Argentina-Canada from 1870: Explaining the dynamics of divergence

González, Germán and Viego, Valentina (2009): Argentina-Canada from 1870: Explaining the dynamics of divergence.

Abstract

Argentina and Canada started their industrialization processes while exporting natural resources and importing capital goods. These two nations were sparsely populated but received significant inflows of European immigrants since the second half of the nineteenth century. Until the start of World War II, both economies experienced similar per-capita GDPs. However, the gap between both per-capita GDPs began to grow, widening throughout the century. We carry out an empirical study of the deep determinants of the divergence process between both economies. We confirm that while Canada was drawn into a successful path due to the adjacency with a bigger and complementary economy, Argentina fell into a “staple trap”.

• Item Type: MPRA Paper
• Language: English
• Keywords: Relative per-capita GDPs, development accounting, total factor productivity, Argentina, Canada
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N16 - Latin America ; Caribbean; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N12 - U.S. ; Canada: 1913-; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O57 - Comparative Studies of Countries

References

Acemoglu, D. (2007) Introduction to modern economic growth, forthcoming Princeton University Press.

Adelman, J. (1992) “The social bases of technical change: Mechanization of the Wheatlands of Argentina and Canada, 1890-1914”, Comparative Studies in Society and History, 34, 2, 271-300.

Adelman, J. (1992b) “Financiamiento y expansion agrícola en la Argentina y el Canadá, 1890-1914”, Ciclos, Año II, II, 3, 3-21.

Adelman, J. (1994) Frontier development. Land, Labour, and capital on the wheatlands of Argentina and Canada 1890-1914, Clarendon Press.

Aitken, H. (1958) “The role of staple industries in Canada’s economic development: Discussion”, Journal of Economic History, 18, 4, 451-452.

Altman, M. (2003) “Staple Theory and Export-led growth: Constructing differential growth”, Australian Economic History Review, 43, 3, 230-255.

Asencio, M. (1995) Argentina Y Los Otros. Historia Economica Del Fracaso Y El Exito, Buenos Aires: Ediciones Corregidor.

Baldwin, R. (1956) “Patterns of development in Newly settled regions”, Manchester School of Economic and Social Studies, XXIV, 161-79.

Bertram, G. (1963) “Economic growth in Canadian industry, 1870-1915: the staple model and the Take-off hypothesis”, Canadian Journal of Economics and Political Science, XXIX, 2, 159-184.

Bertram, G. (1973) “The relevance of the Wheat Boom in Canadian economic growth”, Canadian Journal of Economics, 6, 4, 545-566.

Buckley, K. (1958) “The role of staple industries in Canada’s economic development”, Journal of Economic History, 18, 4, 439-450.

Blyde, J. & E. Fernández-Arias (2005) “Why Latin America is Falling Behind”, in Fernández-Arias E., Manuelli, R. & J. Blyde (eds) Sources of growth in Latin America, Inter-American Development Bank.

Caselli, F. (2005) “Accounting for cross-country income differences”, in Aghion, P. & S. Durlauf, Handbook of economic growth, Volume 1A, Elsevier.

Chambers, E. and D. Gordon (1966) “Primary products and economic growth. An empirical measurement” Journal of Political Economy, LXXIV, 4, 315-332.

Chambers, E. and D. Gordon (1967) “Primary products and economic growth: Rejoinder”, Journal of Political Economy, 75, 6, 881-885.

Chudnovsky, D., Niosi, J. y N. Bercovich (2000) “Sistemas Nacionales de Innovación, procesos de aprendizaje y política tecnológica: una comparación de Canadá y la Argentina”, Desarrollo Económico, 40, 158.

Cincunegui, J. (1982) “La teoría del bien primario exportable y el crecimiento económico argentino hasta 1930”, Estudios Económicos, I (Nueva serie), 1/2, 39-98.

Cortés Conde, R. (1997) La Economica Argentina En El Largo Plazo (Siglos XIX Y XX), Buenos Aires: Editorial Sudamericana.

Cortés Conde, R. (1998) Progreso Y Declinacion De La Economia Argentina, Fondo de Cultura Económica.

Dales, J., J. McManus and M. Watkins (1967) “Primary products and Economic growth: A comment”, Journal of Political Economy, 75, 6, 876-880.

De Gregorio, J & J. Lee (2003) “Economic Growth in Latin America: Sources and Performance”, in Fernandez-Arias et al. (2005) Sources of growth in Latin America. What is missing? Appendix A. Inter-American Development Bank

Della Paolera, G. and A. Taylor (2003) A new economic history of Argentina, Cambridge University Press.

Di Tella, G. and D.C.M. Platt (1986) The political economy of Argentina 1880-1946, MacMillan Press.

Di Tella, G. and M. Zymelman (1967) Las etapas del desarrollo económico argentino, Buenos Aires: EUDEBA.

Di Tella, G. and M. Zymelman (1973) Los ciclos económicos argentinos, Buenos Aires: Paidós

Di Tella, T. (2007) “¿Por qué la Argentina no es como Canadá?, Revista Argentina de Estudios Canadienses, 1, 161-185.

Díaz Alejandro, C. (1970) Essays on the economic history of the argentine republic, Yale University Press.

Duncan, T. and J. Fogarty (1984) Australia and Argentina on parallel paths, Melbourne University Press.

Edwards, S. (1998) “Openness, productivity and growth: what do we really know?”, Economic Journal, 108 (March), pp. 383-398.

Engerman, S. & K. Sokoloff (2003) “Institutional and non-institutional explanations of economic differences”, NBER Working paper series no. 9989.

Easterbrook, W. and M. Watkins (2003) Approaches to canadian economic history, McGill-Queen’s University Press.

Ferrer, A. (1963) La economía argentina, Fondo de Cultura Económica. Fogarty, J., E. Gallo and H. Diéguez (1979) Argentina Y Australia, Buenos Aires.

Grant, D. (1974) “The Staple Theory and its empirical measurement”, Journal of Political Economy, 82, 6, 1249-1253.

Geller, L. (1975) “El crecimiento industrial argentino hasta 1914 y la teoría del bien primario exportable”. In M. Giménez Zapiola (ed.) El Regimen Oligarquico: Materiales Para El Estudio De La Realidad Argentina, Hasta 1930. Buenos Aires: Amorrortu.

Gerchunoff, P. and L. Llach (2003) El Ciclo De La Ilusion Y El Desencanto. Buenos Aires: Ariel.

Gerchunoff, P. and P. Fajgelbaum (2005) Two distant cousins. An essay on the comparative economic history of argentina and australia. PENT Foundation, December.

Gerchunoff, P. and P. Fajgelbaum (2006) Por Que Argentina No Fue Australia? Una Hipotesis Sobre Un Cambio De Rumbo, Buenos Aires: Siglo XXI.

Goodrich, C. (1964) “Argentina as a New Country”, Comparative Studies in Society and History, 7, 1, 70-88.

González, G. (2002) “Apertura, Orientación Comercial y Productividad Total de los Factores: La incidencia del nivel de desarrollo”, Anales de la Asociación Argentina de Economía Política, XXXVII Reunión Anual. Argentina.

Grossman, G. & E. Helpmann (1991) Innovation and growth in the global economy, MIT Press.

Hall, R. and C. Jones (1997) “What have we learned from recent empirical growth research. Levels of Economic Activity across Countries”, American Economic Review, 87, 2, Papers and Proceedings of the Hundred and Fourth Annual Meeting of the American Economic Association, 173-177.

Hall, R. and C. Jones (1999) “Why do some countries produce so much more output per worker than others”, Quarterly Journal of Economics, 114, 1, 83-116.

Hayter, R. and T. Barnes (1990) “Innis’ Staple Theory, exports, and recession: British Columbia, 1981-86”, Economic Geography, 66, 2, 156-173.

Hopenhayn H. & P. Neumeyer (2004) “Latin America in XXth Century: Stagnation, Then Collapse”, in Fernandez-Arias et al. (2005) Sources of growth in Latin America. What is missing? Appendix B. Inter-American Development Bank

Jones, M. and M. Obstfeld (2001) "Saving, Investment, and Gold: A Reassessment of Historical Current Account Data,", in: Calvo G., Dornbusch R. and M. Obstfeld Money, Capital Mobility, and Trade: Essays in honor of Robert Mundell, MIT Press.

King, R. & R. Levine (1994) “Capital Fundamentalism, Economic Development, and Economic Growth”, Carnegie-Rochester Conference Series on Public Policy Volume 40, June 1994, Pages 259-292.

Klenow, P. & A. Rodriguez-Claire (1997) The Neoclassical Revival in Growth Economics: Has It Gone Too Far?, in Bernanke B. & J. Rotemberg (ed.) NBER Macroeconomics Annual, Vol. 12, 73-102. MIT Press.

Kneller, R. (2005) “Frontier technology, Absorptive capacity and Distance”, Oxford Bulletin of Economics and Statistics, 67, 1, 1-23.

Korol, J.C. (1991) “Review: Argentine Development in a Comparative Perspective” Latin American Research Review, 26, 3, 201-212.

Loayza, N., Fajnzylber, P. & C. Calderón (2005) Economic growth in latin America and the Caribean. Stylized facts, explanations, and forecasts, The World Bank.

Lucchini, C. (2002) “Desarrollo económico, industrialización y comercio exterior. Los debates en Canadá y Argentina en la primera mitad del siglo XX”, Revista Mexicana de Estudios Canadienses, nueva época, 2.

Lucchini, C. (2006) Estrategias de Desarrollo. Industria Y Estado En Canada, 1919-1939. Buenos Aires: Siglo XXI.

Maddison, A. (2006) The world economy, Development Centre Studies. OECD Publishing.

Mankiw, N. G., Romer D. & D. Weil (1992) “A contribution to the Empirics of Economic Growth”, Quarterly Journal of Economics, 107, 2, 407-437.

Miguez, E. (2005) “`El fracaso argentino´. Interpretando la evolución económica en el `corto siglo XX´”, Desarrollo Económico, 44, 176, 483-514.

Miller, S. & M. Upadhyay (2000) “The effects of openness, trade orientation, and human capital on total factor productivity”, Journal of Development Economics, vol. 63, pp. 399-423.

Muchnik, D. (2003) Tres Paises, Tres Destinos. Argentina Frente A Australia Y Canada. Buenos Aires: Grupo Editorial Norma.

North, D. (1955) “Location theory and regional economic growth”, Journal of Political Economy, 63, 3, 243-258.

North, D. (1956) “International capital flows and the development of the American West”, Journal of Economic History, 16, 4, 493-505.

North, D. (1959) “Agriculture in regional economic growth”, Journal of Farm Economics, 41, 5, Proceedings of the Annual Meeting of the American Farm Economic Association, 943-951.

Parente, S. & E. Prescott (2002) Barriers to riches, The MIT Press.

Platt, D.C.M. and G. Di Tella (1985) Argentina, Australia and Canada. Studies in comparative development, 1870-1965. New York: St. Martin’s Press.

Pomfret, R. (2000) “Trade policy in Canada and Australia in the twentieth century”, Australian Economic History, 40, 2, 114-126.

Prado de la Escosura, L. and I. Sanz-Villarroya (2008) “Contract enforcement, capital accumulation, and Argentina’s long-run decline”, forthcoming Cliometrics.

Rodriguez, F. (2005) “The Political Economy of Latin American Economic Growth”, in Fernandez-Arias et al. (2005) Sources of growth in Latin America. What ist missing? Appendix C. Inter-American Development Bank

Rodríguez, F. y D. Rodrik (2000) “Trade policy and economic growth: a skeptic´s guide to the cross-national evidence”, in: B. Bernanke y K. Rogoff (eds.) NBER Macroeconomics Annuals 2000, MIT Press.

Rodrik, D. (2003) “What do we learn from country narratives?” in Rodrik, D. (ed.) In search of prosperity, analytic narratives on economic growth, Princeton University Press, Chapter 1, 1-19.

Rapoport, M. (1994) “La inserción internacional de Argentina y Canadá: Un análisis histórico comparado”, in Rapoport, M. Globalization, Integracion E Identidad Nacional. Analysis Comparado Argentina-Canada, Buenos Aires: Grupo Editor Latinoamericano, 175-209.

Rapoport, M. (2005) Historica Economica, Politica Y Social De La Argentina (1880-2003), Buenos Aires: Emecé.

Sábato, J. (1988) La Clase Dominante En La Argentina Moderna: Formacion Y Caracteristicas, Buenos Aires: CISEA-GEL.

Sanz-Villarroya, I. (2005) "The convergence process of Argentina with Australia and Canada: 1875–2000", Explorations in Economic History, 42, 3, 439-458.

Schvarzer, J. (1996) La Industira Que Supimos Conseguir, Buenos Aires: Planeta.

Smith, P. (1983) Carne Y Politica En La Argentina, Buenos Aires: Piados.

Solberg, C. (1987) The Prairies and the pampas: Agrarian policy in Canada and Argentina, 1880-1930. Stanford University Press.

Taylor, A. (1994) “Three phases of Argentine economic growth”, NBER Working papers series on Historical factors in long run growth, no. 60.

Teichman, J. (1982) “Businessmen and politics in the process of economic development: Argentina and Canada”, Canadian Journal of Political Science, 15, 1, 47-66.

Temple, J. (1999) “The New Growth Evidence”, Journal of Economic Literature, 37, 1, 112-156.

Vázquez-Presedo, V. (1988) Estadisticas Historicas Argentinas. Compendio 1873-1973, Academia Nacional de Ciencias Económicas.

Vázquez-Presedo, V. (1992) Auge Y Decadencia De La Economia Argentina Desde 1776, Academia Nacional de Ciencias Económicas, Instituto de Economía Aplicada.

Vázquez-Presedo, V. (1994) Estadisticas Historicas Argentinas(Suplemento 1970/1990), Academia Nacional de Ciencias Económicas. Véganzonès M. and C. Winograd (1998) “Human capital, trade openness and growth in Argentina in the 20th century”, Labour, 12, 2, 305-352.

Waisman, C. (1987) Revearsal of development in argentina: Postwar Counterrevolutionary policies and their structural consequences, Princeton University Press.

Watkins, M. (1963) “A Staple Theory of economy growth”, Canadian Journal of Economics and Political Science, XXIX, 2, 141-158.

Watkins, M. and H. Grant (2000) Canadian economic history. Classic and Contemporary approaches, Carleton University Press.