Encyclopaedia Britannica's editors oversee subject areas in which they have extensive knowledge, whether from years of experience gained by working on that content or via study for an advanced degree. They write new content and verify and edit content received from contributors.
Structuralism is a school of economic thought that began in Latin America in the 1950s. It explains economic development and international trade as connected processes. Structuralists such as RaĂșl Prebisch argued that institutions and factors outside markets strongly affect economic performance. They also believe rich and poor countries cannot be studied separately because their economies are linked through global trade. The approach is closely associated with the United Nations Economic Commission for Latin America and the Caribbean, or ECLAC.
How did RaĂșl Prebischâs core-periphery model describe the global economy?
RaĂșl Prebisch, a leading structuralist economist, described the global economy as one integrated system divided between a wealthy, industrialized âcoreâ in the Global North and a poorer âperipheryâ in the Global South. Peripheral economies were dominated by agriculture and resource extraction. He also said this pattern appeared inside peripheral countries, where industrialized cities often prospered while rural areas remained dependent on farming and extracting resources. Prebisch argued that economic development in peripheral countries could not be understood without considering their relationship to the industrialized core.
How did dependency theory differ from structuralism?
Dependency theory agreed with structuralism that wealthy and poorer countries were linked through international trade and that wealthier countries often received more of the benefits. However, dependency theorists were more doubtful that peripheral countries could achieve lasting development under global capitalism. Structuralists believed government action and domestic industrial development could help poorer countries overcome disadvantages. Dependency theorists questioned whether this was possible in a global system dominated by wealthy, industrialized nations.
Open full sized image
Can raw materials help fuel industrialization? Structuralists argued that developing countries needed to move beyond dependence on commodity exports.
Structuralism is a school of economic thought originating in Latin America in the 1950s that sought to understand economic development and international trade as interconnected processes. Structural economic thought was based on the assumptions that institutions and factors outside the market strongly influence economic performance and that, in a system of globalized trade, the economies of rich and poor countries cannot be analyzed separately, but must be understood through their relationships to one another.
Structuralist economics is closely associated with the United Nationsâ Economic Commission for Latin America and the Caribbean (ECLAC), which helped develop and promote its ideas. Structuralist economists also advocated import substitution industrialization (ISI), a policy aimed at developing domestic industries to replace imported manufactured goods. Structuralist theory is closely linked to dependency theory, but is more inclined toward state-directed capitalist development rather than a socialist reordering of the global economic system. Although structuralist economics grew less influential in the 1970s, its influence is still felt in the language of âcore-peripheryâ and more recent neostructuralist thought.
Origins of structuralism
The intellectual origins of structuralist economics are closely tied to the history of economic development in Latin America in the first half of the 20th century. Since Western colonialism, Latin American economies had been primarily focused on exporting agricultural and mineral commodities. These exports allowed for the importation of manufactured goods, but did little to develop the economy. In the first half of the 20th century, efforts were made to develop local manufacturing sectors, but progress was slow, coordination was lacking, and political and economic disruptions caused further delays.
The years immediately following World War II, however, brought new economic growth and prosperity to the region, as economic disruption in Europe and Asia gave Latin American countries greater negotiating power, and even turned several Latin American nations into net creditors for the first time. Structuralist economists sought to better understand why Latin American economies had been slow to develop, and to provide a theoretical basis for what they believed to be the regionâs economic progress.
RaĂșl Prebisch and the core-periphery model
The earliest ideas of what would come to be known as structuralist economics are generally attributed to RaĂșl Prebisch, an Argentine economist who served as executive secretary of the UNâs Economic Commission for Latin America and the Caribbean (ECLAC) from 1950 to 1963. ECLAC was an important center for economic research and development policy in Latin America, as well as a forum for the regionâs economists.
Open full sized image
Economist Dr. RaĂșl Prebisch, United Nations Conference on Trade and Development (UNCTAD), April 28, 1966
Prebisch put forward a theory of economic development that argued that the global economy must be understood as a single, integrated system, in which wealthier and poorer countries were viewed in relation to one another. He divided countries into two categories, âcoreâ and âperiphery,â with the core being industrialized economies of the Global North and the periphery consisting of economies dominated by agriculture and resource extraction in the Global South. Prebisch further argued that the international relationship between core and peripheral nations was replicated within peripheral nations themselves, where industrialized urban centers often prospered while rural regions remained dependent on agriculture and resource extraction.
Prebisch believed economics to be inseparable from social structure, and argued that resource extraction promoted the power of wealthy landowners, or latifundistas, who were uninterested in developing their national economy and instead spent profits on imported luxury goods in an attempt to imitate the lifestyles of the wealthy in industrialized countries.
Prebisch also argued that prices for agricultural and mineral commodities tended to decline over time relative to the prices of manufactured goods. This meant that countries exporting raw materials would have to sell increasingly more of them to purchase the same quantity of manufactured imports, putting them at a disadvantage in international trade.
This theory, known as the Prebisch-Singer hypothesis, was independently developed by Prebisch and German-born economist Hans Singer and became one of Prebischâs most important contributions to economic thought. The reasoning supported his conclusion that the state and urban business owners must actively promote the creation of local manufacturing sectors. Under Prebisch, ECLAC became a hub for important structuralist theorists, including Brazilian economist Celso Furtado.
Structuralism in practice
Structuralist economic thought gained influence in the 1950s and early 1960s, as major countries such as Mexico, Brazil, and Argentina enacted policies aimed at import substitution industrialization (ISI). Structuralist economists also emphasized the economic impact of institutions and cultural factors, arguing that social reforms, such as land reform and labor unionization, were a precondition for economic development.
Open full sized image
Structuralism proposes that rich and poor economies must be understood through their relationships.
Public domain/Arquivo Nacional Collection, Brazil
Many critics argue, however, that structuralist theory failed to account for or address the economic disruptions brought about by rapid change. By the late 1960s, the limitations of ISI were becoming apparent across the region, including rising foreign debt and inefficient local manufacturing industries. Partly in response to these problems, Latin American countries began adopting market-oriented economic reforms, particularly during the 1980s and 1990s.
Dependency theory and neostructuralism
Prebischâs ideas also helped lay the groundwork for another school of economic thought that emerged in Latin America during the 1950s and 1960s: dependency theory. Like structuralism, dependency theory viewed the economies of wealthy and poorer countries as closely connected through international trade, with the advantages often flowing disproportionately to the wealthier countries. But dependency theorists took a more pessimistic view of the possibility of economic development in peripheral countries under global capitalism. Where structuralists believed that government intervention and the development of domestic industries could help poorer countries overcome their economic disadvantages, dependency theorists questioned whether those countries could achieve lasting economic development within a global system dominated by wealthier, industrialized nations.
Beginning in the late 1980s, structuralist thought experienced a resurgence through neostructuralism, as dissatisfaction with the Washington Consensusâa set of market-oriented economic policies promoted by institutions such as the International Monetary Fund and World Bankâled many economists to search for alternative models of development. Neostructuralism returns to the previous focus on economic and social structures, while incorporating ideas from neoclassical economics and placing greater emphasis on the role of markets.
