To investigate these issues, we explore the history of import protection in Sect. Argentina TPR documents > search > help back to top. Table 7 lists the average tariff for the four broad stages of liberalization described above. To assess the stock of human capital, we look at literacy rates. Exports recovered in the 1980s and early 1990s, and after the mid-1990s, they skyrocketed, especially due to technology adoption in agricultural. The Presidential speech at the “Rural” often faced rejections and boos. These figures are consistent with the industrialization index reported by Bairoch (1982). We appreciate the superb work done by Natalia Porto in the coordination of all the data collection effort. Factor owners (workers, landlords, and capitalists) have different preferences over trade protection (i.e., tariffs or export taxes). National Bureau of Economic Research, Working Paper 9401, Colistete R (2009) Revisiting import-substituting industrialization in Brazil: productivity growth and technological learning in the post-war years. Argentina was initially an open economy, then it closed to trade, and finally opened up again in recent years. Following the 2001-02 crisis, Argentina's recovering industrial sector has pressured the government to obtain restrictions (especially quotas) on Mercosur's free trade regulations, in order to protect their growth from what they see as disloyal competition from their larger partner to the north. 13, we report trends in soybean yields. During the first globalization era, Argentina showed high openness ratios, which ranged from 30 to 40 percent for a period of almost 30 years. Asociación Argentina de Economía Política, Bahía Blanca, Argentina, Taylor A (1998) On the costs of inward looking development: price distortions, divergence, and growth in latin America. In Galiani and Porto, unions have the power to appropriate part of the tariff rent, which is then distributed to unskilled labor. Recession helped lead to a US$1 billion surplus in 2000 and another US$6 billion in 2001; but it was too little, too late. In our data, we account for Mercosur by weighting the intrazone tariff by the share of imports coming from Mercosur (which underestimates the average tariff). The experience of Brazil serves our purpose well, because Brazil followed a model of import substitution and actually protected its industry to a larger extent than Argentina did. Between 1870 and 1930, Argentina experienced robust growth and remained wealthy by world standards. All WTO members are subject to review, with the frequency of review depending on the country's size. 5, we assess some of the consequences of bad trade policies. There was also a slight reversal to protection in the 2000s, after the crisis of 2001. The emergence and the strengthening of the IS model in Argentina strongly correlate with the overall level of protection after the 1930s and up to the late 1960s and 1970s. Prehistory in the present territory of Argentina began with the first human settlements on the southern tip of Patagonia around 13,000 years ago. It takes a detailed and careful assessment of various factors to account for the economic failure of a country with those promising initial conditions. This scenario pushed many developing countries into autarky in the 1940s, 1950s, and 1960s, in a context of a highly interventionist industrialization strategy which is usually known as “import substitution industrialization” (ISI). Due to the Lerner symmetry theorem, in fact, these are manifestations of the same phenomenon. These factors affect the economic environment and constraints that shape the context into which trade policy is dictated., DOI:, Over 10 million scientific documents at your fingertips, Not logged in The exports of gold, allowed by the free trade policies, soon depleted the national reserves. In Western Europe, the hindrance originated in the Common Agricultural Policy inside the European Economic Community (EEC) in 1962. In our analysis, we follow a descriptive approach based on two major sources of data: a compilation of quantitative and qualitative accounts from 1890 to 1966 taken from the literature on Argentine history, and a comprehensive (i.e., disaggregated) trade policy data set (on imports and exports) from 1966 to 2006 that we put together for this project. These are major factors that help explain why Argentina was unable to grow and achieve its once-tangible prosperity. As highlighted in Galiani and Somaini in this volume, the abrupt change in the trends in tariff protection after the oil crisis points to dynamic factors such as the increasing cost of technology adoption in the manufacturing sector as well as the fiscal constraints to finance subsidies to the manufacturing sector. Third, the agricultural protectionism that followed the end of World War II hindered Argentine exports. The combination of export taxes liberally applied, especially on the agricultural sector, and a significant protection granted to the manufacturing sector are the result of the distributional conflict outlined in Sect. The large decline in economic activity around the world, the abandonment of the Gold Standard, and a move towards bilateralism (as opposed to multilateralism) halted trade. Argentina used to import balanced animal feed from fish flour produced in Peru (from the “anchoveta peruana,” a type of anchovies). Argentine comparative advantage lies primarily on agricultural goods, broadly defined so as to include both primary products as well as agro-manufactures. The fact that UK and US imports were not traded in the same exchange market was not casual. PubMed Google Scholar. Clearly, export tax rates within the agricultural sector move in accordance with the general tendency described above. Taylor (1998), for instance, reports that around 1960, the overall rate of protection in Brazil was higher than that of Argentina. Argentine intra-Mercosur trade rose dramatically from US$4 billion in 1991 to US$23 billion in 1998; it declined to US$9 billion during the 2002 crisis, but recovered quickly and reached US$44 billion in 2011 (28% of the Argentine total). Export taxes were reduced significantly at the end of the 1970 and early 1980s, when the Military was in power. They model a three-sector economy (agriculture, manufacturing, and nontradable services) that uses three factors: land, labor, and capital. After World War I, however, Argentina entered a phase of slow economic growth. Composition of Argentine exports (shares of total Argentine exports). In this theory, industries are organized in lobbies which make contributions to the government in exchange for protection. Between 1930 and 1970, Argentina continued growing, but at a slower pace than the world as a whole. One shortcoming of our data is the lack of information on non-tariff barriers. Argentine foreign trade in 2010 by leading export destinations, and chief exports and imports with each (million US$). Argentina is Iran's second largest trade partner in Latin America after Brazil. Nicolas Botan, Laura Jaitman, and Ivan Torre provided excellent research assistance. Trade Policy Reviews of Argentina . The highest tariff rates can be found in Latin American countries. Furthermore, we add the whole series of 8-digit export taxes from 1966 to 2006 (see Sect. Internationally, the Argentine industry was also an underachiever. Argentina has long played an important role in the continent’s history. A non-official source, Foreign Trade of Argentina, has compiled a list of principal definitive imported products for 2009, for 2008 and for 2007, as well as for export statistics, among which are the principal definitive exported products for 2009, for 2008, and for 2007. This index, plotted in Fig. In this scenario, free trade, ceteris paribus, worsens the distribution of income in Argentina, and this provides a distributional root for protection and anti-export bias. This setting, explored in Galiani and Porto (2010), exploits the power of unions as a determinant of tariffs. In consequence, we now explore the structure of export taxes and the most recent evolution from 1966 to 2006. 3, we characterize the structure and evolution of import tariffs from 1870 to 2006. Clearly, Argentina exports mainly primary products and agro-manufactures, with an increasing participation in minerals and fuels, and imports instead capital goods and inputs. 12, implicitly shows how Argentine agricultural production responded to the set of policies and shocks faced by the country. Argentina has a long history of political and economic instability - with significant growth fluctuations every year. In the end, we show that the anti-agro bias impeded growth in agricultural productivity and the import substitution model failed at boosting productivity growth in industry. To see this, we plot the trends in average export tax for the four most important sectors in agriculture, Cereals and Oil Seeds, Dairy, and Meat in Fig. These swings were characterized in Galiani and Porto (2010). In addition, Argentina suffered from the nationalization of railways, telephones, electricity, public transport, and other utilities and services between 1945 and 1950 (the early Peronist years).Footnote 6. [2] These surpluses were bolstered as much by growing exports as by a marked recovery in terms of trade for Argentina, which by 2010 had improved 40% over the level prevailing in the 1990s. While the anti-export bias impeded productivity growth in agriculture, the import substitution strategy was not successful in promoting an efficient industrialization. International trade and trade policies are often identified as a major culprit. 3. In 1952, the Peronist government launched its second 5-year plan with the aim of developing the heavy and basic input industry as well as the oil sector (concession to start prospecting work was given to Standard Oil in April 1955). We thank Rafael Di Tella and Edward Glaeser for encouraging us to write this chapter. Furthermore, Díaz Alejandro (1970) reports that Argentina actually raised tariffs by more than the US and Canada. National Bureau of Economic Research, Working Paper 8739, Junta Nacional de Granos (1975) Estadísticas de Área Cultivada, Rendimiento, Producción y Exportación de Granos. In fact, Argentina has historically been considered as one of the “grain yards” of the world. In this paper, we expand the Galiani and Porto databases in two fronts. Following trade negotiations, soy oil purchases from China resumed in 2011. In Fig. Brazil's higher level of industrialization and production capacity, as well as other economic asymmetries, have been a source of tension with Argentina. Since the US had become Argentina’s main import partner, the higher exchange rate in the “free” market lowered US competitiveness and promoted the development of a local industry to replace the US imports. In contrast, Textiles, Footwear, and Leather become less important. In: Glaeser E, Di Tella R (eds) Argentine exceptionalism, Vazquez Presedo V (1971) Estadísticas Históricas Argentinas. The catch-up took place around 1922 and wheat yields remained comparable up until the mid-1950s. The influx of imported machines and supplies helped the modernization of the country's industrial base; but it negatively impacted its trade balance, which accumulated US$22 billion in deficits from 1992 to 1999; the current account deficit, which would include growing foreign debt interest payments and deficits in trade in services, reached a record deficit of US$14 billion in 1998 alone. In Argentina: History. By distributional conflict, we mean the natural tension in the country between the sector with comparative advantage, Agriculture, and factor ownership. We document this by first looking at the evolution of agricultural productivity in the country (compared to the US), and, second, by assessing the evolution of productivity in the Argentine industrial sector vis-à-vis other countries. First, in the late 1940s, the restrictions faced in the international grain market as a result of the country’s exclusion from the Marshall Plan hit Argentina’s exports very hard. Bairoch P (1982) International industrialization levels from 1750 to 1980. There has also been some variation in the ranking of low-protected industries. In Argentina, for instance, the average tariff from 1870 to 1899 was 26.1% (which was high, but actually lower than in Brazil, Colombia, Peru, and Uruguay). From the 1970s to the early 2000s, the ratio of exports and imports to GDP remained relatively stable (with fluctuations) and, finally, strongly increased in recent years, especially after the 2001 crisis. According to Clemens and Williamson (2002), the decline in Latin America’s terms of trade was of nearly 40%. Moreover, it is interesting to note that while historically there have been sectors with zero taxes (see 5th percentile), after 2002, all sectors faced positive export taxes. Argentine foreign trade in 2010 by type of product (million US$). TRADE POLICIES The different instruments used today in the trade regime of Argentina are the result of past decisions taken either on a national level or through multilateral (bilateral) arrangements. As we will see, however, external and internal factors are interrelated and trade policy can sometimes be affected by changes in external conditions. After the peak of the Depression, tariffs were reduced slightly, but remained high (Fig. Tom Bailey takes a look at exactly how the South American nation found itself in its current condition . These are not intended to be confidence bands for the mean, but to give a sense of the extreme values applied in practice. South America’s second largest economy is expected to contract for a third year in 2020. While the overall anti-export bias in undeniable, there are interesting differences within agriculture. Compiling data on export taxes were actually harder than compiling data on import tariffs, because WITS does not carry information on export taxes and the whole series from 1966 to 2006, only available via the Guía Práctica, had to be manually typed. Argentine exports to the Asian giant are mainly soy and petroleum products, while imports are mainly industrial and consumer goods. The competitiveness of foreign trade promoted the efficiency of Argentine enterprises on the domestic and world markets, and exports had a locomotive effect on the whole economy. The shares abruptly collapsed in the late 1930s and early 1940s up until around the 1950s. Between 1875 and 1889, Argentina had the highest ratio of productive land per capita, 216.44 acres per capita. 10. Gomez-Galvarriato and Williamson (2008) build a different industrialization index for 1910, which measures industrial performance using as a proxy net exports of cotton textile manufactures per capita (the index includes yarn, thread, and cloth of all sorts). The overall trends in trade openness can be explained by both external factors (such as the Great Depression, World War I and II) and internal factors, such as import tariffs, quantitative restrictions, and export taxes. Interestingly, notice that, in the early 1980s, while the high extreme values (the 95th percentile) declined slightly, the low extreme values (the 5th percentile) actually increased. (1999) show that terms of trade, as well as political economy factors, explain the formation of the common external tariff of Mercosur members. The second episode of large tariff cuts took place between 1976 and 1979, during the Military dictatorship. In the end, Argentine growth never took-off. Until 1930, 93% of agricultural growth is explained by the addition of new arable land, while improvements in yields account for the remaining 7%. We use data on the stock of skilled and unskilled labor, capital, and land compiled by Cusolito and Lederman (2009). The trends, in turn, can be understood with changes in the way that different governments weighed the distributional conflict and with changes in the constraints faced by those governments. United Nations, New York, Department of Economic Affairs, Ekboir J (2003) Adoption of Non-till by Small Farmers. Visit Argentina’s trademark national office online by following this web address: Is there any need to use my trademark before I apply for registration? There are, of course, many other factors that complement the distributive concern in the determination of trade policy. The first analysis covers the period 1890–1966 and is based on the abundant, but fragmented, data available in the literature. Written history began with the arrival of Spanish chroniclers in the expedition of Juan Díaz de Solís in 1516 to the Río de la Plata, which marks the beginning of Spanish occupation of this region. The government, in turn, receives these contributions and maximizes social welfare. The Argentine Dirty War was part of the larger Operation Condor, which was an alliance of the right-wing governments of Argentina, Chile, Bolivia, Uruguay, Paraguay, and Brazil to share information and aid one another's secret police. The trends in the production shares of soybeans are different. This can be seen by looking at the patterns of trade. J Econ Perspect 14(3):217–232, Ferreres O (2005) Dos Siglos de Economía Argentina: 1810–2004. Argentine tariffs remained high from 1900 to 1913 (23.4%) and only declined to around 18%, on average, in the post World War I period. Lat Am Econ Rev 27, 4 (2018). To a large extent, this is because the country is relatively abundant in land. In Argentina, quantitative restrictions were intensively used in the early stages of the import substitution process (1950s). Arguably, trade policies are a key factor behind the agricultural trends (both in export shares and in yields), mostly because these trends broadly coincide with the three phases in the anti-agriculture bias of Argentine trade policies that we identified in the previous sections. Imports began recovering sharply in 2003, as both the purchasing power of the peso and domestic demand increased, and, despite this, from 2003 to 2011 the nation's merchandise trade balance recorded a cumulative US$115 billion in surpluses. Immediately after the collapse of the Argentine economy at the end of 2001 and the devaluation of the peso in 2002, imports fell over half and Argentina's trade surplus soared to over US$16 billion, providing for the first current account surplus since 1990. Since these policies have numerous impacts on various outcomes, it is impossible to provide a comprehensive assessment. The dialogue was established in 1996 as a mechanism to str… As recovery ensued and the exchange rate stabilized around 3 pesos/dollar, exports (mainly soy, cereals and other agricultural products, as well as machinery and fuels) grew steadily. The intrazone tariff among members was in most cases reduced to zero. Our analysis tells a story of bad trade policies, rooted in distributional conflict and shaped by changes in constraints, that favored industry over agriculture in a country with a fundamental comparative advantage in agriculture. Source: Own calculations based on the United States Department of However, as the terms of trade worsen, the economy begins a gradual but persistent industrialization process that carries support for protectionism until it becomes a viable political equilibrium (consistent with the post 1943 period in Argentina). During the period 1948–1994, Argentina showed the lowest productivity growth in our sample. Anales de la Academia Nacional de Agronomía y Veterinaria, Argentina, Reca L (2007) Cambios en el Sector Agropecuario Argentino 1950–2005. In 2017 and 2018, the balance returned to deficit due to slowdown in exports growth and higher imports. From 1989 to 1991, the average tariff declined from 30 to 18%, the dispersion in tariff rates was also reduced, and all non-tariff barriers were pulled down. However, Cereals and Oil Seeds were often taxed at a much higher rate than Dairy and Meat. Modest Argentine surpluses with China turned into deficits in 2008, however, and anti-dumping measures enacted subsequently triggered a Chinese boycott of its top Argentine import, soy oil, in 2010. In this section, we present an overview of trade flows, trade patterns, and trade policy in Argentina. Use is not mandatory to apply for a trademark in Argentina, but it must be in use before the 5th year from the registration date. This institution held the monopoly over the country’s foreign trade and originally had an evident anti-agriculture bias. Argentina Economic Growth The economy should rebound, albeit timidly, in 2021 after this year’s sharp contraction. Foreign trade in 2010 by leading export destinations, Exports in 2010 by province and top two exports from each, "El 75% del rojo comercial de la industria, en cinco rubros", "Automotrices deberán exportar un dólar por cada dólar que importen", "Creció un 161% la producción de computadoras en 2011", "En ocho años se duplicó el número de industrias y se crearon 140 mil firmas", "En 2014, la maquinaria agrícola producirá casi el total de la demanda interna", "China volvió a importar aceite de soja, pero el conflicto está lejos de resolverse", "Ministerio de Industria también rechazó la medida de EE.UU", "Obama says to suspend trade benefits for Argentina", "Exportación (2010): Origen provincial según complejos exportadores",, Creative Commons Attribution-ShareAlike License, This page was last edited on 17 August 2020, at 18:28. Nber Working paper 13990, Grossman G, Helpman E ( 2001 ) Special interest politics a at... 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