Download Argentina Compared to Australia:

1
Australia and Argentina: A Study in Contrast
In the last part of the 19th and beginning of the 20th centuries, Australia and Argentina
experienced significant economic growth. By the early 20th century, both countries
ranked in the top 10 in terms of income per capita. Studying the history of Australian and
Argentine economic development, researchers found that they shared political,
geographic, and economic characteristics and had followed similar paths, entering the
international market as providers of rural goods.
Economist Andrés Gallo notes that their shared characteristics were made-to-order for the
globalization of the world economy that took place around 1900. “First, they had open
grasslands apt for the development of rural activities. Second, low density of population
permitted the generation of . . . surplus . . .rural goods for export. Third, settlement was
easier . . . [because of low populations of indigenous peoples]. Finally, all these
characteristics combined made the countries attractive to migratory currents from Europe.
Furthermore, United Kingdom interests in these economies generated an important
inflow of [capital] that accounted for growing shares of investments, mainly in
infrastructure sectors like railroads and other transportation systems. (88-89)
Study Graph 1* to see how Argentina and Australia fared in the first half of the 20th
century. Answer the questions that follow.
2
Part I
Graph 1*
GDP Per Capita
(PPP US Dollars 1985)
190
170
Index 1900=100
150
130
110
90
Argentina
70
Australia
19
00
19
02
19
04
19
06
19
08
19
10
19
12
19
14
19
16
19
18
19
20
19
22
19
24
19
26
19
28
19
30
19
32
19
34
19
36
19
38
19
40
19
42
19
44
19
46
50
The vertical scale on this graph is an index, a number that allows us to compare data from different economies. Since our concern is with economic growth, we
don’t need to have the actual income data in Australian dollars and Argentine pesos. All we want to know is: “By what percentage did per capita income grow
between 1900 and any year after that date?” We can do that by looking at the change in the index number.
The graph starts at (x,y = 1900,100), meaning that, whatever Australia’s and Argentina’s per capita income was in 1900, we’re calling it 100%. Look at the data
where X = 1902. Y for Argentina is about 106 and Y for Australia is about 102, meaning that per capita GDP in Argentina grew 6% since 1902 and per capita
GDP in Australia grew 2%.
3
1. Write a generalization about economic growth that would be true for both Argentina and
Australia in the first half of the 20th century.
2. Write 2 generalizations comparing or contrasting Argentina’s economic growth to that of
Australia.
3. How much did GDP per capita grow from 1900 - 1946
in Argentina? __________
in Australia? ___________
4. Find the following events on the X axis of the graph. Tell how each event affected economic
growth in Argentina and Australia and speculate on the reason for that effect.
Event
Effect on Economic Growth
Argentina
Australia
Possible explanation of
that effect?
World War I
The Great Depression
World War II
5. Predict.
A. Based on the trend established in the first half of the century, what will happen to the
economies of Australia and Argentina in the second half of the 20th century?
B. Based on the trend established in the first half of the century, how will Argentina’s
economic growth compare to Australia’s in the second half of the 20th century?
4
Part II
Graph 2*
GDP Per Capita
(PPP US Dollars 1985)
300
250
200
150
100
50
Argentina
Australia
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
1958
1956
1954
1952
1950
1948
0
This graph also uses and index to compare economic growth in Argentina and Australia, but note that the index has been reset to begin in 1948. Any changes
from 100 are read as growth or decline in per capita GDP compared to what per capita GDP was in 1948.
Look, for example, at 1960. Argentine income had was about 10% lower (the index is about 90) than it had been in 1948, while Australian income had grown
about 15% (the index is about 115) since 1948.
5
6. If you predicted (as you’d be expected to), in question #5 that Argentina and Australia would
continue to experience high rates of economic growth and that Argentina would continue to
outpace Australia, this second graph is probably surprising. Estimate the % economic growth
from 1948 - 2000:
in Argentina __________
in Australia ___________
If a trend doesn’t continue, then the conditions that created the trend must have changed.
The challenge for economists has been to explain what changed in Argentina and apparently
did not change in Australia.
7. Study the timeline of selected events in Argentine history. Next to each event, draw an ↑ (up
arrow) if you think the event increased the willingness of investors and entrepreneurs to get
involved in the Argentine economy. Draw a ↓ (down arrow) next to the event if you think it
discouraged investment and economic activity.
8. Study Graph 3. What is current Argentine GDP per capita? ___________
9. What would per capita GDP be if Argentina had continued on the trend established in the early
20th C? _____
10. Compare the graph and the timeline. What event disrupted the positive trend?
11. Try out your skills as a beginning economic historian. Based on the data you have, explain why
Australia and Argentina entered the 20th century with the same rosy outlook, and ended the
century so differently.
6
An Incomplete Timeline of Argentine History*
Juan Peron released from jail. Takes
control of military gov’t. Populists
who oppose return to traditional
Const. elect Peron President in Nov.
1946. House of Deputies impeach
Sup. Ct. members who oppose
Peron’s policies.
1853-Constitution established gov’t
with Pres., 2-house legislature &
independent Sup. Ct.
≈
1910
1915
1920
1925
1930
1935
1940
1945
1950
Military coup
ousts Peron
1955
Ongoing cycle of military /
democratic governments
Election fraud erodes
citizen support for gov’t.
Saenz Pena Law –
extends democracy by
adopting secret ballot &
enforcing stricter control
of voter rolls
Liberal democracy with active
political parties and reliable
independent judicial system
1st military coup in
Argentine history
9/6/30 – Sup. Ct. gave
approval to coup, calling it a
“triumphant revolution” –
even before legal challenge
could make its way through
court system
11/35 – fraudulent
gubernatorial and provincial
elections run by Conservative
gov’t. Supreme Ct. refused to
intervene even when Electoral
Board called for nullification.
Military coup ousts
Conservative gov’t.
present
Peron builds urban support by
undermining prop. rts. of landowners in
Pampas region. Sets up rent-control
boards and won’t let landowners evict
non-paying tenants.
Peronists write new
Constitution
Remember that in the early 20th century, Australia and Argentina were in the top 10 in the
ranking of world countries by GDP per capita. In 2004, Australia ranked 17th and
Argentina, 71st (CIA World FactBook, 2004:
http://www.odci.gov/cia/publications/factbook/rankorder/2004rank.html)
Graph 3, below, projects Argentine income growth had the trends of the first half of the
century continued.
Graph 3*
GDP Per Capita Argentina
13000
Argentina GDP per Capita
11000
9000
7000
Actual
5000
Fitted (No Break)
3000
19
00
19
05
19
10
19
15
19
20
19
25
19
30
19
35
19
40
19
45
19
50
19
55
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
1000
*All data in this activity taken from: “The Erosion of Rule of Law in Argentina, 1930-47: An Explanation
of Argentina’s Economic Slide form the Top 10,” by Lee J. Alston and Andrés Gallo, June 3, 2003. Used
with permission of the author.