From Boom to Burst: Argentine's Primary Sector and the 1930s Crisis

DJENDEREDJIAN, JULIO; MARTIREN, JUAN LUIS,

Agriculture and the Great Depression: The Rural Crisis of the 1930s in Europe and the Americas

Taylor and Francis / Routledge

Lugar: Londres; Año: 2022; p. 97 - 114

This chapter focuses on Argentine economicdevelopment during the Great Depression, in order to test a hypothesis proposedby recent literature (Delli Gatti et al, 2012) about the role of the primarysectorand the sectorial dislocation during the 1930s. According to thesescholars, in the 30s technical change was localized in agriculture; but when individualincome fell below the required level to finance the transition tomanufacturing, excess labor became trapped in agriculture, reducing wages,affecting the whole economy and causing a larger depression.The Argentine case has a fewinteresting nuancesin relation to this hypothesis, not only because by 1930 the agriculturalsector had already lost weight in the GDP vis à vismanufacturing, butbecause there was as well a clear sectorial dislocation during the 1920s. Wefollowthree strategies in order to showthe evidence: a) we will present some macro-magnitudes related to the primarysector and the whole Argentine economyfrom 1895 to 1937; b) Agricultural sectortotal factor productivity (TFP) will be measured between 1895 and 1937, toconsider its evolution as a key explanation not properly attended until now; c)We estimate labor factor reallocation, particularly between agriculture, construction,and manufacturing, and furthermore the impact of international migrations, to assesswhy and how they affected (or even determined) the effects of the GreatDepression in Argentina.Contrary to the mainstreameconomic literature, we hold that Argentina did not reachits dry farming productivityfrontier in 1914 but by 1930. However, during the 1920s and despite its growth,theprimary sector would have begun to lose ground to manufacturing, which is evidentin a quite strong loss of relative labor productivity. Manufacturing, as thefaster developing sector, assimilated part of the workers not yet taken byagriculture. Nonetheless,the key sector was construction,as it allowed the economy to catch higher amounts of non-skilled labor in boomtimes, expelling them inversely in bust ones. If this phenomenon did not end inunbearable unemployment rates, or higher economic impact when the crisis arose,this was due to the fact that seasonal migration was quite considerable as partof non-skilled labor supply. Therefore, when at critical moments that flow wasgreatly reduced, the workers probablyremained in Europe, adding pressure to itsown labor market.