Rents, knowledge and neo-structuralism: transforming the productive matrix in Ecuador

Abstract

This paper explores the relationship between ground rent, production and knowledge in Ecuador’s neo-structuralist, state-led project to transform the productive matrix. Based upon insights from the Marxian approach to the critique of political economy, we interrogate how neo-structuralism has conceptualised the relationship between ‘natural resource income’ and ‘knowledge-based’ economic development. The paper argues that a rent-theoretical perspective, which takes seriously the regional unfolding of uneven geographical development in Latin America, can highlight the limits of a national development plan conceived according to the logic of Schumpeterian efficiency. In doing so, the paper identifies the contradictory relationship between natural resource exports, state-led ‘knowledge’-based development and capital accumulation. On this basis the paper offers a historically and empirically informed critical analysis of selective import substitution industrialisation and vanguard science and technology strategies designed to transition Ecuador away from primary resource dependence.

Keywords:

• Neo-structuralism
• Ecuador
• Marxism
• rent
• knowledge
• Schumpeter
• uneven development

Acknowledgements

The authors would like to thank Japhy Wilson, Greig Charnock, the CENEDET team and an anonymous reviewer for their very helpful comments on earlier drafts of this paper. The usual caveat applies.

Notes

1. Kay and Kozameh, Ecuador’s Economy.

2. Bielschowsky, “Sesenta años de la CEPAL,” 97.

3. PNBV, Plan Nacional del Buen Vivir.

4. Interview with Alicia Barcena, “Cepal: ‘Necesitamos una economía más basada en el conocimiento’,” http://laprensa.peru.com/economia/noticia-cepal-necesitamos-economia-mas-basada-conocimiento-34862, accessed January 9, 2016.

5. See, respectively, Gudynas, “Estado Compensador y Nuevos Extractivismos,” 128; and Bebbington and Bebbington, “An Andean Avatar.”

6. See, for example, Muhr, “(Re)constructing Popular Power in Our America,” 225.

7. See, for example, Burchardt and Dietz, “(Neo-)extractivism,” 468; and Rosales, “Going Underground,” 1443.

8. Schumpeter, Capitalism, Socialism and Democracy.

9. The paper draws upon 10 in-depth semi-structured interviews with members of the Inter-Institutional Committee for the Transformation of the Productive Matrix, made up of the Vice-Presidency and three principal Ministries: the Coordinating Ministry for Production, Employment and Competitiveness (MCPEC), the Ministry for Industries and Productivity (MIPRO) and the Ministry of Agriculture (MAGAP).

10. Weyland, “The Political Economy of Market Reform,” 235.

11. Leiva, “Towards a Critique,” 12.

12. Prebisch, The Economic Development of Latin America; and Singer, “The Distribution of Gains,” 473.

13. ECLAC, Cambio Estructural, 33. This document was cited by various interviewees as the basis for the design of the TPM project.

14. Ibid. There are 133 instances where ‘knowledge’ is cited. For indicative examples see pp. 31, 38, 66, 79, 85, 243.

15. See, for example, ECLAC, Cambio Estructural, 103; and Bárcena and Prado, Neoestructuralismo y corrientes heterodoxas, 258.

16. Sachs and Warner, “The Big Push”; and Auty, Resource Abundance and Economic Development.

17. See ECLAC, Cambio Estructural, 82.

18. Corden and Neary, “Booming Sector,” 835.

19. See ECLAC, Cambio Estructural, 79.

20. ECLAC, Cambio Estructural, 65–66.

21. Leiva, “Towards a Critique,” 8.

22. Khan, “Rents, Efficiency and Growth,” Chap. 1.

23. See, for instance, MCPE, Agenda de la Política Económica, 98.

24. See, ECLAC, Cambio Estructural, 252. It is difficult to encounter a specification of the social origin of rents beyond brief references to Ricardian scarcity rents.

25. Grigera, “Conspicuous Silences”; and Bina, “Some Controversies,” 82–111.

26. Mcneish and Logan, “Rethinking Responsibility.”

27. Marx, Capital, Vol. I, 125; and Iñigo Carrera, La Formación Económica.

28. Marx, Capital, Vol. III, 994.

29. Clarke, “The Marxist Theory of Overaccumulation,” 442.

30. Harvey, The Limits to Capital; and Smith, Uneven Development.

31. Smith, Uneven Development; and Burnham, “Open Marxism,” 221.

32. Echeverria, Valor de Uso y Utopia, 40–41.

33. Smith, Uneven Development, 71; and Harvey, “Notes towards a Theory,” 70.

34. Grinberg and Starosta, “From Global Capital Accumulation,” 236.

35. Marx, Capital, Vol. III, 755–756.

36. Smith, Uneven Development, 187.

37. Marx, Capital, Vol. III, 779–811.

38. Ground rent can take the social forms of differential rent (DR), absolute rent (AR) and monopoly rent (MR). DR springs from the monopoly over portions of the planet with differentially favourable natural conditions, allowing lower production costs than those prevailing in the world’s marginal lands for which there is solvent demand. AR derives from the simple monopoly over land and is paid even for the use of marginal lands, while MR is the price imposed independently of production costs by the owner of a scarce resource. See Marx, Capital, Vol. III, 779–787, 882–907, 910. In this paper we are primarily concerned with differential rents that have their origin in other branches of social production.

39. See Iñigo Carrera, La Formación Económica, 12.

40. Iñigo Carrera, La Formación Económica, 15.

41. See, respectively, Frank, Latin America; Emmanuel, Unequal Exchange; Marini, Dialectica de la dependencia; and Higginbottom, “‘Imperialist Rent’ in Practice and Theory,” 23.

42. Grinberg, “The Political Economy,” 171.

43. Marx, Capital, Vol. III, 799–800.

44. Ibid. In the same passage Marx clarifies that a false social value comes about when ‘society pays too much for agricultural products’ which ‘is a minus for the realization of labour-time in agricultural production’ but a ‘plus for one portion of society, the landowners’. See also Laclau, “Modos de producción”; and Iñigo Carrera, La Formación Económica.

45. See Iñigo Carrera, El capital.

46. Grinberg and Starosta, “The Limits of Studies.”

47. Ibid., 773

48. Huws, “Defragmenting,” 2.

49. Larrea, “Dolarización, crisis y pobreza en el Ecuador,” 18. This 90%, made up of seven unprocessed goods – oil coffee, cacao, shrimp, fish and flowers – is well above the regional average of 41%.

50. Chiriboga, “Conformacion Historica del Regimen.”

51. This analysis draws upon the framework pioneered by Iñigo Carrera, La Formación Económica.

52. Hofman and Buitelaar, “Ventajas comparativas,” 149.

53. Grinberg, “The Political Economy,” 457.

54. See Saad-Fihlo and Weeks, “Curses, Diseases and Other Resource Confusions.”

55. Grinberg, “The Political Economy,” 456.

56. Iñigo Carrera, La Formación Económica. For a detailed account of these mechanisms, see pp. 17–21.

57. Iñigo Carrera, La Formación Económica, 18.

58. Iñigo Carrera, La Formación Económica, 19.

59. Iñigo Carrera, La Formación Económica, 21.

60. Hofman and Buitelaar, “Ventajas comparativas.”

61. Chiriboga, Conformacion Historica; and Conaghan, “Industrialists and the Reformist Interregnum,” 53–54.

62. Conaghan, Restructuring Domination.

63. Ibid., 45.

64. Iñigo Carrera, El capital, 124.

65. Iñigo Carrera, La Formación Económica, 13–14.

66. De Janvry et al., “Politically Feasible and Equitable Adjustment,” 1577.

67. North, “Militares y Estado en Ecuado,” 91.

68. Iñigo Carrera, La Formación Económica.

69. Vos, “Uso de las divisas,” 235.

70. Cueva, El Ecuador de 1960 a 1979.

71. Báez, “Algunos aspectos,” 121.

72. Ibid.

73. De Janvry et al., “Politically Feasible and Equitable Adjustment”; and Larrea, Dolarización.

74. CDES, Comisión de Auditoría Integral.

75. Ibid.

76. Ospina, “Ecuador”; and Unda, “Modernización del capitalismo,” 30.

77. Ruiz, La Alquimia de la Riqueza.

78. Kay and Kozameh, Ecuador’s Economy.

79. Muñoz, “Forma de Estado,” 123.

80. “El desafío de Rafael Correa”, El Telégrafo, January 15, 2012.

81. Ramirez, La Virtud de los Comunes.

82. Hira and Dean, “Distributional Effects of Dollarisation,” 469.

83. These incentives are stipulated in the 2010 “Organic Code for Investment and Production” (Código Orgánico de la Produccion, Comercio e Inversiones – COIP).

84. Although permissible under the Andean Communities’ and WTO’s trade rules, which permit ‘General Exceptions’ for actions taken to protect ‘life, health and security’, the more recent expansion of import restrictions (salvaguardias) to protect Ecuador’s balance of payments, in response to currency devaluations by neighbouring Colombia and Peru, has led to denunciations of protectionism at the WTO. El Universo, April 14, 2015.

85. “29% cayeron importaciones con la Resolución 116,” El Comercio, August 26, 2014. The import of products subject to new tariffs fell by 29%.

86. This strategy aimed to substitute $396 million worth of imports, increase local purchases by $132 million, and increase national production by $475 million, create $170 million of new investment and increase exports by $268 million. Enlace Ciudadano, No. 396.

87. MCPE, Agenda de la Política Económica.

88. Ospina, “Crisis y tendencias económicas.”

89. Crespo, “La sustitución de cocinas.”

90. ECLAC, Cambio Estructural, 17.

91. “Industriales dicen que sí pueden proveer cocinas de inducción” [Industrialists say they can provide induction ovens], El Universo, August 21, 2015.

92. “Por falta de apoyo de fabricantes, Rafael Correa anuncia importación de cocinas de inducción” [Because of lack of support from producers Correa announces the import of induction ovens], El Universo, December 20, 2014.

93. For example, taking advantage of ISI policies, the biggest toy manufacturer in the country, Plásticos Industriales, grew by 35% in 2013 and reported sales of $77.5 million. See “Travelina, la muñeca ecuatoriana más famosa cumple 16 años,” El Comercio, October 30, 2014.

94. ECLAC, Cambio Estructural, 17.

95. Leiva, “Towards a Critique,” 12.

96. Incentives include: a 5% reduction in income tax; 0% VAT for the import of capital goods and primary material and VAT tax credits; an exemption from tariffs on foreign goods entering these zones; tax exemptions for foreign purchases that equal amortisation of capital and interests that have been used to finance imports.

97. Chávez, El estado, 17.

98. “Yachay, la universidad que proyecta formar a la élite científica de Ecuador, abre sus puertas,” Andes, March 30, 2014.

99. PNBV, Plan Nacional del Buen Vivir, 321.

100. Ibid.

101. Ramirez, La Virtud de los Comunes.

102. “Yachay el velo se descorre” [Yachay removing the veil], Gestion Revista, May 23, 2013.

103. “Organic Code for the Knowledge Economy,” 8.

104. Yachay EP, “Expediente para constituir la ZEDE,” 88–89. See also Zeller, “From the Gene to the Globe”, for an application of rent theory to the biotechnology industry.

105. Grinberg and Starosta, “The Limits.”

106. Zeller, “From the Gene to the Globe.”

107. Vercellone et al., “Theoretical Framework on the Future,” 9.

108. Ospina, “Ecuador.”

109. Villavicencio, Innovacion Matriz Productiva y Universidad, 116.

110. “Ecuador suscribe crédito con China por 198 millones para la construcción de la Ciudad del Conocimiento Yachay,” Andes, accessed March 5, 2016, http://www.andes.info.ec/es/noticias/ecuador-suscribe-credito-china-198-millones-construccion-ciudad-conocimiento-yachay.html.

111. Chávez, El estado del debate.