On Sat, 4 Aug 2001, Michael McIntyre wrote:
> 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.
Isn't there also the related argument that because cheap, abundant and fertile land leads to high wages (because the workers in the beginning had all rather be independent farmers, and in countries like the US and Australia, they could be, so wages were bid up), and high wages gives a big spur to mechanization and hence to overall national productivity? I think Michael Perelman makes a similar argument in pasing in his first book on agriculture, saying in short that high wages are not only good in themselves, they are essential to the transition.
Being part of the Anglo-American culture group and flooded with immigrants from the economically most advanced country probably also helped the US, Canada and Australia to import know how and investment at an earlier historical point than most other countries. Although as Michael McIntyre pointed out, this still leaves leaves Argentina as the odd man out to be explained, and so I rush to add that I am *not* suggesting that culture is the thing that explains this difference. Just perhaps a supplementary help to the countries that got it. Maybe.
BTW, didn't Brad DeLong write something on Argentina as the first world country that didn't?
Michael
__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com