Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

Figure 1: The Long Run: Four Regions.
Notice that, for a given tax rate τ , as the terms of trade worsen (π decreases), the economy
moves from specialization to diversification and trade, to autarky and, finally, to a reversal of the
patterns of trade. For higher levels of taxes τ , the autarky region is larger.
Consider the share of capital employed in the secondary sector: κ = K /( K + K )
m m a
. This is a
measure of industrialization that will be useful in our discussion about preferences for
protectionism. Figure 2 shows how this share varies in the long-run equilibrium for different
λ = L / L + L would look similar.
configurations of terms of trade and taxes. A figure for ( )
m
m
a