Working as an economist for the Argentine government, Raúl Prebisch experienced directly the catastrophic impact of the great depression of the 1930s on what had long been a prosperous economy and a constitutional state. Generalizing from this, he reasoned that so long as industrialized states were able to react to adverse conditions with mercantilist policies, as the United States and Europe had done in the 1930s, it was folly for less powerful states to settle for the gains from free trade available to them as producers of primary commodities. Instead, he urged them to industrialize, however costly in the short run. Prebisch argued that the terms of trade were bound to move in the long run against producers of primary products because demand for their exports was bound to grow more slowly than for the manufactures they needed to import. Moreover any gains from improved productivity in agricultural production and extractive industry would be drained to the industrial economies by the superior bargaining power of their monopolistic labour unions and firms.
The political significance of Prebisch lies much less in the quality of his thought than in its reception. As he rose through the UN Commission for Latin America to become founding Secretary General of the United Nations Conference on Trade and Development (UNCTAD) in 1964, his proposed solutions to the dilemma of primary producers won widespread official acceptance, making him a much more powerful moulder of Third World policies than the neo‐Marxist dependency school with whom he is often mistakenly associated. UNCTAD itself became, during the North–South dialogue of the 1970s, the vehicle for his programme, advocating the stabilization of international commodity markets, continued import‐substituting industrialization and regional cooperation in the Third World, and the retraction of illiberal controls on market access for agricultural goods and textiles imposed by the advanced industrial economies.
http://www.unctad.org/ UNCTAD website.