Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

Transition Remarks
Lucas Llach has given us a statistical picture of Argentina at the dawn of the 20 th century. In his
telling, it was a country with abundant natural resources that delivered high income levels. But
while the country may have been “rich,” at least by the standards of the time, it was not yet
“modern.”
It’s not as if Argentina relied solely on some intrinsic source of natural wealth, like oil. Llach
documents that the country was rapidly investing in physical capital, such as agricultural
machinery and railroads. Just as in the United States, a rich agricultural hinterland needed such
investments to produce and transport its products. But that physical capital investment was not
the same thing as investment in human capital or cutting edge technology.
Llach also highlights the outsized levels of immigration to Argentina during the early 20 th
century, especially from Southern Europe. While there was also heavy migration to the United
States, Argentina’s dependence on natural resources (rather than industry) meant that the
immigration did more to dilute the country’s comparative advantage—abundant land.
Yet despite this immigration, Argentina continued to grow through the 1920s and it remained a
new world success story in 1930. The essays that follow will focus on the post-1930 period to
map out the ways in which Argentina diverged from countries like Canada and Australia.
The next essay offers an alternative approach to understanding Argentina at the dawn of the last
century. Rather than providing a national perspective, it focuses on Argentina’s capital city and
compares it with an American metropolis: Chicago. By focusing in one two cities, it becomes
easier to offer a more granular view of the differences between the United States and Argentina a
century ago.
At first glance, there is much that is similar between the two cities. Both were part of the critical
transportation task facing the agriculturalists of the new world—getting their product to markets
hundreds and thousands of miles away. The products of the farms came to the cities on the hoof
and by rail. The cities themselves both contained giant stockyards and they shipped grain and
beef by water eastward. In both cases, the coming of refrigeration (frigorificos to Argentina and
Armour’s refrigerated rail cars) significantly expanded their beef business.
But moving beyond the obvious similarities, there were also significant differences between the
two cities. Most notably, Chicago had a much larger indigenous group of entrepreneurial
innovators who put that city on the cutting edge of global technology. 19 th century Chicago both
attracted the 19 th century equivalent of high tech companies, like McCormick’s mechanical
reaper firm, and enabled sizable breakthroughs in human knowledge, like the invention of the
skyscraper. At the dawn of the 20 th century, Chicago was well populated with the industries—
including automobile production—that would dominate the early 20 th century. Buenos Aires had
no equivalent concentration of new technologies.