Industrial Development in a Frontier Society: The Industrialization of Argentina, 1890–1930 (review)

The study of Argentina’s presumed failure to industrialize has become a cottage industry. Most of the works try to explain the conundrum of the post-1930 period, after the decline of the liberal global economic system and of Argentina’s privileged position within it. This book concentrates on Argentina’s “golden age” instead. Its dust jacket asserts that although Argentina was “on the brink of industrialization” in 1890, in the following four decades it failed “to develop an efficient manufacturing sector,” even by comparison to other countries in similar circumstances such as Brazil, Mexico, and Japan.

The author does not provide evidence for this comparative claim. But the historical statistics on the world economy culled by the Angus Maddison in The World Economy: Historical Statistics (Paris, 2003) show that by 1930, Argentina’s gdp per capita was four times higher than Brazil’s, two-and-a-half times higher than Mexico’s, and two times higher than Japan’s. It would be plausible that these gaps resulted simply from the exceptional productivity of Argentina’s fabled agropastoral export sector. If so, the limitations of industrialization would have been hardly a concern unless that particular source of wealth had somehow become a fetish. Few people, after all, ask or care why Denmark “failed” to industrialize. But in Chimneys in the Desert: Industrialization in Argentina during the Export Boom Years, 1870–1930 (Stanford, 2006), Fernando Rocchi demonstrates that industrial output increased two-and-a-half times as much as gdp between 1890 and 1930 and that “industry’s share of Argentine wealth was as large as that of agriculture by the 1920s” (2).

Pineda’s comparative claim may not hold much water, but she has plenty of original and important things to say about Argentine industrialization. Her research is solid and thorough. It includes manuscript and published censuses, commercial guides, and company-level data for fifty-nine firms across ten manufacturing sectors that were listed in the Buenos Aires Stock Exchange, allowing her to examine, in Chapter 2, total factor and labor productivity level, labor productivity, economies of scale, and concentration ratios. The results are particularly convincing for labor productivity because they cover the entire period (the other factors are mostly restricted to the 1895 census). This part also includes information about trends in female and child labor.

In Chapter 3, Pineda ingeniously gauges trends in Argentine investment in industrial capital goods by tracing the import of machinery, parts, and fuel, using British, North American, German, and French export data. The consistent growth in the importation of machinery, with an unsurprising dip during World War I, increased productivity in almost all of Argentina’s industrial sectors, but it is also seen by the author as evidence of the country’s inability “to develop the technological capabilities needed to sustain industrialization” (56).

Chapter 4 offers an equally inventive analysis of merchant finance groups that fuses quantitative and qualitative sources using a prosopographical method. It shows that the problem was not a lack of capital per se but stringent bank lending that limited credit to dominant groups and provided incentives for investment in mercantile rather than industrial activities. Together with the next chapter on entrepreneurial strategies and manufacturing profits, this section offers an excellent sociocultural history of business.

The last chapter deals with industrial legislation. The tales of interest groups, lobbying, political pusillanimity, legislative myopia, and lack of long-term planning sound eerily like current international news. Le plus ça change. . . ?