Most economic models do not explicitly incorporate the “state” or the “government” into their analyses. Instead, this entity is viewed as a deus ex machina which plans and directs economic policy according to notions of efficiency, growth, distributional justice, and so on, that form the central concepts of the models. Unfortunately, the same naive thinking permeates a good deal of public policy analysis. This is the case, for example, with issues of development and underdevelopment. Here, attention is concentrated on “technical,” or “economic,” solutions, while taking for granted, either implicitly or explicitly, the existence of the political will necessary to implement them.

Segmentation in the labor markets refers to the fact that a single homogeneous market for labor, as assumed by conventional theory, does not exist. Its definition varies according to different authors. This article will refer to the concept as it is used in the discussion of economic development in Latin America: that is, that created by the type of development which generates a segmentation of the productive structure and, in turn, of the labor markets.

The most exciting prospect in Latin American political economy and public policy is the possibility of pursuing the objectives of equity and efficiency through the same neoclassical policy instruments. In light of conventional views, this convergence is remarkable, perhaps even shocking. We often juxtapose efficiency and equity, along with the ideological positions associated with each. It is common to link Leftist political approaches both to statism and to progressive income distribution, thereby linking statism to progress.

By now, it has become a platitude to proclaim that, over the past decade, Latin America has experienced its deepest, most prolonged economic recession in modern history. Nevertheless, this has indeed been the case. The magnitude and effects of the crisis have, of course, varied from country to country, and so have the policy responses. What is undeniable is that not one single country has escaped the recessionary impact of a complex combination of circumstances which appeared on the horizon in the early 1980s, and in which an adverse international economic environment played a prominent role.

The aim of public policy is to create an environment within which economic agents can produce efficiently the composite commodities, and components thereof, which are needed to satisfy their economic needs.

In recent years, price increases in the inflation-prone countries of Latin America have accelerated from their former customary pace of 2 low digits to 3, 4, or more digits and are inflicting much more economic, social, and political damage than the old, slower price increases ever did. The joint (and inter-related) effects of the debt crisis plus galloping inflation have stopped income growth, reduced per capita income, lowered real salaries, increased unemployment (and underemployment), impaired income distribution, increased absolute poverty, and provoked urban riots.

It is the most common presumption that the relative priority accorded to education in an economy is significantly determined by economic conditions, particularly by the national income per capita and the budget. However, under normal conditions of economic well-being, allocation of resources to education is generally found to be least influenced by economic factors in any important way. Economic ability factors like GNP per capita and public spending on education are not significantly related. Neither are criteria for efficiency, like the rate of return to education, found to influence policies which allocate resources to education (see Tilak, 1982).

Economic growth and government policies in small Caribbean countries have been conditioned (1) by the very large fluctuations in their external sector which continuously change the relative profitability of the various productive sectors of their economies, greatly complicating the macroeconomics management of their economies; (2) by the attempts of their governments to cope with those fluctuations; and (3) by the political economy relations that prevail in those countries, and that determine the nature of government intervention and the role of the private sector.

The aim of this article is to present and comment briefly on the tendencies and changes that have occurred in the organization of the Chilean industrial sector during the 1970-80s. First of all, it must be borne in mind that this was one of the most unstable periods in Chilean economic development, due both to the profound political changes that have taken place in the country and to the great instability of the international economy. These situations have affected the structure of the industrial sector in such a way that it is impossible to analyze it exclusively in terms of the performance of traditional indicators, such as production, employment, productivity, trade, and so forth. The transformation of the system of economic organization in Chile has brought about radical changes in the international insertion of the economy, the price system, the distribution of income, the structure of property, and the relations between the state and the private sector, which cannot be disregarded in an analysis of this nature.

Although decentralization is probably the institutional reform most frequently proposed for Third World countries, it has proven to be an elusive topic for both practitioners and analysts of development. Studies of centralization and decentralization are overwhelmingly descriptive, formalistic, or episodic. This article attempts to improve our understanding of how macro-political factors affect the adoption and implementation of decentralization policies in Latin America.

Since the 1970s, the international environment has been one of successive shocks. These took place during the consolidation of the Eurodollar market as a system independent of the lenders of last resort in the different countries. As the international monetary authorities delinked from gold, they accepted the float of currency exchange rates. At the same time, inflation and interest rates were allowed to vary widely, reaching their highest levels in two decades. Confronting these shocks and these international conditions, the Latin Americans decided against slowing their wheels of industry by consuming less oil but, instead, to increase their rates of growth.