Prebisch, Raúl

Born Apr. 17, 1901, in Buenos Aires. Argentine economist.

Prebisch was educated at the University of Buenos Aires. From 1925 to 1948 he taught political economy at the university and, at the same time, held responsible posts at a number of governmental financial and economic institutions. From 1948 to 1962 he was executive secretary of the United Nations Economic Commission for Latin America, and from 1964 to 1969, secretary-general of the UN Conference on Trade and Development. From 1962 to 1964, and again after 1969, he was director-general of the Latin American Institute for Economic and Social Planning. Prebisch is an advisor to the UN secretary-general on development problems. His major works are concerned with Latin-American economic development.

Prebisch is the founder of the theory of peripheral economies, which investigates the interdependence of technological progress, investment, and capital accumulation and the role of sociological factors in the process of economic development. At the heart of the theory lies a critique of the modern system of the capitalist international division of labor, in which the developing countries, as suppliers of raw materials, are economic appendages to the major capitalist countries. Prebisch views historical development as a dual process, involving the introduction of advanced technology throughout the world and the appropriation of the fruits of this technology. He analyzes world economic development on the basis of a “center-periphery” model that emphasizes the structural ties between the center (the advanced capitalist countries), which has a monopoly on advanced technology and produces the means of production, and the periphery (the developing countries), which carries out the first phase of the production process, that is, the procurement of raw materials. Impulses originating in the center and traveling out to the periphery result in a distortion of economic development in the periphery. This phenomenon, in Prebisch’s view, makes the periphery vulnerable to external influences and market fluctuations. From this Prebisch concludes that the slower rates of economic growth in the Third World countries and the relatively high growth rates in the advanced capitalist countries are interdependent and mutually conditioned phenomena.

Prebisch argues that foreign trade cannot be the driving force behind economic development for the periphery under present conditions, and the world market mechanism is incapable of ensuring a redistribution of income such that the center and the periphery would enjoy the fruits of technological progress equally. He holds that the economic backwardness of the developing countries can be overcome only on the basis of a major restructuring of the existing international division of labor and by industrialization, government regulation, and structural changes in the economies of these countries. He favors the building of fully developed national economies in the present agrarian and raw-materials-supplying periphery of the world capitalist economy. The bourgeois limitations of Prebisch’s point of view are evident in his attempt to convince the Latin-American peoples that this and other fundamental socioeconomic problems can be solved within the framework of capitalism, by attracting foreign capital into the economies of these countries and by using all possible means to encourage private enterprise in the domestic market.