arnold harberger anibal pinto osvaldo sunkel latin american economists in the united states

Latin American Economists in the United StatesAuthor(s): Aníbal Pinto and Osvaldo SunkelSource: Economic Development and Cultural Change, Vol. 15, No. 1 (Oct., 1966), pp. 79-86Published by: The University of Chicago PressStable URL: http://www.jstor.org/stable/1152553 .

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LATIN AMERICAN ECONOMISTS IN THE UNITED STATES*

AnTbal Pinto and Osvaldo Sunkel (Translated by Bryce Wood, Social Science Research Council)

In order to analyze the problem of the training of Latin American economists in United States universities, we may start by asking the following question: Has there been until now an appropriate relationship between the size of the resources dedicated to this and the bene- fits obtained, in terms of the "professional maturity" of those trained, of their consequent contribution in their own countries, and of the various aims taken into account in the United States as part of this collaboration ?

Our impression is that the answer to this question should be in the negative, at least in the sense that the investment has not been very economical, viewed from the United States, nor very advantageous, as seen from Latin America. And we venture to make this judgment after having discussed the matter with many students who have studied in U. S. universities, and also in the light of the results of their training.

In order to clarify our point of view and avoid misunderstandings or inaccurate inter- pretations, we wish to reaffirm two basic matters. The first is that we believe it highly positive for Latin American economists to complete their preparation in foreign universities. The second is that no one can expect or demand that, in the U. S. or other countries, in- struction be adapted to specific needs of foreign students; such students, therefore, must do as best they can in the existing situation.

Let us now follow our argument.

As a basis for the above hypothesis, it may be useful to relate it to the relevant past. Earlier, our graduates and specialists in economics went by preference to Great Britain or France and were trained in accordance with the works of the classic or neo-classic masters. No doubt they learned much that was useful and intrinsically valuable, but with the easy wisdom of retrospection we now have little doubt that they were in general victims of the well-known phenomenon of "cultural alienation. " In fact, in their anxiety to accommodate the reality of our countries to theoretical schemes developed out of context or unrelated to objective circumstances, or in accepting as dogma these schemes' implications for political economy, and in manipulating instruments intended for other circumstances, these foreign- trained students not only contributed very little to the economic development of their countries, but frequently they retarded it. As Celso Furtado has clearly indicated: "There, where reality is far from the ideal world of doctrine, it was assumed that social pathology began. "I

* Under sponsorship of the Joint Committee on Latin American Studies of the American Council of Learned Societies and the Social Science Research Council of the United States and the Institute of Economics of the University of Chile, there was held in 1962 in Santiago, Chile, a conference of Latin American and North American economists. The agenda included several issues relating to university exchanges between the two areas. This article is an ex- tended version of the remarks of the authors at this conference. The views expressed herein are not necessarily those of the institutions in which the authors are employed. They are members of the staff of the Economic Commission for Latin America and of the Latin American Institute for Economic and Social Planning. See Revista de economia latinoamericana, No. 7 (1963). Copies of the report of the conference at Santiago may be obtained from the Social Science Research Council.

1. C. Furtado, Formaci6n econ6mica del Brasil (Ed. Fondo de Cultura).

79



80 ECONOMIC DEVELOPMENT AND CULTURAL CHANGE

Although this was the general case, there were some exceptions, but these were to be found more in the group of the "empiricists" than in that of the "academicians. "

We think it necessary to state frankly that this phenomenon has continued to exist down to the present time. In spite of all changes and advances, and especially at the university level, we have continued to be prisoners of this "alienation, " copying painfully and without critical adaptations whatever emanates from Harvard, Cambridge, and other prestige- ful universities. And in this process, the most active agents (and also the victims) have been those who studied abroad. The situation, apart from the waste of resources and opportunities, is a source of frustration for those who have experienced it, who have made it

possible, or who have had high hopes of its promise.

At this point, it is necessary to face certain objections that may be foreseen. The above position should not be interpreted as unsophisticated scientific "nationalism" or "regionalism. " The problem arises in that the social sciences ought to raise their abstractions from an objective reality which changes in time and space, a phenomenon that does not affect the natural sciences. What is currently called "economic theory" is nothing but a series of such abstractions, some more atemporal or aspacial than others, but all exposed to modifications imposed by changes of circumstances, and all of relative explanatory and operative validity, so that any dogmatic affirmation or transference derived from them may give rise to major confusions and to grave errors in policy. From this point of view, we may agree that certain high abstractions of so-called economic theory may be scientifically valid for a given contemporary reality, for example, for any "economy of scarcity. " However, the distance between them and every specific reality is very great, and to the extent that this difference is ignored, and other assumptions are not relaxed in order to take account of specific situations, the divorce between theory and objective reality will become the more

flagrant, and the results will be clearly manifested in the character of policy decisions.

In summary, the atemporal and ageographical applicability of fundamental propositions of economic theory is directly proportional to its level of abstraction. A higher generality demands a higher level of abstractions, but on the other hand, the more abstract the theory, the less will be its explanatory power and its operative utility with respect to concrete situations.

This problem may be examined in relation to the evolution of, and relations between, micro- and macroeconomics in the industrialized countries.

So far as concerns microeconomics, starting with very abstract but relatively valid assumptions about the behavior of typical units such as the consumer and the entrepreneur, a refined analytical system has been developed. The practical utility of this system has grown in proportion to the "purification" of the assumptions; the elimination of false or insignifi- cant assumptions and the incorporation of others more in accord with the facts has progress- ively brought the models closer into touch with reality. In this way undoubted progress has been made in the refinement and application of quantitative methods for an understanding of rational economic behavior, particularly in the case of business enterprises.

If the economy of a country is composed of or characterized by relatively homogeneous units that direct its behavior with a high degree of "economic rationality"--which would de- pend on certain basic conditions, such as a highly integrated economic system, the mobility of productive factors, a single price system, little interference by the state, a reasonable distribution of income, and so on-then it would not be difficult to trace and understand the macroeconomic model, which amounts to an "aggregation" of the parts or units and which thus constitutes the basic framework for the orientation of economic policy. z

2. We are aware of the fact that in theory there exist serious logical and statistical difficulties with this type of "aggregation," even in the case of developed economies.



PINTO AND SUNKEL 81

In other words, in the developed countries, based on a growing knowledge of the productive unit, not only has it been possible to abstract and systematize laws and trends of economic behavior but also it has been possible to distinguish a global vision of the basic structure and relations of the system as a whole. Naturally, this progress of economic

science, although considerable, is still limited, and besides, it does not necessarily imply that public and private decisions will be "rational, " although there may be a theoretical and scientific approximation with the rational.

If we compare the above sketch with the reality that confronts and challenges economic analysis in our underdeveloped countries, the first thing that attracts attention is the substantial difference among the objects and phenomena that are to be the concern of scientific analysis-that is, that will constitute the raw material for generalization and theories.

To begin with, those private units of production that are representative of the industrialized countries, and which are characterized by a great degree of economic rationality of the type postulated in theory, constitute the exception rather than the rule in Latin American countries. In agriculture, for example, the great majority of productive units are too small to be exploited as commercial units. On the other hand, a considerable part of the arable land is concentrated in the hands of a small group of owners who do not organize its exploitation in an "economically rational" manner. In industry, where modern capitalist enter- prise has been more developed, a high percentage of establishments are shops of artisans, or little more than this, while frequently basic sectors or great enterprises are owned by the state or are under official control with respect to important economic decisions.

With these considerations in mind, it appears evident that valid abstractions drawn from microeconomic analysis of typical productive units in developed countries, as well as the derived aggregation which is brought together in macroeconomic models, is found to be considerably divorced from the reality of adolescent economies. In brief, these abstractions are far from being sufficient for explaining the effective behavior of the most characteristic units and of the whole economic system, and therefore they have small operative value, when, indeed, they do not have a counter-productive effect by being applied "out of context.'

We continue this analysis, recalling that the lagging countries need above all economists and administrators capable of formulating policies of economic development that re- quire the elaboration of a macroeconomic interpretation of the process, which will serve as a basis and guide for dynamic and well oriented action.

It happens, however, that the macroeconomic models with which Latin American students are made familiar in the U. S., apart from. the above observations, are seriously inadequate, because they are in general short-term or static models; they are also usually of the "closed" variety, or models in which international trade has little importance.

In reality, the problem of development does not exist in an analytical framework that is static or of short-term nature, since the very method of analysis excludes it. The central problem in this type of model is to achieve the optimum productive combination of certain given resources, in order to satisfy a certain level and structure of demand. The Keynesian innovation of introducing a short-term dynamic element in the static neo-classical model consists simply in noting that such a level of demand does not necessarily assure the full utilization of productive resources. Consequently, another fundamental problem of the economy is to attain a level of effective demand that will permit an optimum productive solution with full employment of resources.

What, then, are the central problems of economic development ? Surely they do not appear to be "the optimum distribution of productive factors determined freely in the goods and factor markets. " In an underdeveloped country, an optimum combination of productive




factors to satisfy a given demand would bring about a totally unsatisfactory solution. It would be an unstable solution, capable of leading to stagnation, socially unjust and surely "irrational" from the point of view of taking advantage of development potential. This is because the free play of market forces in an underdeveloped economy leads to relative hyper- trophy of specialized foreign trade, this is to say, to dependence on one or a few export products. This model of growth, in the majority of cases, leads by way of strong fluctua- tions to the disproportionate expansion of one activity or productive region and of certain directly related services. The remainder of the economy, on which the great majority of the population depends, remains more or less stagnant, while income and property is gradually concentrated in the hands of those persons who are related directly or indirectly to the highly productive export sector. Resources in the rest of the system are thus wasted, and unem- ployment and underemployment of manpower become more and more flagrantly evident.

The fundamental problem of development is to attain a tendency toward rapid increase in productivity per head of employed population. This, in the conditions of an underdeveloped country, depends on the exploitation of natural resources which are not utilized, or on the intensification of the use of those that are presently wasted. To accomplish this, institutional changes are necessary that, in the first place, will permit access to such natural resources, and then permit the accumulation of more capital, new technology, and more highly trained human resources to organize production rationally. Moreover, it is necessary to secure this capital, technology, and manpower, since those that are "given" in the economic system are insufficient or inadequate. Our concern, to speak more clearly, is not so much to determine what is the best combination of natural resources, capital, technology, and manpower in a given moment, but rather the determination of institutional reforms and the re-orientation of economic policy that are necessary so that those natural resources may become accessible and be exploited effectively, that savings may increase and be ade- quately channeled, that technology may become available, and that human resources may be formed that are responsive to economic requirements at all levels.

This problem is not presented in terms of production only. In an economy in which there is a great concentration of property and of the advantages of education and of health, and in which the markets are not only imperfect but independent of each other, wages ap- proximate the value of the marginal product only in imported textbooks. Consequently the distribution of income is enormously unequal, and the structure of the demand of goods and services has no relationship whatever to the effective needs of the people. In these circumstances an economist would have to remain completely aloof from reality, be entirely identified with the status quo, or be very frivolous, to adopt the position that this problem "is outside the scope of an economist because it constitutes a value judgment. "

From the foregoing, one may conclude that the young graduate of a North American university does not only carry a "tool kit" that is no more than remotely applicable to Latin American realities, but that his own attitude toward his profession has been compromised. There weighs on his conscience a fantastic ethical specter a la Robbins that shuts the route of analysis of the most interesting and vital problems that are presented by the actual situation. Of course, in the majority of cases, reality is finally accepted, rather than myth, but only at the cost of many efforts and frustrations and many hours lost in purely scholastic debates.

Another characteristic of study in North American universities is the emphasis given there to great rigor in analytical work. In fact, the capacity for rigorous analysis constitutes the most signal mark of academic distinction. Of course, this in itself is correct and of value, and we can only wish that it were more evident in Latin America. Unfortunately, however, scientific rigor has come to be identified with mathematical modes of expression. Although it is clear that any analysis carried out with the aid of mathematical methods possesses in itself a certain scientific rigor (at least in the sense that the analysis is



PINTO AND SUNKEL 83

logical and consistent), it is no less the case that (a) not all economic problems lend themselves to mathematical treatment; (b) those that can be mathematically analyzed are not necessarily the most important; and (c) the use of mathematical methods is not the only way to achieve scientific rigor.

These considerations would have minor importance if it were not that in Latin America basic statistical information-the fundamental element of all useful quantitative analysis- is incomplete and inadequate or is nearly valueless because of elemental statistical errors. Besides, the fundamental problems of development are extraordinarily complex; they include variables of heterogeneous structure whose behavior is not possible to define clearly and elements that introduce discontinuities in economic processes. There are also variations in factors that are normally regarded as data in static, short-term analysis, such as consumer preferences, population growth, distribution of income, and so on. For these and other reasons, what can be submitted to mathematical treatment is either very concrete and specific or very general and abstract-and therefore largely irrelevant. However, since the mathematical has been identified with the scientific, the most capable of young Latin Ameri- can economists are directing their best efforts to research oriented to the application of mathematics to economic analysis, even when they run the risk of the sterility or of the deli- cate refinements that are so characteristic of current academic activity. In order to avoid misunderstandings, we wish to note that mathematical analysis should be welcomed insofar as it may aid in the introduction of greater rigor and more quantitative elements in what is basic and fundamental in economic analysis; without the mathematical tool, it is impossible, for example, to conceive and develop techniques of planning. However, care is necessary in order that this analysis should not be regarded as an end in itself, and thence as a ve- hicle into escapism and irrelevance.

To take up again the thread of our discourse, we make so bold as to assert that the majority of young economists who go to industrialized countries for training return to their home environment with theoretical schemes that are to a greater or lesser extent divorced from objective reality and from the economic problems of their own countries, and often with research methodologies that have no possibility of being usefully applied. It is not rare, then, that such students must on their return pass through a period of "agonizing reapprais- al"-a desperate effort at re-adaptation. The most mature and intelligent students will succeed in separating the wheat from the chaff, in establishing the proper place for theoretical abstractions, and in selecting methodologies with respect to the possibilities of their useful application. Others, however, either fall into a state of confusion and discourage- ment or become repeaters of textbook clich6s or architects of mathematical acrobatics, while they are incapable of interpreting national realities or, still less, of aiding in the solution of economic problems.

This phenomenon should be a source of deep preoccupation for the economic profession in Latin America, for two basic reasons. In the first place, ,because in recent years (and those in the near future will heighten this tendency) economic problems have been raised to the leading place in the Latin American political scene, both within individual countries and in their relations with each other and with other regions of the world. This has meant, in practice, the incorporation of many economists recently trained in our universities into professional life, in private business, and especially in governmental service, notably in the institutions responsible for economic development policies. Economists have come to occu- py in this way positions that traditionally were entrusted to lawyers, engineers, and finan- cistas. It would be unfortunate if these new professionals should assume such functions with ideas, attitudes, and analytical equipment that are entirely inapplicable and lacking in realism and without any understanding of the mission they are responsible for fulfilling.

On the other hand, it should be remembered that the students who study abroad are generally the most distinguished of their generation, and that, on their return, they begin their professional life in the universities, teaching what they have just learned without much



84 ECONOMIC DEVEIOPMENT AND CULTURAL CHANGE

preoccupation and little understanding of the specific and daily tasks of private entrepreneurs and of the officials responsible for the formulation and execution of economic policy.

In view of these circumstances, it is not surprising that national and international or- ganizations dedicated to the task of economic development in Latin America should have had a fairly disheartening experience with the employment of young economists produced by our universities, which are now oriented toward the North American model, as they were formerly toward the European model. There is no doubt that there exists dissatisfaction with the quality of this education, and especially with the type of professional that it produces. It is not only that there is the impression that these economists have acquired little competence in the use of practical and operational instruments of analysis, but, in particular, that their entire training has made them alien to the problems and hostile to the context in which it is their responsibility to participate. In summary, there is no doubt that there is an immense gap between the studies undertaken by our students in North American universities--and still more in our own, which are frequently dull copies-and the tasks that they must carry out in institutions such as development banks, exchange control commissions, planning commissions, budget offices, institutes of agrarian reform, offices of social security, housing cor- porations, and so on.

This is the fundamental reason that explains the appearance in recent years of a series of special programs of more or less intensive courses intended to fill this gap between the university and reality. Following the special training program of the Economic Commission for Latin America presently carried out by the Latin American Institute for Economic and Social Planning, which has been in existence for over ten years, there have been instituted the programs of the International Bank, of CEMLA, of the BID, and the special courses on economic development in various North American universities, which thus offer for the first time courses for students from underdeveloped countries. The manner in which new programs and courses of this type have "blossomed" in recent years has been documented in a recent pub- lication of OECD. 3

It would be pretentious to try to summarize the causes of the phenomenon and still more to suggest the remedies for it. However, we shall attempt to make some observations that we consider relevant.

For many of those who have studied abroad, especially in Great Britain and the United States, one of the specific reasons for the situation mentioned above is the custom of organ- izing studies of foreign students toward the acquisition of a degree-Master of Arts or Doctor of Philosophy-which demands the selection of a given number of courses of the curriculum and therefore the complete integration of the students into the educational system outlined for the youth of the host country. What happens ? The foreign student learns many things, among them how to work hard, but on the whole it may be that he does not learn the things that he needs most whether from the point of view of his professional and technical career, or from that of his intellectual approach.

In order to clarify this question, it is sufficient to recall the themes that constitute the essence of the basic courses of economics in the industrialized countries, and which are evidently related to their complex of problems: the functioning of the price mechanism under certain competitive conditions; full employment; problems of the business cycle, viewed from the angle of systems having an important capital-goods-producing sector in the economy; international financial movements and their effects on the balance of payments; indirect and automatic instruments of economic policy; agricultural overproduction, and so on.

3. OECD, Catalogue des Institutions de formation en matiere de developpement economique, 6dition 1962 (Paris, 1962).



PINTO AND SUNKEL 85

These courses deal with important matters, no doubt, but are these really the matters that constantly confront a Latin American economist ? There is reason to doubt this, if one has in mind the dominant concerns of our situation: economic development; the distribution of income and of wealth; the rigidities of the agricultural sector; vulnerable and unstable foreign trade; deterioration in the terms of trade; discriminatory foreign exchange policies; the economics of state-controlled enterprises; planning; anachronistic institutions; etc.

In summary, within this scheme, and apart from certain basic generalities and analytical tools that are more or less applicable, there exists a great probability that the en- thusiastic seeker of academic training and distinctions will finish by becoming prepared, in the best hypothesis, to comprehend and operate in a world to which he is a total stranger.

Related to this question is the difference of objectives of university training in the industrialized countries and in Latin America. While in the former the main purpose is to train new recruits for the academic profession, in our own countries-in spite of the importance of this aim, which would in any case be attained only with difficulty by a short period of training abroad-the fundamental objective is the substantial augmentation of the contingent of experts and officials of the middle range, who are able to collaborate in the formulation and execution of development policies. It seems almost unnecessary to stress the fact that these two relatively disparate objectives cannot be achieved within the framework of standard curricula in North American universities, since these are naturally oriented toward indigenous needs.

Given these circumstances, and keeping in mind our opening remarks on the positive significance of cooperation between universities in the United States and in other countries, what can be done ?

A first, limited, but very important step would be to concentrate opportunities for training on individuals capable of specialization in subjects with which they have some familiarity and which they have encountered in their professional experience. In other words, the recipient of a fellowship should go abroad after having had practical experience, during several years, which will have made him familiar with the problems and nature of the situation in which he will later play a part. At the present time, it seems clear that a high proportion of the recipients of fellowships are not sufficiently mature to select, from among the broad spectrum of courses offered to them by foreign universities, those that they need and that will be most significant in their training and in their later professional careers.

In accordance with what has been noted earlier, there should be a substantial modi- fication in the distribution of fellowships among those who take courses to obtain a degree and those who go to undertake research, in favor of the latter. On this point, it appears evident that the contribution that universities in Europe and the United States can offer is related to their tradition and practice of scientific method, that is, to their customs and techniques of amassing, ordering, and systematizing objective data susceptible to being utilized as bases for valid abstractions. For various causes, both cultural and material, these functions are not performed by our universities, especially in the social sciences. Therefore, one of the most promising lines of cooperation that is so generously offered lies in the training of graduate students in the techniques of scientific research, giving them the necessary facilities, aiding them to carry out investigations and to organize the material thereby obtained, guiding them so that their hypotheses and conclusions may be supported by rigorous disciplinary standards. The possibilities of this line of action appear most clearly when it is recalled that there is an enormous amount of source materials of all types on Latin America and each of its countries in the libraries of the major foreign universities, as well as a wide range of subjects that may be studied with respect to relations of all kinds between industrialized economies and dur own. This matter may be made more precise by means of a few very obvious questions. Would it not have been more advanta-




geous for all concerned if a Chilean graduate student, who worked so hard to gain a master' s degree on this or that problem of imperfect competition or the theory of games, had given his attention to the study of the structure of the industry and the functioning of the market for copper in the United States ? Or this Brazilian--should he not have studied the factors which determine the elasticity of demand for coffee in the United States ? And should not that Ven- ezuelan student have done research on U. S. import restrictions on petroleum and their importance and effects ?

On the other hand, foreign universities may provide substantial aid to our own, chang- ing the traditional form of fellowships into a system of grants to their own professors and graduate students, and also to Latin Americans, for the undertaking of research on an academic level in Latin American countries. In doing so, they may even secure real advantages for themselves. It should be recalled that not a few of the best studies on problems of Latin America have resulted from foreign field research supported by various institutions in Europe and the U. S.

These considerations are fundamental because, however much may have been published recently on economic development, very little basic research has been accomplished on the structural and institutional characteristics of these economies and on the ways in which these characteristics affect the functioning of the societies in question. What is really known about the obstacles to the change of techniques, customs, institutions, and policies ? The theory of development-as is manifest from a glance at any textbook on the subject-does not consist of more than a curious mixture of economic generalizations and pseudo-sociological propositions; a conglomeration of short- and long-term analytical elements and of static and dynamic approaches; of various doctrines and schools of thought. Very little has been done, in fact, to reformulate economic theory systematically in view of changes in assumptions and new elements that are presented by the actual situation in the underdeveloped countries. This cannot be accomplished without basic research, and such research can only be undertaken in those countries themselves.

In the present situation, there is practically no possibility in the Latin American university-with notable exceptions-to carry out the fundamental research that could serve as a base for an analytical interpretation and an abstract model or theory of development. In these circumstances, it is not even possible to take adequate advantage of the student who returns from a foreign country with improved technical training because, on the one hand, he cannot dedicate himself to research and, on the other, since his professional work will have little relationship to what he has been taught and will teach, he will soon be con- verted into a parrot of the textbooks that he studied abroad, and especially of those that are currently most fashionable.

There are no more than two alternatives. Either we continue with the present situation, hoping that at some future time the North American universities may offer training in subjects that really interest us, and that subsequently this knowledge will be transmitted to our universities; or our own universities may be transformed into serious centers of high intellectual quality, having as their objective the stimulation of research on the social reality in which their graduates will have to participate. Our profound conviction is that there is no substitute for this fundamental reorientation of our universities. We need highly qualified faculty members who possess original and unprejudiced minds and who would dedicate themselves and their assistants to research and to the guidance of teams of research workers on forward-looking projects. We believe that this is the necessary condition for the accumulation and transmission of scientific knowledge. In this task, the aid of North American universities, and also of those in Europe, Japan, China, the Soviet Union, Africa, and other areas, will be extremely beneficial, if offered in accordance with the above recommendations.



arnold harberger anibal pinto osvaldo sunkel latin american economists in the united states

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