Emergence of a New Center and Periphery

This article commemorates the 50th anniversary of the U.N. Economic Commission for Latin America by recalling Raul Prebisch, ECLA's first Executive Director, who hypothesized that developing countries on the periphery of the world economy were destined to remain suppliers of food and raw materials to advanced countries at the center unless they adopted special measures to foster manufacturing industries. How might Prebisch react now that the "center" of the world economy has shifted from advanced industrial powers to the global capital market, and most nation-states find themselves on the "periphery?" The common dilemmas faced by peripheral countries today are primarily: 1) the destabilizing impact of capital surges, 2) the loss of national autonomy in managing monetary and other domestic policies, and 3) the deterioration of real wages in relation to the levels of remuneration enjoyed by more mobile capital. These issues and some policies proposed or adopted to address them are discussed briefly.