Structuralist economics

Structuralist economics is an approach to economics that emphasizes the importance of taking into account structural features (typically) when undertaking economic analysis. The approach originated with the work of the Economic Commission for Latin America (ECLA or CEPAL) and is primarily associated with its director Raúl Prebisch and Brazilian economist Celso Furtado. Prebisch began with arguments that economic inequality and distorted development was an inherent structural feature of the global system exchange. As such, early structuralist models emphasised both internal and external disequilibria arising from the productive structure and its interactions with the dependent relationship developing countries had with the developed world. Prebisch himself helped provide the rationale for the idea of Import substitution industrialization, in the wake of the Great Depression and World War II. The alleged declining terms of trade of the developing countries, the Singer–Prebisch hypothesis, played a key role in this. Dutt and Ros argue that structuralist economists try to identify specific rigidities, lags as well as other characteristics of the structure of developing countries in order to assess the way economies adjust and their responsiveness to development policies. A normal assumption within this approach is that the price mechanism fails as an equilibrating mechanism, to deliver steady growth, to produce a "desired" income distribution. Nixson reports Bitar's argument that there had become a broad consensus on what amounted to the neostructuralist approach. This included the recognition of: the importance of political and institutional factors in the analysis of economic problems. of the need to raise the level of domestic saving in order to raise the rate of investment given that external sources of finance are likely to be hard to come by inflation as a "social phenomenon" requiring for its elimination social, psychological and political-institutional changes, as well as orthodox monetary and fiscal policies.