Petroleum Of course in certain countries but in other countries you have move movements in the opposite direction. Argentina is a case in point. Also Chile Peru and Colombia Mexico despite the fact that many years ago Mexico nationalized the oil industry and has nationalized certain other industries. Today I would say provides a very good climate for private American investment and I don't believe one could say that it is harassed. Many Latin American countries desire to develop in any way they can and in many cases private enterprise for one reason or another is not prepared to do certain things. This is certainly true in agriculture I mean the actual road building large power installations transportation many things that are

sometimes go into that curious name of infrastructure. Now in this area where a lot where private enterprise is either unwilling or unable to do certain things. The government wishes to do it itself and I don't think we can criticize that attitude. We certainly do not would not encourage any movement of government control over industry and uprising in general. There you would say there is a distinction between the emphasis placed by light and variance on the role of government in the economic life of the country that is the regulation rather than say actually operate operation industries. Nationalization Well I think there is a difference in Latin between Latin America and the United States and I think the reason is that this country developed under under quite different circumstances long before the

developing process got underway in Latin America. Many things in this country just take the railroads were originally developed by private enterprise and remain in private hands. Many parts of Latin America why they have had to be stimulated courage by government capital. The whole the whole complex of private enterprise in this country has provided a stimulus to further bargain enterprise. Now in Latin America in many cases it's been very difficult to get things started and that is in order to get things started that many Latin American countries and found it necessary to give special help for example development institutions development banks things of that sort things that we take for granted in this country such as Federal Savings and Loan associations building loan associations are very little known in Latin America. Now an institution of this sort needs help from the government to get

started. And it's our hope that with some kind of government help we can widen the area of private enterprise in time. Today we are again fortunate to have with us Dr. Robin Crist professor of geography of the University of Florida. Let an American governments while they have desired to own the heavy industries the basic industries deal transportation public utilities have been perfectly willing. In the vast majority of cases to see foreign firms coming in established branch factories and participate in the domestic economy particularly if those foreign factories come in and make the needed capital partners in the venture these firms are primarily producers of consumer goods and we find

many branches of American and European factories spread throughout Latin America. Furnishing a larger and larger proportion of the consumer manufactured goods consumed throughout the area. Dr. Chris. One of the problems that has occurred in Latin America is that the local capitalist in Latin America has not in many cases been willing to invest in manufacturing industrial development. What do you why do you think this has been true. Well generally speaking I think because they could make more money in larger return on the money they had to invest. If they invested it in an important business even jumping high tariff walls

or in urban real estate and now it is possible it would seem to me possible that the high returns on this will not be as are in future as they have been in past and this capital may be looking for a place to invest itself locally and particularly in industries that are controlled by nations to the extent of at least 51 percent of the industry. Also I think that we have had a problem in the past of a flight of capital out of Latin America. Why do you think the Capitol has been leaving the country. There again for one thing there were there was political instability in many areas. That can only mean for a person who has K.. He would like to get it out and not have it destroyed or used by

roving bands of guerrilla warriors. I can understand that privately however as political stability has become more and more prevalent in even. In areas where at one time it was not. I've noticed a trend on the part of a businessman to think in terms of investing there and very frequently the tax structure for businessmen in Latin America is more favorable I am told then it is in some of the more developed areas. Yes that is perfectly true the tax rates are considerably lower in a good many parts of Latin America are in all parts of Latin America but I know the tax rate in the United States. I think that we can say that.

The lack of capital in Latin America has delayed the trend toward industrialization that industrialization will help these countries attain a rate of growth which will we hope be considerably higher than the rate of population increase. So there will be a real improvement in the standard of living. This capital will come from the outside and from the progress. But of course only if the Latin-American is willing to help himself. In other words at the conference the Latin-American made certain commitments. That those commitments included a modification of land tenure where land tenure was an important

drawback in the economic development. A revision of the tax structure to bring about a more equitable distribution of the tax burden. And of course this development will only occur in Latin America if savings continue in the private sector of the economy. And investment follows the savings because there is not enough. Even though 20 billion dollars sounds like a tremendous amount when you consider that is to be over a 10 year period into 20 Republicans. This will not in itself be enough. If however the domestic savings and investment increase and in addition to that you have an average of 2 billion of

capital from the outside each year we have great expectation that the Latin American countries will not only start growing but that they will continue in their growth at an accelerating rate over the next 10 20 and 50 years. Thank you for the past half hour we've been reporting on the struggle for industrialization the contemporary revolution in Latin America. The Latin American economy to struggle for industrialization. In a series of weekly documentary reports on the contemporary revolution in Latin America. The program is narrated by the distinguished journalist and editor of The

Christian Science Monitor cannot produce cooperation with the University of Florida's school of enter American studies. You may receive without charge the text of today's program by writing this station. This program was prepared and recorded by us for Radio Center school of journalism and communications University of Florida Gainesville under a grant from the National Educational Television and Radio Center and is being distributed by the National Association of educational broadcasters. This is the end Radio Network.