Structural Change in Argentina, 1900-1973: The Role of Import Substitution and Factor Endowments

This paper investigates structural change in Argentina between 1900 and 1973.  It has been argued that trade policy under import-substituting industrialization disfavoured agriculture and led to a "technological lag" in the sector, and that this explains agriculture's relative decline during a period of rapid industrialization.  I find that there is no technological lag to be found in the data and, moreover, that relative prices had no discernible effect on agricultural output.  A three-by-three model based on these findings is developed in which structural change is caused by exogenous changes in factor endowments.  A simulation of the model replicates the observed structural changes from the 1920s onwards, suggesting that the decline of agriculture and rise of manufacturing can be explained by population growth once the land frontier had been reached.