Structuralism (development economics)

Indian Economy glossary

Also called: Latin American structuralism · Topic: Schools of Economic Thought and Economic Laws · NCERT: Beyond NCERT

Meaning

Structuralism is a Latin American school of development economics. It says developing economies have structural rigidities: they depend on exporting primary goods such as crops and minerals. Raúl Prebisch and Hans Singer (1950) argued that the terms of trade of these exporters decline over time. Terms of trade are the prices a country gets for its exports compared with the prices it pays for imports. The structuralist answer was state-led industrialisation and import substitution, which means making at home the goods that were earlier imported.

Example

India's inward-looking trade policy after independence followed the same logic. It used high tariffs and quotas to protect domestic industry so that India would make its own manufactured goods instead of importing them.

Don't confuse with

  • Dependency theory: blames exploitation of the poor "periphery" by the rich "core". Structuralism focuses on terms of trade and economic structure, and it is more reformist.

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