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From Riches to Rags, and Back? Explaining the Growth Trajectory of Argentina since the 1890s

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  • Campos, Nauro F.
  • Karanasos, Menelaos G.
  • Tan, Bin

Abstract

Argentina is the only country in the world that was 'developed' in 1900 and 'developing' in 2000. Although various underlying reasons have been identified (chiefly political instability, financial development, inflation, trade openness, and international financial integration), no study has quantitatively assessed their relative importance. This paper tries to fill this gap. We use the power-ARCH framework and annual data since 1896 to study how important are these factors vis-à-vis both growth and growth volatility. Our results suggest that financial development, trade openness and political instability are the main factors, with important differences in terms of their short versus long-run behavior.

Suggested Citation

  • Campos, Nauro F. & Karanasos, Menelaos G. & Tan, Bin, 2009. "From Riches to Rags, and Back? Explaining the Growth Trajectory of Argentina since the 1890s," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 37, Verein für Socialpolitik, Research Committee Development Economics.
    • Handle: RePEc:zbw:gdec09:37
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    References listed on IDEAS

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    1. Aaron Tornell & Frank Westermann & Lorenza Martinez, 2004. "The Positive Link Between Financial Liberalization Growth and Crises," UCLA Economics Working Papers 834, UCLA Department of Economics.
    2. Kaminsky, Graciela Laura & Schmukler, Sergio L., 2002. "Short-run pain, long-run gain : the effects of financial liberalization," Policy Research Working Paper Series 2912, The World Bank.
    3. Gerardo della Paolera & Alan M. Taylor, 1997. "Finance and Development in an Emerging Market: Argentina and the Interwar Period," NBER Working Papers 6236, National Bureau of Economic Research, Inc.
    4. Sanz Villarroya, Isabel, 2006. "Contract enforcement and Argentina's long-run decline," IFCS - Working Papers in Economic History.WH wp06-06, Universidad Carlos III de Madrid. Instituto Figuerola.
    5. Sanz-Villarroya, Isabel, 2005. "The convergence process of Argentina with Australia and Canada: 1875-2000," Explorations in Economic History, Elsevier, vol. 42(3), pages 439-458, July.
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    1. Campos, Nauro & Karanasos, Menelaos & Tan, Bin, 2008. "Two to Tangle: Financial Development, Political Instability and Economic Growth in Argentina (1896-2000)," CEPR Discussion Papers 7004, C.E.P.R. Discussion Papers.
    2. Ionescu Cristian, 2012. "Financial Instability And Political Instability," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 154-158, December.

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    More about this item

    Keywords

    economic growth; financial development; volatility; political instability; trade openness; power-GARCH;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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