A Structural Decomposition of Imports in Argentina: The Role of Autonomous Demand, Income Distribution, and Productive Integration (1953–2018)

Abstract

Foreign currency scarcity stands as one of the most significant constraints on growth for small open economies. This article investigates the determinants of import growth, the main source of demand for foreign currency, by introducing a novel adaptation of structural decomposition analysis, rooted in a Sraffian supermultiplier growth model. The decomposition is applied to Argentina's input-output matrices spanning 1953–2018. Findings reveal that autonomous demand is the primary long run determinant of imports, through its influence on output. While the role of income distribution in the long run is neglectable, it holds significance in the short term. The process of deindustrialization, initiated in the mid-70s, has amplified the influence of autonomous demand on imports. This further reduced the external space to boost demand and output through increased government spending and/or higher real wages.