The economic integration of a region comprising a number of politically separate units, has come to be seen by many ‘poor’ countries as necessary to their economic development. The gains from integration are normally taken to be two-fold: the realisation of economies of large-scale production and of specialisation by location. This is based on a concept of economic development which identifies its most important aspect as the growth of manufacturing industry, and its most
important index as the growth of per capita income. On the further assumption that the most important obstacle to the growth of manufacturing is the smallness of domestic markets, economic integration be comes a natural out-growth of development strategy. For, the argument runs, the widening of the market which is brought about by the freeing of tariff and quota restrictions on trade within the region, permits higher levels of regional output, at lower real production costs. In that sense, current ideas of the ends of integration are conditioned by current concepts of the process of economic development.
We wish, however, to relate the ends of integration to a concept of economic development which is defined qualitatively rather than quantitatively. The economic development of any political or geographic unit is a process by which the inhabitants continuously and creatively manipulate the natural environment for the satisfaction of the material needs. Like the Burmese economist, Hla Myint, we place emphasis on the existence of a balance between “wants” and “activities” over time in the community. The single most important characteristic of “poor” countries is the widening gap, not so much between the rich countries and themselves, as between the material aspirations of their inhabitants and their ability to fulfil them.
Secondly, we wish to avoid the use of average income per person as the index of development. For one thing, economies can “grow” without “developing” as Demas has pointed out. * * More important, average per capita income says nothing about its distribution. Most important of all it says nothing about the degree to which the population participates in, and controls, its economic life. Many poor countries have exhibited growing total and per capita incomes with a decreasing degree of popular participation in economic activity and control. In so far as the end of economic development is a growth in human welfare then this might be called progress only for those social segments enjoying a growth in income, and even that might be questioned. We focus instead on changes in the degree of popular participation in meaningful economic activity; and in the ability of the society and its constituent productive units to organise the economy for the satisfaction of the material needs of all individuals.
Third, we lay stress on the role of technology in the process of development. But technology is never developed and applied in a vacuum. For our purposes, what is important is that technological development takes place within the context of an economic organisation which ensures first, that it transforms what ever materials the economy has into productive resources; and second, that the gains from technological progress accrue to the national economy.
A development process defined in this way is, of course, difficult to invest with specific quantitative in dices. But there will nonetheless be observable changes. For one thing, there will be a growth in the proportion of the population involved in economic activity characterised by growing output per man and rising income over time. Secondly, there will be significant increases in the degree of utilisation of natural and human resources and the existing stock of technical knowledge. Finally, we would expect to see the emergence of more rational systems of resource allocation in the most important sectors of the economy.
ff the development process is seen in this way then schemes of collaboration and economic integration between politically separate units also become an important part of the development strategy, but on a somewhat different reasoning. To be sure, the pooling of markets to exploit economies of scale and locational specialisation will be one of the economies of integration, but not the only or even the most important one. A second important economy will arise where there are complementarities of input in the use of natural and technical resources. McIntyre has called this Resource Combination. Thus, where one country has deposits of iron ore, another sources of cheap power, another the potential for natural or synthetic rubber production and another a certain stock of engineering skills; then all four could be used for the establishment of an earth-moving and transport equipment industry that none of the countries alone could have initiated. In traditional neoclassical economics, of course, such economies are realised by freeing the movement of goods, labour and capital between the countries. But later we advance reasons for believing that prevailing system s of resource allocation in Latin America and the Caribbean would tend to inhibit the realisation of such economies even in the event of a liberalisation of trade and factor movements.
This brings us to a third economy of integration in the context of a development process as outlined above.
An attempt to rationalise methods of resource allocation from the point of view of national and regional objectives will undoubtedly encounter resistance from the existing institutions of resource allocation, which often have quite other objectives. In certain sectors, such as agriculture and distribution, these institutions may be domestically based while in others, such as mining, manufacture and finance, they are more likely to be international in character and based in the metropolitan countries. And in a world where the balance of economic and military power is heavily on the side of these metropolitan countries a development strategy of the ‘poor’ countries which runs contrary to the interests of the ‘rich’ ones may be expected to encounter enormous difficulties. Thus, the pooling of the individual bargaining powers of the former may be essential to the rationalisation of their internal production structures and constitutes perhaps the decisive reason for integration.
Within the context of such strategies of development and of regional integration, the possible gains from schemes of collaboration and economic integration between the Caribbean and Latin America may be significant. The question will be asked why then, is there so little economic contact between the two areas? It is the answer which we wish now to explore.