His previous beliefs had been supported by the spectacular economic growth of Argentina from the 1860s to 1920s as the country exported a large amount of beef and wheat to the United Kingdom.
However, by the 1930s the Great Depression and the growing economic dominance of the United States, which exported beef and wheat rather than buying them, had significantly hurt the Argentinian economy.
The plight of Argentina forced Prebisch to reexamine the principle of comparative advantage described by David Ricardo, marking the creation of a new school of economic thought in the late 1940s.
German economist Hans Singer had separately arrived at a similar conclusion as Prebisch at roughly the same time, although his paper used a more empirical approach based on analysis of world trade statistics.
Prebisch pointed to the decline in the terms of trade between industrialised and non-industrialised countries, which meant peripheral nations had to export more to get the same value of industrial imports.
[2] Due to Prebisch's influence the ECLA became the center of Third World activism in the UN, giving birth to the Latin American school of structuralist economics.
While dependency theory was the polar opposite of Prebisch and ECLA's original purpose, he continued to criticize the neo-classical economic forces that he felt were victimizing the global poor.