Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

Clearly, world market conditions were more favorable to Argentina in 1943-1955 than in
1929-1943. After the war, policymakers had an option which they had not had during the Great
Depression: to guide economic growth on the basis of expanding exports of both rural and
manufactured products (see Díaz-Alejandro, 1970). Indeed, this was explicitly attempted under the
economic leadership of Federico Pinedo during the early 1940s. Pinedo's plan was a well
thought-out attempt to recover the dynamism of the agricultural sector and to promote export-led
industrialization (see Llach, 2002). However, Pinedo's strategy failed to take hold. One of the
reasons for this failure is that it was opposed by the new dominant electoral coalition formed by
urban capitalists and workers, who stood to benefit from a deepening of the import-substitution
strategy (see Section 3.3). This electoral coalition would elect Juan Perón as President of the
country in 1946 in what were arguably the first truly free and democratic elections with universal
male suffrage.
Perón decided to consolidate the social base of his movement by redistributing income to the
working classes. In fact, he saw industrialization as a mean of achieving the goals of his
nationalistic and populist policy of increasing the real consumption, employment and economic
security of the masses of workers (see Gerchunoff, 1989).
Indeed, as Figure 5 shows, the share of wages on GDP peaked during the Peronist era. It is clear
from the figure that the share of wages in GDP is lower when the economy is integrated into the
international economy than under autarky when the secondary sector has exhausted its
possibilities of import substitution. Notice that this stylized fact is consistent with our model. In
the long-run equilibrium workers' share is equal to ( 1−
φ a
−φ
m
) + ( 1−
β )( Y m
/ GDP)
, i.e., the share
of services in consumer preferences plus the share of labor in the secondary sector times the share
of industrial output in total GDP. Notice that in the long run, and perhaps even in the medium run,
workers not necessarily are better off under autarky (see Section 3.3 and Proposition 7).