The Mexican Rescue by Joseph
Kraft. Group of Thirty, 66 pp. $15
(paper).
Joseph Kraft, a nationally syndi-
cated columnist and regular contrib-
utor to The New Yorker magazine, is
the author of several books on U.S.
government and international affairs.
Kraft has taken the journalist’s route
in tracing the story behind Mexico’s
traumatic ultimatum to the world
banking community in 1982, present-
ing the issue in the words of key par-
ticipants. The director of Mexico’s
Department of Public Credit perhaps
describes the bombshell best, “We
didn’t crawl to the international finan-
cial community as debtors seeking re-
lief through some minor adjustment
that could be made backstage. We
walked in through the front door. We
said we had a major problem with a
capital P. We didn’t say the problem
was a particular debt. We said the
problem was the whole international
financial structure. We said it was ev-
erybody’s problem.”
Kraft’s depiction of the impact of
Mexico’s actions is fascinating and
highly readable–especially for lay-
people. He plots the manoeuvres re-
quired in negotiating with the lending
institutions, commercial banks, na-
tional governments and dozens of ex-
tremely powerful personalities. The
author also looks at the political impli-
cations of developments in interna-
tional finance, and the U.S. Treasury
Department’s ineptitude in foreseeing
Mexico’s most apparent financial
crisis.
Income Distribution and Economic
Development: An Analytical Survey
by Lescaillon, Paukert, Morrisson and
Germidis. International Labour Of-
fice, 207 pp. 30 Swiss Francs,
(paper).
No matter how quickly the gross
national product grows, a nation can-
not be said to have made progress if
its population does not benefit from a
corresponding increase in income.
The ILO has conducted over 100
studies on economic development vis-
A-vis employment throughout the
Third World and on the distribution
between rich and poor. This book syn-
thesizes these studies and is com-
plemented by information from paral-
lel projects conducted by the World
Bank.
Opening chapters provide a struc-
tural analysis of income distribution;
an examination of the demographics
of income inequality follows. The
closing chapters look at possible dis-
tribution alternatives, based on a
number of studies undertaken by the
ILO. Latin American nations receiv-
ing special focus in this pan-Third
World study are: Chile, Colombia,
Puerto Rico and Panama.
Planning the Mexican Economy:
Alternative Development Strategies
by Jorge Buzaglo. St. Martin’s Press,
306 pp. $27.50 (cloth).
In this book, Buzaglo looks at
Mexico’s oil-based development and
its effects on agriculture and the rest
of the economy. According to Buzag-
lo, oil-led development strategies can
create a number of long-term prob-
lems for Third World nations. Ag-
riculture generally suffers most, and
agriculture is precisely the sector
where development problems tend to
be the most serious. Rural poverty,
migration to the cities, urban un-
employment and underemployment
are the usual results, along with
higher food prices, inflation and in-
creasing dependence on food imports.
Mexican agriculture has stagnated
since the mid-1960s. Income distribu-
tion is extremely inequitable; the poor
are getting poorer. Buzaglo considers
how an expansion in oil production
could alleviate, or exacerbate, de-
velopment in the non-industrial sec-
tors.
Latin America in the 1930s: The
Role of the Periphery in World
Crisis edited by Rosemary Thorp. St.
Martin’s Press, 338 pp. $32.50
(cloth).
Latin America is now facing its
most severe “adjustment” crisis since
the 1930s. But while there are certain
parallels between the continent’s cur-
rent role in the world economy and its
position in the years preceding World
War II, these carefully argued essays
emphasize the differences between
the two periods, rejecting superficial
comparisons.
As channels to international trade
and finance began to close down fol-
lowing the 1929 crash, many Latin
American nations recovered through
an import-substitution scheme. This
group of authors argues that several
Latin American economies performed
particularly well during the early
crisis years, especially in comparison
to North America. But today there are
no opportunities for rapid recovery,
and countries are now looking to ex-
pand existing exports rather than di-
versify their industrial base. The au-
thors of these essays-academics
from prestigious international institu-
tions, Carlos Diaz Alejandro among
them-present an integrated view of
the two most important periods in
Latin America’s modern economic
history.
The Political Economy of Income
Distribution in Mexico edited by
Pedro Aspd and Paul E. Sigmund.
Holmes & Meier, 542 pp. $85 (cloth).
The essays in this volume examine
the impact of public policy upon the
distribution of income in Mexico. The
authors conclude that Mexico’s rul-
ing Institutional Revolutionary Party
(PRI) has not been able to achieve so-
cial transformation and growth with
equity and political stability. Pro-
grams designed specifically to effect a
more equal distribution of wealth,
have by-passed the traditional and
rural sectors. As a consequence, “re-
distribution in Mexico in recent de-
cades . . . has benefitted the middle
sectors at the expense of” the mar-
ginalized sectors. In 1977, 36% of
Mexican families, 22 million people,
were living below the national poverty
line.
Uncertain Future: Commercial
Banks and the Third World edit-
ed by Richard E. Feinberg and Valer-
iana Kallab. Overseas Development
Council/Transaction Books, 124 pp.
$12.95 (paper).
Commercial banks became the
main channel for the transfer of capi-
tal from the North to the South during
the 1970s. But in the current external
debt crisis, higher interest rates are
draining Latin American nations of
badly needed development just as new
MARCHIAPRIL 1985
11
MARCH/APRIL 1985
11bank lending is tapering off. Outright
default seems unlikely, but an inten-
sified conflict between the creditor
and debtor nations seems imminent,
unless corrective measures are im-
plemented in the near future.
The Overseas Development Coun-
cil is an independent, non-profit or-
ganization founded in 1969 to pro-
mote awareness of the economic and
social problems confronting the de-
veloping nations. In this volume, the
Council has collected essays covering:
the politics and diplomacy of bank
lending; the changing relationship be-
tween the banks, the IMF and the
World Bank; and proposals for a re-
formed lending framework encompas-
sing credit and improved data collec-
tion.
Brazil’s State-Owned Enterprises:
A Case Study of the State as En-
trepreneur by Thomas J. Trebat.
Cambridge University Press, 287 pp.
$42.50 (cloth).
Thomas Trebat has written a sys-
tematic analysis of the performance of
Brazil’s state-owned enterprises in
petrochemicals, steel, electricity and
telecommunications. Private enter-
prise is actively encouraged in Brazil,
and the state-owned enterprises have
served primarily as a catalyst to eco-
nomic growth, at least through the
early 1980s-and they have grown
rapidly relative to the private firms.
They have also performed better than
many of their counterparts in the de-
veloping nations. Trebat argues that
the Brazilian economy’s large-scale
production capacity and the govern-
ment’s supervision of the firms have
been key to this success. However,
the real test will be if public enterprise
performance can withstand Brazil’s
current crisis.
Transnational Corporations and In-
dustrial Transformation in Latin
America by Rhys Jenkins. Cam-
bridge University Press, 255 pp.
$27.95 (cloth).
In the 1950s and 1960s, “develop-
mentalism” touted the benefits of di-
rect foreign investment for Latin
America’s growing manufacturing
sector. By the late 1960s, economic
nationalism was on the rise through-
out the region, and the tide turned
against foreign investors. Taking the
criticism further, dependency theo-
rists pointed to a new and greater form
of dependency in which significant
sectors of industry fell under the con-
trol of the transnationals. In this com-
prehensive study, Rhys Jenkins illus-
trates shortcomings in all three posi-
tions. He concludes with case studies
on the automotive industry and phar-
maceuticals, with sections on the in-
ternationalization of capital and class
structure.
The Role of the International Fi-
nancial Centres in Underdeveloped
Countries by Xabier Gorostiaga. St.
Martin’s Press, 139 pp. $25 (cloth).
Xabier Gorostiaga is director and
founder of the Institute of Socio-Eco-
nomic Research (INIES) in Managua.
In 1976 he began a study of the impact
of the international financial centers
on local economic structures in Pa-
nama as part of a doctoral thesis in
economics at Cambridge University.
This study is an extended look at the
role and function of financial centers
in the world economy, with Panama
as a key example. Gorostiaga ana-
lyzes the structural causes that have
given rise to the centers in various de-
veloping countries, their function and
operating mechanisms and impact on
the zones in which they operate. He
also explores the historical and geo-
political backgrounds of these host na-
tions which make them ideal operat-
ing bases.
Economic Liberalization and Sta-
bilization Policies in Argentina,
Chile and Uruguay: Applications of
the Monetary Approach to the Bal-
ance of Payments edited by Barletta,
Blejer and Landau. The World Bank,
163 pp. $17.50 (paper).
In May 1982, the Latin American
and Caribbean Regional Office of the
World Bank convened a conference to
review the recent economic experi-
ences of Argentina, Chile and
Uruguay, each of which had adopted
what is here termed “the monetary
approach to the balance of pay-
ments.” There were considerable var-
iations in the three nations’ policies,
and very mixed results. Equally
i2
REPORT
ON THE AMERICAS
mixed were the interpretations of the
experts. The theoretic validity, inter-
nal consistency and social costs of the
applied programs are still hotly de-
bated.
The conference participants repre-
sented major international lending in-
stitutions, research centers and uni-
versities of North and South America.
And for the most part, these presenta-
tions are in strictly balance-of-pay-
ments terms, ignoring political and
social components.
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