By: Elliot Charette University of Wisconsin - Superior.

Argentina’s History and Recent Growth:

A Decomposition of Growth from 1991-2010

By: Elliot CharetteUniversity of Wisconsin - Superior

Historical analysis◦Natural resources and political system

Empirical analysis◦Empirical decomposition ◦Cobb-Douglas framework

Outline

Argentina◦ 1900-1930 Austria, Germany, France, and

Sweden◦ Better than Italy and Spain (measured by GNI)◦ Very productive agricultural sector

Advanced country/economy during this time

Historical Analysis

The Pampas!◦ Fertile land◦ Grain and pastures for cattle◦ Allowed for high volume of agricultural exports

6% of property owners owned 70% of the Pampas

Reasons for Growth and Wealth

The Pampas

End of the 1930s and early 1940s Unequal distribution of land

◦Land owners didn’t invest in industrial capital

Lack of industrial capital led to less competiveness in the global market

Imported European goods

Beginning of Decline

From the 1930s to 1976 Perón extends tariff protections, exchange

controls, and import licenses◦‘Protects’ domestic industry from global

competition◦1945 industry contributes more than

agriculture as a share of GDP

Protectionism

Adoption of more neoliberal reforms◦Aimed at creating more competition More efficiency

1990s◦Extreme liberalization of economy Cuts social programs and government

employees

1976 and Onwards!

1900-1930:Strong

Agriculture,Wealthy Country

1931-1976:Protectionism,

Declining Prosperity

1976 - 2010:Liberalization,

????

Summary of Historical Analysis

How much does each factor contribute to growth?◦Not much research on recent growth◦How much does total factor productivity

contribute to GDP? Data 1991-2010

◦Source: Penn World Table and World Bank

Empirical Analysis: Decomposition of Growth

Cobb Douglas Framework(Zhu 2012)

Average Annual Growth Rates (%)

Time Period GDP per

capita

Labor force

participation

rate

Capital

per worker

Average

human

capital

Total Factor

Productivity

1991-20104.19 0.15

3.28

1.58

1.31

 Contributions to per capita GDP growth (%)

Time Period GDP per

capita

Labor force

participation

rate

Capital

per worker

Average

human capital

Total Factor

Productivity

1991-2010100 3.65 19.60 37.70 39.06

Results

LFPR was a small factor contributing to GDP◦ Possibly because of small, constant pop growth

Capital contributed to 19% of growth Human capital was a large factor (37%!!!)

◦ High literacy rates◦ “Right to education”

Total factor productivity largest factor at 39%◦ Possibly liberalization?

More research needs to be done

Reasons for Each Growth Factor

QUESTIONS?

Brennan, J. (2007). Prolegomenon to Neoliberalism: The Political Economy of Populist Argentina. Latin American Perspectives, 34.3. 49-66.

Giovagnoli, P. (2005). Estimating the Returns to Education in Argentina 1992-2002. World Bank Policy Research Working Paper. 1-47.

Gonzalez, G., Viego, V. (2011). The Argentine Failure From a Comparative Perspective: The Role of Total Factor Productivity. Revista De Historia Economica, 29.3, 301-326.

Hall, R., Jones, C. (1999). Why Do Some Countries Produce So Much More Output Per Worker than Others? The Quarterly Journal of Economics, 114.1, 83-116.

Johns, M. (1992). Industrial Capital and Economic Development in Turn of the Century Argentina. Economic Geography 68.2, 188-204.

Rodriquez-Boetsch, L. (2005). Public Service Privatisation and Crisis in Argentina. Development in Practic, 15.3, 302-315.

Novick, M., Miguel L., Sarabia M. (2009). From Social Protection to Vulnerability: Argentina's Neo-liberal Reforms of the 1990s. International Labour Review 148.3, 235-252.

CIA World Factbook. Central Intelligence Agency, n.d. Retrieved from <https://www.cia.gov/library/publications/the-world-factbook/geos/ar.html>.

Zhu, X. (2012). Understanding China’s Growth: Past, Present, and Future. Journal of Economic Perspectives 26.4, 103-124.

Works Cited