Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

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Transition Remarks The previous essay concluded by performing a simple statistical exercise that asks whether America’s education advantage a century ago can explain the income differences between America and Argentina today. Using a very simple regression analysis, the essay finds that Argentina and America’s relative income differences today are roughly in line with those that would be predicted by their past differences in education, given the global connection between education and economic growth during the 20 th century. In a sense, then, this paper suggests that education was a critical reason why Argentina’s being rich but not modern mattered over the 20 th century. Yet even if historic education can explain the gap in modern incomes in a statistical sense, it does not explain how that income gap evolved. Education seems to be important not only because of contemporaneous productivity, and technological growth, but also because there appears to be a link between education and political outcomes. Perhaps education also influenced the industrial composition of the country and that mattered for the political economy of long run trade policy. The next paper moves from Argentina’s early 20 th century conditions to the possible mechanisms that led to Argentine underperformance over the last century. Using benchmark economic models, Taylor explores the relative contribution of trade and capital investment to Argentine stagnation. The increasing isolation of the Argentine economy is explored in later chapters, but here Taylor gives a sense of the extent to which Argentina’s growth may have been retarded by its reliance on inward-looking economic policies. Taylor documents the rising trade frictions, such as export taxes, that impacted Argentina during the 20 th century, which may have increased trade costs by as much as 50 percent. These trade costs, in turn, made it harder for Argentina to cheaply import “capital goods and intermediate inputs.” A standard economic model predicts that trade barriers on this level “would lower GDP by roughly .200 log points or 20 percent in the long run steady state.” The primary reason for the reduction in GDP is the higher cost of intermediate goods. By contrast, the impact of reduced technology transfers is likely to be quite small. Taylor’s exercise sets the stage for the book’s subsequent discussion of Argentina’s trade policies, which seem to have clearly played an important role in limiting Argentina’s growth. He also emphasizes the gap in capital investment between Argentina and other countries. This gap is measured by examining returns to capital investment, which appear to have been significantly higher in Argentina than elsewhere, which in turn implies that Argentina was investing relatively little in capital. If Argentine capital was lower quality than capital elsewhere, then this would mean that the return on investment was even higher in Argentina, suggesting that the underinvestment was even larger.
A simple calculation suggests that this underinvestment can also explain a large part—perhaps as much as one quarter—of the current income difference between the U.S. and Argentina. But why did Argentina invest relatively little in capital? Taylor offers several explanations. One possible reason is the relatively high frequency of macroeconomic crashes that severely reduce the returns to investment. These crashes often have political or global sources. Another explanation is that the Argentine government did too little to protect property rights. While Taylor emphasizes traditional economic challenges for Argentine under-performance, his explanations lead to public policy and politics. Argentina’s trade barriers were not given by geography—they reflected policy choices. Argentina’s underinvestment in capital likewise had some connection to political weakness. Taylor’s explanations therefore push us to further peel the onion and explore the deeper political and institutional sources of Argentine economic weakness.
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Exceptional Argentina Di Tella, Gla
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A third explanation of Argentina’
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Maddison's "Western Offshoots" by l
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A final point on this mechanistic a
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GDP in 1900 at 12,100 (in constant
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nationalized railways and banks, to
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country interacted with initial con
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1900. As there is an extremely stro
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Between the 1940s and 1970s income
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particularly in terms of food consu
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Even before the 2001 crisis, Argent
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Scandinavia and Northern Europe the
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Figure 4. A modified Human Developm
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Figure 6. Per capita GDP across Arg
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production 15 . Moreover, beyond st
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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
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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: Table 4: 19th Century Variables and
Page 87 and 88: toy model with a minimum of paramet
Page 89 and 90: were lifted, but import taxes remai
Page 91 and 92: to compute that the MPK term above
Page 93 and 94: versus foreigners, on most occasion
Page 95 and 96: X institutions policies income p
Page 97 and 98: series variation. The coincidence o
Page 99 and 100: Figure 1—The Great Divergence and
Page 101 and 102: Figure 3—Trade taxes
Page 103 and 104: Transition Remarks The previous ess
Page 105 and 106: CHAPTER FOUR Argentine Trade Polici
Page 107 and 108: Argentine comparative advantage lie
Page 109 and 110: thousands of product lines in Argen
Page 111 and 112: Japan). Third, the agricultural pro
Page 113 and 114: different preferences over trade pr
Page 115 and 116: two nomenclatures had to be manuall
Page 117 and 118: esult, soybeans were finally adopte
Page 119 and 120: Figure 1 Trade Openness Exports + I
Page 121 and 122: Figure 5 Relative Sectoral Protecti
Page 123 and 124: Figure 7 Average Export Taxes 0 10
Page 125 and 126: Figure 9 Average Export Taxes at 2-
Page 127 and 128: Figure 11 Evolution of Argentine Ag
Page 129 and 130: Figure 13 Yields in Agriculture: Wh
Page 131 and 132: Table 2 Livestock per Capita 1895 C
Page 133 and 134: 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
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Transition Remarks Economic success
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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
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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
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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
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CONCLUSION 20 th century Argentina
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can be harbingers of worse things t
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Ahumada, Hildegart, Alfredo Canaves
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Barro, Robert J. 2005. “Rare Even
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Burzaco, Eugenio et al. 2004. “Ma
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Cortés Conde, Roberto and María M
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Di Tella, Rafael, Juan Dubra and Ro
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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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