Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

CONCLUSION
20 th century Argentina remains a potent warning that countries can readily move from relative
economic success to stagnation. At the start of the 21 st century, many nations, including the
United States and much of the European Union, remain anxious about their own economic
futures. We end this volume with a few tentative conclusions about the implications of Argentina
for other countries today.
Perhaps the most obvious lesson is that even an enormous abundance of natural resources and a
seemingly solid political structure are no guarantee of success. The risks associated with natural
resources are relatively well known. A long literature documents the potential downsides of
natural resources abundance, including high real exchange rates that limit the competitiveness of
more dynamic sectors (the “Dutch Disease”). Perhaps even more problematically, abundant
natural resources may attract kleptocratic regimes or sustain autocrats who have few other
sources of revenues. And they may confuse people into thinking that they are productive, instead
of just rich.
But the chapters in this volume do not argue that Argentina’s rich agricultural land actually hurt
the country, but rather that agrarian success was insufficient to maintain growth and that external
conditions during periods like the 1930s made Argentina’s agricultural productivity less
valuable. Any country that bases its prosperity on a narrow range of products faces the risk that
the market value of those products will decline. And voters in these countries are presented with
a challenge: how to interpret changes in their spending power. A more educated population may
understand the downturns as inevitable aspects of their economic strategy. Others may come to
the conclusion that the elites running the country have taken advantage of their power. Political
entrepreneurs participate in these exercises in collective interpretation, often fueling populist
conclusions.
This lesson is less relevant for most of the world’s developed countries today, which typically
export a range of goods and services that are consistently evolving, but it is more significant for
world’s resource dependent economies. Current energy market conditions have made some of
the OPEC nations among the wealthiest in the world, but Argentina’s experience emphasizes that
to be rich, but not modern, is a precarious position. The 20 th century comparison between
Argentina and other more successful, new world economies including the United States, suggests
the value of investing in human capital and institutions that foster political trust.
One question that Argentina’s 20 th century experience poses for the developed world is whether
skilled post-industrial economies can also be subject to long-term downturns due to terms-oftrade
or fiscal shocks. In the second half of the 20 th century, human capital levels were strongly
correlated with economic success. But in the 21 st century, it may become more apparent that