Economic Regional Dynamics in Argentina during Import Substitution Industrialization: a Comparative Analysis (1914 - 1959)

Abstract

Argentina exhibits significant regional heterogeneity in demography, income, geography (with varying availability of natural resources), and productive specialization. However, economic analyses of regional disparities relying on quantitative evidence for the first half of the 20th century are notably limited. During this period, Argentina, along with much of Latin America, began to engage in Import Substitution Industrialization (ISI), and its impact on the current economy is still a matter of ongoing discussion. To analyze the regional dynamics during the ISI period in Argentina, the initial phase of this study involves providing comparable GDP estimates for all provinces during this timeframe. Specifically, for selected years in the 1930s and 1940s, provincial GDP is estimated using a top-down approach. This involves distributing each sector of the national GDP among the prov-inces, relying on allocation indicators derived from provincial variables associated with each sector. By combining the newly derived estimates with those existing for previous and subse-quent years, the following step involves a comparative analysis of regional performance in terms of GDP and GDP per capita, spanning from the late 19th to the early 21st centuries. The findings reveal economic and population concentration in the Pampean region, accompanied by relatively high and growing GDP per capita in Capital Federal and Patagonia. At the same time, the poor provinces in the northern part of the country consistently lag behind. Focusing on the ISI period, this study also examines the presence of economic convergence among provinces and the role played by productivity and productive structure differences in regional disparities. The results indicate that, overall, regional disparities tend to widen, par-ticularly in the first phase of industrialization before World War II. Additionally, the study iden-tifies and characterizes sectoral differences across provinces, revealing that productivity is more heterogeneous across provinces than across sectors. This suggests that while existing sectoral differences may contribute to explaining productivity asymmetries during the Argentine ISI period, other more influential factors may be at play. Among these potential factors, the study explores the effects of regional interactions on convergence, using spatial econometric tools on departmental GDP data for the 1950s to control for spatial dependence in growth re-gressions. This approach enables the decomposition of growth regression estimates into direct effects, net of spatial dependence, and indirect effects generated by contagion among regions. The findings indicate that the special effects run in the opposite direction of convergence, and regional responses to exogenous shocks are notably heterogeneous. The findings of this thesis underscore the importance of incorporating the regional component in the study of Argentina’s economic history and the need for quantitative support in the analy-sis.