The Argentina Paradox: microexplanations and macropuzzles
Latin American Economic Review volume 27, Article number: 3 (2018 ) Cite this article
The economic history of Argentina presents one of the most dramatic examples of divergence in the modern era. What happened and why? This paper reviews the wide range of competing explanations in the literature and argues that, setting aside deeper social and political determinants, the various economic mechanisms in play defy the idea of a monocausal explanation.
There is an old saying among economists, possibly apocryphal, and of unclear attribution: “throughout history there have been only four kinds of economies in the world: advanced, developing, Japan, and Argentina”.
This idea can be more concretely grasped by looking at evidence on the long run levels of income per capita in a broad range of countries over the last two centuries in Fig. 1. Material living standards have advanced across the entire world, but the well-known Great Divergence is quite apparent. A few rich countries have become much richer; a larger group of poorer countries have grown more slowly average. Within each group are notable exceptions, with some very poor countries making little progress at all. However, most striking is those countries witnessing a reversal of fortune, moving from one group to the other.
