Human Capital, Trade Openness and Growth in Argentina in the 20th Century

Abstract

We estimate a production function that accounts for the economic performance of the country in the 20th century. We elaborate long term time series whereas most of the recent empirical studies on growth are based on cross section analysis. This approach allows us to follow the various regime changes that can be identified in the rich economic history of Argentina. To evaluate Total Factor Productivity (TFP) we initially test the classical Solow Model. We estimate the speed of convergence of TFP and obtain a non convergence result. This speed of convergence has declined since the 1930s, and we find a phenomenon of divergence in the period 1970-90. We then analyse the impact on production of additional variables recently highlighted in the endogenous growth literature such as the process of catch up of foreign technical progress, human capital and trade openness. Chow tests for this extended production function give us a strong probability of changes in the growth regimes. The estimation, that takes into consideration the break points identified, shows that the impact of trade openness and foreign technology is not stable throughout the century. In what concerns the impact of education on economic growth, we find a strong effect of primary education on growth, and a weaker effect of secondary-university education.

The «Argentine failure» from a comparative perspective: the role of total factor productivity

“…Argentina's experience illustrates that capacity expansion (not only in equipment, but also in workers’ formal education) must be accompanied by growing technological competencies; otherwise, inefficiencies would arise and per capita income stagnates or declines over time. These results are consistent with Véganzonès and Winograd (1998) who find a relatively low efficiency of the Argentine economy after 1933 with a slower adoption of foreign technological progress and weaker diffusion. After the end of WWII, Argentina continued increasing its physical capital intensity with severe losses in productivity.…”

“…For instance, Kneller (2005) argues that the positive effect of frontier technology on domestic economies could vary with physical distance if the knowledge generated in one country is not instantaneously available without cost to all. For this reason, we introduce two measures: the aggregate productivity of the United States — estimated by Véganzonès and Winograd (1998) — which represents the technological frontier, and wheat production as a measure of the relative productive specialisation and the reliance of productivity performance on the agricultural sector. The first variable captures the adjacency effect, while the second captures different kinds of specialisation processes in accordance with the staple theory (Watkins, 1963), in particular the relevance of the wheat boom in Canada.…”

Trade Openness and Economic Growth: Empirical Evidence From India

“…Ghatak et al (1995) conclude a stable long run relationship between the trade liberalization, human capital, physical capital and economic growth in case of Turkey by using the cointegration method. Further the impact of trade openness and foreign technology on economic growth is not stable; where as impact of education on economic growth is positive and stable in case of Argentina (Véganzonès et al 1998). Chuang (2000 used cointegration and error correction model in case of Taiwan by using sample size 1952-1995.…”

A Survey of the Literature on Human Capital‐intensive Firms

“…It corresponds to macroeconomic empirical works which examine the major drivers of economic growth and the characteristics of growth regime in different countries. The aim of these articles is to characterize the importance of generic human capital in the economic development of advanced countries (Antonelli and Fassio, ) and of emerging ones (Véganzonès and Winograd, ; Neves, ; Lin, ). All these contributions emphasize either on the level of education and qualification of workers, training and on professional experience (Antonelli et al ., ) or on wage inequality between skilled and unskilled workers (Chusseau et al ., ; Crinò, ) to explain and compare countries’ economic situation.…”