Prebisch attributed third-world underdevelopment to structural trade patterns rather than local institutions

Evidence

The NIEO’s proponents contended that the gap separating the Third World from the developed countries could only be narrowed if the international trading system were reformed in such a way as to correct the “biases” against developing countries that were alleged to be inherent in it. This rationale for the NIEO’s program of structural reform rested largely on the influential work done by Raúl Prebisch while head of the United Nations Economic Commission on Latin America. Much of the research conducted by the economists at ECLA purported to show a historical decline in the terms of trade for primary commodities, which Prebisch argued allowed the rich countries to reap most of the technological advances engendered through industrialization. Prebisch and his colleagues at ECLA thus agreed with the prevailing view of the modernization theorists—that is, that industrialization was the requisite linchpin of any development effort. But they took issue with modernization theory’s claims that the primary constraints on successful industrialization in the Third World were institutional and/or cultural. Instead, they argued that they were structural, and rooted in the nature of international trade patterns—that is, the exchange of primary commodities from the periphery for manufactured goods made in the core. On the basis of this analysis, Prebisch concluded that developing countries should pursue autonomous industrialization, and prescribed a regime of import substitution toward that end. — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1742

Categorization

• DEFINE: This is a clean single-paragraph definition of the Prebisch thesis and import-substitution industrialization — the core intellectual foundation of the NIEO.
• XREF: Connects to dependency theory and modernization theory debates; also to the broader postwar developmental economics literature that the Mont Pèlerin network was reacting against. — connects to: Neoliberal economists inverted colonial extraction into a source of Third World progress — Jessica Whyte, The Morals of the Market: Human Rights…, 401; Modernization theory blamed underdevelopment on internal cultural flaws within societies

Broader Connections

• Modernization theory blamed underdevelopment on internal cultural flaws within societies #contradicts (0.85)