Latin American trade during the First Globalization: a new measure of product differentiation comparable in time and across countries

BADIA-MIRO, MARC; CARRERAS-MARIN, ANA; RAYES, AGUSTINA

Boston

Congreso; XVIII World Economic History Congress; 2018

International Economic Association - Massachussetts Institute of Technology

The Latin American integration to the international markets during the First Globalization (1870-1913) has been a topic widely discussed by historians. A big part of the discussion has been around trade concentration (or lack of diversification) based on the high share of few main products or main destinations in each country?s exportation. This approach has prevented detailed knowledge of the pattern of the exported goods, i.e. the relative share of each of the partners by item. Additionally, it has hampered the analysis of potential trade in its extensive terms. In this article we present new empirical evidence fromthe official foreign trade statistics of a sample ofLatin American countries around 1912 in order to analyse the degree of diversification both by product and by destination. Through standardizing the records of each country with the StandardInternational Trade Classification (SITC), we offer a new measure of product diversification that allows for comparison across countries as well as in time. Additionally, we complement that measure with the number of destinations, including differentiation by markets. These new measures arise some new questions on the Latin American trade performance of the period before the First World War. On the one hand, the traditional hegemony of Argentina, as a unique and exceptional case of diversification in the region, diminishes with the higher diversification of Uruguay, Mexico and Chile. On the other hand, in relative terms, no country in Latin America was so much diversified as the exporters of manufactures in Europe, but they were quite close to those countries in the periphery also specialized in commodities. It seems as if the nature of the goods exported mattered a lot in the potential diversification of trade, possibly mediating into the link between exports and economic growth.