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The Marketing Concept and Economic Development: Peru*

Published online by Cambridge University Press:  02 January 2018

William P. Glade  and
Jon G. Udell
William P. Glade
Affiliation:
Graduate School of Business, The University of Wisconsin, Madison, Wisconsin
Jon G. Udell
Affiliation:
Graduate School of Business, The University of Wisconsin, Madison, Wisconsin
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Extract

In the literature of development, it is recognized that the possibilities for national economic growth are strongly conditioned by prevailing institutional patterns. Exogenous factors, such as international market trends, the supply of foreign investment funds, and terms of trade, define outer constraints on the growth of many less developed countries; but within these boundaries, the realizable growth depends on endogenously set parameters that influence public policy alternatives, the level and direction of domestic capital formation, and the scope and rapidity of structural economic changes. It is in this latter area that the study of institutional performance becomes relevant.

To date, the focus of institutional analysis has been on a variety of social organizations that influence the economic process at one point or another, e.g., trade unions, political parties, financial intermediaries, land tenure systems, and government agencies.

Type
Research Article
Information
Journal of Inter-American Studies , Volume 10 , Issue 4 , October 1968 , pp. 533 - 546
Copyright
Copyright © University of Miami 1968

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Footnotes

*

This report is part of a larger project sponsored by the Center for International Business Research of The University of Wisconsin in which extensive field interviewing was conducted in Peru over a period of four and one-half months. In the project, 110 structured interviews with a sample of industrial firms drawn from different sectors were supplemented by semi-structured interviews with other informed observers and material gathered from secondary sources.

References

1 According to the latest revision of Peruvian product and income statistics, the average growth rate for the manufacturing sector between 1950 and 1964 was 7.8 per cent. During the same period real GNP expanded at an average rate of 5.6 per cent. Manufacturing accounts for 17 per cent of national income, compared with 16 per cent for commerce and 22 per cent for agriculture. Cuentas nacionales del Perú, 1950-1965 (Lima: Banco Central de Reserva del Perú, 1966), pp. 7-10.

2 Rostow, Walt W., “The Concept of a National Market and Its Economic Growth Implications,” Proceedings of the American Marketing Association (Fall, 1965), p. 19 Google Scholar.

3 Recently the rapid growth of the fishing industry has attested to the continuing export-induced thrust of development as well as to the diversified set of comparative international advantages which differentiate Peru from most of its Latin American sister nations.

4 See, for example, Rosenstein-Rodan, P. N., “Problems of Industrialization of Eastern and Southeastern Europe,” Economic Journal, June-September, 1943, pp. 202-11CrossRefGoogle Scholar; Nurkse, Ragnar, Problems of Capital Formation in Underdeveloped Countries (Oxford: Oxford University Press, 1953)Google Scholar; and Mosk, Sanford, Industrial Revolution in Mexico (Berkeley: University of California Press, 1950)Google Scholar.

5 The case for “unbalanced growth” (meaning the deliberate development of “strategic imbalances”), presented several years ago by A. O. Hirschman in his Strategy of Economic Development (New Haven: Yale University Press, 1958), makes heroic assumptions in this regard, for it posits an elasticity of supply response of a very high order despite the author's recognition (ibid., p. 154) that administrative or office operations are likely to lag substantially behind production operations in efficiency. Of the two chief sources of development advice for Latin America, ECLA and the World Bank, the latter has generally taken greater cognizance of the relevance of the marketing process than the former.

6 One of the lasting benefits of the recently inaugurated Cooperación Popular Program, a national community development effort not unlike the Peace Corps, may be its role in familiarizing the educated youth of the coast with the highland ways of life. Never before has Peruvian industry been able to draw upon such a reservoir of personnel so well acquainted with the highland markets.

7 Rostow, “The Concept of a National Market…,” p. 16.

8 While this paper deals primarily with the improvement of marketing policies, no implication is intended that it is the sole requisite of advance. Continued development of infrastructure, improved industrial relations, the more effective use of cost accounting as a basis for managerial decisions, and other developmental activities are all of great importance.

9 Peruvian Times (Lima), October 15,1965.

10 James E. Littlefield and William A. Strang, “Marketing an Underdeveloped Economy: The Case of Peru” (unpublished Ph.D. dissertation, University of Wisconsin, Madison, 1967), p. 467.

11 El Comercio (Lima), March 4, 1966.

12 This assignment of social validity to the set of needs expressed in the market is not, of course, absolute. To further long-run national development, not all possible demands registered freely in the marketplace should necessarily be ratified by corresponding shifts in the pattern of production. Indeed, a good many should not be. For example, pandering to an antisocial degree of conspicuous consumption is hardly supportable on any grounds while more urgent claims on resources go unmet. In this, the operations of the public sector are of paramount social value, provided that private waste is not simply replaced by public waste as has unfortunately happened in some parts of the world. Similarly, there may be harmful products for which a demand might conceivably exist or be cultivated (e.g., narcotics). These cases aside, however, and with all due recognition of the social validity of certain contraventions of the market mechanism, it remains true that effective marketing can play a valuable part in reducing the manifold market imperfections that have long held the efficiency of resource use to low and inhumane levels in many parts of the globe.

13 McCreary, Edward A., The Americanization of Europe (Garden City, New York: Doubleday and Company, Inc., 1964), pp. 184-86Google Scholar; and Jon G. Udell, “Taking Advantage of Changing Markets,” Selected Proceedings of the First Annual Wisconsin Small Business Management Conference (Madison, Wisconsin, March, 1962).

14 Whereas the necessities of the industrial and consumer markets should usually be priced according to this principle, conspicuous consumption items should be priced on a low volume-high margin basis, which would restrict the flow of resources to the luxury market, or heavily taxed to achieve the same effect.