Springer, Farmers Experiences, Innovations, Socio-Economy, Policy, Engerman S, Sokoloff K (2000) History lessons: institutions, factor endowments, and paths of development in tne new world. Due to differences in the quantity and quality of trade policy data, we split the analysis in two. J Econ Hist 58:1–28, Taylor A (2010) The Argentine paradox: microexplanations and macropuzzles. Israel: 1949-05-31: See also Argentina–Israel relations, Argentine Jew, History of the Jews in Argentina. Argentina used to import balanced animal feed from fish flour produced in Peru (from the “anchoveta peruana,” a type of anchovies). World Bank Econ Rev 12(2):297–320, Olarreaga M, Soloaga I, Winters LA (1999) What’s behind Mercosur’s common external tariff?” World Bank Policy Research Working Paper No. The share of Processed Food was relatively stable throughout the period, with a slight increase starting in the mid-1980s. Relying on sizable foreign investment inflows to balance the current account, these did not suffice and the Central Bank was again forced to resort to borrowing to protect the peso's value against such pressure (mostly by floating bonds, then the most sought-after in the developing world). 11, we show the evolution of Argentine exports (largely composed of agricultural exports—both primary products and agro-manufactures). In the end, we show that the anti-agro bias impeded growth in agricultural productivity and the import substitution model failed at boosting productivity growth in industry. There are at least three factors that made the model become increasingly unsustainable. Cooperation between Brazil and Argentina (historic competitors) is the key to Mercosur's integration process, which includes political and military elements in addition to a customs union; Brazil accounts for 74% of Mercosur GDP and Argentina about 23%. Index of cattle, corn, soybean, and wheat production Argentina 1914–2007. CEPAL, Cavallo D, Domenech R, Mundlak Y (1989) La Argentina Que Pudo Ser: Los Costos de la Represión Económica. 5). Since the US had become Argentina’s main import partner, the higher exchange rate in the “free” market lowered US competitiveness and promoted the development of a local industry to replace the US imports. Compiling data on export taxes were actually harder than compiling data on import tariffs, because WITS does not carry information on export taxes and the whole series from 1966 to 2006, only available via the Guía Práctica, had to be manually typed. The first liberalization episode took place after 1967 and up to around 1976. In Brazil, industrial productivity (measured as gross output per industrial worker) grew at an annual rate of 5.2% between 1945 and 1979 (Colistete 2009). 3. In Argentina: History. The emergence and the strengthening of the IS model in Argentina strongly correlate with the overall level of protection after the 1930s and up to the late 1960s and 1970s. During these years, the average tariff rate declined steeply, reaching around 30% in 1980. In 1933, the government created a dual exchange rate system, a so-called “controlled” market and a “free” market. Export taxes were reduced significantly at the end of the 1970 and early 1980s, when the Military was in power. While the anti-export bias impeded productivity growth in agriculture, the import substitution strategy was not successful in promoting industrialization. Panel a): CEPAL (ECLAC) office in Buenos Aires. And in the 1960s, President Illia mostly shared the view to support and develop the heavy industry. However, the Brazilian industry performed better than Argentine industry. Internationally, the Argentine industry was also an underachiever. The large decline in economic activity around the world, the abandonment of the Gold Standard, and a move towards bilateralism (as opposed to multilateralism) halted trade. Google Scholar, Clemens M, Williamson J (2002) Closed jaguar, open dragon: comparing tariffs in Latin America and Asia before World War II. However, as the terms of trade worsen, the economy begins a gradual but persistent industrialization process that carries support for protectionism until it becomes a viable political equilibrium (consistent with the post 1943 period in Argentina). Events that affected northwestern Argentina prior to the 16th century are described in … These reforms came in two stages. The period from around 1810 to World War I was the first “global century:” transport costs continuously declined and commodity markets were increasingly integrated (Williamson and O’Rourke, 1999). University of California at Los Angeles, Mimeo, Mallon R, Sourrouille J (1977) La Política Económica en una Sociedad Conflictiva. That said, protracted macroeconomic imbalances, sky-high inflation, capital controls and potentially market-unfriendly policies will weigh on growth. Rev Econ Stat 92(3):482–494, Galiani S, Somaini P (2010) Path dependent import substitution policies: the case of Argentina in the XX Century. 6). During the 1950s and 1960s, several concomitant external factors conspired against Argentine agricultural exports, thus encouraging further domestic protection. The main source of growth was agriculture. Between 1931 and 1952, the decline in production is mostly due to a reduction in harvested area. Am Econ Rev 84(4):833–850, Grossman G, Helpman E (2001) Special interest politics. Agriculture is intensive in land, which is mostly owned by richer landowners. We argue that the structure of protection in Argentina, which has favored industrial manufactures like textiles or footwear over agro-manufactures, can be accounted for by two interrelated theories, lobbies (and political economy) and unions. The 95th percentile reached over 300%, and even the 5th percentile was close to 100%. There were peaks of over 60% in 1971 and 1983, but the shares plummeted in the 1980s and 1990s, reaching a lowest value of less than 30% in 2006. These figures are consistent with the industrialization index reported by Bairoch (1982). In consequence, both the agricultural and industrial sectors grew. Relative sectoral protection against agriculture. Argentine comparative advantage lies primarily on agricultural goods, broadly defined so as to include both primary products as well as agro-manufactures. We emphasize two manifestations of such bias: the burden imposed by economic policies on the agricultural export sector and the benefits granted to manufacturing sectors that typically competed against imports from the rest of the world—the model of import substitution.Footnote 2, Source: Own calculations with data from ECLAC, INDEC and Ferreres (2005). In the 1900s, agricultural primary products accounted for most of Argentine’s exports. 3, we characterize the structure and evolution of import tariffs from 1870 to 2006. The story about the interplay between the distributional conflict inherent to the Argentine society and external shocks is developed in the next chapter by Galiani and Somaini. It takes a detailed and careful assessment of various factors to account for the economic failure of a country with those promising initial conditions. In this section, we present an overview of trade flows, trade patterns, and trade policy in Argentina. 3 and of export taxes in Sect. Between 1930 and 1970, Argentina continued growing, but at a slower pace than the world as a whole. Clearly, export tax rates within the agricultural sector move in accordance with the general tendency described above. Traditional agricultural exports and imports from the UK were traded at a low exchange rate in the “controlled” market, where the difference between the sale and buy rates worked as an implicit export tax or import tariff. The shares abruptly collapsed in the late 1930s and early 1940s up until around the 1950s. The first salient feature of our data is the presence of long episodes of active policies of export taxes in the recent past, an undeniable manifestation of the anti-export bias. Clearly, Argentina exports mainly primary products and agro-manufactures, with an increasing participation in minerals and fuels, and imports instead capital goods and inputs. Using more recent customs data, Fig. From a relatively low base in the early 1970s, export taxes reached a peak of nearly 15% in the mid-1970s. A renewed devaluation of the peso contributed to a US$700 million surplus with Mercosur in 2009, though deficits of US$1.8 billion were recorded in 2010 and 2011. In fact, Argentina has historically been considered as one of the “grain yards” of the world. We cover most of Argentine history, from 1890 to 2006. The trends, in turn, can be understood with changes in the way that different governments weighed the distributional conflict and with changes in the constraints faced by those governments. Mercosur is an economic and political agreement between Argentina, Brazil, Paraguay, Uruguay and Venezuela. An interesting case is the Wood sector which moved between the middle and top of the distribution during the first three periods but became the third least protected industry starting in 1991. There was also a reduction in the extreme values and in the dispersion of tariff rates. Tariffs were still high but relatively stable during this period. Soon after adoption, Argentina became a major producer, at an increasing rate. According to this index, Argentina (net imports of \(-5.47\)$ per capita) and Australia (\(-8.7\)$ per capita) recorded the highest dependence on imported cotton textile manufactures. [1] The U.S. has largely maintained a moderate trade surplus with Argentina, however. This posed a great problem, as gold was the medium of exchange of the local economy. Looking forward, we estimate Terms of Trade in Argentina to stand at 121.88 in 12 months time. Between 1875 and 1889, Argentina had the highest ratio of productive land per capita, 216.44 acres per capita. In contrast, Footwear, Machinery, and Transport are among the least-often taxed sectors, with 7 and 13 years, respectively. Argentine exports to the Asian giant are mainly soy and petroleum products, while imports are mainly industrial and consumer goods. From 1952 to 1987, yields and harvested area equally explain production growth. 2, we document historic aggregate trade flows and describe the pattern of Argentine trade. While the Agricultural sector is still more heavily taxed, all sectors show positive taxes and, in addition, show similar trends in time.
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