National Identities and Export Growth

1. National Identities and Export Growth Lecture # 4 Week 2

2. Structure of this class • Advantages and disadvantages of independence (re-visited) • Contemporary interpretations of 19th Century Latin America • Classification into three different groups • Alternative explanation • The specificity of Brazil • Conclusion: How does 19th Century Latin America compare with the present export-led growth under the globalization trend?

3. Advantages and disadvantages (re-visited) In last class we argued that independence from Spain and Portugal had • Two positive consequences: • End of external trade monopoly • Latin America could finance investments in international capital markets • Four negative consequences: • Boundary disputes • Bourbon and Pombaline reforms became obsolete • Fiscal problems exacerbated • Years of violence and retreat of landed aristocracy to haciendas

4. Interpretations of 19th C Latin America • Independent movements due to: (a) Spain could not justify taxation and trade restrictions (b) Creoles denied governing positions (c) Indigenous communities demands increased access to land (d) France’s control (Spain & Portugal)

5. Volume, composition, and patterns of trade (1820 – 1914): higher export volume →higher GDP per head

7. Difference in performance across countries due to: (a) Growth in the export sector in turn due to factor endowment differences (“Commodity Lottery) (b) Growth in the non – export sector

8. 3 Groups: First group: stellar performers, rapid growth of export and non-export sectors Countries that succeeded under an export-led strategy in 19th Century Latin America: Argentina & Chile Uruguay? Yes export growth relatively poor, but no-export economy performed well These are the three success stories before First World War

9. Second group: Rapid growth export sector, slow growth non-export sectorTwo countries: Cuba and Puerto Rico Third group: Disappointing export performance All other Latin American countries Why? Commodity Lottery (e.g., Guano in Peru) Political unrest (e.g., Mexico)

10. Human Capital story à la Bloom – Williamson (1999) • Relative to mining, labor shortages were more acute in meat production related industries • High demand for labor →high marginal productivity of labor→large number of young, risk-taking, entrepreneurial migrants • Higher productivity of labor force from Europe, higher rates of GDP growth While this could account for Argentina and Uruguay, it really doesn’t for Chile In particular, Chilean economy based on copper and nitrates where labor shortages were not as acute, and therefore the marginal productivity of labor was not high either, and low European migration Moreover, Chile may be described a as “Dutch diseased” country with very litte social mobility prospects.

11. Control by Portugal did not have as important an impact on Brazilian development as Spanish control did elsewhere Fairly well agricultural base Main export product: coffee Unlike other products, coffee could be produced just as efficiently in small farms →better social mobility prospects for the not so wealthy migrants But, unlike copper produced by Chile, coffee was produced by other countries: Colombia, Guatemala, El Salvador…. Nevertheless, Dutch disease took its tool (gold, diamonds…) - Next Class: Topic 5 (consult syllabus pls) Brazil