By Lorenzo Vasquali, Analyst KEDISA
This study examines the divergence between Argentina and the Western developed nations during the twentieth century. The research compares Argentina with Australia, similar countries that followed policies of “Import Substitution Industrialization” (ISI) until the mid-1970s, long after other Western nations had veered away from autarchy. The study investigates various reports on the implementation of these policies and traces back in time to identify the critical differences between Argentina and Australia that led to divergent economic paths. One important answer lies with the interest groups that prevailed in the post-independence power struggle. In Argentina, the landowning elites of the Pampas shaped the economy in a tributary relationship with “core countries” because their interests were low wages and a weak currency. Conversely, merchants in Australia built reciprocal relations with the world economy; they demanded growth of the consumer market, capitalization of land, and kept a firm balance between import and export. The extractive setup of the Argentine economy made it ill-equipped to navigate the shocks of the twentieth century.
