Trade shocks and Resilience to Economic shrinking: comparative analysis of Argentina, Australia, and Canada

Kerstins Rum Session 3: Historical national accounts organized by Svante Prado and Kerstin Enflo


Juan Pablo Juliá, Martin Andersson (Lund University)


Convergence has been an exception since the Industrial Revolution. Rarer are the cases of divergence from the group of “rich” nations. Argentina’s experience is usually associated to falling behind when compared to other settler economies. The growth comparisons between these countries have been deeply documented (Frankema & Visker, 2011; Prados de la Escosura & Sanz-Villarroya, 2009; Sanz-Villarroya, 2005; Taylor, 1992). All in all, it seems that the Argentinian model displayed weaknesses already in the 19th century, it struggled to adapt to the shocks of the first half of the 20th century, and divergence intensified at the end of the century. Despite this large research agenda that focused on several dimensions of growth aspects, the role of economic shrinking has not been treated yet. Therefore, in this article we aim to analyze how economic shrinking behaved in these settler economies, and what were the main forces under it. For this purpose, we will put special attention in the dependence on external factors (mainly trade), the country economic structures, and its social endowments. Thus, we will emphasize the interaction between economic shrinking, external conditions, and social capabilities. We will look to the case of Argentina, in comparison to Australia, and Canada since 1880. All in all, we argue that Argentina’s relatively good performance during the First Globalization relied on positive international economic conditions. Moreover, the tailwinds of this period prevented the accomplishments of major economic and social reforms in the country. Consequently, when these conditions deteriorated, and disruptions of global trade took place, the country’s low social capabilities and the attempt to preserve the old growth regime prevented the transition to a new economic model. On the contrary, Australia and Canada managed to adapt to the changing circumstances. Thus, Argentina’s high shrinking tendencies could not be altered (while the other two countries managed to do so). With the help of the capability approach we will try to understand this shrinking story. While it is usually assumed that GDP per capita levels were similar in the three countries, Canada and Australia were remarkably different. The economic stagnation of Argentina during the 20th century would be less striking when these aspects are highlighted.


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