Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

thousands of product lines in Argentina for the last forty years of Argentine history.
1. 1890 - 1966
The period from around 1810 to World War I was the first “global century:” transport costs
continuously declined and commodity markets were increasingly integrated (Williamson and
O’Rourke, 1999). During this period, Argentine tariffs were relatively high. Based on data
from Clemens and Williamson (2002), Table 6 reports measures of average tariff rates
(calculated as the ratio of total revenue from import duties and the value of total imports). The
highest tariff rates can be found in Latin American countries. In Argentina, for instance, the
average tariff from 1870 to 1899 was 26.1 percent (which was high, but actually lower than in
Brazil, Colombia, Peru and Uruguay). Argentine tariffs remained high from 1900 to 1913 (23.4
percent) and only declined to around 18 percent, on average, in the post World War I period.
Note that, during the late 1800s and early 1900s, import tariffs were one of the main sources of
revenues for countries like Argentina (i.e., countries abundant in land, scarcely populated, and
with limited access to capital markets). In these cases, internal taxes on expenditure and wealth
were hard to collect (Irwin, 2002). 4 This suggests a revenue-raising motive, rather than a
purely protectionist motive, behind trade policy during this period.
During this first phase of globalization, despite high tariffs, Argentina enjoyed very high
growth rates in comparison not only to the rest of the periphery and but also to the Core. The
main source of growth was agriculture. This growth was driven by at least three major factors:
an increase of the harvested area following the expansion of the Argentine border (after the
“Campaña al Desierto—”military campaigns against the indigenous local population); the
penetration of the railways (mostly financed by British capitals) that facilitated crop
transportation and exports; and booming international markets for exports (Cortés Conde,
1993).
After a few dark years during World War I, Argentina boomed in the 1920s. Imports and
exports rapidly expanded in a growing world that was recovering from the war. In
consequence, both the agricultural and industrial sectors grew. The domestic industry
benefitted not only from increased world aggregate demand and higher relative prices but also
from high exchange rates and from changes in the structure of tariffs. On the one hand, import
taxes were expressed in aforos and, in 1923, the value of the aforos was increased (Barbero and
Rocchi, 2003). On the other hand, from 1909 to 1927 tariffs on manufactured products were
increased while tariffs on raw materials were reduced, thus increasing effective protection
(Díaz Alejandro, 1970). 5
World trade doomed with The Great Depression of the 1930s. The large decline in economic
activity around the world, the abandonment of the Gold Standard, and a move towards
bilateralism (as opposed to multilateralism) halted trade. This had strong negative implications
for Argentina. Further, the improvement of the terms of trade that boosted the growth in the
periphery in the early globalization era, strongly reversed in the 1930s. According to Clemens
and Williamson (2002), the decline in Latin America’s terms of trade was of nearly 40 percent.
This scenario pushed many developing countries into autarky in the 1940s, 1950s and 1960s, in
a context of a highly interventionist industrialization strategy which is usually known as
4 Centeno (1997) finds that the average share of customs duties in total revenues across eleven Latin American
republics was 57.8 percent between 1820 and 1890.
5 As a result, General Motors and Ford established assembly plants in Argentina in 1917 and 1925, respectively.
According to Garcia Heras (1983), tariffs on semi-finished cars were 20 percent lower than on finished vehicles.