Contemporary revolution in Latin America; Latin American Economy, part 1

The following program is produced by the University of Florida's school of journalism and communications under a grant from the National Educational Television and Radio Center in cooperation with the National Association of educational broadcasters. The University of Florida presents a Latin American economy. Part one struggles for economic independence. The seventh 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 one TV camera. 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 of 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 seek to throw off the yoke of what they consider a colonial or semi colonial economy. Now what do we mean by semi colonial economy. You're either a colony or you're not a colony. You're either independent politically or you're not independent politically. But economically this is something else. The countries that are overwhelmingly dependent upon one crop or one product are in a semi colonial position in comparison with the big users of the product whether it is food fiber metals or what have you.

We talked to a Latin American specialist the Columbia University sociologist Clarence senior. For instance Chile 71 percent of the export crop export products export trade of Chile is represented by copper. In Bolivia of course overwhelmingly it is ten fifty eight percent of all of Bolivia's exports are represented by 10 in Oregon why it's World. Fifty six percent OR ago eyes exports our world. Now when we in the United States who are one of the biggest users of all in the world decide that we would rather raise wool inside our borders rather than buy it from Oracle I. This causes a tremendous dislocation in Oregon because one of the biggest markets is

being cut down or in some cases is being closed to the product on which a majority of the foreign trade depends. Venezuela for instance is probably the most blatant example of concentration of one product in foreign trade. Ninety two percent of all of Venezuela's exports are represented by oil. Now this is very important for Venezuela. The present government under President Gore. And his trying party coalition has been trying as they say down there to sow oil. In other words they're going to try to make as much as they can out of the profits from the oil in order to stabilize their economy.

Certainly the dissatisfaction with United States policies in Latin America has been deeply rooted in economics. I don't Americans somehow felt the United States responsible for the chronic for two Asians in the prices paid for their own basic export products coffee metals cotton bananas technically known as the instability of commodity prices. This condition has nontechnical effects that the entire population feeds the pinching of the pocketbook. The tightening of the trouser belt what kind of help we should allow the more developed countries. Gave or make available. To the poorer countries. The countries that have not been able to capitalize with think the first one should be to stop the opposition to the stabilization of the international market of commodities. So you say figuris former president of Costa Rica a

great champion of democracy in Latin America for reasons that are understandable. Although not justifiable. Great Britain and the United States have been fighting out in the United Nations when we have been and levering to bring about a certain stability of the world market of raw materials and of all products exported by the poorer nations. What in Latin American economics is the primary product. And I say Latin American economic because I have had several editors in the United States cut the phrase out thinking that I'm wrong and they translate that into raw product raw materials. We call primary product our exports which are destined to be manufactured in the more industrialized nations. It seems incredible that after the experiences of the advanced countries of today they're seeing how the betterment of the living

standards of the people of the United States in bringing about poverty and ruin to industry. But what about mass production. Streamlined production and general wealth. It seems incredible that with the experiences of our economists. After the technological revolution they should they still need to argue this point of the needle stability for the project of our product so much. I am happy to report that the government of the United States about two or two and I have years ago changed its attitude in our fight for the stabilization of the price of coffee and that instead of opposing it they have been helping ever since. The main help. To be gave in. Or to be made possible to a country is a fair payment for its products for its work and that it is easier for everybody concerned to help in quota systems and in private stabilization then to go and

tax the American people in order to give or to lend the money that could have flown down to the producing countries in an ocular way. We realize that this must be reciprocal and we and by we I mean by we I man the economists of the Liberal Party. We do not complain. Strangely enough. When they tell us the price of the oil product is they realized that the price of automobiles is this they realized that there is there are ways already in the American economy to do away from the old cliches and that many is taken. Cars have been abandoned in fact and they are not if not in word and that American industry enjoys a great deal of stability which is far ahead of many articles that are still being written in the newspapers. What I mean is that if we demand the prize of stability and a planned economy for our product we are willing to admit it for the products that

we buy which are the products of advanced industry the products that require a high concentration of capital to be produced and those are the ones that we buy from you and from western Germany. I have had the satisfaction of hearing Mr. Black the president of the World Bank in Chicago speak about how a drop in the price of coffee. Mant. Nearly a billion dollars a year for Latin America and how it was almost impossible to raise the amount of money in there for loans or for investment of any kind. Impossible for the World Bank to compensate Latin America for what the drop in the price of coffee means or may mean. I was satisfied probably because of a little point of vanity. Because he was repeating the speech that his own economists or the economists of the World Bank had been fighting against. When I delivered it in Stanford University years ago our guide for

this program is professor of economics at the University of Florida Dr. Robert W. Bradbury President Kennedy has indicated the United States is interested in the problem of stabilizing commodity prices in Latin America. A longtime assistant to Douglas Dillon secretary of the treasury Mr. John leddy now assistant secretary of the Treasury has investigated this problem. Well first come in we were saying I think there is a problem many Latin American countries depend quite heavily on their exports of basic commodities such as coffee can land sink copper cocoa. You can go down the line. These things are traded on the world market and their prices have tended to fluctuate rather severely. Now the Latin Americans these commodities for export provide the Latin American countries with

most of the foreign exchange which they have to have in order to import development capital equipment as well as satisfy consumers needs. And therefore when the prices plummet down it can have in some countries almost disastrous effects on the economy. Now you come to the difficult question of what do you do about it. First it's perfectly clear that there is no single solution for all of these commodities we have found this out in the United States in our own farm program. You need different kinds of approaches to different commodities and in some commodities it may be that you can achieve nothing in the way of a general stabilization. We do have a 10 agreement would just help stabilize prices in which the United States while not a member has supported. We have encouraged the formation of a coffee exporting group in Latin America which has helped stabilize the price of coffee.

We're prepared to. Discuss any revisions of that which might be helpful. Similarly we are participating in the lead in zinc Study Group. I think the first thing that needs to be done in these days is is a careful study of the individual commodity situations to find out what is practicable both by the consuming countries and by the producing countries with the other result of mitigating these extreme extreme price fluctuations as much as possible. This is not to say that I would favor at any rate any any grandiose attempt to regulate fixed prices for these commodities I don't think that would work that many countries would agree with that but some ways to mitigate these may be feasible in some cases. If I understand correctly then it would be any fixed price but the tremendous fluctuations with just the tremendous fluctuations and also the

an effort in some cases to eliminate surpluses which are now being helped. For example in the case of coffee Brazil has had to carry a very heavy burden of surplus coffee. The only way one can get it back is to try to get an arrangement in which Brazil and other coffee producing countries might be willing or able to cut back production. These are the kinds of things that need exploration. In many cases these commodities are produced by other areas for example coffee and cocoa prominently and in Africa lead and zinc is also produced in Australia a can of them elsewhere so that usually you find with respect any given commodity that you need to bring together countries from various regions of the world. The important thing is to bring together those countries which are the big producers and those which are the big consumers.

Agriculture still employs between 50 and 60 percent of the workers in most countries of Latin America despite this. Agriculture has lagged behind Commerce and Industry in attracting investment capital. Many Latin American leaders and economists have thus in a sense abandoned agriculture as a dynamic way of expanding the economy. An Argentine born professor of economics at the University of Mississippi Dr. Prezant explains why Latin America is preoccupied with industrialization. All of Latin American countries are of course interested these days and have been for various years particularly since the Depression. In economic development. And the first attempts at this economic development well cross made during the Mexican Revolution. But these revolutions are attempts at development where I grab revolution but in the long run these agrarian revolutions did not work

out. They created the basic the basis necessary for further development but by themselves I didn't bring about this development. So the right out then that was sought and is now followed by most Latin American countries in the sterilization industrialization agriculture development did not work out because frequently these countries didn't have sufficient land to raise a standard of living very much more efficient agriculture meant that you didn't need as many people in the countryside so you had to sent them to the cities and find jobs for them and of course the only urban survivability than the services or preferably an industry. So the way out for Latin America greatly has been industrialization. They're trying to develop production or properly manufactured goods which formerly were imported frequently goods of a basic type what we were

manufacturing. Other countries who have the resources have even gone into heavy manufacturing and heavy chemicals. This has taken place and has taken place and Mexico and Brazil very successfully and their raw material for heavy industry and heavy chemicals. But other countries like yours. I've been very successful in manufacturing and sometimes in precision instrument medical instrument production and so forth. Principal advantage is to a country that they would say probably nationalization these Latin American countries had to import on the manufactured goods and in order to pay for them they had to sell their IRA culture or production. Now many of these things they import it they can easily and

almost at the same cost produce at home. So there will be a tremendous saving there. And this the saving of foreign exchange then can be used to buy to buy for the machinery with which to build the factories. Now the main advantage then authors in the strata ization is that you will be burning up an internal economy and internal economy and that. What we call in economic terms the multiplier will be able to work in these countries. Q You would put people to work in one factory and that means supplies are needed for that factory and that means other factories have to be built to supply this factory and pretty soon everybody is involved in this industrial complex and you dont depend anymore. On. That is absolutely on imports from from foreign countries. For many a variety of products sometimes they charge that it is a very inefficient industrial

worker. If you found that to be true in your studies and no I think that is a mess. I don't know where that develops but workers in Latin America and the factories it doesn't take very long to train them and they are actually very skilled because they still have the handicraft skills. There seems to be a difference between formal education and skill like you need in a factory is a skill. That doesn't take much not even in the United States to have somebody work on an assembly line and tighten one vote. Are you going to teach him that pretty soon. But in Latin America the assembly lines are generally not as broken down as they are here so what I would have to do now the mobile factory for instance 5 6 operations before the car moves on to the next stand and I have personally seen that done and there they are very efficient at that. They learn very fast.

We have the pleasure today of having With us Dr. Raymond Crist professor of geography of the University of Florida. Dr. Crist the countries of Latin America have been one crop countries traditionally. Why do you think that these countries did specialize on one agricultural crop or one mineral product in their export economies. Well it's pretty hard to answer just exactly how this came about. I would like to point out that most of the countries are. Our grey area a rather large percentage of the people are living in the country. However it's well to keep in mind that a very high

percentage probably over 50 percent in most of them are self-sufficient agriculturalists and they live on kind of a live a kind of marginal existence and have very little contact with the rest of the economy. And the export particularly the export of agricultural products has been carried out on a large scale mechanized plantation bases which the whole operation is in the hands of relatively few people and relatively few people are required to do the work and get whatever the product is whether it's sugar in the sugar islands or bananas in the Banana Republic. It takes relatively few people large outlays of capital relative you people to get those crops on the market. The international market.

Yes I think that that is a perfectly valid statement. I think that we find in these countries that foreign investors were not interested in all lending or investing in small scale agricultural pursuits. The market would have been strictly internal. They would not of produced the purchasing power in terms of money that they were used to. And so the investment of capital went largely into these large scale export industries. This is what has been referred to as colonialism economic colonialism where the investments went into mining oil production for large scale agricultural production. The countries themselves have worried about this dependence upon one export crop or one export product.

They have felt that they were too much at the mercy of international price fluctuations. And so the first attempt made to improve their condition was a program of diversification and attempt to find many export items rather than one export item so that they would not be dependent upon the fluctuations of any one product. What do you believe happened to this early attempt to diversify in agriculture. Well there there seems to be a desire to continue on in some sort of specialization. It's awfully hard to diversify over a whole country because a person who has been a Sells of Asian agriculture and grows two or three crops that's all he's ever

interested in growing really unless he could see a market for that which is out of the question under the circumstances. So. The point seems to be that they simply continue on doing what they have always done. And a large producer continues to produce the one crop that he knows. There seems there is an international market precisely where he can make his case that's where he's going to continue his investment. We've had the same problem of course in the United States of trying to get the southern cotton farmer to diversify the ball Weevil of course helped in the United States south. But except where you have some sort of a natural disaster the production still tends to go under that crop or that product that seem to present the largest national advantages

after the failure of the diversification plan. The next big move in Latin America was an attempt to industrialize to bring in industries that would absorb this unemployment or partial employment that you were referring to as existing in the self-sufficient part of the economy there. When we say that they have only in recent years started to industrialise we do not mean that no industrialization existed in Latin America in the previous centuries. There's always been a certain amount of handicraft industry or small scale factory production. I'm sure that you can think of a good many examples of such factory production even in rather remote areas

in Latin America. Oh yes textiles tanning industries. Very small pottery works are all over. And it's precisely these these works very small household industries that could add so or a lot of this underemployment in the rural areas and that gradually has been absorbing as they increase in size locally. The foreign investor. At first was not interested in these industrialization plans but it gradually attracted the attention of a good many plants in foreign countries that range factories could be established in Latin America and engage in profitable operations. Of course in the smallest countries the most economical sized

plant cannot be built. But in other countries you could engage in rather large scale complicated production. These plans have been part of them sponsored by foreign investors. Part of them have been directly on the part of domestic investors so that you do have all types of investment. The thing that has been necessary however has been a matter of sufficient investment to permit the construction of these factories because the capital has been the scarce factor in Latin-American the best. Thank you very much Dr. Frist. Next week we will continue with this subject of the economic problems of Latin America and we'll cover the this drive to industrialize and the sources and use of capital and particularly at the end.

What the audience up on our progress so President Kennedy's Alliance for Progress means for the future of Latin America. Thank you General for the past half hour we've been reporting on the economy of Latin America a product of the contemporary revolution in Latin America. A Latin American economy park one struggle for economic independence is the seventh in a series of weekly documentary reports on the contemporary revolution in Latin America. The program is narrated by the distinguished American journalist and editor of The Christian Science Monitor Erwin decamped. This series is broadly used in cooperation with the University of Florida school into American studies. You may receive without charge the text of today's program by writing this station.

Today's report was based in part on material published by the University of Florida Press. This program was prepared and recorded by Will Lewis 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.