Volume 45, Number 176, January-March 2014


EDITORIAL
“SUMAK KAWSAY”: A LESSON IN DEVELOPMENT
FOR MARGINALIZED SPACES IN LATIN AMERICA

revista164The pressing need to search for development alternatives from a South-South perspective, contrary to the neoclassical model of Solow but included in the Seven Essays by Mariátegui, is today yielding results through the notion of “Sumak Kawsay” or “good living,” of the Plurinational State of Bolivia. The results of the beginning of the grand transformation will soon become evident, quantified through reports by international bodies, including the Economic Commission on Latin America and the Caribbean (eclac) and information that will be shared from the Vice-Presidency and the Central Bank of Bolivia.

The changes that have taken place under the current government have been noteworthy. Public investment has gone from 879 million to 3.807 billion dollars, increasing by more than 400 percent. Savings have gone up substantially from 3.711 billion dollars in 2005 to 13.819 billion in September 2013. International reserves rose from 1.714 billion dollars in 2005 to 14.857 billion when this edition went to press, representing 52 percent of gdp. Meanwhile, between 2006 and 2012, the fiscal revenue of the Non-Financial Public System (spnf) saw average growth of 21.7 percent, where tax revenue and revenue due to the sale of hydrocarbons in the domestic and external markets were the greatest contributors, representing 39.5 and 43.8 percent of the growth, respectively.

Data from the eclac reveals that from 2007 to the present day, the poverty index in Bolivia fell from 61 percent to 49 percent in 2012, while extreme poverty levels fell from 34 percent to 25.4 percent in the same time period. Public social spending has been increasing in the majority of countries in Latin America and the Caribbean. According to eclac data, in 2005, Bolivia allocated nearly 12 percent of its gdp to public social spending, increasing this figure to above 15 percent by 2012. If we compare this number to public social spending in Mexico (11 percent) in the same year, it becomes clear that the Bolivian government is intent upon improving its wealth distribution.

The most important lesson for this country to take away is that by taking charge of the nationalization of Yacimientos Petrolíferos Fiscales Bolivianos and allowing controlled foreign investment, collection on the surplus of deposits has substantially increased. The gap has widened significantly since 2005. If the nation had followed Law 3058 without nationalizing collection, revenue would have gone from 385 million to 1.617 billion dollars in 2012. With Law 3058, and including nationalization, retentions have gone from 673.1 million to 4.277 billion dollars in the same time period.

What is important here is that the way in which tax revenue was used in combination with healthy fiscal and monetary policy have allowed increases in social spending, producing financial stability. This combination of "good living" is rapidly turning Bolivia into a middle-class country. The increase in tax revenue has made it possible to implement redistribution policies through social transfers, such as the Juancito Pinto bonus, the Renta Dignidad (income with dignity) and the Juana Azurduy bonus, among others, which all aim to reduce social inequality. For example, the Juancito Pinto bonus went from providing 31,413,893 dollars to 1,085,360 people in 2006, to allocating 56,196,339 dollars in 2012 for 1,877,425 beneficiaries in Bolivia. Meanwhile, the Juana Azurduy bonus grew considerably from 2009 to 2013, going from a value of 15,396,080 dollars to 22,683,172 dollars, although the number of beneficiaries fell from 248,755 to 176,107.

In 2013, Bolivia saw annual growth of 6.5 percent, a fiscal surplus in the non-financial public sector of 3.3 percent of gdp, public spending increasing by 27 percent over 2012, due to the substantial increase in capital expenditures of 60 percent, at 30.979, and public investment of 3.807 billion dollars (the first quarter of 2013).

The teachings of “good living” or “Sumak Kawsay” are yielding results based on economic policy that promotes the principle of greater inclusion for a population that has been marginalized from minimum welfare for centuries, meaning they have lacked access to basic needs, such as education, health and housing. The most important democratic triumph, the outcome of a social movement and an electoral process approved of by international bodies, is that Evo Morales has managed to lift up the most marginalized groups on the Latin American continent. Eight years since its inception, the notion of “Sumak Kawsay” or “good living,” has demonstrated to hegemonic thought that there are new ways of development, based on political, economic and social constitutional reforms. Of course, "Sumak Kawsay" also demonstrates this with numbers.

This edition begins with a work by Sun Hongbo, entitled “A Model for Energy Cooperation Between China and Latin America,” analyzing the globalization strategy of the Development Bank of China, by way of investments in strategic resources in our region. This relationship is especially apparent for oil, as well as in other sectors. More than just providing technology, they also grant loans in exchange for oil. China views Latin America through the lens of its abundance of hydrocarbons, which China has yet to discover or does not have at all. The next article, in some ways linked with the first, is "The Scope of Economic Cooperation Between Russia and China and Future Prospects,” by Tatiana Sidorenki, analyzing the strong dependency between Russia and China, although the former has a greater deficit. This is in large part due to the monetary policies of these countries: the ruble is overvalued and the yuan is undervalued. Russia principally sells oil, fertilizers and weapons to international markets, while China sells manufactured products at prices far below what Russian items would cost. The energy policies of the two countries also complement each other. China needs hydrocarbons to foster accumulation, and there are large oil and gas deposits located in regions nearby. It is thought that Eastern Siberia and the Russian Far East account for nearly 20 percent of the country's national oil resources and 23 percent of its gas.

“The Emergence of China and its Impact on Commercial Relations Between Argentina and Brazil,” by Marta Bekerman, Federico Dulcich and Nicolás Moncaut, is extremely important in terms of Latin American integration and development. Since its 1978 reforms and membership in the World Trade Organization in 2001, China has become a principal exporter of manufactures on the global scale. On the other hand, Latin America has had a strong tendency towards primarization, especially in exporting commodities. The Latin American region is facing a challenge in light of the vulnerability of export prices in financial markets, while China is exporting more and more industrialized products, thereby replacing the United States and Europe as a supplier of these inputs.

The importance of these strategic resources becomes clear in an article by Sergio A. Berumen, “The Impact of the Crisis on the Economic Development of Mining Regions in Europe,” due to the unprecedented growth of extractive industries in Latin America. This work highlights the increase in mining investment from 2000 to 2008, taking into account aid from the European Union as new mining regions joined. However, the onset of the crisis and recession was damaging to mining regions. This is an important lesson for Latin America, as the region must diversify its mining exports and not only concentrate national production in a single area or on a single product. Latin America should take advantage of the technology of European mining companies given the potential for relocation from the European region, as a result of the deep recession and crisis that has been ongoing for the past five years.

A work essential to explaining Cuban migration is, “Migrants in Socialism: A Debate on Cuban Development,” by Edel J. Fresneda. The author's hypothesis to justify the high rates of migration from Cuba abroad involves a development strategy based on the formation of rising capital or human development. This strategy has been distorted because the nation failed to rise in production and its insertion in the global market was no more successful in light of the United States embargo. Consequently, the country has basic needs that are not being met and urgently needs to improve the income of its labor force. The lack of a full employment policy with adjustments to productive schemes and economic plans has led to distortions in the island's internal product, resulting in the expulsion of the labor force and the need to migrate.

"Corporate Control of Food Distribution in Mexico,” by José Gasca and Felipe Torres, highlights how food distribution has evolved in the midst of significant changes to information and communication technologies (ict), the so-called "Efficient Consumer Response" (ecr) and the logistics technique of cross-docking, which consists of directly collecting wholesale products, generally carried out by a manufacturing company, and then organizing distribution to directly place the products in retail sale. Looking at these major changes, which have taken place in both the United States and Europe, the authors describe the food distribution system in Mexico, which is based on the leadership and predominance of the corporate business model. This article seeks to explore the causes and effects operating in the growth of a more competitive and organized food distribution model on the global level, and its diverse effects on more traditional domestic channels. These changes include the transition from traditional methods to more technologically and organizationally developed business schemes.

One of the key elements in the growth of modern food distribution companies has been the intensive use of technology and the development of organizational innovations both within and between companies.

Finally, the article, “Production and the Appropriation of Value in Argentina: The Role of Real Wage Depression,” proposes the central hypothesis that the growth phase in the first decade of the twenty-first century in Argentina is a result of the increase in land rents and paying the labor force below its value. The author highlights the ISI industrial project, interrupted by the military coup of 1976, followed by a gradual transition to a model based on external debt and financial valuation, up through the convertibility regime. When this development model collapsed, land rents became an extraordinary source of surplus manifest in exports. This role is similar to the role played by external debt in a previous phase. The analysis set forth in this text is very important in order to appreciate the triumph of the current economic regime as well as its own deterioration and end.

The review section recommends five books: Feminism and Social Change in Latin America and the Caribbean, by Alba Carosio (coordinator), reviewed by Santiago Hernández, Urban Informality and Uncertainty: How Can Informalization be Studied in Metropolises?, by Felipe de Alba and Frédéric Lesemann (coordinators), reviewed by Iván Sánchez, Assessing the Policy of Access to Drinking Water in Mexico City, by Arsenio González (coordinator), review written by Nallely Bautista, Crossroads, Prospects and Proposals for Social Security in Mexico, by Berenice P. Ramírez and Roberto Ham Chande (coordinators), reviewed by Cruz Álvarez and The Challenges of International Migration, coordinated by Ana María Aragonés and promoted by Diana Atempa.

Alicia Girón
Journal Editor
unam, December 2013

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 193, April-June 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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