Latin American Economies Shed Old-World Past

ONCE a sorry symbol of state ineptitude, today's privatized Aeromexico Airlines is a stunning example of efficiency.

"In three years, Aeromexico has gone from one of the worst to one of the best airlines in the world," says Roberto Salinas, an economist at the Center for Free Enterprise Research in Mexico City.

Operational staff has been cut by nearly two-thirds, yet the airline puts 25 percent more flights into the air. In 1991, it had the world's best on-time departure record.

Aeromexico exemplifies the dramatic trends that are sweeping the hemisphere like a bracing breeze: privatization, deregulation, inflation busting, free-trade pacts, and quality control in manufacturing. Behind these trends, some observers say, is a change in Latin America's mental climate.

Aid expert Lawerence Harrison contends the region is now rapidly jettisoning the cultural and attitudinal baggage delivered by the Spanish conquistadors that has tended to hold these nations in a state of underdevelopment.

"The process of eroding the Ibero-Catholic model has been going on for the last 100 or so years. But it's really accelerated in the past decade," Mr. Harrison says. "The region's economic crisis and the collapse of Eastern Europe have forced Latin America to reassess why it is what it is."

In his book, "Underdevelopment is a State of Mind - the Latin American Case," published in Spanish in 1989 (in English 1985), Harrision asks why an area of the world that entered the industrial age with resources and a development level comparable to North America's early British colonies has fallen so far behind. He blames an authoritarian, Old World Spanish heritage for shaping values that handicapped this part of the New World.

Harrison's theories stem from 20 years service with the US Agency for International Development. He argues that the same values that relegated Spain (despite abundant natural resources) to the position of economic laggard in Europe also took root in Latin America. One example is the tendency in Ibero-American culture to limit one's circle of trust to family. This spawns nepotism, which often is not the most efficient business nor governmental system. Also noted is the Hispanic tendency to believe in fata lism, a "natural" hierarchy, and paternalism, which favor centralized control and undermine individual initiative. And Harrison charges that the Roman Catholic views of sin and expiation have resulted in ethical behavior that is less conducive to developing discipline and weeding out corruption.

But just as Spain has advanced economically in recent decades because of more exposure to Europe, Latin American development is arguably being advanced by value shifts.

According to value surveys done in 1990 by Miguel Basanez, director of the Center for the Study of Public Opinion, and University of Michigan researcher Ronald Inglehart, Mexicans are more politically active, more likely to be entrepreneurial, and less supportive of statist systems than a decade ago.

"Not only are Mexican values changing rapidly," says Mr. Basanez, "but the values of the US, Canada, and Mexico are converging. And the changes tend to support the economic reforms under way."

For example, the Mexican circle of trust is growing beyond family members. Mexicans, Canadians, and Americans indicate about the same amount of confidence in their families. But when asked about people in general, only 33 percent of the Mexicans expressed trust in their fellow citizens. This compares to a 50 percent endorsement by Canadians and Americans. But Mexican confidence in nonfamily members has jumped significantly, from 18 to 33 percent, since 1981.

"We used to be very oriented toward pleasing our boss, our government, our party. The pyramid hierarchy is starting to crumble. Now we're beginning to think in terms of pleasing the customer," says Joaquin Peon Escalante, director general at the Mexican Foundation for Total Quality, a consulting firm.

Perhaps another bellwether of attitudinal shifts is the rapid growth of evangelical churches in Latin America. Harrison says clear-cut results may be a generation away, but that the Evangelical Protestant religions "offer greater emphasis on hard work, discipline, avoidance of alcohol and infidelity, and in the case of Mormonism, for example, greater enterpreneurism."

But Carlos Perez Gavilan doesn't see a fundamental value change under way. The director of the Social Union of Mexican Businessmen, an organization informally allied with the Roman Catholic Church and that promotes Christian principles in the workplace, Mr. Perez also argues that Latin America's ethical shortcomings can't be pinned on the Catholic Church. "Why blame the Church for what we as individuals are guilty of? The church is a human organization. But the religion, the ethics, the principles of Chr istianity are not flexible. The laws of Christ are clear. They haven't changed. Unfortunately, we don't always follow them."

Perez also disagrees that a Spanish heritage has alone fostered underdevelopment. "You also must count the role of our northern neighbors and other developed nations which have exploited the natural resources of Latin America without nurturing domestic growth. Yes, the culture can be blamed for underdevelopment, but Spain hasn't been the only outside influence."

Other observers argue that despite the major economic structural shifts in Latin America, the cultural and attitudinal changes are relatively minor.

"Privatization and free-market policies are simply a result of economic necessity," says Rodolfo De la Torre, assistant director of the Center of Economic Research and Analysis in Mexico City. "The huge debt loads, unemployment, and inflationary instability created by past policies forced a fundamental change in practices."

Another catalyst in Mexico, he notes, was joining the General Agreement on Tariffs and Trade in 1986. This step lowered import tariffs, thus exposing Mexican industries to foreign competition.

Carlos Castro, a consultant with Dunn and Associates in Mexico City, isn't certain he is witnessing a cultural change, but he does see mounting fear in managers suddenly facing competition from Southeast Asia. He says large Mexican firms particularly are adopting "total quality control," "just-in-time," and other manufacturing management systems. But Mr. Castro says small and medium-size companies are responding slowly.

"Mexican matadors still don't seem to recognize the size of the bull in front of them," he says.

Harrison admits that "at the outset, these new [economic and management] policies are the most palpable change agents. But they can't happen without people with a predisposition to some cultural change, to a different mindset."

He says President Carlos Salinas de Gortari exemplifies a new generation of Latin American technocrats - intellectual, business, and political leaders who have generally gone to US and European universities. Mr. Salinas, a Harvard-educated economist who hails from a town near the US border, has had an "important dose" of the US education system, Harrison says. Members of Salinas's cabinet have attended Stanford, the Massachusetts Institute of Technology, Yale, and Princeton.

Consultant Castro has noticed that exposure to international business practices does seem to influence cultural habits. He finds, for example, that Mexicans working in multinational companies are more likely to be punctual. He says that when he meets executives at domestic firms, it's not unusual to be kept waiting a half an hour.

Although Latin America has all but left dictatorships behind, there remains a cultural bias toward paternalism and authoritarianism in government. This slows the trend toward stable, full-fledged democracies, analysts say.

"Authoritarian decisionmaking not only reflects a lack of commitment to political reform, but reinforces a paternalistic model contrary to economic and cultural openness," says Roderic Camp, a Tulane University political scientist. But he acknowledges that without the dominant, authoritarian powers exercised by Salinas and his predecessor, it's unlikely Mexico's huge economic policy reversals would have occurred.