From Boom to Burst: Argentine's primary sector and the 1930s crisis

Abstract

During the First Globalization Argentina experienced a huge economic growth, ranking among the wealthiest countries in the world by the outbreak of WWI. A great boom in the agrarian sector, which boosted a fast industrial development and a construction fever, promoted that process. Nevertheless, from 1914 onwards, these ‘best days’ started to fall behind. This new conjuncture became evident since the 1930 Crisis. Economic literature has pointed out that the particular role and characteristics of the agrarian sector had a deep involvement in the fall of the Argentine economy, particularly taking into account that productivity limits for extensive growth had been reached by 1910, and no more expansion would be possible if not preceded by high capital investment. But for a country that has been traditionally a borrower, this was not an easy task in war and post-war times. Moreover, the question is why the Argentine economy’s best performing sector – agriculture – has not been able to generate a higher investment rate since then. In this chapter we will try to test that, by measuring factor productivity of the agrarian sector, and relating it to the performance of the whole economy, particularly manufacturing and construction sectors.