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Regionalism in Latin America: prospects for the Latin American Economic System (SELA)

Published online by Cambridge University Press:  22 May 2009

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In October 1975, all twenty-five Latin American and Caribbean nations created a new, exclusively Latin American regional economic organization, the Latin American Economic System (SELA). The organization's two general goals are: (1) to promote regional cooperation for economic development, mainly through the creation of Latin American multinational enterprises; and (2) to establish a system of consultation for the adoption of common economic positions vis-à-vis third countries and international organizations. This paper is an exploratory inquiry into the prospects for SELA. The method of analysis employed is to draw from the literature on Latin American integration five problem areas common to integration efforts (weak institutional structures, an unequal distribution of the benefits of integration, nationalism, competing ideologies, and external pressures) to use in assessing SELA's probable evolution. SELA has the potential to further regional integration, but faces an uphill struggle to gain the active support of key countries; it is more likely to achieve its objective of coordinating the policies of Latin American states on international economic issues.

Copyright © The IO Foundation 1978

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1 Solar, Donald, “The Case Against Latin American Integration,” in Hilton, Ronald, ed., The Movement Toward Latin American Unity (New York: Praeger, 1969), p. 115Google Scholar.

2 Milenky, Edward, “Latin America's Multilateral Diplomacy: Integration, Disintegration, and Interdependence,” International Affairs (01 1977): 77Google Scholar.

3 Several works on Latin American integration were examined. Among the works on the general subject of post-World War II integration, I consulted: Carnoy, Martin, Industrialization in a Latin American Common Market (Washington: The Brookings Institution, 1972)Google Scholar; Dell, Sydney, A Latin American Common Market? (New York: Oxford University Press, 1966)Google Scholar;Grunwald, Joseph, Wionczek, Miguel, and Carnoy, Martin, Latin American Integration and U.S. Policy (Washington: The Brookings Institution, 1972)Google Scholar; Maritano, Nino, A Latin American Economic Community (Notre Dame: Notre Dame University Press, 1970)Google Scholar; Hilton, Ronald, The Movement Toward Latin American Unity (1969)Google Scholar; Wionczek, Miguel, ed., Latin American Economic Integration (New York: Praeger, 1966)Google Scholar; and Herrera, Felipe, “La Tarea lnconclusa: America Latina Integrada,” International Development Review (1973)Google Scholar. The following works deal with Central American integration: Cochrane, James, The Politics of Regional Integration: The Central American Case (New Orleans: Tulane University Press, 1969)Google Scholar; Cochrane, James and Sloane, John, “LAFTA and CACM: A Comparative Analysis of Integration in Latin America,” Journal of Developing Areas (10 1973): 1338Google Scholar; Hansen, Roger, Central America: Regional Integration and Economic Development (Washington: National Planning Association, 1967)Google Scholar; Schmitter, Philippe, Autonomy or Dependence as Regional Integration Outcomes: Central America (Berkeley: University of California Press, 1972)Google Scholar; and Fagen, Stuart, Central American Integration: The Politics of Unequal Benefits (Berkeley, Institute of International Studies, 1970)Google Scholar. LAFTA is the subject of works by: Cochrane and Sloane (1973); Mathis, F. J., Economic Integration in Latin America (Austin: University of Texas Press, 1969)Google Scholar; and Milenky, Edward, The Politics of Regional Organization in Latin America: The Latin American Free Trade Association (New York: Praeger, 1973)Google Scholar. Among the many works on the Andean Group, see: Dudley, Darrel, “The Andean Integration Movement: An Appraisal,” A Contract Study for the U.S. Department of State, 09 1975Google Scholar; Avery, William and Cochrane, James, “Innovation in Latin American Regionalism: The Andean Common Market,” International Organization (Spring, 1973): 181223Google Scholar; Kearns, Kevin, “The Andean Common Market,” Journal of Inter-American Studies and World Affairs (05 1972): 225–49Google Scholar; Milenky, Edward, “Developmental Nationalism in Practice: The Problems and Progress of the Andean Group,” Inter-American Economic Affairs (Spring 1973): 4968Google Scholar; Middlebrook, Kevin, “Regional Organizations and Andean Economic Integration, 1969–1976,” unpublished paper (08 1976)Google Scholar; and Switzer, Kenneth, “The Andean Group,” Inter-American Economic Affairs (Spring 1973): 6981Google Scholar. On Caribbean integration, see Preiswerk, Roy, ed., Regionalism and the Commonwealth Caribbean (Trinidad: Institute of International Relations, 1969Google Scholar) and Segal, Aaron, The Politics of Caribbean Economic Integration (Rio Piedras: University of Puerto Rico Press, 1968)Google Scholar.

4 Dudley, , “The Andean Integration Movement: An Appraisal,” 1975, pp 68Google Scholar.

5 Kearns, , “The Andean Common Market,” 1973, p. 228Google Scholar. See also Switzer, , “The Andean Group,” 1973Google Scholar.

6 Business Latin America, February 2, 1977, p. 30.

7 Dell, Sydney, “Obstacles to Latin American Integration,” in Hilton, , The Movement Toward Latin American Unity, p. 70Google Scholar.

8 Ricardo Ffrench-Davis, “The Andean Pact: A Model of Economic Integration for Developing Countries,” unpublished paper, no date.

9 Carnoy, Martin, Industrialization in a Latin American Common Market (1972), p. 26Google Scholar.

10 Haas, Ernst, “Turbulent Fields and the Theory of Regional Integration,” International Organization (Spring 1976): 176Google Scholar. See also Hansen, Roger, “Regional Integration: Reflections on a Decade of Theoretical Effort,” World Politics (01 1969): 242–71Google Scholar.

11 Grunwald, , Wionczek, , and Carnoy, , Latin American Integration and U.S. Policy, (1972)Google Scholar.

12 Milenky, , “Latin American Multilateral Diplomacy,” (1977) pp. 9192Google Scholar.

13 Convenio De Panama, Article 2.

14 Alejo, Francisco Javier and Hurtado, Hector, El SELA: Un Mecanismo Para La Action (Mexico: Fondo de Cultura Económica 1976) p. 32Google Scholar.

15 For the organizational structure of SELA, see Convenio De Panama, Articles 8–31.

16 Personal interviews.

17 Documentation Basica Sobre El Sistema Economico Latinoamericano: SELA, pp. 44–45.

18 Ibid. For budgetary purposes, the countries are divided into four groups:

Group One: Argentina, Brazil, and Mexico, each of which will contribute 12.5 percent of the budget, or $237,500.

Group Two: Chile, Colombia, Cuba, Peru, and Venezuela, each contributing 7 percent of the budget, or $133,000. In addition, Venezuela will make a special contribution of $195,700 for 1976.

Group Three: Bolivia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Jamaica, Nicaragua, Panama, Paraguay, Dominican Republic, Trinidad/Tobago, and Uruguay, each contributing 1.2 percent of the budget, or $22,000.

Group Four: Barbados, Grenada, Guyana, and Haiti, will provide.4 percent each, or $7,600. The largest expenditure item in the budget is for personnel, $1.2 million.

19 Ibid, pp. 11–19.

20 Ibid, pp. 36–37.

21 Díaz-Alejandro, Carlos F., Direct Foreign Investments by Latin Americans (Yale University, Economic Growth Center, Center Discussion Paper No. 243), p. 20Google Scholar.

22 El National, Caracas, March 24, 1977.

23 Daily Journal, Caracas, March 24, 1977.

24 Lalin American Economic Report, April 1, 1977, p. 49.

25 The following is based on personal interviews with SELA officials and consultants, members of the Venezuelan government, and ECLA representatives.

26 Documentation Basica Sobre El Sistema Economico Latinoamericano: SELA, pp. 31–35.

28 As of 1973, only two firms were set up under the CACM's “Regime of Industries of Integration.” LAFTA has not established any joint ventures. The Andean Pact proposed creation of Multinational Telephone Enterprise in 1976, but it remains to be seen whether all the Andean countries will approve the proposal. In addition to integration inspired joint ventures, there are several others: the Flota Mercante Grancolombiana (Colombia, Venezuela, Ecuador); Monómeros Colombo-Venezolanos, a petrochemical project; several binational companies between Brazil and Paraguay, and Argentina and Paraguay; and the recent bauxite-alumina plant to be built with Venezuelan, Mexican, and Jamaican capital.

29 Díaz-Alejandro, pp. 25–26.

30 Latin American Economic Report, March 5, 1976, p. 37.

31 See my essay, “Venezuela's Role in International Affairs,” in Bond, Robert D., ed., Contemporary Venezuela and Its Role in International Affairs (New York: New York University Press, 1977)Google Scholar.

32 Personal interviews.

33 One indication of an area of possible confrontation with the United States surfaced at the March 1977 SELA meeting. Some states discussed the possibility of a resolution condemning the US for intervention in the internal affairs of Latin America countries over the issue of human rights.

34 Reed, Steven L., “Cuban Participation in Multinational Organizations and Programs in the Hemisphere,” paper presented at the International Conference on “The Role of Cuba in World Affairs,” University of Pittsburgh, 11 15–17, 1976, p. 12Google Scholar.

35 Interviews with Cuban officials.

36 Interviews with US State Department officials.

37 Nye, Joseph, “United States Policy Toward Regional Organizations,” in Thorp, Paul A. Jr, ed., Regional International Organizations: Structures and Functions (New York: St. Martin's Press, 1971), p. 257Google Scholar.

38 Fishlow, Albert, “The Mature Neighbor Policy: A Proposal for a United States Economic Policy for Latin America,” unpublished paper, 04 1977Google Scholar.

39 Nye, p. 263.

40 Dominguez, Jorge, “Ghosts from the Past: War, Territorial and Boundary Disputes in Mainland Central and South America,” unpublished paper, 03 1977Google Scholar.

41 Joseph Nye argues that the web of regional integration in Central America did help to ameliorate conflict in the area, but within narrow limits. Nye concludes:

“In short, the Central American case provides a good illustration of the limits to conflict prevention and resolution by micro-regional economic organizations. It is incorrect to say that the 1969 war demonstrates that there is no relationship between such organizations and reduction of violent interstate conflict, but it does indicate that common markets are not panaceas which can solve deep-rooted social problems. The relationship exists, but within narrow limits.” Nye, , Peace in Pans (Boston: Little, Brown, 1971), p. 123Google Scholar.