Staple Products, Linkages, and Development: Evidence from Argentina

Abstract

We investigate how historical patterns of primary production influenced development across local economies in Argentina. Our identification strategy exploits exogenous variation in the composition of primary production induced by climatic features. We find that locations specializing in ranching had weaker linkages with other activities, higher concentration in land ownership, lower population density, and less immigration than cerealproducing areas. Over time, ranching localities continued to exhibit lower population density and they experienced relatively sluggish industrialization. Ultimately, ranching specialization had large negative effects on long-run levels of income per capita and human capital. Our findings show that early patterns of production can have a crucial influence on development patterns, providing suggestive support to the staple theory of economic growth.