Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

(footnote table) The sign of the effect of the endowment of capital on the share of capital
employed in the manufacturing sector is the same as a quadratic function of ρ
1
, ρ
2
and ρ
d
that
depends on parameters α , β and λ .
In Section 3.4.1, we analyze the effect of Lˆ and  (population growth and productivity growth
in agriculture) on κˆ and λˆ .
We notice that d / ˆλ dLˆ
has the same sign as ρ2 − ρd
, i.e., population growth L will decrease λ
if the elasticity of substitution in consumption is greater than in the production of manufactures (
ρ d
> ρ 2
). We also state that the effect on κ will be the opposite: d / ˆκ dLˆ
has the same sign as
ρd − ρ 2
.
Similarly, in the table we read that d / ˆλ dAˆ
has the same sign as ( ρ2 − ρ d
) ρ d
, which corresponds
with what was stated in Section 3.4.1: Higher productivity in the agricultural sector will decrease
λ if the elasticity of substitution in consumption is greater than 1 and than that in the production
of manufactures (i.e., ρ
d
> 0 , ρ d
> ρ2
). Similarly, d / ˆκ dAˆ
will have the same sign as − ρd
: the
share of capital, κ , will decrease if the elasticity of substitution in consumption is greater than 1.
8 Appendix B
In this appendix we provide evidence supporting our argument that trade policies are still a key
component of electoral competition and that the coalitions vote as suggested by our model. We
look at the developments of 2008, when the government's attempt to increase export duties was
met with a nationwide lockout by farming associations and mass demonstrations in urban centers.
We also use the results of the 2007 presidential election and the 2009 legislative elections to
compare how the incumbent party --Frente para la Victoria (FPV), a political coalition including
the Justicialist Party-- fared before and after it publicly confronted the pro-agriculture coalition.
Export duties were almost non-existent during the 1990s, but were raised after the devaluation in
2002 to capture windfall profits from exporting firms. Over time, they became a reliable source of
revenue for the federal government and a handy mechanism for keeping domestic food prices in
check. For example, the tax rate on oilseeds exports was raised from 0.5% in 2001 to 17.5% in
2002.
The FPV is an electoral alliance that was founded in 2003 within the Justicialist (Peronist) Party by
Néstor Kirchner, who ran for President the same year. The party won the election with an
unimpressive 22% of the vote. However, in the legislative election of 2005, the FPV secured a
majority in both houses of Congress, and in the presidential election of 2007, it obtained 45% of
the vote --22% more than its nearest rival. In 2007 the FPV candidate was Mrs. Cristina Fernández
de Kirchner, the incumbent president's wife.