Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

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more capital intensive, through both product substitution between sectors of diverse capital intensity and factor substitution within each of those sectors. I end Section 3 by discussing whether and how the novelties of the 1920s (a static agricultural frontier, worsening terms of trade) can help understand such a factorial switch in Argentina's economic structure. In Section 4 I address the question of the sustainability of Argentina's prosperity. I maintain that the factorial composition of national wealth (intensive in natural capital, less intensive in human and physical capital) presented some peculiar problems for Argentina's subsequent development. Natural capital, more important in Argentina than in other rich countries, was being diluted through the highest immigration rates in the world. And relatively lower levels of human and physical capital may have implied some disadvantages for factor accumulation compared to countries with a similar income level. It is hard to say whether Argentina was doomed to a subsequent decay in any state of the world. This was a fairly rich economy by the standards of the day in the midst of a structural transformation. Argentina was becoming a more modern –ie., capital intensive– agricultural exporter while it was developing its importcompeting manufacturing industries. Unfortunately, that modernization was cut short, first by the depression of world trade and soon by an extreme trade policy reaction that would remain in place even in the less unfriendly international conditions of the postwar decades. 2. Was Argentina Ever Rich? As mentioned in the introductory essay to this book, Argentina converged to the rich in the late 19th, early 20th century, and reached around 90% of the rich countries' per capita GDP. Was Argentina really a rich country, in a broader sense of the word, by 1929? What about other dimensions that are typically considered as being characteristic of developed countries? Was Argentina not only rich but also "modern" − ie., did Argentina show (i) welfare indicators in line with its level of income and −connectedly− (ii) an economic structure with fundamental factors that made its income position sustainable, rather than a consequence of temporary events such as transitory natural resource boom? In this section I weigh some measures of national prosperity beyond income. In the Section 3 I describe Argentina's growth before the Depression in terms of factor accumulation, to detect whether there was something special behind Argentina's high standing in terms of per capita GDP. Let's consider first some deeper markers of prosperity 3 . Peter Lindert’s data on human capital 4 allows for a broad picture of Argentina’s comparative standing in education ( Figure 2). The primary enrollment rate (613 per 1,000 aged 5-14) was in 1930 way below that of the Western Offshoots (935) and significantly lower than in Northern Europe’s (744). It was closer to Scandinavia’s (688), somewhat above Southern Europe’s (557) and clearly higher than in other Latin American countries (382) 5 . The increase in educational attainment during the half-century before the Depression is quite impressive: in 1880 the figure for Argentina was just 143, implying a 470 point increase in 1880-1930. In the Western Offshoots, 3 Eduardo Míguez has recently argued, precisely, that these deeper markers of wealth (particularly, human capital) were scarcer in Argentina than what was warranted by her national income. Míguez (2005). 4 www.econ.ucdavis.edu/faculty/fzlinder/Lindert%20data%20CUP%20book/App._T._A1__primary_enrol.xls 5 Western offshoots: average of USA, Canada, Australia, New Zealand. Northern Europe: Belgium, France, Germany, Netherlands, UK. Scandinavia: Denmark, Finland, Norway, Sweden. Southern Europe: Greece, Italy, Portugal, Spain.
Scandinavia and Northern Europe the increase was between 100 and 130 points, and 220 in Southern Europe. Two conclusions emerge from educational data. On the one hand, as shown in Figure 3, Argentina's #11 rank in GDP per capita wasn't matched by its international standing in access to education. Argentina is #19, below the top-10 in the per capita GDP list and eight countries with lower income: Ireland, Sweden, Spain, Norway, Austria, Germany, Czechoslovakia and Greece 6 . On the other hand, Argentina was quickly improving educational access throughout the 1920s. This human capital dimension suggests that we should keep the 1920s on the convergence side of Argentina's fortunes. Data on life expectancy present a similar picture 7 . At 52 years, Argentina's life expectancy stood #18 in the world around 1930 The only difference with the schooling list is that Argentina is ahead of Spain, Greece and Czechoslovakia but trails Finland and Italy. Heights −another measure of biological welfare− are harder to compare because of differences in the exact age of samples and diverse methods of correcting end-tail problems. With a mean of 169.5 centimeters for the 1930 birth cohort, Argentine conscripts analyzed by Salvatore (2004) are indeed higher than Mexicans (165cm according to López Alonso and Porras Condey, 2003), Spaniards from Elche (165.1, Martínez Carrión and Pérez Castejón, 1998) and Italians (167.1, Floud 1994), but lower than most countries in Floud's survey, such as Belgium (170.3), Switzerland (171), Germany (171.6), the Netherlands (173.8), Denmark (173.9) and Norway (175.8) 8 . Figure 1. Educational attainment 1000 900 Western Offshoots Primary school attendance per 1000 800 700 600 500 400 300 200 Southern Europe Western Europe Argentina Other Latins 100 0 1880 1890 1900 1910 1920 1930 6 For this sentence, Lindert data was complemented with the more complete coverage of Beavot and Riddle (1988). 7 Acemoglu and Johnson (2006). 8 Linear projection for 1930 from estimates surveyed by Floud (1994).
Page 1 and 2: Exceptional Argentina Di Tella, Gla
Page 3 and 4: A third explanation of Argentina’
Page 5 and 6: Maddison's "Western Offshoots" by l
Page 7 and 8: A final point on this mechanistic a
Page 9 and 10: GDP in 1900 at 12,100 (in constant
Page 11 and 12: nationalized railways and banks, to
Page 13 and 14: country interacted with initial con
Page 15 and 16: 1900. As there is an extremely stro
Page 17 and 18: Between the 1940s and 1970s income
Page 19 and 20: particularly in terms of food consu
Page 21: Even before the 2001 crisis, Argent
Page 25 and 26: Figure 4. A modified Human Developm
Page 27 and 28: Figure 6. Per capita GDP across Arg
Page 29 and 30: production 15 . Moreover, beyond st
Page 31 and 32: Figure 10. Average weight of export
Page 33 and 34: etween the prewar export-led growth
Page 35 and 36: which was wholly bound to local dem
Page 37 and 38: protectionism", certainly stronger
Page 39 and 40: agricultural pastures and cropland
Page 41 and 42: far. Argentina's differential popul
Page 43 and 44: Appendix Figure A. 1. Argentina's r
Page 45 and 46: Peru 35 38 25 34 34 34 32 29 26 27
Page 47 and 48: Like the Llach paper, the Campante
Page 49 and 50: I. Introduction Both Buenos Aires a
Page 51 and 52: across the ocean. Over the course o
Page 53 and 54: Buenos Aires’ hinterland rose dra
Page 55 and 56: significantly greater education lev
Page 57 and 58: Why is there such a difference in l
Page 59 and 60: illion dollars today). Each Chicago
Page 61 and 62: Chicago also appears to have been a
Page 63 and 64: casualties. Roca secured the presid
Page 65 and 66: capital to St. Petersburg he was pr
Page 67 and 68: and the logarithm of per capita GDP
Page 69 and 70: Moreover, years of schooling today
Page 71 and 72: y its overwhelming political import
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200 Figure 2a: Annual Wage Data 187
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Figure 3: Real Monthly Wages in Chi
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Log GDP per capita 2000 5 6 7 8 9 1
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Figure 7 Log GDP per capita 2000 7
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Table 2: Top 5 Industries in Chicag
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Table 4: 19th Century Variables and
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A simple calculation suggests that
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toy model with a minimum of paramet
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were lifted, but import taxes remai
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to compute that the MPK term above
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versus foreigners, on most occasion
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X institutions policies income p
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series variation. The coincidence o
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Figure 1—The Great Divergence and
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Figure 3—Trade taxes
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Transition Remarks The previous ess
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CHAPTER FOUR Argentine Trade Polici
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Argentine comparative advantage lie
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thousands of product lines in Argen
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Japan). Third, the agricultural pro
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different preferences over trade pr
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two nomenclatures had to be manuall
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esult, soybeans were finally adopte
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Figure 1 Trade Openness Exports + I
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Figure 5 Relative Sectoral Protecti
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Figure 7 Average Export Taxes 0 10
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Figure 9 Average Export Taxes at 2-
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Figure 11 Evolution of Argentine Ag
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Figure 13 Yields in Agriculture: Wh
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Table 2 Livestock per Capita 1895 C
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Table 5 Mean Share of Exports (Impo
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Table 7 Tariff Statistics for perio
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Table 9 Evolution of Industrial Pro
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CHAPTER FIVE Path-Dependent Import-
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actors, and they were demanding pro
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the primary sector, using land and
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Figure 1: The Long Run: Four Region
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Finally, in the reversal of pattern
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Figure 3: Medium Run Preferences ov
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sector to give rise to a protection
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technological improvements or incre
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Argentina did relatively well when
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World War, a second globalization e
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Argentine primary sector and ensure
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Clearly, world market conditions we
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for the years to come. The most imp
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governments zigzagged in their poli
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public spending on infrastructure s
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understand the rise of the urban-ru
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To sum up, by the beginning of the
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has a comparative advantage in the
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L λ = m L K κ = m K That is, λ i
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K c a = 1− α 1−α T A ( κ )
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Given a set of parameters ϒ , φ a
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consumption of good i. For any agen
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Proposition 3 In the short run, pro
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ρ 1/ 1 ρ ρ 1 ( ξ ξ ) 1 TT K ,
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Up to 2008, the FPV government had
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negative correlation between the pr
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policies would, supposedly, eviscer
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I. Introduction In a seminal study,
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terms, Peronist beliefs in the 1990
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Several authors have emphasized the
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foreign capital and trade as the gl
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of already available information. A
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having the need to do more than wak
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Argentines (who implement these pol
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opinion about elements of capitalis
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intense (the proportion is under 1.
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involved in social ordering that wi
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cost of the deviating firm, since w
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Admissible Region Bounds on w b Nex
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The previous proposition may be par
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and note that Peron insists on the
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Appendix 2: Definitions of Variable
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Table II: The Beliefs of Peronists
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Transition Remarks The previous cha
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CHAPTER SEVEN A Short Episodic Hist
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the income distribution between 193
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empirical evidence and on existing
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of commodities. The country was off
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accounts increased by 8% between 19
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Argentina in 1942 (4.1%) is not ver
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This change in inequality is also r
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1982, when Mexico’s default on it
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1995. While growth bounced back qui
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The main characteristics of this ep
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skilled workers that more than offs
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Household Expenditure Survey. An in
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The relationship between internatio
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machinery and equipment can acceler
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occurred not only in production tec
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a relative abundance of rents to sh
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even when the number of well-off in
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and similar patterns emerge when co
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This chapter described the level an
Page 265 and 266:
Transition Remarks Economic success
Page 267 and 268:
CHAPTER EIGHT Why do Argentines tru
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in the 1970s and 1980s. Despite the
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Figure 5. Percentage of the populat
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analysis of the Argentinean and Chi
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observationally equivalent individu
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the low rank policeman. 13 4. The C
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Figure 7. Share of people having a
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6. Why did the Argentinean Police d
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instability, σ, a worried leader h
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the deeper question of why the Arge
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Table 2. Comparative facts for cano
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of formal education, whereas in the
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only bargaining tool to get money.
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Table 6. Tierra del Fuego Subinspec
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4. Police deaths during the 20th ce
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Of course, these conclusions depend
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“stop go” dynamics 4 ). In fact
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income distribution and earnings gr
Page 303 and 304:
Figure 2. Basic Statistics Food Clo
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Table 2 Dep. Var.: Share of food Sm
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Figure 3. Variety in food retailing
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Table 3 Dep. Var.: Share of food at
Page 311 and 312:
3.3 Income distribution effects The
Page 313 and 314:
Figure 6. Individual Effects Using
Page 315 and 316:
Expenditure Income 5000 6000 4000 4
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Figure 10. Income distribution Dens
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Appendix A: Estimation strategy Est
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w ijt where [ ln( 1+ ∏ ) − ln(
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2.2 Income distribution effects Fol
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Appendix B: The data To run our est
Page 327 and 328:
Appendix C: Additional tables C1: B
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C3: Table 3 coefficients Dummy for
Page 331 and 332:
CONCLUSION 20 th century Argentina
Page 333 and 334:
can be harbingers of worse things t
Page 335 and 336:
Ahumada, Hildegart, Alfredo Canaves
Page 337 and 338:
Barro, Robert J. 2005. “Rare Even
Page 339 and 340:
Burzaco, Eugenio et al. 2004. “Ma
Page 341 and 342:
Cortés Conde, Roberto and María M
Page 343 and 344:
Di Tella, Rafael, Juan Dubra and Ro
Page 345 and 346:
Gaggero, Horacio and Alicia Garro.
Page 347 and 348:
Gerchunoff, Pablo, Fernando Rocchi
Page 349 and 350:
James, Daniel. 1988. “October 17
Page 351 and 352:
Maddison, Angus. 2006. The World Ec
Page 353 and 354:
Piketty, T. 2003. “Income Inequal
Page 355 and 356:
Spiller, Pablo and Mariano Tommasi.
Page 357:
Williamson, Jeffrey G. 1995. “The
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Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

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