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F R O M S T R U C T U R A L I S M TO T H E N E W

I N S T I T U T I O N A L E C O N O M I C S :The Impact of Theory on the Study of

Foreign Trade in Latin America

Sandra Kuntz Ficker

El olegio de Mexico

This paper originated w ith Jonathan Brown's invitation to participatein a LARR-sponsored panel at the 2004 L S Congress, comm enting onthe lectures offered by John Coatsworth and Joseph Love. The discussants'task was to relate the general ideas presented by these scholars to our ownfield of specialization, which in my case happens to be the history of for-

eign trade. Therefore, this article summarizes the evolution of economicideas with respect to Latin America, with special emphasis on foreign tradeand commercial policy. It explains the basic positions held by the stmctur-alist and dependentista schools, the shift brought about by the retum ofneoclassical economics, and the partial departure from orthodoxy madeby the New Institutional Economics (NIE). This article concludes w ith adiscussion of how these changes in paradigms were generated and howthe evolution in ideas contributes fresh approaches to the historical inter-pretation of the role of foreign trade in Latin America.

Latin American structuralism was probably the first original com-prehensive explanation about the causes of the region's own underde-velopment that originated from the third world. It represented a radicaldeparture from mainstream economics and from the classical interna-tional trade theory, yet it was theoretically and politically far from Marx-ism. Although many economists had grasped by intuition some of theideas that were to make up structuralism , as Joseph Love affirms, urd irlos diferentes hilos en una trama argumental coherente desde laperspectiva de la periferia fue el gran aporte de [Raul] Prebisch y [Hans]Singer (Love 1993, 66). The seminal work done by these two econo-


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American economic evolution, and its influence spread to many otherthird world countries. The research also inspired more radical approachto the study of Latin Am erican underdevelopment, namely dependencytheory or, in Robert Packenham 's words, the dependency movem ent ;Packenham 1992).' As John Coatsworth and Alan Taylor remind us,under the shelter of structuralism some of the first systematic attemptsto gather statistical data about the Latin American economies were un-dertaken, and the first economic histories of the region were written(Coatsworth and Taylor 1998, 2; see also Coatsworth this issue).

Structuralists were the first to call atten tion to the striking differencesthat separated the developm ent of Latin America from that of the NorthAtlantic economies. They also stressed that these differences would notto be overcome by patience and the passing of time. On the contrary,these were structural differences and characterized the particular wayin which backward, underdeveloped countries had evolved and par-ticipated in the world economy. These structu ral differences called for asubstantially different analytical approach than the one offered by neo-classical economics. Thus, the rejection of monoeconomics was from

the beginn ing a distinct feature of the struc turalist approach.^Another distinctive trait of structuralism was its negative stance on

foreign trade and its role in the history of Latin Am erica. Like some ofthe pioneers of development economics, structuralists conceived for-eign trade as a 'zero-sum gam e' enabling the rich advanced coimtriesto prosper at the expense of the poor backw ard on es [emphasis in theoriginal]. ̂Furthermore, according to this view, the disparities betweenthe centre and periphery are reproduced through intemational trade

(Kay 1989, 26-27). This critical stance towards the role of foreign tradeevolved in wh at came to be known as export pessimism , or the notionthat primary exports were detrimental to those economies that special-ized in their production . Export pessimism found its roots in the begin-ning of the Great Depression in 1929, when the export-led growthmechanism essentially broke down (Thorp 1996,141). The Depression

1. It is wo rth no ting that structuralism is also characterized as a mov em ent in Love'scontribution to this panel.

2. In this and other respects, Latin Am erican structura lism coincided w ith a current of


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THE NEW INSTITUTIONAL ECONOMICS I 7

exhibited the vulnerability of those economies that relied on primaryexports to sustain their growth processes. Furthermore, according tomany contemporary analysts, the experience of the Depression showedthat the purchasing power of these kinds of commodities deterioratedfaster than that of industrial products during times of crisis, and thattheir supply was relatively price-inelastic, as compared to that of indus-trial goods (Love 1993,63). In fact, the Great Depression w as interpre tedas the worst of a series of alarming signs about the risks and costs ofrelying on the external market to foster and sustain growth. In the after-math of the Depression, pushed in pa rt by the circumstances and in part

by this growing conviction, some Latin American governm ents startedto promote a more inward-looking development by means of tax ex-emptions, subsidies, tariffs, and currency devaluation (Thorp 1988).

According to Prebisch and Singer, the main reason for export pessi-mism was the trend tow ards de teriorating terms of trade for the coun-tries producing primary commodities, starting in the last third of thenineteenth century^ On the other han d, this trend originated in the dy-namic disparity of dem and between Center and Periphery. This is, in

reality, a corollary of the Engel's law, a statistical relationship betw eenincreased income and a shift in the demand pattern of consumers awayfrom basic products ( inferior goods) towards du rables. Furthermore,for some export pessimists of the mid-twentieth century, the low incomeelasticity of dem and for primary p roducts could naugh t but worsen , assynthetic substitutes wou ld take their place, tightening even further thedemand for raw materials in industrialized countries.^

According to Prebisch and Singer, the terms of trade for primary ex-

porters also tended to deteriorate as a result of the power of organizedlabor and oligopolistic industries in the developed world. The former wereable to maintain high wages, and the latter to control production ratesinstead of reducing prices, when demand fell. Neither of these conditionsheld for primary commodities, or for the countries producing them. Inany event, deteriorating terms of trade m eant a con tinuous transfer of thebenefits from increased labor productivity in the export sectors of under-developed countries, benefits that gravitated towards the developed world.

There were also other motives at hand for export pessimists. One wasthe external disequQibriiun, due to the higher propensity of underdevel-oped countriesto import industrial goods thanto export primary products


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imbalances throughout the domestic economy. Finally, the negative stancewith respect to foreign trade was extended to other links with the interna-tional economy, w hich were considered in general disadvantageous for theimderdeveloped countries (Coatsworth 2005, 135). For instance, foreigninvestments were opposed on the grounds that they constituted enclavesdetached from the rest of the economy of the recipient country. It was Singerwho pointed to the distorting effects of enclave activities: they never be-came a part of the internal economic structure of those underdevelopedcountries themselves, except in the purely geographical and physical sense. . . Economically they were reaUy an outpost of the economies of the more

developed investing countries (cited by Szentes 2002,265).For several decades the specter of export pessimism haunted Latin

America. The era of Latin American history characterized by an export-led pattern of growth (lasting roughly from the last third of the nineteenthcentury to the economic collapse of 1929), was identified as the origin ofmodem underdevelopment in the region, and, as such, was severely criti-cized n order to overcome the distortions generated by that model, struc-turalists advocated a path of development that relied basically on internal

forces and resources and was inward looking and thus less vulnerable toexternal factors. This meant essentially three things: first, Latin Americancountries should promote industrialization, producing what had beenpreviously imported from abroad; second, they should rely basically onthe internal market to find dem and for their new industrial productionand third, as the structural changes that w ere necessary to achieve theseaims could not take place spontaneously, the state should play a centralrole in shaping this industrial pattern of growth (Bagii 1986).

It has been argued that structuralists did not originally advocate aninward-oriented pattern of grow th, but rather developm ent fromwithin, a model that was not exclusively inward-looking, bu t fore-saw protection as a temporary device that would allow the develop-ment of new export capabilities. According to Rosemary Thorp, thephrase 'desarrollo desde adentro ' occurs in Prebisch's early writing, incontrast to the later description of reality 'desarrollo hacia aden tro ', andexpresses the idea that the Latin American economies should be inte-grated to the international economy, bu t in a way that reinforced inter-nal capacities, respected autonomy and built up long-run comparativeadvantage (Thorp 1996 145) In fact as Love notes Prebisch himself


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THE NEW INSTITUTIONAL ECONOMICS I 4 9

criticized the excesses and distortions of the import-suhstitutionindustrialization (ISI) model as it was heing implemented in LatinAm erica (Love 2005,106). In any case, what prevailed in theory as wellas in practice, was an inw ard-oriented model of industrialization basedentirely on the internal market and with a strong anti-export bias.

Most of the Latin Am erican historiography that was written by au-thors from the region between the 1950s and the 1970s (works by CelsoFurtado, Anibal Pinto, Aldo Ferrer, Rene Villarreal, Osvaldo Sunkel, andPedro Paz, among others)'' was dom inated by the structuralist perspec-tive or by its more radical offshoot, dependency theory—often repre-

sented by the same people, as Coatsw orth points out (Coatsworth 2005,133). Most of the historical literature shared the idea that the links withthe international economy were essentially negative and had ill-fatedconsequences for national developm ent and tha t those domestic groupsthat acted on behalf of the links with the intemationai economy werebetraying the national interest. Paul Cootenberg explains dependentistainterpretations of nineteenth-century Peru:

The old villains of history—the conservatives and erstwhile barbarians whoobstructed liberal Progress, including free trade—have suddenly beconie itsnew heroes. And al reves: the old modernizers, particularly liberal European-ized thinkers, have become the century's malinches. (Gootenberg 1989,10)

The influence of structuralism w ent well beyond university classroomsand theoretical debates, profoundly affecting public policies throughoutLatin Am erica. Maybe for the first time in history, a theoretical parad igmbecame a development program, consciously followed by national gov-ernments and supported by intemationai agencies. As a matter of fact,stmcturalism was the only third world school that had the privilege ofbeing embedded in an intemationai research institution enjoying directcontacts with economic decision-makers, advisors and other researchersin national banks and finance m inistries Love 2005,116). By these means,ISI became the route of Latin American development for several decades.

Neoclassical interpretations d id not disappear in the meantime, how -ever. On the contrary, au thors like Jacob Viner, Gottfried Haberler, HlaMyint, and Max Corden confronted the structuralist thesis theoretically

as well as empirically, underp inn ing the case for free trade (see Haberler1959; Myint 1965; Corden 1965; Viner 1955). In short, their contention


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1989, 4-7). At some point, the neoclassical approach was enriched by amore intensive use of formalized models and m athematical techniques.Their application to historical analysis gave birth to the New EconomicHistory. Soon enough, some scholars, either bom or educated in the UnitedStates, adopted this perspective to study Latin American coimtries.' Theirapproach did not always escape entirely from the attractive force of thestructuralist-dependentista paradigm , resulting sometimes in interpreta-tions that used neoclassical techniques with a dependen tista touch. Forinstance, the first scholars that analyzed Latin American economic his-tory using this new approach , found it very hard to depart from the idea

that the connections with the intemationai economy had a negative side.Although at the time the New Economic History found little echo in LatinAmerican scholarship, its contribution was crucial in many respects: theinnovative ways of addressing old and new issues, the systematic use ofquantitative data and quantitative methods, the definitive insertion ofLatin America case studies into wider intemationai debates about eco-nomic backwardness and economic growth.

Was ISI successful? It depends on the parameters that we choose to

evaluate it. It provided the Latin American economies with an indus-trial base, and generated sustained growth for a few decades. ISI notonly raised the share of manufactures in GDP but also contributed about50 percent of the growth in industry from the Great Depression to theearly 1980s.' As the same structuralists recognized, however, industrygrew under the shelter of protectionism, and thus was inefficient andunable to compete in the intemationai market. On the other hand , growthwas concentrated in particular sectors and its benefits did not spread

throughout the whole society. In fact, income distribution deterioratedin some cases.̂ ° To make things worse for the sup porte rs of ISI policies,the world soon became aware of the extraordinary success of the EastAsian economies, a success that relied at least to some extent on theopposite growth recipe: outward orientation, limited levels of protec-tion, and limited state intervention.

Whatever its success may have been, by the early 1970s the ISI modelshowed clear signs of exhaustion. Its demise, along with the old andnew criticisms to the stmcturalist approach, stimulated the resurgenceof neoclassical economics in the interpreta tion of the role of foreign trade


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THE NEW INSTITUTIONAL ECONOMICS I 5 I

in economic growth. The classical view that stressed comparative ad-vantage and the idea that intemationai trade was beneficial for all theparticipants were reformulated in more sophisticated ways, and theyfinally p revailed. The re turn of neoclassicism was greatly reinforced bythe emergence of the New Political Economy, which p roduced an im-pressive body of literature against protectionism and for free trade.

The new paradigm spread somewhat slowly and found some resis-tance within the Latin American scholarship, to the extent that most ofthe new research was at first undertaken w ithin the U.S. academy. Not-withstanding that, little by little, it led to a reinterpretation of the two

contrasting phases of development in the contemporary history of theregion: the first export-led growth phase between the late nineteenthcentury and the early twen tieth century on the one hand , and the age ofprotectionism and ISl, on the other. With respect to the former, new as-sessments were m ade that pa id m ore careful attention to the role of ex-ports in the economic development of Latin America. They tried toevaluate the re tum value of export activities, their possible linkages w ithother sectors, and their overall effects on the rest of the economy. Under

this new light, economic historians becam e more aw are of the complex-ity of export-led growth. Maybe exports were not always so bad afterall. Perhaps the so-called enclave activities were not that isolated fromthe rest of the economy. Possibly the rise in per capita GDP during thisera had something to do with export-oriented grow th. Furtherm ore,as Steve Haber suggests in a forthcoming essay, it is likely that the im-petus for industrial development came from the expansion of foreigntrade , and that ISI and export-led g rowth are not conceptually or his-torically contradictory (Haber forthcoming). As for the age of ISI, criti-cal assessments from a neoclassical point of view have been commonsince the 1970s.^ ̂More recently, the New Political Economy contributedto them by showing that protection was more costly than demonstratedby the conventional neoclassical welfare analysis of the impact of traderestrictions. This was so because protection fostered rent seeking andother forms of directly unproductive profit-seeking activities, whichyield zero direct ou tput and absorb scarce real resources. '^

11. A more balanced assessment of Latin Am erica's export-led growth phase can be


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152 Latin merican Research Review

The pioneers of the so-called neoclassical counterrevolution (schol-ars like Bela Balassa, Jagdish Bhagwati, Anne Krueger, and Ian Little)from the beginning criticized state intervention, protectionism, and ISI,or what Deepak Lai has called the dirigist dogma. ^ ̂As happened withstructuralism, their neoclassical views not only influenced scholarshipbu t also had a great impact upon public policies, by m eans of interna-tional agencies like the Intem ationai M onetary Fund IMF) and the WorldBank. More specifically, they contributed to the formation of what hasbeen known as the Washington Consensus, the growth policies that havebeen applied to Latin Am erica in recent decades an d include trad e liber-

alization, deregulation, and an outward orientation of the economyamong their central components.'^It is interesting to describe the way in which, according to the man

who coined the term, the Washington Consensus originally emerged.John Williamson explains tha t its origin lies back in 1989, in his attemptsto gain support for the Brady Plan before a U.S. congressional commit-tee. There he argued that some Latin American countries were makingprofound changes in their economic policies and that they deserved some

debt relief from the industrial coimtries. A few weeks later, at a seminarat the Institute for Developm ent Studies, he was asked by Hans Singerto identify the policy changes that he regarded as so welcome, to whichhe replied w ith the ten reforms that came to be known as the Washing-ton Consensus. The consensus was not mean t as a neoliberal mani-festo, because Williamson did not agree with all of the economic policiespursued by Ronald Reagan and Margaret Thatcher under the inspira-tion of Friedrich Hayek and Milton Friedman. L ikewise, Williamson doesnot claim to identify himself with any of the following attitudes: theimposition of economic correctness by Washington, or dependency, orthe arrogance occasionally displayed by employees of the IMF and W orldBank in their dealings w ith mem ber countries, or the triumphalism ofthe Am erican right at the collapse of com munism (Williamson 1996,20). Far from that, his intention in drawing out the text was merely tooffer a lowest comm on denominator of orthodoxy or, as someone pu t

14. Quoted in Lai 2000, 129. A look at some of the w orks published by these au thors


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it, the outcome of an opinion survey. '* In order to work ou t a docu-ment that could p retend to have a consensus it was necessary to leaveaside some social concerns, which would have been rejected by the con-servatives, and som e policies like minimization of taxation or the aboli-tion of capital controls, which would have been unacceptable to theprogressive side of the spectrum. Last, he admits not only that the con-sensus should be broadened to include a clearer emphasis on social is-sues, bu t also that the application of those rathe r general principles tospecific situations deserves an in depth discussion before it takes place(Williamson 1996, 17-18, 21). In spite of all these caveats and reserva-

tions, Williamson is aware that the term 'Washington Consensus' did adisservice to the cause by suggesting that the reforms were being madein response to pressure from Washington rather than because of localrecognition that the changes were desirable. He also recognizes thatdespite a change of mind in the direction of the consensus within thecontext of Latin Am erican govern m ents, public opinion [in LatinAm erica] was still hos tile (Williamson, 1996,16).

To Williamson's ow n reservations one may add that there is strong

evidence suggesting that pressures from the intemationai financial agen-cies in favor of implementing the consensus have existed and do exist,and that the consensus' policies have become a frozen set of prescrip-tions that leaves little room for a thorough analysis of particular circum-stances and broader social needs. Furthermore, as we know, there is noconsensus at all about the validity of th Washington Consensus for eachand every country in Latin America (Coatsworth 2005, 143). Criticismfrom the theoretical point of view includes the idea that the consensus is nothing but an old, ahistorical explanation of the phenom enon called'underdevelopm ent,' taking it out of the context of the world economyand even of the structural, institutional and sociological legacies of thepast (Szentes 2002,341). On empirical grounds , there is the fact that inthe twenty-odd years of the 'Washington' consensus, the Latin Ameri-can econom ies have experienced their worst two decades since the cata-strophic first half of the nine teenth century (Coatsworth 2005,137). Inthe end , opposition to the consensus also has an ethical side, as it goes tothe very question of how development should be understood, and theconviction that its version of the goals of developm ent is far too re-stricted, both in its instruments and objectives. ^''


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5 Latin American esearch Review

Criticism of the Washington Consensus is likely to increase as a re-sult of the poor performance of the Latin Am erican econom ies, and somecritiques may well have a structuralist tone. Just to mention some rel-evant examples, authors like Jose Antonio Ocampo and Lance Taylorhave restated structuralist views on the common grounds of their oppo-sition to the Washington Consensus.'* In fact, structuralist approacheshave no t disappeared. However, the idea that there is a general theorythat explains Latin American development h s been replaced by the moremodest assessment that there are particular explanations for groups ofsimilar countries (Bustelo 1999, 186, 245-46). Besides, as Joseph Love

reminds us, the new structuralists have entered original fields of research,making important contributions to the analysis of the informal sector,inflation, and stabilization policies, among other topics.'' Moreover, inthe ideological arena the old structura list thesis about state in terventionand inward-looking industrialization still enjoys great popularity, andis brandished by leftist leaders and international organizations in theirefforts to contain the forces of globalization. Whatever the impact ofthese critiques m ay have been, the truth is that the market fundamental-

ism characteristic of the early phase of the neoclassical resurgence hasyielded to more moderate positions. Basically, it is now recognized thatthe state has played and should play a significant role in supportingeconomic growth, as in the various forms of strategic trade policy that,as most neoclassical economists agree, can improve the functioning ofthe market. At the same time, it has become evident that there is nosingle recipe for economic development, and that the dominant para-digm has had rather uneven outcomes (to say the least) in Latin AmericaAs a result, a more open approach to the problems of development hasemerged, which calls for more instruments and broader goals, as Jo-seph Stiglitz, a former W orld Bank officer, affirms.̂

One particular current within the New Political Economy has repre-sented an interesting (even though moderate) departure from p ure neo-classical economics. I refer to the New Institutional Theory (NIT, alsonamed New Institutional Economics [NIE]), which, applied to thirdworld countries, has yielded remarkable results, with historical as well


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as theoretical implications. Typically, neoclassical economy has ignoredthe importance of institutions. Institutional theory, particularly in theform developed by Douglass North, suggests that it takes more thanneoclassical rationality to explain real economic phenomena, that mar-kets are imperfect and transactions costly, that institutions matter, andthat values and beliefs are all crucial, not only for private life, but alsobecause they effect the choices made by economic agents.^^ All this isnothing but to state that culture matters and history matters.^ ̂Economicchange tow ards a more efficient equilibrium is not as easy and linear asneoclassical theory assumes, and the reason is threefold: first, because

individuals make choices based on other criteria besides just maximiz-ing rationality; second, because institutions are not necessarily createdto be economically efficient; and third, because pa th dependence makesit difficult to alter the direction of an economy once it is on a particularinstitutional pa th. ^ Against the image of single world created by neo-classical economics, the New Institutional Theory has shown that thereare indeed differences among countries, and among regions, and thatthese differences condition the particular shape that development is

going to take. In contrast to the structuralist pa radigm, the NIT positsthat these particu lar features are not created by external factors, bu t bycommon historical trajectories; even so, they generate patterns and com-mon traits that separate, for instance, the pa th of development followedby Latin American countries from that followed by the North Atlanticeconomies (Coatsworth 2005,138). Certainly few scholars are under theillusion any longer that one general theory, with a relatively sm all nu m-ber of variables, is capable of explaining everything in Latin Americandevelopment.

In his contribution to this panel, John Coatsworth states that bothstructuralists and dependen tistas shared the preoccupation . . . w ithinstitutions as key determinan ts of economic success or failure, sug-gesting that there is some line of continuity from structuralism to theNew Institutional Economics. This suggestion is confirmed by the phrase

21. For more on the NIE approach, see North 1973; 1981; 1990.22. This oversight [of history by neoclassical economics] is unfo rtunate. Historical

work opens a rich database of institutional experience that has not been adequately


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that the structuralist and dependentista em phasis on issues of politicaleconomy and institutional development also has a newly contempo-rary ring (Coatsworth 2005,133,136). It may be true that the two LatinAm erican schools focused on institutional 'structures,' such as the con-centration of land ow nersh ip (Ibid., 134). H owever, there is at least oneimportant reason why I doubt that a line of continuity could be tracedbetween those approaches and the NIE: the attention given by the formerto the external factors of underdevelopm ent diverted the sight from thestudy of internal hindrances to growth. On the other hand , the focus onthe latter created a whole different pa th of research, which s tarted with

grow th economics (a la Kuznets) and ended up recognizing the impor-tance of institutions in economic performance.̂ ^In contrast with the structuralist movement, which found its origin

and developm ent in Latin Am erica, the NIE irradiates its influence fromthe United States. In fact, the early studies about Latin American coun-tries employing a NIE approach were written by American scholars (Ithink specifically of the contributions made by John Coatsworth^^ andSteve Haber^'), and it has been largely under their auspices that some

Latin Am erican scholars have started to adopt this approach.^^

S O M E C O N C L U D I N G R E M R K S

o conclude, what do these developments m ean for the study of for-eign trade in Latin America?

1 There does not seem to be conclusive evidence to seal the debate on

the interpretation of the historical role of export-led growth and import-substitution industrialization. It seems clear that the export pessimism ofstructuralism and dependency theory does not account for the contribu-tion of exports and export-led growth to the Latin American economies,bu t neither does the naive export optimism of neoclassical economics. Thesame may be said when it comes to the interpretation of the inward-oriented growth of the mid-twentieth century, or even of the current stageof globalization. Recent research by Angus Maddison suggests that Latin

24. See Haber 1997, Introduction .


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America grew at roughly the same rate that the United States did during1870-1970, which is to say that it grew both under an export-led pa ttern of

growth and under an ISI model of developm ent (cited by Coatsworth thisissue). Throughout decades of research, both paradigms have accumu-lated an impressive array of empirical evidence to support their cases.One can argue about the rigor of the methodologies employed in eithercase, or feel attracted by the thoroughness of a particular analysis, but thetruth is that it would be very hard to prove that one of these explanationsis utterly wrong and the other one is completely right. As Coatsworthstates, since the structuralist and dependentista scholars apparently gotthe

growth issue

wrong, succeeding scholars

have tended to

overlook w hatthey got right (Coatsworth 2005,135). Likewise, those who oppose thecurrent state of affairs in general, may find it hard to acknowledge thatsome of the ingredients of the Washington Consensus constitute a goodgrow th policy after all. The fact is that it does not seem to be the scientificsuperiority of either one of these paradigms w hat has made it prevail overthe other at any given period of time, and that, at some point, there is anideological and political corifrontation that makes them irreconcilable andmutually exclusive.̂ *

2. In trying to imderstand the transitory natu re of theoretical para-digms, it may be useful to refer to Paul Krugman's assertion that eco-nomic ideas have cycles, and what is the conventional wisdom todaymay seem stupid and irrational tomorrow (Krugman 1996). Historicalevidence sup ports K rugm an's assertion. For instance, the idea that stateplanning and import substitution were crucial for a successful growthstrategy, which seems so wrong today, was the general consensus thirtyyears ago. Likewise, free market and outward orientation were the con-ventional truths of the 1920s, exactly as they are today.^' According toKrugm an, there is a cultural aspect in conven tional economic w isdom .

28. Colin Bradford pu ts it neatly by saying: el estilo predom inan te de los debates hasido el de plantea r dicotomi'as. La exposicion se ha ce ntrado en uno u otro term ino, y losesfuerzos se han encaminado exclusivamente a eliminar los paradigmas o ideologi'as

contrarias planteada s en tom o a esas dicotomias. En consecuencia, hasta hace poco hansido escasas las convergencias de opiniones, sintesis entre diversas perspectivas oconsensos hacia los que nos hayamos orientado En ese sentido quiza el debate economico


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which makes intellectuals and policy makers adopt certain beliefs abou teconomics that nobody then dares to deny (Krugman 1996). This set of

beliefs is what makes up the orthodoxy of the time. However, as Rich-ard Auty and John Toye poin t out, Orthodoxies are no longer just setsof beliefs. They are beliefs to assent to which one feels some kind ofsocial and psychological pressure (Auty and Toye 1996,1). In any event,in embracing or rejecting a paradigm it is worth keeping in mind that allof them are historically transitory and that the ascendancy of one overthe other(s) is culturally (and, one could add, politically and ideologi-cally) conditioned.

3. Even though it is unlikely that structuralism will reemerge as a domi-nant paradigm for the interpretation of Latin American developm ent, the Big Questions it poses are still out there waiting to be answered.^ Neo-classical economics, especially the more pragm atic W ashington Consen-sus, does not seem to be especially concerned with these big issues, bu trather with the short term and with microeconomic analysis. This is one ofthe reasons why the development of the New Ir\stitutional Economics cre-ates a welcome opportunity to get rid of the conceptual and ideologicalrigidity of conventional modes of thinking and to approach Latin Ameri-can reality in original and innovative ways. s the structuralists, the newinstitutionalists are interested in the factors that foster or hinder growthin the long term, as well as in the historical itineraries that created struc-tures (path dependent trajectories) which conHgtire conditions of roughbut durable equilibrium . . . that may open or foreclose opportunities forlong run economic grow th (Coatsworth 2005,138).

4 With respect to foreign trade, one of the great advantages of the NewInstitutional Theory is that, although rooted in neoclassical economics,it does not have any preconceived notion towards the role of interna-tional trade, trade policy, or the desirable orientation of the grow th pro-cess. Its concern has to do w ith the creation of efficient institutions andbetter defined property rights. One can presume that trade liberaliza-tion and lower tariff barriers fit the notion of more efficient institutions,bu t in a way that is by no m eans incompatible with strategic tariff pro -tection, export prom otion or other means of sophisticated governmentintervention. '^ Eurthermore, the New Institutional Theory provides


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NIT represents a victory, intellectually, for historical analysis over ab-stract theory (Vendenberg 1998, 24). By these means, it is capable of

recognizing different paths to development, and of finding a place forhistorical diversity within theoretical reflection. In short, the NIT is ahealthy, even if unintended, denial of dogmatic monoeconomics, whichis always refreshingly good news.

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