Why is the Development in Latin-America Blocked?

An Analysis and Ideas for its Revitalization

To a lot of people, it is not understandable, why in certain Latinamerican countries the process of development is blocked and there seems to be no way out. I as author of the following essay used to belong to the persons mentioned above. I have a special interest for this subcontinent during most of my life. Especially in countries like Mexico, Brasil or Argentina with a great population of European origin, the backwardness compared with Western Europe, the United States, Japan and more recently some countries of Eastern Asia, is hard to explain at first sight. Argentina, which used to be amongst the wealthiest countries in the world until the sixties, a state with a homogeneous population of up to 80% European origin (in the metropolitan area of Buenos Aires even more than 90%) has the highest rate. During the last years I frequently made study trips throughout the whole subcontinent. But only when I worked in Argentina I gathered knowledge, which explains a lot of the chronic problems, which this subcontinent is troubled by. Above all I came to the conclusion that it is quite possible to accelerate the process of development in this part of the world as well, and to reach at least the level of some countries of Eastern Asia (e.g. Korea, Singapore, Hongkong). Certainly it would be necessary in this respect, that some European or North-American based corporations with branches in Latin-America wouldn`t just let things drift: "It`s a useless effort anyway!" As the examples of some companies with branches in Argentina claim with the following text: It would be useful to say the least!

From Taylorism to Lean Production

In some industrial branches, Taylorism has reached its limits. This means, that a decisive growth of productivity is virtually impossible. What does Taylorism stand for? The idea has been introduced by a British economist namned Taylor. Until very recently the production used to be divided as follows:

Strict separation of manual and brainwork.
Tasks as small as possible.
Measurable times for certain tasks.
Working under supervision with the objective to reach the biggest output possible.

This kind of production has reached its limits:

The growth of the production by simply doing it faster and faster has certainly come to an end. At a certain point the facilities and assembly-lines of industrial plants cannot function any faster.
The production with more modern, computerbased facilities leaves less and less room for so-called "stupid" tasks. These facts develop into a serious problem as soon as superiors or managers are unable to adopt new methods of production.
With constant adjustment of the production and reduced amounts of fabrication, the system in itself will not be flexible enough.
The production will be divided into units for teams. Each team gets a certain goal - how he will comply with it is his own job. In the team itself, it will be decided who will work when, on what and where. The goal will be to obtain a qualified knowledge so that every member of the team will be capable of carrying out as many different tasks as possible.
In any case, a boss or other superiors will become unnecessary, without any doubt. This not only because of the fact that the team is interested in reaching the set goals, but as my experience has shown very clearly, because of a decisive growth of its personal motivation.
In securing quality, the highly qualified group is easily in the position of being self-responsible and highly efficient.

To sum it all up, it can be said, that the essence of Lean Production is the cultivation of the intelligence of the so-called blue collar workers, their encouragement and integration into the process of production. Highly innovative companies are reaching within a short time an increase of efficiency of about 20%. In factories where any form of thinking for oneself is strictly forbidden, where suggestions for improvements regularly result in the firing of the innovative thinker; where there exists no kind of serious communication between the management and the ordinary personnel, the idea of Lean Production becomes an absurd farce.

Lean Production expresses the desire to develop for the first time, the productive force number one: The use of the employee`s brains for the decisive increase of production.

Within the framework of "taylorisation" it was important that the worker functions like a robot executing simple tasks. It is obvious that such management philosophy has no motivation. Again and again I made the amazing experience that for some leading managers their personal position was more important than the well-being of the company itself, not to speak of the employees.
In earlier days any kind of education of the blue collar worker was regarded a handicap for productivity. Nowadays it is just the opposite. In this respect it is important to add that my experience in Argentina shows me that the cultural and educational level of the ordinary work-force is by no means to be underestimated by the mangement.

Developing a Collective Work-style

The development of a team should be under the guidance of a boss, who does not take his job as a matter of fact. He should possess a better professional qualification (not just the title!) than his colleagues. Certainly it would be desirable and in the sense of a productive work-climate, when orders and hints would be given in a friendly manner, and not by shouting in the manner of military commands. This results in:
The higher valuation of collective rather than individual achievements.
No personal bonuses but the encouragement of teamspirit.
Development of collective control and self-control.
The possibility of instructing people on a human level is more important than just teaching them exclusively technical and specified knowledge.

To what extents these ideas comply with the latino mentality, shows an interview given by the world-famous colombian malaria scientist Manuel Patarroyo, for a German TV-Station recently:

"Here, we are all working hard and together, which means that I am not trying to hide the results of my work from the others. Everything will be developed on a common basis. That`s why brandnew ideas are coming up; unlimited possiblities. But we are also discussing everything very seriously, with the clear cold arguments that are usual in science. We are carrying out our work in this manner."

Unity of Leadership and Base

Reduction of useless executive management and bureaucratic overcentralization of decisions by introducing so-called "diminished-hierarchies" and transfering the responsibilities to more common levels. Especially those on the common level, are usually far better informed of the complicated tasks and working conditions than some managers. That this is not mere fantasy, but a thoroughly realistic new management philosophy, can be seen in two statements of leading Siemens managers:

"You may give your master, even the President of the board your opinion when it is correct and valid."

"Narrow-minded dogmatism and ruthlessly competitive behaviour does much more harm than good to the work-climate. Instead of propagating stubborn class-struggle slogans between the bosses and employees in modern runned factories, we should talk more about Co-management."

Wherever a philosophy like the one stated above is not handled openly, a reasonable development is virtually impossible. No building project, nor installation of high-technology alters that fact, because systems like the above mentioned may be used only to a very small extent - if at all.

In 1995 the Munich-based "Fraunhofer-Institute" examined the introduction of teamwork in nation- and worldwide leading companies of different industrial sectors. Precisely those companies who increased their production decisively, had encouraged the motivation and creativity of their employees and workers and so saved time and costs as well as improved the quality of their products. Unfortunately my experience in Argentina shows that any kind of creativty of the ordinary work-force has been prevented for many years in order to maintain the position of influence of an "Anti-Elite" as Barbara Töpper characterizes in the competent book "Transformation im Südlichen Lateinamerika - Chancen und Risiken einer aktiven Weltmarktintegration in Argentinien, Chile und Uruguay" (Transformation in Southern Latin-America - opportunities and risks of an active integration in the world-market in Argentina, Chile and Uruguay).

Patronalism as an Extreme of "Bogged-Down Hierarchy"

"Lean Production is not a technical method of production but a management philosophy, which is based on the principle of mutual responsibility concerning management, employees and subcontractors. It is a dynamical system where all forces are adjusted to reach perfection in quality and production. To put this concept into action makes high demands on the management of the companies. This means a far-reaching change of one`s views; a dividing of possessions and roles one has grown fond of. This constitutes a big challenge for many German factories with bogged-down hierarchies, narrow demarcations of competence and one-way thinking." (From Lean Production, p.20, edited by BDI - Federal Union of German Industry, 1993).

It must be added hat the above mentioned "bogged-down hierarchies" have to be cleared up in Latin-America, because of the infamous patronalism that exists.

The independent organization of the complex interaction between men, machines and material by highly skilled workers in the production (who are collaborating in a flexible way) is quite decisive. The "Trendreport Rationalization" specifies:

"Integrated in the team activities, will be functions like the optimal penetration and pre-planning of the work-action; the development of new fields of efficiency and innovation, which includes avoiding waste. These tasks used to be in the hand of experts in rationalization of the department of industrial-engineering. To hit the nail squarely on the head, the employees themselves should become efficiency experts within the framework of the continued improvement-process." (Michael Schumann, Trendreport Rationalisierung, Berlin 1994, p.345).

To put the above mentioned ideas into practice; to realize these rationalization-measures will remain an utopia for a long time to come, if there is no will to draw personal conclusions. This demands a continuous checking of the qualifications of superiors and managers - a practice which is good and which works in Shell Argentina for example.

Nepotism and Corruption is NOT a Natural Law in Latin-America

"On the other hand the processes of social atomization, "mafiotization" and the desintegration of social cohesion as a whole will be strenghthened. These processes are only possible if the state lacks efficiency and clear stated rules and guarantees for the people. Corruption will become a general social factor. An efficient liberalization is not possible under these circumstances." (So Barbara Töpper in the already mentioned book " Transformation in Southern Latin-America, p.255f.).

States that are neither willing nor able to keep corruption and nepotism within reasonable limits, so that the political economy as a whole is not endangered, can be controlled by the European or North-American head based corporations themselves. I`d like to mention two interesting examples concerning this aspect.
Mercedes Argentina dismissed the entire national management without warning as it became clear that the very existence of the factory was endangered because of corruption. Even more interesting for me was the statement of the general-manager of Adidas Argentina, during an interview for Argentinian`s T.V. He said that it is not his main purpose to spend as much time as possible playing golf or staying at Uruguay`s noble seaside resort Punta del Este, but to use all of his energy in the interests of the factory he is in charge of. He then added:

" In Adidas Argentina times have changed forever. Enough of this disorganisation!"

Anyway, these examples and my experiencies in Latin-America, show without any doubt, that the continuous claims and assertions, that countries like Argentina as part of the Third World are unable to produce high-quality products and to reach a transformation towards an active integration into the world-market, are not true. Singapore, Korea and Hongkong were also considered Third World countries and even in Mexico areas of theoretic and applied high-technology exist.( May I remind you of the private university of Monterrey, which enjoys international reputation and is easily keeping up, in every respect, with comparative institutions of the First World). Noone convinces me, that Argentinians are less efficient, intelligent and competent than Mexicans or Koreans. This is only an excuse. No German or Italian loses his intellectual abilities just because he moves from the Rhine or the Po to the River Plate. What I missed most badly in Buenos Aires, was the complete lack of intention to at least compete with some of the countries and companies mentioned above - countries which had begun from comparable starting points.

Perspectives and Conclusions