Neo-extractivism and the new Latin American developmentalism: the missing piece of rural transformation

Abstract

What, if anything, is actually new about political and economic transformation in twenty-first century Latin America? Here we explore how ostensibly ‘new’ policies are being built on two ‘old’ foundations that may be mutually exclusive. These are ‘extractivism’ and ‘developmentalism’, concepts that have been used rather loosely to describe current economic policies. The new developmentalism, however, may not only be contradicted by extractivism; it may be more constrained than its predecessor by fortified capitalist class interests and new global conditions. Moreover, it pays little attention to the employment-generating potential of rural areas or to the agricultural sector.

Keywords:

• Developmentalism
• extractivism
• rural restructuring
• neoliberalism
• Central America
• South America

Acknowledgements

The authors would like to acknowledge useful input received during presentations of this paper at congresses of the Canadian Association for the Study of International Development (CASID), Canadian Association for Latin American and Caribbean Studies (CALACS), International Studies Association (ISA), and Latin American Studies Association (LASA). We also thank the two referees, whose valuable comments on an earlier draft have helped improve the paper.

Notes

1. In developing our arguments here we are aware that generalisations about Latin America can be highly misleading, with its mix of large (Brazil and Mexico) and small (Bolivia and Ecuador in the Andes and all of the Central American nations) countries, the different ethnic make-ups and histories of nations, and so on. We will try to keep these differences in mind.

2. Khan and Christiansen, Towards New Developmentalism.

3. Now named the Economic Commission for Latin America and the Caribbean (ECLAC).

4. We are referring especially, but not only, to Bolivia, Ecuador and Venezuela in the Andean region – countries that have described themselves as ‘21st century socialists’. The new developmentalism, in varying forms, has also been present in Argentina (the Kirchner governments), Brazil (the Workers’ Party governments), Uruguay (various), and Chile (under the Bachelet governments in particular).

5. Stiglitz, “El rumbo de las reformas”; and Weisbrot et al., The Scorecard on Globalization.

6. UNCTAD, Trade and Development Report, VII, defines ‘the idea of “policy space”… [as] the freedom and ability of governments to identify and pursue the most appropriate mix of economic and social policies to achieve equitable and sustainable development in their own national contexts, but as constituent parts of an interdependent global economy. It can be defined as the combination of de jure policy sovereignty, which is the formal authority of policymakers over their national policy goals and instruments, and de facto national policy control, which involves the ability of national policymakers to set priorities, influence specific targets and weigh possible trade-offs.’

7. Borras Jr. et al., “Land Grabbing.”

8. Gudynas, The New Extractivism.

9. President Rafael Correa visited South Korea in September 2010. In 2009 his Minister of Productive Coordination (later also Employment) had invited Ha-Joon Chang to provide advice in the preparation of the government’s first industrialisation strategy, which was more-or-less in place from 2009 to 2012. See Andrade, Política de industrialización.

10. Vergara-Camus, Land and Freedom.

11. The students who have inspired us are Carlos Velasquez, “The Persistence of Oligarchic Rule”, on the reorganisation of dominant classes in El Salvador; Leandro Vergara-Camus, Land and Freedom, on peasant movements in Brazil and Mexico; Timothy D. Clark, “The State and the Making of Capitalist Modernity”, on the reorganisation of class domination in Chile; Tyler Shipley, “Honduras and the New Canadian Imperialism”, on the violent closure of reform spaces in Honduras; and Simon Granowsky-Larsen, “Within and Against the Market”, on peasant-led agrarian reform efforts in Guatemala. They all completed doctorates in the Political Science Department at York University.

12. Khan, “Exploring and Naming,” 3. ‘New developmentalism’ is one of the labels attached to a set of post-neoliberal analyses and policies in Latin America. Another one, closely related, is ‘new structuralism’ or ‘neo-structuralism’. The latter is associated with ECLAC, which launched these ideas in the 1990s, building on ECLA’s structuralist analysis from the 1950s. According to one view, the distinction between the two is that: ‘New developmentalism is a set of values, ideas, institutions, and economic policies through which, in the early 21st century, middle-income countries seek to catch up with developed countries. It is not an economic theory but a strategy; it is a national development strategy, based mainly on Keynesian macroeconomics and structuralist development macroeconomics…[which is] being defined by critical Latin-American economists having as parameter the Asian experience.’ “The First Workshop,” 843.

13. Khan, “Exploring and Naming,” 4.

14. Ibid.

15. Wade, “Market versus State.”

16. Khan, “Exploring and Naming,” 6.

17. Chang, “Hamlet without the Prince of Denmark,” 3.

18. Chang, “Hamlet without the Prince of Denmark,” 7.

19. Agosin and 83 others in a special edition of the Brazilian Journal of Political Economy.

20. Larrea, “Políticas sociales y cambio social.”

21. Gallagher, “Why Latin America.”

22. Ibid.

23. Agosin et al., “Ten Theses on New Developmentalism.”

24. Ibid.

25. The Homestead Act of 1862 provided 160-acre land grants to settlers who wanted to farm. This legislation hugely expanded the family farm economy of the USA. As for industry, the southern plantation owners lost the political power to block protectionist policies. For a discussion of the political economy of the civil war and its consequences, see Moore Jr., The Social Origins of Dictatorship and Democracy. An interpretation of Latin American history based on Moore’s analysis can be found in Rueschemeyer et al., Capitalist Development and Democracy.

26. You, “Land Reform,” 205.

27. It is worth noting that the USA intervened militarily in Guatemala in 1954 in order, among other things, to bring land reform to a halt, at the same time that it was providing assistance to the pursuit of radical agrarian reform in Asia.

28. Of course, there are differences among the Latin American countries. Mexico did have a social revolution (1910–18) and implemented some agrarian reform (1934–40), as did Bolivia after its 1952 Revolution. Costa Rica shared some of the characteristics of the Asian countries (eg peasant agriculture and cooperative marketing were important, as was investment in mass education, including in rural areas); its 1948 Revolution played a critical part in this transformation, which was led by the country’s social democratic party, Liberación Nacional.

29. See Baer, “Import Substitution”; and Thorp, Progress, Poverty and Exclusion, 127–200.

30. In Peru the self-styled Revolutionary Government of the Armed Forces (1968–80) followed upon the upsurge of peasant-based rebellions in the indigenous highlands. It pursued radical agrarian reform. In comparison, the agrarian reform programme of Ecuador’s reformist military government (1972–80) was very modest.

31. Zeitlin and Ratcliff, Landlords and Capitalists, 7.

32. Furtado, Economic Development of Latin America, 21.

33. Brownrigg, “The ‘Nobles’ of Cuenca.”

34. Hanson, “Political Decision Making in Ecuador.”

35. Conaghan, Restructuring Domination. See also North, “Implementación de la política económica”; and Navarro, La concentración de capitales.

36. Paige, Coffee and Power.

37. Loveman, Chile.

38. Furtado, Economic Development of Latin America, 66–67.

39. Thorp, Progress, Poverty and Exclusion, 199.

40. Clark, “The State and the Making of Capitalist Modernity,” 242.

41. Clark, “The State and the Making of Capitalist Modernity,” 240.

42. Kay, “Visión de la concentración,” 20.

43. Velazquez, “The Persistence of Oligarchic Rule.” Jairo and García, Trabajo, territorio, y política, analyse the devastating social and economic consequences of the abandonment of the international agreement on coffee prices in the case of Colombia, a country with a much stronger economy than El Salvador’s. Those consequences, of course, included the violence that followed the turn to coca production and the rise of the narco-economy.

44. Granovsky-Larsen, Within and Against the Market.

45. Kay, “Visión de la concentración,” 30.

46. Orozco, Migration and Remittances, Table 6: 11.

47. Audley et al., NAFTA’s Promises and Reality, 6.

48. Wise, “Small-scale Farmers and Development.”

49. Vergara-Camus, Land and Freedom.

50. Ibid.

51. With regard to labour migration within Latin America, a great variety of situations exists: Nicaraguans seek work in Costa Rica, Bolivians in Argentina and Brazil, and Peruvians in Ecuador (where the US dollar is the official currency and proves attractive vis-à-vis the Peruvian sol); Colombians have been migrating to Ecuador for quite a few years – some of them officially recognised refugees – to escape the civil war at home. Despite their significance, the local impacts of these very large movements of people – their role in reducing labour market pressure at home and supporting the daily consumption needs of the poorer sectors – tend not to be factored into the discussions on development policies and social well-being in the region. See also World Bank, “Migration and remittances.”

52. Borras Jr. et al., “Land Grabbing in Latin America,” 851.

53. Ibid.

54. Ibid, 859.

55. Kay, “Visión de la concentración.”

56. Ibid., 25, Table 1.

57. Ibid.

58. The fruit and vegetable sector tends to employ more workers, especially women. Poor working conditions and low wages are the norm, as in the broccoli and cut flower plantations of highland Ecuador.

59. Grinspun, “Trade Liberalization.” The World Trade Organization sets up the institutional framework for the multilateral trade regime, amplified by a plethora of bilateral and regional trade and investment agreements. Noteworthy regional trade agreements in our context are the North American Free Trade Agreement (NAFTA, 1990), the US–Central America–Dominican Republic Free Trade Agreement (CAFTA–DR, 2004), and the Trans-Pacific Partnership (TPP) agreement recently negotiated by 12 countries around the Asia-Pacific region. Regarding the impacts of NAFTA in Mexico, see Roman and Velasco Arregui, Continental Crucible.

60. Sreenivasan and Grinspun, The Rural Poor and Food Security.

61. Grinspun and Mills, “Canada’s Trade Engagement”; and Grinspun, “Trade Liberalization.”

62. Gallagher, “Regulating Global Capital Flows.”

63. Grain, Pension Funds.

64. Presentation by Ricardo Grinspun, reported in Payne and Ravecca, Trade and Investment-induced Population Displacement.

65. Larrea, “Políticas sociales y cambio social.”

66. Larrea, “Inequidad social y redistribución,” 25.

67. Larrea, “Inequidad social y redistribución,” 10.

68. Martínez Valle, “La concentración de la tierra.”

69. Jeffery Webber argues that the 2006 economic development plan of the Morales government, rather than representing some form of twenty-first century socialism, was ‘fundamentally predicated on the continuation of an export-led economy based on non-value added, primary natural resource commodities, most importantly hydrocarbons and mining minerals, the exploitation of which will continue to be controlled fundamentally by transnational capital. Existing agri-business will also play a driving role in the national development model.’ Webber, From Rebellion to Reform, 75.

70. See, among others, Deonandan and Dougherty, Mining in Latin America.

71. Gallagher, “Why Latin America.”

72. We thank one of our referees for emphasising this point. See, for example, Veltmeyer, “The Political Economy of Natural Resource Extraction.” Critics of neo-structuralism, an analytical approach closely related to new developmentalism (see endnote 12), argue that it presents a ‘sanitized analysis of Latin American economy and society scoured clean of conflict and power relations … [its] mode of theorizing marginalizes power relations from the analysis of the economy and society.’ Leiva, Latin American Neostructuralism, xxvi. Leiva further argues that neo-structuralist analysis abjures key tenets of its structuralist past and embraces an export-oriented regime of accumulation that deepens the penetration of transnational and financial capital.

73. Larrea, “Políticas sociales y cambio social.”

74. For example, the monopoly of agricultural exports (canned asparagus and mushrooms) granted to peasant cooperatives in Taiwan in the 1950s.

75. Pipitone, “Agricultura.”

76. Berry, “Eficiencia económica,” 63–76; and Lebefer, “Trade, employment and the rural economy.”

77. Martínez Valle and North, ‘Vamos dando la vuelta’, 21–31; and Ospina Peralta, El territorio de senderos.

78. See Berdegué and Modrego, as reviewed by North, “Review.” A number of fieldwork-based MA theses have been prepared recently on issues of agri-business, land concentration and small-scale agriculture in the FLACSO-Ecuador graduate programme in Rural Territorial Development directed by Luciano Martínez and Myriam Paredes. Some of the results of these works have been published in the programme’s journal, Eutopía (available online). Additional theses on these rural and agrarian issues are under preparation. Ana I. Larrea, who is preparing her doctoral dissertation on malnutrition in Ecuador at the Economics Faculty of the University of Barcelona, recently wrote in a personal communication: ‘I found a negative and significant correlation between the distribution of land in Ecuador (as measured by the Gini [coefficient] of Land) and chronic child malnutrition. That is to say that in the counties where the Gini of Land is high the nutritional health of children is quite poor and this relation exists even when controlling for income, poverty, the distribution of income, and a list of 15 other possible determinants of malnutrition.’ Of course, these are preliminary findings that have to be further corroborated.

79. Grinspun, “Exploring the Links,” 48–49.