Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

World War, a second globalization era began (see, among others, Baldwin and Martin, 1999; and
Williamson, 2002). Nevertheless, the move toward multilateralism was gradual and was not
achieved, for all practical purposes, until the 1990s (see Brambilla et al. in this volume for a fuller
discussion of these issues).
The breakdown of the economic order was transmitted to Latin America first of all through a sharp
change in relative prices: dollar export prices collapsed more steeply than dollar import prices.
According to Clemens and Williamson (2002), the magnitude of the decline was around 30% for
Asia and the Middle East and 40% for Latin America. This decline in the terms of trade was used
as a strong argument in support of the move of the developing world toward autarky in the 1940s
and 1950s, within the context of a highly interventionist industrialization strategy.
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Figure 4: Terms of Trade, 1875-2006 (1993=100). Source: ECLAC Office in Buenos
In Argentina, the terms of trade deteriorated considerably even before the collapse of the
international economic order in the early 1930s (see Figure 4). During the 1920s, on average, the
terms of trade were approximately 30% below the pre-First-World-War level of 1913. Such a
shock alone merits the label of a reverse of fortune. For a country with a ratio of exports to GNP of
one-to-three, a 30% deterioration in the terms of trade represents a loss in real income of about
one-tenth, assuming no change in physical output. The 1930s show some recovery in relative
prices, which still were, on average, about 16% below their 1913 level. This reversal of fortune,
with some pronounced fluctuations, continued throughout the rest of the 20th century. Just to put
this into perspective, the average terms of trade for the period 1930-1999 was 20% below the
average relative prices for the period 1890-1913. Nevertheless, in recent years the terms of trade
emerged in response to the food shortages that the continent suffered during the Second World War.