Celso Furtado.

AuthorCortez, Ana Luiza
PositionAhead of the Curve - Biography

Asked to define underdevelopment, Celso Furtado replied in his characteristically north eastern Brazilian accent: "There is no need to define underdevelopment; just go out and look; that is underdevelopment!" Yet, his greatest contribution to development thought was a thorough understanding of underdevelopment and its determinants.

Born in the relatively poor state of Paraiba in Brazil, Furtado confronted the economic backwardness of Latin America in general, and Brazil in particular, after joining the UN Economic Commission for Latin America and the Caribbean (ECLAC) in 1949. With the world emerging from a major economic recession and a horrific war, the time was ripe to deal with the specific problems of late industrializing countries for which prevailing economic theories were ill-equipped to address or had simply ignored. ECLAC--where Furtado became Director of the Development Division and met Raul Prebisch--offered a fertile environment for the development of new ideas and the search for concrete solutions to promote the economic advancement of the region.

Prebisch had rejected the idea that all countries would benefit from organizing their productive structure and trade around their comparative advantages. He noted that growth in primary commodity suppliers was determined by external demand and subject to the business cycles of the major importing markets. More importantly, commodity exporters were unable to retain the fruits of their own technological gains and faced deteriorating terms of trade, vis-a-vis manufacturing exporters. Increasing exports would only lead to lower prices. Thus, taking the comparative advantage route would not help commodity exporters reach the income levels of manufacturing exporters; instead, as a consequence, the income gap between the two groups of countries would widen. Underdevelopment was not a temporary stage leading to development, but had become a permanent condition. Diversification of production, through industrialization, was necessary.

Inspired by this framework, Furtado further developed and enriched these ideas by rigorous historical investigation to identify the factors that explain changes in the structure of the economy over time. He was one of the main contributors to the first major report of ECLAC, the 1949 Economic Study of Latin America (Estudio Economico de America Latina), which for the first time presented the "Prebisch thesis" and became the founding document of the Latin American...

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