For South Eastern Latin Americanist (submitted 2 January 2000)

Antonio Jorge and Jorge Salazar-Carillo, editors. Price Policies and Economic Growth. Westport, Connecticut: Praeger, 1997. ISBN 0-275-95322-X. xii+256 pp. $69.50.

This anthology should be of interest not only to economists, but also to historians and other social scientists interested in Latin American development since World War II. Antonio Jorge and Jorge Salazar-Carillo, professors of economics at Florida International University in Miami, have presented a collection of superior papers on price structures and policies and their relation to economic growth.

Although not exclusively concerned with Latin America, that region is clearly the principal focus of most of the papers in this volume. Attention to other develo

ping regions provides comparative analysis and helps to place the Latin American economies in a global context. The volume supports the argument that the functions of a rational price system differ substantively in advanced market economies from those of developing market economies.

Following a useful introduction and overview, the volume is organized around four central themes related to price structures and economic growth. A section on price structures, market signals, and reform offers three articles that explain price formation issues within the context of non-market and imperfect conditions. Jorge Salazar-Carillo compares government costs in Latin America, using wage and price data for eleven Latin American countries between 1960 and 1976. A second chapter by Salazar and Antonio Jorge examines the role of rational prices in the adoption of market structures by developing command economies, emphasizing that a successful transformation requires adequate coordination between the means of structural changes and the policies that deal with economic stabilization. The authors argue in favor of a gradual approach to economic change, rather than the "Big Bang" approach or immediate de-socialization of the economy. In a final chapter in this section, Enrique Delgado reviews price comparison studies in Central America between 1973 and 1981.

The second section deals with the relationship between domestic prices, foreign trade, and economic growth. Here Felipe Pazos discusses protection, price structure, and export growth in Latin America since 1946. Carlene Frances then presents a case study on the Bahamas, a tourist driven economy, in "Implications of a Fixed Exchange Rate for Stability and Growth in Small, Open Economies." James Seale and Charles Moss examine data from Brazil, Costa Rica, Guatemala, and Venezuela in "Import Demand and Foreign Debt: A Latent-Variable Systemwide Approach," finding a positive relationship between aggregate income and total imports, but no significant relationship between primary resources and financial stress.

A section on primary commodity prices and productivity begins with Antonio Casas González's "Oil, Prices, Economic Growth, and Economic Productivity." Casas challenges the popular belief that the oil crisis of the mid-1970s was directly responsible for the debt crises and economic stagnation of the Latin American economies in that era. He argues that the dramatic oil price increase of the 1970s was merely coincidental to escalating inflation rates, unemployment and declining economic growth worldwide, offering some statistical evidence for this argument. His contention that the more advanced economies of Europe and the United States suffered relatively little from the increase in oil prices, however, is not altogether convincing evidence that the cost of oil was not a deterrent to economic growth in Latin America. Also in this section, Dodla Sai Prasada Rao, Cailash Chandra Sharma, and William Sheperd look at agricultural price policy in developing countries, beyond as well as including those in Latin America.

The final section includes five theoretical and methodological studies, large dealing with data outside of Latin America, but providing interesting comparative frameworks and methods for further study. These include articles by Ilona Kovács, Charles Moss, Henri Theil, Sri Devi Deepak, and Marcos Mamalakis, plus a final essay by the volume editors critiquing the International Comparisons Project, and reviewing the debate since the 1970s on how best to conduct international comparisons of production and prices. This section will be of greater interest to specialists on price policy than to Latin Americanists in general.

This volume thus brings together a number of leading economists who focus on price structures and their relationship to trade, productivity and other related matters. The studies should prove useful to the economic historian of the post-World War II period as well as to those involved in price formulation policies in the future.

Ralph Lee Woodward, Jr.

Texas Christian University