Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

than Ireland and Norway." The author claims that part of that success is attributable to the "belated
opening of the Australian economy to the rest of the world".
The differences between these two cases start to appear when we focus on the intensity of the
distributional conflict and the institutional settings where this conflict needed to be resolved. We
claim that the Argentine distributional conflict was more intense and that its institutions were
weaker. As a result, while Australia was able to overcome its conflict, Argentina was
overwhelmed by it. Moreover, international and geopolitical conditions helped to ease the
Australian anti-trade trap but not the Argentine one. In what follows, we stress some key
differences between these two economies and show how they contribute to our argument.
5.1.1 From Endowments to Institutions
Since its creation in 1901, the Australian Federation adopted protectionist trade policies that were
strenghtened during the course of the 20th century up until 1973, when the country entered into a
gradual but steady process of liberalization (see, among others, Anderson 1998, 2002; Anderson
and Garnaut 1987; Corden 1996; Garnaut 2002).
The Australian gold rushes of the late 19th century sparked an early influx of immigrants who
helped to consolidate a mining export sector. The mining sector had powerful forward and
backward industrial linkages that generated interest in scientific and technical research, as well as
giving rise to a unionized labor force across the economy. The trade unions and entrepreneurs
involved with mining coalesced into political groups that opposed the creation of a ruling
land-owning elite.
In 1901, the Labor Party joined the Protectionist Party to form the first government of the
Australian Federation. Two key issues on the political agenda were the level of protectionism and
immigration policy. The government successfully passed the Immigration Restriction Act of 1901,
which formed the basis for the White Australia Policy. However, the government had to reach a
compromise with the Free Trade Party in order to set import tariffs in 1902.
Australian immigration policies have been substantially different from those of Argentina. As
mentioned before, the Argentine elite chose to promote immigration. Argentina's population went
from 1.35 million in 1861 to 11.28 million in 1928, while, in Australia, it went from 1.2 to 6.22
million. In Argentina, this decreased wages and increased the return on land. Indeed, Taylor
(1997) calibrates a general equilibrium model to estimate the impact on wages of the massive flow
of immigration to Argentina up to the First World War. His calibration suggests that the flow of
immigration reduced real wages in Argentina by approximately 20% from what wage levels would
have been if immigration had not taken place.
What is more, and in spite of similar factor endowments, land was more concentrated in Argentina
than in Australia, where family-operated, medium-sized farms were relatively more common. As a
consequence, landowners in Australia did not constitute an oligarchy as they did in Argentina; they
were a broad social group and were not a ruling class. Landlords in Australia never controlled the
governmental machinery as they did in Argentina (see Hirst, 1979).