Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

CHAPTER TWO
Yet Another Tale of Two Cities:
Buenos Aires and Chicago
Filipe Campante
Harvard University
Edward L. Glaeser 1
Harvard University and NBER
Abstract
Buenos Aires and Chicago grew during the nineteenth century for remarkably similar reasons.
Both cities were conduits for moving meat and grain from fertile hinterlands to eastern markets.
However, despite their initial similarities, Chicago was vastly more prosperous for most of the
20 th century. Can the differences between the cities after 1930 be explained by differences in the
cities before that date? We highlight four major differences between Buenos Aires and Chicago
in 1914. Chicago was slightly richer, and significantly better educated. Chicago was more
industrially developed, with about 2.25 times more capital per worker. Finally, Chicago’s
political situation was far more stable and it wasn’t a political capital. Human capital seems to
explain the lion’s share of the divergent path of the two cities and their countries, both because of
its direct effect and because of the connection between education and political instability.
1 Both authors thank the John S. and Cynthia Reed foundation for financial support. Conversations with John Reed
helped start this project. We also thank the Taubman Center for State and Local Government for financial
assistance. We are grateful to Kristina Tobio for her usual superb research assistance, and to Esteban Aranda for his
outstanding assistance with the Argentinean data.