A New Economic History of Argentina (review)

This is an important book, rich in ideas and data. It will be welcomed by scholars engaged in the study of the economics and political economy of long-run development, and by specialists struggling to explain the Argentinian conundrum — how a society that was one of the wealthiest in the world "lost its way." A New Economic History is "new" because it updates and extends the pioneering, if idiosyncratic, collection by Carlos F. Díaz Alejandro (Essays on the Economic History of the Argentine Republic [1970]), and because it applies a novel approach to the analysis of Argentine history. The editors are to be commended for encouraging contributors to combine the traditional techniques of the historian—descriptive narrative based on archival work, shaped by analytical insights—with the use of theoretical models and quantitative methods. While this combination works better in some areas than others, the overall result is to demonstrate how profoundly macroeconomic performance inter-connects with political structure and cultural mores.

Given the scope and quality of the volume, it is almost invidious to single out individual contributions. Nevertheless, several chapters are likely to provoke particular interest due to the new evidence displayed, the methodology deployed, and the conclusions advanced. Focussing on the decades immediately following independence, Ricardo Salvatore and Carlos Newland demonstrate how, despite political instability and economic volatility, there were substantial welfare gains and export diversification between 1810 and 1870. They also argue that during this period, Argentina became one of the most open economies in the world. Does the dynamic of a complex economy, albeit operating under severe constraints, signal the emergence of a national market before the formation of a nation-wide state and more efficient ways of combining factors of production?

Della Paolera, María Alejandra Irigoin and Carlos Bózzoli analyse a century and a half of "state performance," considering the extent to which individual regimes responded to—or generated—economic instability. The construction of nine core economic variables (including indices for inflation, currency devaluation, debt, taxation, and output) for the whole period from 1853 to 1999 represents one of the innovative features of the chapter. Their findings demonstrate that the most effective administrations were those capable of pushing through dramatic institutional changes in the "political market place," and in areas such as taxation and finance. Combining growth with macroeconomic stability, the most effective administrations turn out to be the little-known Buenos Aires provincial administration of Pastor Obligado (1854-56), and the national administrations of Domingo Sarmiento (1869-74), Agustín Justo (1932-38), and Carlos Menem (1990-5, 1996-9). Taylor addresses a key question in Argentine history: why has the rate of investment been so volatile? He produces series on rates of change in GDP, savings, investment, and investment as a share of GDP for the period, 1884-1992. Exploring the allocative efficiency of investment and factors shaping investment behaviour, Taylor shows that until 1913 savings flowed into very productive areas with a high growth co-efficient, that investment in the inter-war period was constrained by a reliance on domestic savings (given volatility in world markets), and that from the 1940s to the 1980s poor policy design reduced the flow of savings and had a detrimental impact on investment allocation.

María Inés Barbero and Fernando Rocchi connect incomplete industrialisation with general economic decline. Their chapter charts the evolution and performance of manufacturing, offering a persuasive chronology of industrial growth, and perceptive comments on micro aspects of business performance and the growth of the market. Rejecting conventional structuralist and neo-classical approaches, they view manufacturing as a by-product of market and government action. Leonard Nakamura and Carlos Zarazaga meet the challenge of appraising the performance of the Buenos Aires capital market: they should be encouraged to extend their analysis beyond the 1900-1935 period. Sergio Berensztein and Horacio Spector consider constitutional doctrine on commercial activity and private property...