The First Export Era Revisited: Reassessing its Contribution to Latin American Economies

367 Pages·2017·5.489 MB·English

by  Sandra Kuntz-Ficker (eds.)

PALGRAVE STUDIES IN ECONOMIC HISTORY
THE FIRST EXPORT
ERA REVISITED
Reassessing its Contribution to
Latin American Economies
Edited by Sandra Kuntz-Ficker
Palgrave Studies in Economic History
Series editor
Kent Deng
London School of Economics
London, United Kingdom
Palgrave Studies in Economic History is designed to illuminate and
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Sandra Kuntz-Ficker
Editor
The First Export Era
Revisited
Reassessing its Contribution to Latin
American Economies
Editor
Sandra Kuntz-Ficker
El Colegio de México
Mexico City, Mexico
Palgrave Studies in Economic History
ISBN 978-3-319-62339-9 ISBN 978-3-319-62340-5 (eBook)
https://doi.org/10.1007/978-3-319-62340-5
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Prologue
Let me start by thanking Sandra Kuntz-Ficker not only for the invitation
to coauthor the chapter on my native Colombia but also for giving me
the honor of writing the preface to this excellent volume on Latin
America’s first export era, the one that took place during the ‘first global-
ization’ of the late nineteenth and early twentieth centuries. This is indeed
a great volume not only based on a truly collective project but also on the
outstanding leadership of Professor Kuntz-Ficker, who led all the authors
to deal with a uniform set of themes regarding the strength and charac-
teristics of the export expansion and its domestic effects.
The book contains an analysis of the export era in seven Latin American
economies: Argentina, Bolivia, Brazil, Chile, Colombia, Mexico, and
Peru. It also includes an initial methodological chapter by the editor, as
well as a final chapter in which she draws common patterns and differ-
ences from the different case studies. However, aside from the effort to
make the case studies comparable, each chapter underscores specific
national characteristics. Some relate to the varied intensities, diversifica-
tion, and phases in export expansion, which in some countries started in
the early or mid-nineteenth century and in the countries most dependent
on European markets slowed down significantly after World War I and
thus before the end of the first globalization with the Great Depression of
the 1930s. Other differences relate to the domestic effects of export
growth. The chapters also include epilogues that assess to what extent
v
vi Prologue
developments during the Great Depression and the early post–World
War II years benefitted from the modernization and the beginnings of
industrialization that had taken place during the export age.
The period analyzed here is, in many ways, an extraordinary one. It is
the only long period in which average Latin American per capita income
has mildly caught up with that of the developed world. This reflected the
fact that the region’s exports increased substantially, rising as a share of
world exports. They also diversified away from colonial or early indepen-
dence export staples (precious metals, sugar, tobacco, hides, and guano)
toward new agricultural goods (cereals, wool, and meat), minerals
(nitrates, copper, lead, and tin), and, late in the boom, oil, with coffee
continuing to be the only traditional staple to share in the boom. It was
also an era of infrastructure modernization, in particular in railroads and
electricity generation. And it was the beginning of industrialization
through several channels: processing of export goods (e.g., important for
some metals, sugar, and meatpacking), supplying part of the increase in
consumption that took place as a by-product of export expansion, and
the turn toward protectionist policies that characterized several countries
in the region, as part of an international trend led by Continental Europe
as well as the old protectionist trends of the United States.
The editor provides in the first chapter the analytical framework, as
well as questions and issues that are discussed in the different case studies.
She presents her views in contrast with what she sees as the enduring
traditions of structuralism and dependency theory. This analysis is built,
of course, on the excellent group of authors she collected, all of whom
have studied many of the issues dealt with here in the specific national
economies they discuss. Indirectly, the conclusions of this volume pose
interesting questions about the comparability of the ‘export era’ analyzed
here with the experience of Latin America during the ‘second globaliza-
tion’ that the world has lived in since the 1960s or so, and particularly
after the opening of the economies that started in a few countries in the
second half of the 1970s but spread throughout the region from the mid-
1980s to the mid-1990s.
In the analytical framework proposed, the editor makes a strong criti-
cism of the interpretation of the first export age by the dependency and
structuralist schools, which generally viewed the center-periphery character
Prologu e vii
of Latin America’s insertion into the world economy—as producers of
commodities and importers of manufactures—as a source of misguided
development. Her critique is based on the assessment that, under the con-
ditions prevailing in Latin America’s economies at the beginning of the
export era (limited domestic saving, small and fragmented markets, and
poor transport infrastructure, among others), industrialization based on
the domestic markets was simply not a realistic option. In contrast, integra-
tion into the world economy through commodity exports actually opened
up the opportunity for Latin American countries to restart (or, perhaps,
just start) a process of economic growth that would even spark the indus-
trialization process that eventually took off once the export era collapsed. In
this interpretation, the view that Latin American industrialization based on
the domestic market was possible in the late nineteenth century was simply,
in Professor Kuntz-Ficker’s terms, an ‘anachronism’.
Interestingly, having been brought up myself with a strong influence
from the dependency and structuralist schools, this is precisely what I
argued in my first book, which dealt precisely on Colombia’s foreign
trade in the nineteenth century (Colombia y la economía mundial,
1830–1910), published in 1984. I argued in that book that, given the
fragmentation of the domestic market and limited capital accumulation
and technological development, export growth provided the only way
forward to expand the domestic market itself, including through the
gradual integration of the fragmented markets facilitated by infrastruc-
ture development. At the same time, however, it was true, as the tradi-
tional schools claimed, that this was only a long-term effect, as
infrastructure development first integrated the export regions with the
international economy rather than among themselves, and the artisan
textile production of central Colombia was destroyed by manufacturing
imports. So, in a sense, those traditional schools did make contributions
to the understanding of Latin American development beyond their inter-
pretive flaws and general lack of strong empirical analysis. Most impor-
tantly, perhaps, they made the point that development patterns (and, if
we want, the nature of capitalism) were radically different in the ‘periph-
ery’ than in the ‘center’ of the world economy.
Interpretations of the more orthodox schools of economic thought
have sometimes been equally flawed in the analysis of the export era. In
viii Prologue
this case, they have tended to view the export era as a sort of ‘golden age’
in which Latin America specialized according to its comparative advan-
tages, a process that was interrupted by the industrialization policies that
were put in place with the spread of protectionism and State interven-
tion. This interpretation is flawed in several ways. First, it fails to recog-
nize that the turn toward inward-looking development was forced by the
collapse of the world economy, and of international trade and finance in
particular, rather than by the ‘choice’ of interventionist policies. Second,
it ignores that some of the roots of those interventionist policies were
seeded during the export era in several countries, notably protectionism
and State intervention in infrastructure. Third, it particularly fails to
grasp that the most rapid economic growth of Latin American history
took place when the industrialization model was in full swing, from the
end of World War II to the mid- or even the late-1970s, and not during
the ‘golden age’ of export development that preceded it. We have force-
fully made these points in a joint book with Luis Bértola, The Economic
Development of Latin America Since Independence.
As noted, this volume tries to identify common features in the case
studies but also differences in the nature of the export growth and its
domestic effects. These divergences are related, among other factors, with
the varied resource endowment of countries, their geographic position,
and their capacity to respond to the stimulus of external demand. Some
major issues relate to the importance of foreign investments and immi-
gration, the capacity to diversify exports, and the capacity to spread
export growth through different regions in their national territories—or
the incapacity to do so.
The chapters analyze the ups and downs of export growth, terms of
trade, and real exchange rates during the first export era. Some of the
interesting effects are, for example, that in the nineteenth century pro-
ductivity gains were passed on to lower prices of manufactures much
more than in the twentieth century, generating gains in the purchasing
power of exports and per capita consumption of manufactures in
commodity- dependent economies. At the same time, however, the mix
of improving commodity prices and real exchange rate appreciation had
some ‘Dutch disease’ effects, and perhaps not so much in terms of dein-
dustrialization (although certainly of the destruction of some artisan
Prologu e ix
activities) but of ‘de-agrarization’ and thus of a slowdown of the diversifi-
cation of domestic agricultural production and exports, which became a
monoculture in several countries. The analysis of the ‘return value’ of
different types of exports is particularly important when involving for-
eign capital and immigration, as well as, in contrast, the participation of
native investors in the export expansion, and the wage and fiscal spill-
overs it generated.
The case studies also assess the overall economic contribution of
exports, both in terms of direct contribution to GDP growth, but also in
many aspects of domestic development: the expansion of the agricultural
and demographic frontier, diversification of the production structure,
and regional development. Central to this is the analysis of the domestic
linkages of the export sector and the externalities it generated. Some of
them were associated with capital accumulation, wage spillovers, and a
gradual formation of a domestic market for manufactures, which was
essential for industrialization. As already indicated, tariff policy evolved
in many countries from a simple fiscal device to an instrument of promo-
tion for early industrialization. Forward linkages included the processing
of export goods, and the retention of part of the exportable product in
order to satisfy domestic demand. Among the externalities we should
include in particular the development of infrastructure (notably rail-
roads), the use of modern energy, and financial development. In the first
two cases, foreign investors who were initially attracted by the export
sector spread their activities later on to the domestic economy.
This is, no doubt, a volume that would be widely used in historical
analysis but also on the contemporary debate about export growth and its
links to development. I thank once again the extraordinary energy of the
director of the project and editor of this volume, without which this
excellent book would not be in your hands.
José Antonio Ocampo