Why isn't Australia more like Argentina (or vice versa)?

[Michael McIntyre]

If Australia is "like" Argentina because it is an economy in which land is the abundant factor of production and the economy is based on export of meat and grain, then don't both of them go with, say, Canada and New Zealand?  In which case Argentina, not Australia, is the odd one out.  Indeed, look at all four of them one hundred years ago, and they don't look so very different from one another.  To be a bit Arthur Lewisian about it, abundant land raises the implicit wage floor in small industrial sectors that could otherwise pay former subsistence farmers very little for their labor.  Higher wages in the nontradable sector in turn translate into better terms of trade.  (This, of course, requires you to buy into Lewis's open-economy argument in the second half of "Economic Development with Unlimited Supplies of Labor" - or to Emmanuel's unequal exchange thesis).

Carlos Waisman (in _Reversal of Development in Argentina_) developed the argument that Argentina is different because of a divided bourgeoisie that oscillated between supporting Peron as a last ditch defense against socialism and supporting military regimes when Peron became intolerable (to them, at least).  Neither kind of regime was particularly kind to the Argentine economy.

(I should note that I'm not entirely convinced by either of these arguments, but it's a start).

Michael McIntyre


>>> dhenwood at panix.com 08/04/01 14:52 PM >>>

By the way, why is Australia still rich? Why didn't it follow a path 
more like Argentina? There's not much autonomous technological 
capacity, and the economy seems very resource based for a First World 
(or imperialist, if you want) country. Can someone explain Australia 
to me?

Doug