The legacy of Carlos Diaz-Alejandro – at Yale and in Latin American scholarship 

By Lisa Qian

March 29, 2021

One of Yale’s most influential and prominent economics professors never intended to become an academic. 

For Carlos Diaz-Alejandro, a native Cuban, the goal in pursuing graduate study in economics at MIT was to “improve the general standard of living in my country Cuba.” However, just as he was finishing his dissertation, the failure of the Bay of Pigs invasion and consequent suspension of U.S.-Cuba diplomatic relations threw a wrench in his plans to return to Cuba. A friend described his choice to stay in the U.S. and become an academic as the “most difficult decision of his life.” 

Diaz-Alejandro with other economists
Carlos Diaz-Alejandro (far left) with fellow economists Maria Conceição Tavares, and Edmar Bacha in Rio de Janeiro, Brazil in June 1980. Prof. Bacha will speak in a virtual event on April 9, 2020. (See the box below.) Photo courtesy Edmar Bacha.

Diaz-Alejandro ultimately spent the majority of his academic career at Yale, where he was known not only for being a brilliant economist, but also a vocal supporter of human rights in Latin America. In addition, he was one of the few tenured Latino professors at major American economics departments in the 1960s and 70s. 

“For years his work has served as both an inspiration and a point of departure for all those involved in the study of Latin American economic development,” wrote Nohra Rey de Marulanda of the Inter-American Development Bank in a book honoring Diaz-Alejandro.

Early Life

Diaz-Alejandro was born in Cuba in 1937. He attended Miami University for his undergraduate degree and MIT for his Ph.D. Because the trauma of U.S.-Cuba relations was so great, he refused to write about Cuba’s economy and history. Instead, he turned to Argentina for his dissertation. Before finishing, he received an offer from the EGC’s Country Studies Program, which hired young assistant professors and sent them into the field to study and write books on the economies of developing countries. Diaz-Alejandro selected Argentina for his Country Study – a natural choice given his research – and spent the 1963-64 academic year in Buenos Aires. 

“[T]hose who study Argentine history…will find this book one of their most valuable tools and formidable challenges,” said one review of Diaz-Alejandro’s Country Study monograph. “It will be possible to fully appreciate its value only when others have answered many of the fundamental questions which it brilliantly and persuasively raises.”

His book, published in 1970, was the most extensive English-language account of the Argentine economy’s history and is still considered a standard reference by economic historians today.

“[Professor Diaz-Alejandro] is clearly the top young man in the Latin American field,” read an evaluation of his time with the Country Studies Program. “But Diaz-Alejandro is more than a Latin American economist: he is a distinguished theorist generally in the fields of international trade and economic development.”

Join Edmar Bacha & Ana Cecilia Fieler in a virtual event on April 9

Edmar Bacha, IDE MA '65, Yale Economics PhD '68, and Ana Cecilia Fieler, Visiting Assistant Professor of Economics will discuss "The Economy of Brazil, 1980 to Present: Problems and Possibilities", as part of the celebration of EGC’s 60th anniversary celebration and 65 years of the International Development and Economics (IDE) Masters program.

A rising star at Yale

Initially, he left Yale after the Country Studies Program ended to teach at the University of Minnesota, but returned a few years later and became the youngest ever full professor in the Yale economics department at the time, at age 32. Throughout the next 15 years, he became known both for his insightful analyses of Latin American economies and his outspoken advocacy for human rights and improved U.S.-Cuba relations.

Diaz-Alejandro’s research focused on the Argentina and Colombian economies, covering numerous aspects of their development. His best known papers researched financial crises in Latin America in the 1930s and identified moral hazard, the idea now known as “too big to fail” and dollar-denominated debt, as major causes, all of which are as applicable today as they were historically. 

As Gus Ranis, the EGC’s director from 1967-1975, explained, Diaz-Alejandro always wrote about development with “subtlety.” He understood the danger of transferring policies that worked well in one country to another, emphasizing that each country’s development depended on initial conditions at independence, in terms of natural resources, political circumstances and human capital. In addition, he was concerned with equality and recognized that fast growth could exacerbate unequal income distributions. His research identified policies that might ensure that development was inclusive, such as investing in infrastructure for rural areas and technology for food crops (as opposed to cash crops). He was also a pragmatist and examined the effect of political dynamics on policy possibilities. 

Edmar Bacha and Diaz-Alejandro
Edmar Bacha (left) and Carlos Diaz-Alejandro (right) in Ouro Preto, Brazil in June 1980. Diaz-Alejandro taught Bacha during his master’s course at Yale and later, the two were close friends. Photo courtesy of Edmar Bacha.

“Carlos enjoyed his position as a middleman between the historian and the economist, the Latin American and the North American, the left and the right, the intellectual and the politician,” Edmar Bacha M.A. ’65 M.Phil. ’67 Ph.D. ’68, who was Diaz-Alejandro’s student and friend, wrote. 

Dias-Alejandro's work on U.S.-Cuba relations

Although Diaz-Alejandro didn’t research Cuba’s economy, he was active in attempts to mend U.S.-Cuba relations. In 1977, he participated in the first academic exchange with Cuban scholars since the rupture of relations in 1961, which was hosted by Yale. A group of Cuban scholars traveled to a Yale conference space in New York, where they met with a group of American university professors and presented on their respective research.  The next year, he was part of a group of Cuban exiles that successfully lobbied Fidel Castro to release political prisoners.  His political activity extended to the U.S. government as well. In 1984, he was appointed by President Ronald Reagan to the National Bipartisan Commission on Central America, or the Kissinger Commission, as it was known, despite being a vocal critic of the president.

It could hardly have been surprising, then, that Diaz-Alejandro was a vocal dissenter on the Commission, which had been created in hopes of increasing congressional support for aid to the Nicaraguan Contras right-wing rebel group and military assistance for the El Salvadorian government. In his statement, he wrote that the U.S. should end support to the Contras because U.S. interference “hurts the chances of reaching the goal of a truly democratic Nicaragua.” More in line with his values was the report’s “conditionality clause,” which required that U.S. aid to Latin America be conditioned on improved protection of human rights. Diaz-Alejandro insisted on its inclusion.  

The name lives on

Diaz-Alejandro died the next year, in 1985, from an AIDS-related illness. He had just left Yale for Columbia. His former colleagues at the Economic Growth Center rallied to raise funds in his name, with the intention of supporting the graduate and post-doctoral work of Latin American scholars. Today, Diaz-Alejandro’s legacy continues through the students who have studied at Yale under his name as well as the EGC’s renewed focus on how public policy can secure economic justice and human rights for the world’s most disadvantaged populations.  

His legacy also lives on through the Carlos Diaz-Alejandro prize, given by the Latin American and Caribbean Economic Association to honor outstanding contributions to Latin American economics. The prize was awarded to Orazio Attansio, an EGC-affiliated professor, in 2016.

“Carlos was a wonderful colleague – very smart, knowledgeable, warm, occasionally wry – and a really good scholar,” Hugh Patrick, a former director of the EGC said. “We were good friends at the Yale EGC, and unfortunately, all too briefly at Columbia. I still miss him.”