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This paper tests empirically the Balassa-Samuelson (BS) hypothesis (i.e. rapid economic growth is accompanied by real exchange rate appreciation because of differential productivity growth between tradable and non-tradable sectors) using annual data for twenty Latin American countries. The paper applies new panel data unitroot tests proposed by Im et al. (Discussion paper, University of Cambridge, June 1997) and new panel data cointegration techniques suggested by Pedroni (Oxford Bulletin of Economics and Statistics, 1999) and the results are compared with those obtained with conventional time series unit-roots and cointegration tests. The main finding is that whereas a standard time series approach rejects the Balassa-Samuelson hypothesis for 11 countries out of 20, new panel cointegration techniques permit the rescue of this hypothesis for Latin American countries, as well as for Central American and South American groups of countries considered separately. [ABSTRACT FROM AUTHOR]

Official reserves have increased to unprecedented levels since the mid-1990s, particularly in developing economies. One of the reasons ascribed for accumulating official reserves is the so-called mercantilist motive. This motive is seen as a part of an active industrial policy in the sense that these resources allow the monetary authorities to maintain a stable and undervalued real exchange rate, promoting economic growth and development via the tradable goods sector. In this paper we attempt to assess this motive using data for ten selected Latin American economies during the period 1996–2011. Unlike most previous work done on this topic, we consider official reserves as one of the determinants of the real exchange rate. Our econometric findings indicate that international reserves in the region appreciate the real exchange rate. This result suggests that the strategy of hoarding reserves in Latin America has not promoted economic growth and development. [ABSTRACT FROM PUBLISHER]

Using recently developed panel unit root and panel cointegration tests and the Fully-Modified OLS methodology (FMOLS), this paper estimates the impact of remittances on the economic growth of selected upper and lower income Latin American & Caribbean (LAC) countries over the 1990-2007 period. Despite the large flow of remittances to the region, there have been relatively few empirical studies assessing the impact of remittances on economic growth in LAC. Panel unit root tests suggest that several of the macro variables included in the model exhibit unit roots, yet, at the same time, Pedroni's panel cointegration test determined that there is a cointegrating relationship among the variables in the estimated model. The FMOLS estimates suggest that remittances have a positive and significant effect on economic growth in both groups of countries. The estimates also indicate that both the degree of economic freedom and credit provided by the banking system have a positive and significant effect on economic growth in upper (middle) income LAC countries. The sign of the interaction term between remittances and the credit (and EFI) variables suggest that remittances act as substitutes for these variables. Finally, the effect of remittances on both sets of countries is stronger in the presence of a financial (credit) variable. [ABSTRACT FROM AUTHOR]

This paper analyzes the origins of economic development theory by focusing on the work of Raúl Prebisch. When Prebisch put forward his theoretical framework, he was faced with the challenges of creating a foundation for development policies in the context of the Cold War. Moreover, Prebisch was immersed in a determined mentalité; he was part of a social network and institutional setting that transformed his ideas into an influential theory. The objective is to highlight that economic theories do not rely on natural laws, and rather result from a historical and social context and that economists are not passive, isolated theoreticians; they are socialized and directly impact the issues on which they theorize. To strengthen the argument, archival research on the Prebisch Papers at the UN Archives as well as interviews from the UN Oral History Project are included. [ABSTRACT FROM PUBLISHER]

This paper seeks to further the debate surrounding Banco del Sur and the possible roles it can play for both South America in general and for specific member countries. Drawing on lessons from the region's recent history, a case is made for the need to incorporate established national publicly owned banks into Banco del Sur's regional framework if the objectives proposed for the bank are to be fulfilled. [ABSTRACT FROM AUTHOR]

Using evidence from Cusco, Peru, the paper examines the effects of the planned displacement of informal traders from city-centre streets. Although more than 3500 traders were relocated to new off-centre markets, the research identifies the emergence of 'unplanned' alternative city-centre locations for informal trade, especially the new courtyard markets. The municipal-led changes, influenced strongly by concerns to enhance tourism, reveal a process which displays many of the hallmarks of gentrification. Lower-class traders were displaced from city-centre streets for the benefit of middle-class tourists and local people. There was also gentrification of the trading activity itself: by manipulating stall allocation and pricing structures to exclude the poorest traders from the new higher-quality municipal markets. The changing pattern of informal trading can be viewed as an unconventional 'barometer' of the progress of policy-led gentrification, applicable to other cities in the developing world. [ABSTRACT FROM AUTHOR]

Copyright of Cuadernos de Economia is the property of Universidad Catolica del Uruguay Damaso Antonio Larranaga and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Desarrollo Económico is the property of Instituto de Desarrollo Economico y Social and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Since the nineteenth century, Latin America and other poor areas of the world received periodical visits from missions of economic experts. This paper analyzes the picture that Hirschman draws of these money doctors, whose main task was to advise on the economic and financial reforms that were deemed necessary for economic development. Hirschman coins the expression 'visiting-economist syndrome' to criticize the work done by these money doctors. I discuss whether Hirschman, as a money doctor himself, was able to acquire immunity from the disease he feared. [ABSTRACT FROM AUTHOR]

Recent studies of economic growth have moved from explaining average trends in long-term growth to study growth accelerations and decelerations. In this paper we argue that the standard shift-share analysis is inadequate to measure the contribution of sectors to accelerations in productivity. We present a modified shift-share method, which takes account of surplus labour in agriculture and accounts for the contribution to growth from expanding sectors. We apply this novel methodology to the GGDC 10-sector database , which is a new data set with annual time series of value added and persons employed for the ten main sectors of the economy. The data set covers 19 countries in Asia and Latin America spanning the period from 1950 to 2005. We find that growth accelerations are explained by productivity increases within sectors, not by reallocation of employment to more productive sectors. Challenging conventional wisdom, productivity improvement in market services is more important than productivity growth in manufacturing. [ABSTRACT FROM AUTHOR]

The term ‘Washington Consensus’, as Williamson conceived it, was the lowest common denominator of the reforms that he judged ‘Washington’ could agree were required in Latin America. The term has evolved to denote a different set of policies from those initially conceived. This paper investigates the different versions and interpretations of this controversial term and assesses whether the term itself is suitable and viable or slowly becoming irrelevant and obsolete. Most importantly, the evolution of the term mirrors the evolution of economic thought on economic development for nearly the last two decades. [ABSTRACT FROM AUTHOR]

After almost 25 years of experimenting with the neo-liberal economic reforms collectively known as 'Washington Consensus' policies, Latin Americans are starting to re-assess the merits of these policies at the voting booth. Whereas one of the key policies of the 'Washington Consensus' package was the liberalization of investment regimes, many of the newly elected governments are beginning to scrutinize the role of foreign direct investment (FDI) in their countries. Indeed, some nations have gone as far as to nationalize foreign firms. Without endorsing or condoning the actions taken by these governments, in this paper we argue that it is quite rational and very justified for governments in the region to re-evaluate the role of FDI for their development paths. Our exhaustive review of the literature on FDI in Latin America during the reform period shows that very few nations in the region actually received significant amounts of FDI as a result of reform, and that when FDI did materialize, it often fell far short of generating the necessary linkages required to make FDI work for economic development. [ABSTRACT FROM AUTHOR]

Copyright of Revista de Economía Institucional is the property of Universidad Externado de Colombia and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Trade and investment policies reform that deepened integration in the world markets implemented by most Latin American countries in the last two decades have failed to deliver high and sustained growth rates as expected. Multilateral institutions, which strongly supported such reforms, now suggest that further market friendly changes arc needed to produce the expected results. Drawing on evidence from Brazil, this paper argues that the neoliberal model that impregnated policy reforms in Latin America neglected a crucial political dimension, that is, the role of State in the planning and fostering of development. By weakening national states, liberalization, not only increased vulnerability to external shocks but also stimulated conflict in societies with profound social divisions and fragile institutions. Development requires a dense network of both public and private institutions managing issues related to the asymmetries in access to markets, to capital and to technology. Building such institutions is the critical part of a new agenda for development. [ABSTRACT FROM AUTHOR]

This paper revives Fernando Fajnzylber's methodology, used to characterize Latin America's development pattern from the nineteen-sixties to the nineteen-eighties, leading him to describe it as a non-equitable growth pattern, which he termed the empty box. This time around, we analyze the last thirty years, aiming to reveal how the development pattern in the region has fundamentally changed, if it has changed at all, and find evidence as to whether the empty box, pursuant to its original definition, persists or not. Implicitly, the task is to propose a critical analysis of Latin American economic development in line with a classic structuralist work, as Fajnyzylber's research is. [ABSTRACT FROM AUTHOR]

Copyright of Política & Sociedade: Revista de Sociologia Política is the property of Revista Politica & Sociedade and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Previous research has shown that trade and FDI are beneficial to countries' economic development. This paper builds on the literature, and analyzes the ef fects on total factor productivity (TFP) through three channels of openness-imports, inward FDI and international call traf fic (ICT) for a set of developing countries in Asia and Latin America and the Caribbean (LAC). Using data from the period of 1980 to 2000, I find that imports, FDI and international call traf fic all significantly promote TFP growth in developing countries, and that human capital enhances the ef fects of imports on TFP. [ABSTRACT FROM AUTHOR]

Based on a classical political economy, on Latin American structuralism, and on Gramscian perspective about the state this paper argues that national economic strategies are formed by particular interactions between institutions and economic structures and evolve according to social conflicts in a non neutral international environment. This idea is explored to interpret the rise of the developmental state in some national development strategies experienced by peripheral countries during the highest convergence period of the Golden Age and its crisis and redefinitions during the greatest divergence phase and neoliberal reforms of the last two decades of the 20th century. [ABSTRACT FROM AUTHOR]

This article reviews some of the recent literature on the relationship between the legal system and economic development. We also look at the historical, socio-cultural, and political factors that explain the differences in the characteristics of legal systems across countries and thus affect the link between the legal environment and economic outcomes. Although the field of law and economics of developing countries is still in its youth, it is growing rapidly and is a fertile ground for exciting new findings, both theoretical and empirical. Further progress in this field is likely to come from the studies of the elements of the legal system other than the substantive law (enforcement and dispute resolution) and should move beyond specific analyses of the impact of particular success or failure stories towards more general analyses of the determinants and outcomes of successful legal institutions. [ABSTRACT FROM PUBLISHER]

China's rapid economic growth and increased openness has been one of the most significant developments in the global economy over the past 25 years. This paper analyses Chinas impacts on the Latin American economies, and in particular the challenges that China poses for the region. It discusses both the direct impacts arising from bilateral trade and investment flows between China and Latin America, the indirect impacts associated with Chinese competition in export markets and for foreign direct investment, and the positive terms of trade effects resulting from Chinas increased demand for raw materials. Challenges identified include the recent rapid increase of competition from Chinese imports in the Latin American market, the concentration of exports to China in a narrow range of primary products and the uneven distribution of profits from trade with China within Latin America. [ABSTRACT FROM AUTHOR]

This paper analyzes two aspects of China's economic relationship with Latin America and the Caribbean (LAC). First, we examine the extent to which China's economic growth is affecting trade and investment flows between China and LAC. Second, we analyze the extent to which the emergence of China as a world exporter affects the ability of LAC countries to compete in world markets bath in terms of exports as well as in the capacity to attract foreign investment. For each of these questions, we provide a critical assessment of a new body of work in this area, as well as offer a series of analyses that build on and confirm some of this previous work. Furthermore, we offer implications for policy and future research. We show that there is an emerging consensus regarding China and LAC. With respect to trade and investment flows, China accounts for a significant amount of the boost in LAC exports and foreign investment in recent years, but is exporting more than it imports. In terms of global competitiveness, LAC is not significantly threatened by Chinese exports in global markets, with the exception of Mexico. [ABSTRACT FROM AUTHOR]

Commodity prices are characterized by boom and bust cycles. In this article, the impact of the commodity boom of the 2000s on Latin American and Caribbean economies is studied by analyzing four categories of commodity exports (agricultural raw materials, fuel, food, ore and minerals) as well as manufactured exports. Latin American and Caribbean economies had higher growth during the 2000s than in the period before the commodities boom. This study examines whether the higher growth was explained by the commodity boom, and if so, which of the different export commodities accounted for this higher growth. The findings should be relevant to understanding the effects on economic growth of a possible bust in commodity prices. The results show that ore and mineral exports, fuel exports and food exports generally had a negative effect on GDP per capita growth but ore and mineral exports had a positive effect on LAC countries during the boom. During the boom period, agricultural exports had negative effects, especially for LAC countries. Fuel exports had a positive effect on LAC and non-LAC countries during the boom. Manufacturing exports in general had a positive effect on economic growth, but in the boom period this effect almost disappeared for the LAC countries. [ABSTRACT FROM AUTHOR]

Railways were one of the main engines of the Latin American trade boom before 1914. Railway construction often required financial support from local governments, which depended on their fiscal capacity. However, since the main government revenues were trade-related, this generated a two-way feedback between government revenues and railways, with a potential for multiple equilibria. The empirical tests in this article support the hypothesis of such a positive two-way relationship. The main implication of our analysis is that the build-up of state capacity was a necessary condition for railway expansion and also, to a large extent, for export expansion in Latin America during the first globalization. [ABSTRACT FROM AUTHOR]

China has over the last two decades been committed to creating a strategic partnership with Latin American states by persistently extending its economic and political involvement in the continent. China's efforts in this regard reflect not only its desire to intensify its economic cooperation and political relations with nations in Latin America, but also its strategic goals of creating its own sphere of influence in the region and enhancing its 'hard' and 'soft' power in order to elevate China's status at the systemic level. With access to Latin American markets, resources and investment destinations, China may sustain its economic and social progress that bases its long cherished dream of restoring its past glory of fuqiang (wealth and power) and rise as a global power capable of reshaping the current world system. The enormous economic benefits deriving from their economic cooperation and trade may persuade Latin American nations to accept the basic premise of China's economic strategy: that China's rise is not a threat, but an opportunity to gain wealth and prosperity. This will help China gain more 'soft' power in and leverage over its economic partners in Latin America, and thereby help it to rise in the global power hierarchy. [ABSTRACT FROM AUTHOR]

Copyright of Revista de Historia Económica / Journal of Iberian & Latin American Economic History is the property of Cambridge University Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Revista de Economía Institucional is the property of Universidad Externado de Colombia and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Abstract Over recent decades, Latin America has seen its position in the world order erode. Its share of total world exports has significantly declined. A broad opening to foreign investment has economically depressed many local initiatives, and the region's economic growth is now largely dependent upon foreign capital. Nevertheless, an incipient trend has become established that reflects a change in preference for foreign capital destinations, shaped by the degree to which a science-technology base is present. This draws attention to the fact that tax facilities, proximity to markets, and cheap labor are insufficient factors to guarantee the cycle of capital, since what stands out is the outgoing transfer of the innovation activity itself. Latin American governments have done little to build an attractive science-technology platform that could allow our countries to join these rapidly growing chains of commodity production. This ultimately suggests that greater exclusion is to be expected. In this article, the case of Mexico is highlighted as an example of these trends. [ABSTRACT FROM AUTHOR]

Copyright of Revista de la CEPAL is the property of United Nations Publications and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

China's increasing, and increasingly visible, engagement in Latin America has led to a variety of analyses, many based on either international relations notions of realism or international political economy precepts of trade. Rather than seeing China's rhetoric on its relations with Latin America as fluff that conceals a harder reality, this article takes rhetoric seriously as a device of “framing and claiming”: a way in which political elites in China interpret the fast-changing developing world and China's place in it. The article explores how political elites have understood the sources of China's own domestic development and then projected those notions on to other parts of the developing world, through earlier “fractal” logics of development whereby each state repeats one model of development in its own way and a currently dominant “division of labour” logic that posits one integrated model of development whereby complementarity and comparative advantage hold sway. The article concludes with a comparison of China's relations with Peru and Brazil, suggesting that China's bilateral relations with Brazil indicate a newer, emerging rhetoric of global partnership based on equality. [ABSTRACT FROM PUBLISHER]

There has been considerable concern in Latin America over the implications of increased competition from China for local industry. These concerns include the possibility of “deindustrialization,” the increased “primarization” of the region's exports and the difficulties of upgrading manufactured exports into higher technology products. This article examines the impact of Chinese competition both in the domestic market and in export markets on Brazilian industry. It documents the increased penetration of Chinese manufactures in the Brazilian market and the way in which Brazilian exports have lost market share to China in the US, European Union and four Latin American countries. Brazil, because of its more developed and locally integrated industrial sector, is not typical of other Latin American countries and the article also discusses the relevance of the Brazilian experience for the region as a whole. [ABSTRACT FROM PUBLISHER]

Copyright of Colombia Internacional is the property of Universidad de los Andes and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This inquiry explores crises facing developmental states in Latin America related to their national strategies for economic growth. Some patterns commonly associated with an import substitution strategy are argued to be rooted in structural and institutional variables related to an abundance of natural resources. However, with the demise of national development strategies after the 1980s, external and internal efforts and measures stemming from big business and financial capital challenged the developmental state. During the 1990s countries in Latin and South America followed similar patterns toward financial integration. Failures related to this recent strategy opened space for a new development policy. [ABSTRACT FROM AUTHOR]

In the twentieth century, Latin American militaries developed economic industries, organised businesses, and provided security and development assistance in lieu of the state. Despite shifts to democracy and the market, the military remains an economic actor in many countries in the region. This article seeks to open debate and suggest ways to approach the subject theoretically. It examines the concept of military entrepreneurs and scholarship on the topic, and then suggests how three approaches from the domain of comparative politics - rational, structural and cultural - can be useful to develop theoretical frameworks for studying the military's role in the economy. [ABSTRACT FROM AUTHOR]

A century after Weber's famous essay, The Protestant Ethic and the Spirit of Capitalism, Protestantism has changed dramatically. Today, there is an affinity between Pentecostalism-a movement vibrant in Latin America and Africa-and modern economic development. Analogues to the Protestant ethic can be found in eastern Asia and these may be looked upon as 'functional equivalents.' Other examples include Opus Dei in Spain and the Old Believers in Russia. Something like the Protestant ethic is a necessary though not sufficient causal factor if a population is to move successfully from poverty to a reasonably decent standard of living. [ABSTRACT FROM AUTHOR]

Copyright of Revista de Historia Económica / Journal of Iberian & Latin American Economic History is the property of Cambridge University Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In the context of a severe contraction of 'development space' for Latin American and Caribbean economies in the global political economy, we are witnessing a novel and increasingly explicit articulation of migration as a national development strategy by governments in the region. This is particularly pronounced in the Caribbean basin (defined to include Mexico). In response to the shifting shape of the transnational division of labor, the core development strategy that is being articulated is one of insertion into transnational supply chains on the basis of the provision of labor, in the sense both of populating the new transnational professional workforce and of ensuring a continual supply of cheap, low- or unskilled, often undocumented workers to a huge range of sectors in cities and outside them. This article contends that what is thereby put in place is a new political economy of inequality in the Americas, through which a dominant, transnationalized form of 'accumulation by dispossession' can be reinforced and deepened. This transnationalized form of accumulation by dispossession combines, in highly contingent ways, with the distinctively 'nationalized' governance of migration to constitute a contemporary political economy of migration in the Americas in which the developmental potential of labor mobility is subject to profound constraints. [ABSTRACT FROM AUTHOR]

This study determines the factors responsible for the growth of transport sector CO2 emissions in 20 Latin American and Caribbean (LAC) countries during the 1980–2005 period by decomposing the emissions growth into components associated with changes in fuel mix (FM), modal shift and economic growth, as well as changes in emission coefficients (EC) and transportation energy intensity (EI). The key finding of the study is that economic growth and the changes in transportation EI are the principal factors driving transport sector CO2 emission growth in the countries considered. While economic growth is responsible for the increasing trend of transport sector CO2 emissions in Argentina, Brazil, Costa Rica, Peru and Uruguay, the transportation EI effect is driving CO2 emissions in Bolivia, the Caribbean, Cuba, Ecuador, Guatemala, Honduras, Other Latin America, Panama and Paraguay. Both economic activity (EA) and EI effects are found responsible for transport sector CO2 emissions growth in the rest of the Latin American countries. In order to limit CO2 emissions from the transportation sector in LAC countries, decoupling of the growth of CO2 emissions from economic growth is necessary; this can be done through policy instruments to promote fuel switching, modal shifting and reductions in transport sector EI. Copyright © 2008 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This essay examines three recent historical approaches to the political economy of Latin America's relative economic backwardness. All three locate the origins of contemporary underdevelopment in defective colonial institutions linked to inequality. The contrasting view offered here affirms the significance of institutional constraints, but argues that they did not arise from colonial inequalities, but from the adaptation of Iberian practices to the American colonies under conditions of imperial weakness. Colonial inequality varied across the Americas; while it was not correlated with colonial economic performance, it mattered because it determined the extent of elite resistance to institutional modernisation after independence. The onset of economic growth in the mid to late nineteenth century brought economic elites to political power, but excluding majorities as inequality increased restrained the region's twentieth-century growth rates and prevented convergence. [ABSTRACT FROM AUTHOR]

For many countries which specialize in the production and export of raw materials raw material wealth can become a "curse" when, instead of helping to overcome underdevelopment it serves to consolidate it. However paradoxical this may seem there is clear evidence of a connection between raw material wealth, massive inflows of foreign currency, and poverty. The resource wealth of raw material export economies in the Third World is generally accompanied by a multiplicity of socio-economic pathologies, such as distortions in the structure of resource allocation, injustices of distribution, and concentration of wealth in a few hands. In addition, raw material economies are prone to crisis, do not have stable institutions, and have no solution to the spread of poverty. Their governments apply clientistic techniques to retain supporters, foster the expectation among the population that it will be taken care of by the state, and are frequently authoritarian. Raw material wealth is a curse particularly in oil-producing countries, and equally in Latin America and the oil exporting countries in the Persian Gulf. Saudi Arabia, Kuwait, and the United Arab Emirates are very rich countries, with a high per capita income, but nevertheless they are far from belonging among the developed countries. Also as regards economic growth the performance of raw material dependent economies is rather modest: the per capita growth rates of underdeveloped, raw material rich, and raw material exporting states - particularly those with non-renewable raw materials - have been clearly behind those of raw material poor countries since the 1960's. Despite their raw material wealth and sometimes considerable financial inflows they have not been able to lay the foundations for development. Because raw material countries concentrate one-sidedly on the extraction of raw materials they neglect the form of wealth creation which relies on human efforts rather than nature's bounty. It doesn't always have to be this way. The success stories of various raw material rich countries which since the end of the nineteenth century have managed to escape the "curse of abundance" point in this direction. A number of measures are necessary to that end, For example, the destabilizing effects of the raw material sector on the rest of the economy must be cushioned and a transfer of resources set in train from the raw material sector to the economic sectors which meet the needs of the majority of the population. The conditions must be put in place for that through the reorganization and modernization of energy markets, among other things. The strategic goal is a well-balanced, integrated, and dynamic economy which has a developed domestic market and is internationally competitive. [ABSTRACT FROM AUTHOR]