Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

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Figure 14. Selected capital per capita 1400 1200 1000 800 Agricultural machinery per agro worker 1876=100 Machinery in manufacturing per manuf. worker, 1876=100 600 400 Km of railways per agro worker 1876=100 200 0 1876 1879 1882 1885 1888 1891 1894 1897 1900 1903 1906 1909 1912 1915 1918 1921 1924 1927 1930 Sources: Same as Figure 13. Machinery in manufacturing from CEPAL (1959). The Argentine export sector was rapidly becoming more capital intensive in the 1920s. Capital per worker was actually growing more in agriculture and ranching than in manufacturing, which suffered heavily from World War I shortage of capital goods imports. Even so, the manufacturing sector was getting larger in absolute terms (Figure 15). In other words: Argentina was becoming more capital intensive both through factor substitution within sectors and through structural change favoring the more capital intensive manufacturing sector. This style of growth was clearly different from the one predating WWI, as can be seen by comparing the capital invested in railways with machinery in both Argentina's farms and its factories. In 1913, the value of capital invested in railways was 50% higher than the combined value of machinery in Argentina's primary and secondary sectors. By the end of the 1920s, these were 60% higher than capital in railways 19 . Can the 1920s be described as a time of retardation in capital accumulation? The answer depends on the status conferred to one type of capital (railways) which is an inevitable complement of land accumulation, at least for products with a high weight-value ratio. In such a context there cannot be a "land intensive" type of growth that is not at the same time "railway intensive". But capital-intensification not related to land accumulation was actually faster in the 1920s, through capital intensification in agriculture and a widening of the manufacturing sector, which absorbed both capital and labor. Why was the economy becoming more capital intensive during the 1920s? Three possible and non-exclusive hypotheses come to mind. First, it could just be the Solowian mechanics of accumulation at work. The fact that Argentine savings were actually being employed at home rather than abroad would imply that in spite of the exhaustion of opportunities for railway extension, Argentina was still perceived as a suitable place for investment. A combination of size and average income of its internal market certainly boosted manufacturing production, 19 CEPAL (1959).
which was wholly bound to local demand: out of the 20 top countries by per capita GDP in 1928, the size of the Argentine economy was only smaller than those of the U.S., Germany, Britain, France, Italy (which was #19 in per capita GDP) and Canada (which was only 8% larger than Argentina's). Second, the marginal productivity of capital could have been increasing due to technological change. Third, in line with Gerchunoff and Aguirre (2006), the rise in the relative price of manufactures due to the negative terms of trade shock of the 1920s could have had an effect on optimal factor choice. As a sector more capital- and laborintensive than agriculture, manufacturing growth should have the raised the demand of both capital and labor. In a world of perfect factor mobility, there would have been no effect on relative factor prices. But if labor is assumed less mobile than capital, real wages would have increased and the relative price of capital vis a vis labor declined. The result would have been in line with what actually happened in the 1920s: manufacturing growing more than agriculture and both sectors becoming more capital intensive. Also consistently with this terms of trade explanation, the wage-rent ratio, that had fallen massively in the fifteen years to World War I, stabilized during the 1920s 20 . Figure 15. Values of different types of capital 20000 18000 "Extensive" growth "Intensive" growth million 1950 pesos 16000 14000 12000 10000 8000 6000 4000 Capital in railways Capital in industrial machinery Capital in agro machinery 2000 0 1876 1879 1882 1885 1888 1891 1894 1897 1900 1903 1906 1909 1912 1915 1918 1921 1924 1927 1930 Sources: CEPAL (1959). 4. Was Argentina's prosperity sustainable? We have described in the previous sections some peculiarities of Argentina in the pre- Depression era. First, by the 1920s, Argentina was quite a rich economy, and an increasingly big one, as a result of exceptional per capita and total growth since its Agricultural Revolution of the late 19th, early 20th century. Second, though income wasn't unequally distributed between labor and other factors of production, it was unevenly spread geographically, and 20 The wage-rent ratio fell from an index of 580 in 1880-1884 to 53.6 in 1915-1919 and was still at 51 in 1925- 1929. Williamson (2002), 73.
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 and 22: Even before the 2001 crisis, Argent
Page 23 and 24: Scandinavia and Northern Europe the
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: etween the prewar export-led growth
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
Page 73 and 74: 200 Figure 2a: Annual Wage Data 187
Page 75 and 76: Figure 3: Real Monthly Wages in Chi
Page 77 and 78: Log GDP per capita 2000 5 6 7 8 9 1
Page 79 and 80: Figure 7 Log GDP per capita 2000 7
Page 81 and 82: Table 2: Top 5 Industries in Chicag
Page 83 and 84: Table 4: 19th Century Variables and
Page 85 and 86:
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
Page 231 and 232:
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
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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
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Figure 6. Individual Effects Using
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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
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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
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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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