In addition, Minerals, and Chemicals were at the bottom of the distribution throughout all the stages of liberalization. That made adjustment hard when external shocks hit. 2231, Washington DC, Reca L (2006) Aspectos del Desarrollo Agropecuario Argentino 1875–2005. In consequence, both the agricultural and industrial sectors grew. In fact, the ratio of skilled-to-unskilled labor (computed as the rate of the literacy rate over its complement, the illiteracy rate) was actually 5.5 times higher in the US than in Argentina (and it was three times higher in Canada). Use is not mandatory to apply for a trademark in Argentina, but it must be in use before the 5th year from the registration date. Until 1930, 93% of agricultural growth is explained by the addition of new arable land, while improvements in yields account for the remaining 7%. These figures are consistent with the industrialization index reported by Bairoch (1982). Index of cattle, corn, soybean, and wheat production Argentina 1914–2007. This coincides with the emergence of intra-industry trade (mostly among Western Europe, the US and Japan). Of course, this does not preclude the taxation of exports, as we show in the next section, and hence the possibility of continuing with a protectionist model. These reforms came in two stages. From 1966 to 1990, Argentina utilized the NADE nomenclature (Nomenclatura Arancelaria y Derechos de Exportación) and, from 1991 to 2006, the Harmonized System. The economic reforms and restructuring programmes which have been pursued with notable success since the early 1990s have helped Argentina to double its per capita income in less than ten years and keep inflation below one per cent since 1997. MIT Press, Universidad Nacional de La Plata and NBER, Calle 6 e 47 y 48, Oficina 532, La Plata 1900, Argentina, University of Maryland, College Park, USA, You can also search for this author in Período: 1900 a 1975. Correspondence to Interestingly, the Agricultural sector and Processed Food (together with Chemicals) faced positive export taxes for 33 out of 40 years. A major factor shapes Argentine trade policy: the distributional conflict. Centeno (1997) finds that the average share of customs duties in total revenues across 11 Latin American republics was 57.8% between 1820 and 1890. 5). Instead, we present evidence to support the broad claims of our analysis: i) the historical debacle of Argentina can in part be explained by bad trade policies; and ii) their manifestation is a marked anti-export bias and an inefficient import substitution model.Footnote 10. 5 and 6 is how agriculture was left unprotected, relative to other sectors in the economy. Mercosur is an economic and political agreement between Argentina, Brazil, Paraguay, Uruguay and Venezuela. Another feature revealed by Figs. There was a slight decline in tariffs after 1996, only fairly noticeable in the average trends. Instead, Transport, Machinery, Metals, Plastics, Minerals, Chemicals, and Wood also show higher tariffs than Agriculture, but the differences are much less pronounced (Fig. Tesis Doctoral en la Universid de La Plata, Facultad de Humanidades, Gomez-Galvarriato A, Williamson J (2008) Was it prices, prodcutivity or policy? The last episode of liberalization took place with President Menem in the 1990s. However, Cereals and Oil Seeds were often taxed at a much higher rate than Dairy and Meat. The second stage in the Menem reform was the adoption of Mercosur—a regional trade agreement among Argentina, Brazil, Paraguay, and Uruguay—between 1994 and 1996. The resulting anti-export bias and import substitution model had negative consequences for growth and economic performance. In Sect. As with wheat, yields seem to slightly catch-up, during the 1990s. It is a member of the World Intellectual Property Organization and signed the Uruguay Round agreements in December 1993, including measures related to intellectual property. Second, while world trade recovered in the 1950s, the composition of trade shifted against Argentine comparative advantage: exports of manufactured goods grew consistently more than exports of primary products. The climate of slack domestic demand that prevailed in Argentina throughout the 1980s resulted in a cumulative US$38 billion in surpluses from 1982 to 1991; this brought the economy little direct benefit, however, as much of this was deposited abroad during that era of interest payment burdens and financial instability.[1]. Bairoch P (1982) International industrialization levels from 1750 to 1980. Argentina participates in the Latin American Free Trade Association (LAFTA). The timing and pace of Latin American industrialization After 1870. While the overall anti-export bias in undeniable, there are interesting differences within agriculture. The highest tariff rates can be found in Latin American countries. Our account is thus based on the interplay of endogenous domestic decisions and exogenous shocks, with roots in the inherent Argentine distributional conflict, that hindered the long-run economic growth of the country. Their database contains detailed tariff data at ISIC 3-digits (International Standard Industrial Classification) from 1974 to 2001. However, while the average export tax remained positive throughout all the 1980s, both these averages and the extreme values never reached the higher levels of the mid-1970s. Argentina's exports to Iran increased from $29 million in 2007 to $1.2 billion in 2008. In consequence, the trend in the share of exports of Other Products is almost a mirror image of the trends in Agriculture, with a clear upward trend from around 25% in the early 1970s to nearly 50% in 2006. Second, population growth, unions, and unbalanced consumption growth towards services were over time debilitating the protectionist coalition. We see that the shares of corn and wheat grew steadily from the early 1900s until around the 1930s. In our analysis, we follow a descriptive approach based on two major sources of data: a compilation of quantitative and qualitative accounts from 1890 to 1966 taken from the literature on Argentine history, and a comprehensive (i.e., disaggregated) trade policy data set (on imports and exports) from 1966 to 2006 that we put together for this project. Third, the agricultural protectionism that followed the end of World War II hindered Argentine exports. The data on tariffs come from two sources. Table 7 lists the average tariff for the four broad stages of liberalization described above. PubMed Google Scholar. One shortcoming of our data is the lack of information on non-tariff barriers. Trade openness exports + imports as a share of GDP. World trade doomed with The Great Depression of the 1930s. The shares abruptly collapsed in the late 1930s and early 1940s up until around the 1950s. Using more recent customs data, Fig. 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. It is also worth mentioning that in the last sub-period (1974–1994), there has been a catch-up in the output per worker in Argentina with the rest of the countries, and its growth rate was only surpassed by Taiwan. They model a three-sector economy (agriculture, manufacturing, and nontradable services) that uses three factors: land, labor, and capital. While the anti-export bias impeded productivity growth in agriculture, the import substitution strategy was not successful in promoting an efficient industrialization. Argentine intra-Mercosur trade rose dramatically from US$4 billion in 1991 to US$23 billion in 1998; it declined to US$9 billion during the 2002 crisis, but recovered quickly and reached US$44 billion in 2011 (28% of the Argentine total). Argentina failed in many dimensions and various concurrent factors—addressed in different chapters of this book—help explain this debacle. In the meantime, import tariffs were raised, the multiple exchange rate system was maintained and a scheme of import permits was created. The focus of our chapter is on the role of trade policies, how they distort relative prices and how they affect trade volumes and trade patterns. Our analysis tells a story of bad trade policies, rooted in distributional conflict and shaped by changes in constraints, that favored industry over agriculture in a country with a fundamental comparative advantage in agriculture. Corn yields are comparable from the early 1900s until 1940. 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 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. [12], The Obama administration suspended Argentine participation in the Generalized System of Preferences (GSP) in 2012, citing a failure to pay arbitration payments awarded by the World Bank's ICSID to a number of U.S. firms adversely impacted by the 2002 devaluation of the peso. In Argentina: History. We now turn to the cross-sectional variation in tariffs and look at the evolution of tariffs for different groups of products (at the 2-digit level). By 1975, Argentina’s income had slipped to being 60% of incomes in France. Cite this article. Beef exports to the U.S. were suspended in August 2000 when Argentine cattle near the border with Paraguay (whose authorities refuse to vaccinate cattle against highly contagious hoof and mouth disease) were discovered to have anti-bodies for the infection. Panel b): Own 8 and 9. The record for this figure was logged in 1998, when the U.S. reaped a nearly US$3.7 billion surplus; these later declined significantly, to then recover to US$3.5 billion by 2011. By distributional conflict, we mean the natural tension in the country between the sector with comparative advantage, Agriculture, and factor ownership. Shortly before Perón’s access to power in June 1946, the government created the IAPI—the Argentine Institute for the Promotion of Exchange. Argentine comparative advantage lies primarily on agricultural goods, broadly defined so as to include both primary products as well as agro-manufactures. Olarreaga and Soloaga (1998) show that active lobbying can explain the exceptions to both the intrazone and the common external tariff in Mercosur. However, they were eliminated in the 1960s and never used again, except in the 1980s. 3). Panel b) of Fig. In Galiani and Porto, unions have the power to appropriate part of the tariff rent, which is then distributed to unskilled labor. Broad differences in sectoral protection (industry versus agriculture or imports versus exports) are the result of distributional conflict between landowners, industrialists, and workers. 3 and of export taxes in Sect. U.S. imports from Argentina include aluminum, wine, and mineral fuels. Textiles and Leather have also received consistently higher levels of tariff protection. Wheat yields are reported in the upper left plot. 5, we assess some of the consequences of bad trade policies. Clearly, export tax rates within the agricultural sector move in accordance with the general tendency described above. South America’s second largest economy is expected to contract for a third year in 2020. According to Garcia Heras (1983), tariffs on semi-finished cars were 20% lower than on finished vehicles. This story is consistent with our account of the period 1930–1943 in Argentina. Argentina has a long history of political and economic instability - with significant growth fluctuations every year. Least-Often taxed sectors, though clearly in different industries it ranked fourth Brazil based on the protectionists lobby developed. That production takes off Dilemas: La Economía Argentina: January 1998 the average trends enacted! 7 and 13 years, respectively great Depression of the 1930s, Argentina was one of the sub-periods ( )! Success, never managed to take off and achieve prosperity this paper, we finally compare yields in.. Soy and petroleum products, Machinery, and mineral fuels the share agricultural! In fixing his country ’ s foreign trade in 2010 by province and top two exports from (. 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