Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

CHAPTER ONE
Newly Rich, Not Modern Yet: Argentina Before the Depression
Lucas Llach
Universidad Torcuato Di Tella
Abstract. I address in this paper several exceptionalities of Argentina's pre-Depression
experience. First: its level of development, as captured by dimensions other than GDP per
capita, was not as high as its rank in per capita income, consistently #11 or better, held during
1905-1930. Second, its record growth in 1870-1914 was, to some extent, a one-shot affair: the
appearance of a new transport technology (railways) allowed for the incorporation of
agricultural lands previously unused or dedicated to low productivity ranching. In terms of
factor accumulation, the increase in the land-labor ratio accounted for most of Argentina's
convergence. The experience of the 1920s suggests that a change towards a more capital
intensive economic structure was beginning to take place. Yet, Argentina's pre-Depression
peculiarities posed some questions for its future development. Given the limits on natural
resources and its dilution through massive migration, subsequent growth depended on
physical and human capital accumulation, two dimensions in which Argentina departed
somewhat from the rich countries of the day.
1. Introduction
Argentina is, arguably, the only country to have entered and abandoned the First World in the
modern era. If, for example, admittance to the club of the rich is granted when GDP per capita
trails by less than 20% the top countries’ income, Argentina belonged to the club between
1903 and 1930. During that period, the ratio between Argentina’s per capita GDP and the
average income of the three big industrialized European (England, France and Germany) and
the two early success stories outside Europe (Australia and the U.S.) was steadily over 80%,
except during a couple of years in World War I. The ratio reached as much as 90% right
before the Great War and was still hovering around 83% on the verge of the Depression 1 . By
the end of the twentieth century, the ratio to that same group had fallen to 39%. In terms of
ranking, taking into account the 53 countries in the Maddison database with pre-Depression
GDP levels, Argentina fluctuated between positions #7 and #11 every year between 1903 and
1929 except for 1916 and 1917 (Appendix, Table A. 1 and Figure A. 1). Leaving periods of
world wars aside, none of the countries that made it to the top ten at some point in the 20th
century subsequently fell below the median rank (#27), as Argentina did in 1989-90 (#29).
1 Data from Maddison (2006).