June Flanders’s 1964 thorough critical assessment of the Prebisch thesis on protectionism and industrialization at the periphery is a classic of its kind. However, it does not follow from Flanders’s evaluation that Prebisch was a “poor economist”. True enough, his (and Hans Singer’s) hypothesis of falling terms of trade has been controversial and criticized from both theoretical and empirical perspectives. However, as pointed out by Flanders 1964, the “heart” of the Prebisch case for protection was his proposition that the periphery’s relative rate of economic growth is constrained by the disparity between the income elasticities of its imports from industrialized countries and of its exports of primary commodities. Prebisch’s approach (based on a careful application of Harrod’s foreign trade multiplier) has become the backbone of balance of payments constrained growth models further developed and tested since the 1970s by Anthony Thirlwall and others (see my paper with Ricardo Solís http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2151264). Surely, the validity of Prebisch’s “single, minimum model” is an empirical question, as remarked by Flanders 1964. But that is true of any economic model.
Citando M June Flanders <[log in to unmask]>:
Dear All
I blush at sounding my own horn, but I feel obliged to comment at this point. I disapprove of Raul Prebisch’s inclusion not because he was a protectionist, but because he was a poor economist, however effective he may have been in the Economic Commission for
Latin America (ECLA), UNCTAD, and other such organizations. I made that point in a paper published in The Economic Journal (after a good deal of hesitation on the editor’s part) in 1964: “Prebisch on Protectionism: An Evaluation,” The Economic Journal, Volume LXXIV, No. 2, June 1964.
The editor invited Prebisch to submit a reply, which was not forthcoming. My paper was included in four handbooks and collections on development, and translated, without my knowledge, into Spanish in Latin America. More to the point, people I knew at the time who were active and prominent in the development field commented that they were astonished to learn that the economic arguments in Prebisch’s writings were so thin and flawed. I am not aware that there was any counter argument to my paper, by anybody.
Professor M June Flanders
The Eitan Berglas School of Economics
Tel Aviv University
Tel Aviv Israel 69978