(Palgrave Studies in Economic History) Sandra Kuntz-Ficker (Eds.) - The First Export Era Revisited - Reassessing Its Contribution To Latin American Economies (2017, Palgrave Macmillan)

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
enrich our understanding of economies and economic phenomena of the
past. The series covers a vast range of topics including financial history,
labour history, development economics, commercialisation, urbanisa-
tion, industrialisation, modernisation, globalisation, and changes in
world economic orders.
More information about this series at

http://www.springer.com/series/14632
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
Library of Congress Control Number: 2017953911
© The Editor(s) (if applicable) and The Author(s) 2017

This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and trans-
mission or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional
claims in published maps and institutional affiliations.
Cover illustration: Walker Art Library / Alamy Stock Photo
Printed on acid-free paper
This Palgrave Macmillan imprint is published by Springer Nature

The registered company is Springer International Publishing AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
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
Prologue
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
Prologue
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
Contents
1 Latin America’s First Export Era: Reassessing Its

Economic Contribution 1
Sandra Kuntz-Ficker
2 The Contribution of Argentine Exports to the

Economy, 1875–1929 39
Sandra Kuntz-Ficker and Agustina Rayes
3 The Bolivian Export Sector (1870–1950) 75

Jose Alejandro Peres-Cajías and Anna Carreras-Marín
4 The Brazilian Export Economy, 1822–1913 113

Christopher David Absell and Antonio Tena-Junguito
5 The Impact of Nitrates on the Chilean Economy,

1880–1930 153
Marc Badia-Miró and José Díaz-Bahamonde
xi
xii Contents
6 Exports and Economic Development in Colombia:

A Regional Perspective, 1830–1929 191
José Antonio Ocampo and Santiago Colmenares Guerra
7 Mexico in the Export Era (1870s–1929): Export Boom,

Economic Modernization, and Industrialization 235
Sandra Kuntz-Ficker
8 Exports and Their Impact on the Economy.

The Case of Peru, 1830–1930 279
Luis Felipe Zegarra
9 Latin America’s First Export Era: A Preliminary

Balance (Toward a New Synthesis) 313
Sandra Kuntz-Ficker
Index 337
List of Figures
Fig. 2.1 Argentine exports, 1875–1929 (FOB values in dollars, at current

and constant (1913) prices). Note: constant values were calculated
with a Fischer price index. Sources: Rayes (2015, unpublished) 42
Fig. 2.2 Argentina’s terms of trade, 1875–1929 (1913 = 100).
Note: TOT (Kuntz-Ficker & Rayes, 2017) was estimated
with an import price index calculated over the export price
index of five trade partners weighed by their share in Argentine
imports, and our own export price index (see Fig. 2.1).
TOT (Ferreres) was calculated with Ferreres (2010, fig. 8.1.7).
Sources: Kuntz-Ficker and Rayes (2017), Ferreres (2010),
and Rayes (n.d.) 45
Fig. 2.3 Real bilateral exchange rate (Argentina–United States),
1875–1930. Sources: Nominal exchange rate and Argentine
price index from Ferreres (2010, Figs. 5.1.1 and 7.2). US price
index from Officer (2007, Fig. 3). In both cases, the base year
was changed to 1913 46
Fig. 2.4 The return value of Argentine exports (percentage upon total
export value). Source: Own elaboration based on Kuntz-Ficker
and Rayes (2017) 50
Fig. 2.5 The purchasing power of Argentine exports, 1880–1929
(US dollars). Note: Own elaboration using the yearly value of
exports at current prices (Rayes, n.d.) and the price index of
imports estimated by the authors 53
xiii
xiv List of Figures
Fig. 2.6 Progress in import substitution: apparent consumption

of manufactures, 1913 (percentage upon total value).
Source: Dirección General de Comercio e Industria (1927) 57
Fig. 3.1 Prices of the main Bolivian export commodities,
1870–1950. Note: Tin prices are plotted in the right axis.
Sources: MOXLAD 83
Fig. 3.2 Composition of Bolivian exports, 1900–1950 (%). Notes:
Data for bismuth and rubber were unavailable in 1936–1941,
1943–1944, 1946–1947 and 1949. Sources: Bolivian official
foreign trade statistics 85
Fig. 3.3 Bolivian exports, 1900–1950 (millions US$ at current and
constant values). Sources: Peres-Cajías and
Carreras-Marín (2018)87
Fig. 3.4 Terms of trade of Bolivia, 1900–1950 (1913 = 100).
Sources: Gómez (1978), Arroyo-Abad and Maurer (2011)
and own estimation based on Bolivian official foreign
trade statistics and MOXLAD 91
Fig. 3.5 Nominal and real exchange rate of Bolivia related to US$,
1900–1950. Note: The real exchange rate is plotted in the
right axis. Sources: The nominal exchange rate has been
obtained from Mc Queen (1925) and Bolivian Central Bank
Yearbooks. The real exchange rate comes from authors’ own
work based in the Bolivian nominal exchange rate, the US
Consumer Price Index presented by Officer and Williamson
(2017) and the Consumer Price Index calculated by
Herranz-Loncán and Peres-Cajías (2016) 93
Fig. 3.6 Purchasing power of Bolivian exports, 1900–1950 (1913 = 100).
Sources: Authors’ own work based on Peres-Cajías and
Carreras-Marín (2018) and MOXLAD 97
Fig. 3.7 The return value of mining, 1900–1950 (%).
Sources: Peres-Cajías (2015a, 2015b) and Gómez (1978) 99
Fig. 4.1 Brazil’s export performance. Above: total exports (logs),
values at current and constant (1913) prices, 1821–1913.
Below: exports per capita, US$, Brazil and the United States,
values at constant (1913) prices, 1821–1913. Sources: Brazilian
export value: Absell and Tena-Junguito (2016). Brazilian
population: Yáñez, Rivero, Miró, and Marín (2014). United
States population and export value: Carter et al. (2006).
List of Figures
xv
Notes: The current value of exports is deflated by a Fisher

export price index that includes the international prices of six
products (cacao, coffee, cotton, hides, sugar and rubber),
the base year being 1880–1882, indexed to 1913 116
Fig. 4.2 Openness of Brazilian economy, percentage of total exports
in GDP, values at current prices, 1821–1913. Sources: Exports:
Absell and Tena-Junguito (2016); GDP: Tombolo and Sampaio
(2013), Contador and Haddad (1975), Goldsmith (1986) 119
Fig. 4.3 Indices of import and export prices and terms of trade
(1913 = 100), 1821–1913. Sources: Export price index: Absell
and Tena-Junguito (2016); Import price index: Absell and
Tena-Junguito (2017) 120
Fig. 4.4 Index of trade-weighted real effective exchange rate (REER)
(1913 = 100), 1821–1913. Sources: Bilateral nominal exchange
rates: Denzel (2010), Nunes, Mata, and Valério (1989),
Braun-Llona et al. (2000); Partner price indices: Mitchell
(2007a, 2007b), Nunes, Mata, and Valério (1989),
Braun-Llona et al. (2000). Brazil price index: see endnote.
Geographical distribution of exports: Sturz (1837),
Brazil (Various years), Brazil. Ministério da Fazenda
(Various years), Brazil. Sebastião Ferreira Soares
(Various years), Brazil. Alfândega do Rio de
Janeiro (Various years), Brazil (1939) 121
Fig. 4.5 Purchasing power of exports, 1827–1913. Source: Export
value: Absell and Tena-Junguito (2016); Import price index:
(Absell and Tena-Junguito, 2017). Note: Calculated as the
current value of exports deflated by the import price index.
The import price index is the geometric average of six chained
Laspeyres indices, each constructed using a different base year.
See Absell and Tena-Junguito (2017) for complete description 136
Fig. 5.1 Chilean exports, 1830–1930 (in current and constant (1913)
million $US). Source: Díaz et al. (2016) 154
Fig. 5.2 Nitrate exports, 1880–1930 (percentage share over total exports).
Source: Own elaboration base on Díaz et al. (2016) 157
Fig. 5.3 Average product per worker, 1880–1936 (in tons per worker).
Source: Own elaboration based on Cariola Sutter and
Sunkel (1983) 159
xvi List of Figures
Fig. 5.4 Exports, 1880–1930 (percentage as a share of GDP).

Source: Díaz et al. (2016) 163
Fig. 5.5 Export composition, 1880–1930 (as a percentage of total).
Fig. 5.6 Export and import prices, 1880–1930 (1913 = 100).
Fig. 5.7 Terms of trade, 1880–1930 (1913 = 100). Source: own
elaboration based on Díaz et al. (2016) 165
Fig. 5.8 Real exchange rate of Chile, 1830–1940 (1913 = 100).
Fig. 5.9 Direct contribution to economic growth, 1830–1945
(as a percentage of GDP). Source: Own elaboration. To avoid
any bias due to atypical levels, the series were smoothed with
the Hodrick-Prescott filter 169
Fig. 5.10 Cost and tax, 1880–1923 (percentage share over Saltpeter
exports). Source: own elaboration based on Reynolds (1965) 171
Fig. 5.11 Export’s purchasing power, 1870–1930 (1900 = 100).
Fig. 5.12 Imports by type of goods, 1882–1950 (as a %).
Source: Badia-Miró and Ducoing (2015) 177
Fig. 6.1 Value of exports 1835–1929 (millions of dollars at constant
prices of 1910–1914). Sources: Goods + Gold: until 1898
Ocampo (1984); afterwards GRECO (2002). Goods: until
1905–1909 Ocampo (1984); afterwards GRECO (2002).
Note: Nominal values of exports were deflated with the
export price index of Ocampo (1984, Table 2.4, series 3 (for
1854–1910), series 2b (for 1835–1854)) and in Ocampo and
Montenegro (1984, Table A-2 series 4A). The data was then
converted into dollars at the exchange rate of 1910–1914 199
Fig. 6.2 Share of the five main products in total exports (%).
Sources: up to 1906–1910, Ocampo (1984, Table 2.7);
onwards GRECO (2002) and Ministerio de Hacienda (1919) 201
Fig. 6.3 Terms of trade (1870 = 100). Sources: Ocampo (1984,
Table 2.5); for 1905–1928, Ocampo and Montenegro (1984).
Note: For the earliest period, the relationship between the
price of gold and textiles is used; in the next period the price
of exports was weighted based on the composition of exports
in 1855–1858, and so on. The price of imports was weighted
List of Figures
xvii
based on the composition of imports during the period

1890–1899 for all but the oldest curve. Laspeyres indexes
are used in all cases 202
Fig. 6.4 Exports and imports (millions of dollars). Sources: until 1898
Ocampo (1984); onwards GRECO (2002) 205
Fig. 6.5 Ambalema—Price of tobacco in three nodes of the commodity
chain (pesos de ley/quintal). Sources: The prices paid to the
farmer and the landowner were converted to pesos de ley per
quintal from data provided by Sierra (1971, pp. 147–148) and
Safford (1965, chap. 5). The import price in Bremen was
converted to pesos de ley per quintal from data in Ocampo (1984,
pp. 222–223). Note: The import price of 1849–1850 is that of
1850; the import price of 1860–1861 and 1861–1862 is the
average of each pair of years; the import price for the second
half of 1862 (1862-II) is that of 1862. Note about currency: In
those years there were two monetary account units: the old
peso de 8/10, inherited from colonial times, in which 1 peso is
formed out of 8 reales, and the republican peso de ley that
worked with the decimal system. One peso de 8/10 was thus
equal to 0.8 pesos de ley, although both were based on silver 209
Fig. 6.6 Montes de María—Price of raw tobacco in the four main
nodes of the commodity chain, 1855–1913 (constant pesos
de ley of 1892/quintal). Sources: for prices paid to the grower,
the broker, and the bag’s value, Colmenares (2017). For import
price in Bremen, Ocampo (1984, pp. 222–223). Note: To
estimate constant pesos, nominal prices were deflated with
a series of prices of food in Barranquilla, available for the
interested reader upon request 211
Fig. 6.7 Land prices in three exporting regions (pesos de ley/hectare).
Sources: Montes de María: Colmenares (2017); Cundinamarca
and Antioquia: Palacios (1983) 219
Fig. 7.1 Mexico’s export value. Above: 1870–1930 (fob values in dollars,
current and constant (1913) prices). Below: 1820–1913 (total
values in dollars at current prices). Sources: Above:
see Kuntz-Ficker (2007, 2010) for primary sources and method.
Below: Kuntz-Ficker and Tena-Junguito (forthcoming),
Kuntz-Ficker (2010), Bulmer-Thomas (2014) 241
xviii List of Figures
Fig. 7.2 Real bilateral exchange rate (with the USA), 1885–1929
(1913 = 100). Sources: For US price consumer index,
Officer (2010, pp. 142–145). For Mexico City price index,
Gómez Galvarriato and Musacchio (2000, pp. 76–77).
For Mexico’s nominal exchange rate INEGI (1885, II,
pp. 810–811)245
Fig. 7.3 Mexico’s net barter terms of trade (of commodity and specie
exports) and productivity in the mining sector, 1870–1929
(1913 = 100). Sources: output per worker was calculated with
information taken from Flores Clair et al. (1985, pp. 17–18),
González Reyna (1956), El Colegio de México (1961, pp. 131,
139, 140, 173), INEGI (1985, I, p. 404). Import price index
taken from Kuntz-Ficker (2007, pp. 495–496). As for the
export price index, a Fisher index with 1913 = 100 was built 247
Fig. 7.4 Mexico’s export basket, 1910 (percentage share in commodity
export value). Note: rubbers: rubber and guayule; fibers:
henequen and ixtle; animal products: cattle, hides and
skins; other minerals: antimony, zinc, and graphite; fine woods:
cedar and mahogany. Source: elaborated from information in
Kuntz-Ficker (2010) 252
Fig. 7.5 The return value of exports, compared to their total value,
1880–1929 (dollars at constant 1913 prices). Note:
elaborated from Sherwell’s estimates for 1910 and 1926 on
the share of export value that stayed in Mexico (return value)
or was remitted abroad (leakage) by export group. For our
estimate, we weigh the yearly share of each group in the total
value of exports and take the proportions given by Sherwell for
1910 and 1926 as upper- and lower-bound estimates for the
return value in each year. Source: Sherwell (1929) 254
Fig. 7.6 The structure of Mexican imports, 1870–1928 (percentage
upon value). Note: PG: production goods; CG: consumption
goods. Sources: own elaboration according to the
reconstruction of value and composition of trade in
Kuntz-Ficker (2007, p. 277 and ff.) 257
Fig. 7.7 Composition of railroad cargo, 1906–1907 (percentage
upon total tonnage). Note: For sources and railroad
companies included, see text 260
Fig. 7.8 Mineral and oil exports according to their degree of
processing, ca. 1929 (percentage upon volume).
Source: Kuntz-Ficker (2010) 262
List of Figures
xix
Fig. 7.9 Type of energy consumed in Mexican industries,

1929 (value in millions of pesos). Source: Secretaría de la
Economía Nacional (1933). *Includes textiles, leather articles,
foods, tobacco, paper, jewerly, graphic arts, and art objects 265
Fig. 8.1 Value of exports (millions of current dollars).
Note: Zegarra (2017) provides an explanation of the sources 282
Fig. 8.2 Export quantum (millions constant dollars of 1913).
Notes: The figure depicts the index of export quantum
(1913 = 100). For a discussion of the sources of
information, see Zegarra (2017) 282
Fig. 8.3 Export and import prices and terms of trade (1913 = 100).
Notes: The indexes of export and import prices were
expressed in gold dollars. The index of terms of trade was
calculated as the ratio between the index of export prices
and the index of import prices. The index of export prices
comes from Zegarra (2017). The index of import prices was
calculated using information from Seminario (2015),
pp. 865–868, 1026 283
Fig. 8.4 Nominal and real exchange rates. Notes: The nominal exchange
rate is expressed in soles per dollar. The real exchange rate
(RER) is an index and was calculated as RER = NER × IPf/IPd,
where NER = nominal exchange rate, IPf = index of foreign
prices and IPd = index of domestic prices 285
Fig. 8.5 Index of Herfindahl. Notes: The figure depicts the index of
Herfindahl of the export sector. I took into account the value
of the main Peruvian exports listed in Table 8.1. The index of
Herfindahl measures the sum of the square of the participations
of all export products. This index can take values between 0
and 1. A greater value of the index indicates that the export
sector is more concentrated. For a further discussion on the
sources of information for the calculation of the value of
exports, see Zegarra (2017) 295
Fig. 9.1 Terms of trade for six Latin American countries
(weighted average), 1913 = 100. Sources: data provided
by authors of Chaps. 2–8 of this volume 327
List of Tables
Table 2.1 Rates of variation of Argentine exports, 1875–1929 43

Table 2.2 The direct impact of exports on GDP growth,
1875–1929 (percentages calculated at current values of
GDP and exports, in dollars) 47
Table 2.3 Exports with and without value added 56
Table 3.1 Export growth rate, volatility and exports per capita 88
Table 3.2 Direct contribution of exports to GDP growth 95
Table 3.3 The composition of Bolivian imports, 1913–1927 (%) 98
Table 4.1 Per annum growth rates of total, coffee, sugar, cotton and
rubber exports, values at constant (1913) prices,
1821–1913117
Table 4.2 Commodity composition of exports, percentage of
total exports, values at current prices, 1821–1913 118
Table 4.3 Direct contribution of exports to GDP, values at
current prices, 1821–1913 123
Table 4.4 Share of exporting houses in total export of coffee
from Rio de Janeiro and Santos, 1858–1899 126
Table 4.5 Cost per sack of coffee, in réis and US dollars, and
percentage of final price retained for each stage of
the commodity chain, Rio de Janeiro, 1880s 127
Table 4.6 Foreign public and private investment attributed to
the export economy, 1824–1913 130
xxi
xxii List of Tables
Table 4.7 Composition of imports by categories, percentage

in total imports, Brazil and Rio de Janeiro, 1841–1913 134
Table 5.1 Rate of variation and value of Chile’s commodity
exports, 1870–1930 156
Table 5.2 Direct contribution to economic growth, several periods (%) 168
Table 6.1 Annual growth rate (%) 200
Table 6.2 Foreign trade indexes 203
Table 6.3 Tobacco prices received by different social
classes: Ambalema vs. Montes de María 213
Table 7.1 Value and rate of variation of Mexico’s commodity exports,
1870–1930244
Table 7.2 The contribution of (commodity) exports to GDP growth,
1895–1929 (percentages) 249
Table 8.1 Goods included in the calculation of the value of exports
and the index of export prices 281
Table 8.2 Indicators of the export sector, 1830–1930 283
Table 8.3 Calculation of the contribution of exports to GDP growth 292
Table 8.4 Annual growth rates (%) 297
Table 9.1 Export indicators for seven Latin American countries 315
Table 9.2 A provisional typology of export-led growth in seven Latin
American countries 323
Table 9.3 Frequency of rankings by country 324
1
Latin America’s First Export Era:
Reassessing Its Economic Contribution
Sandra Kuntz-Ficker
Introduction
This book deals with the first Latin American export era. By this term, we
refer to the first time that Latin American countries engaged as indepen-
dent entities into a process of global economic integration. The period of
this phenomenon is usually dated between 1870 and 1929, but in some
countries it started earlier (e.g. Brazil), while in others it finished rather
I would like to thank El Colegio de México and particularly Dr. Erika Pani, dean of the History
Department, for their continuous support to all my research endeavors. I also thank the
participants in this volume for their enthusiastic collaboration and their commitment to this
collective project. Many colleagues commented previous versions of the overall framework and of
particular chapters, in events that include the III Jornadas of the Mexican Economic History
Association (Mexico City, 2015), the XVII World Economic History Conference (Kyoto, 2015), and
the V Congreso Latinoamericano de Historia Económica (CLADHE V) (Sao Paulo, 2016). My
sincere appreciation to all of them. I would also like to acknowledge the research assistance of
Mario Alberto Naranjo, who has accompanied and facilitated my labor throughout this project.
Finally, I wish to thank the collaboration of Francisco Blancarte in the translation or revision of
the English versions of some of the chapters in this volume. The usual disclaimer applies.
S. Kuntz-Ficker (*)
El Colegio de México, Mexico City, Mexico
© The Author(s) 2017 1

S. Kuntz-Ficker (ed.), The First Export Era Revisited, Palgrave Studies in Economic
History, https://doi.org/10.1007/978-3-319-62340-5_1
2 S. Kuntz-Ficker
late (like in Bolivia). This age of exports took place amid what we here
call the first globalization, a process of international economic integra-
tion made possible by technological progress (that reduced transporta-
tion costs and increased income and demand) and relatively lower barriers
of trade in the more advanced countries, as well as the progressive diffu-
sion of the gold standard. We are aware that there were other globaliza-
tion processes before, but maintain that this was the first one that came
about under the imprint of the Industrial Revolution, thus representing
the earliest globalization of the modern era. Some of its distinctive fea-
tures were a new intensity and scope of integration and the fact that it
took place in several dimensions, which included the movement of goods,
people, and capital across boundaries.1
A series of real or presumed commonalities and scholarly tradition
have made of Latin America a customary unit of analysis. This is so in
many disciplines within the social sciences and certainly in economic his-
tory and historical sociology. From enduring traditions like structuralism
and dependency theory to more recent interpretive notions and an array
of publications, Latin America appears as an entity susceptible to a com-
prehensive approach.2 Colonialism, independence, and an overall similar
timing in the adoption of successive patterns of development (export-led
growth, import substitution industrialization, export-led growth again)
explain and to an extent justify that perspective. In fact, general interpre-
tations have been very useful in defining a research agenda, orienting
empirical studies, and setting the terms of the debate within our disci-
plines. However, there are clear limitations to what an interpretive gener-
alization may contribute to our understanding of historical processes.
Considering how each Latin American country is so different in terms
of its resource endowments, initial conditions, social structure, and polit-
ical and economic institutions, why should a common phenomenon
have the same impact and consequences in every single country? How far
can one go in introducing nuances and differentiating each particular
case when the declared aim is to embrace them all under a single interpre-
tive formula? Would it not be more rewarding to proceed inductively
and, by putting together several case studies, progressively build an inter-
pretive synthesis?3 In contrast with a general model, a synthesis would
identify, within the set of countries under analysis, features that hold
different degrees of generality, some belonging to every country, while
1 Latin America’s First Export Era: Reassessing Its Economic... 3
others correspond to specific subsets, and even some more revealing

peculiarities that characterize exclusively a single country. In order to ful-
fill that purpose, case studies should be oriented by a similar set of ques-
tions or concerns and, to the extent that the availability of information
allows it, build the necessary evidence, translate it into analytical param-
eters or quantifiable indicators, and present it in a uniform manner. This
effort at standardization of criteria and procedures should not preclude
the detection of historical specificities and singular features, which should
emerge from the in-depth analysis of each case.
That is precisely the purpose of this book. Our aim is to adopt a com-
mon set of parameters in order to assess the economic contribution of
exports for a group of Latin American countries during the first export
era.4 To do this, we draw from the contributions made by the more
important scholarly traditions in Latin American thought. We intend
to translate some of the most popular claims of structuralism, depen-
dency theory, and other interpretive frameworks into testable hypoth-
eses, which will be tried out empirically on a case-by-case basis.5 By
these means, we aim to contribute building an interpretive approach
that values comparison and the finding of regularities—useful to
explain patterns and outcomes—on the one hand and on the other
holds in high regard the recognition of irreducible specificities that defy
generalization. The countries selected for this analysis are representative
of different geographic locations within the region, as well as varied
resource endowments and patterns of specialization. We present them
in alphabetical order, as follows: Argentina, Bolivia, Brazil, Chile,
Colombia, Mexico, and Peru.
The rest of this chapter is organized as follows. The second section
briefly summarizes the different views on Latin American development
and some recent approaches that help contextualize our own endeavor. A
third section proposes a shift in the perspective from which the first
export era is judged, aiming to place it within the appropriate historical
context. The fourth section provides the analytical framework that we
adopt in this book. Firstly, it presents the descriptive indicators of export
performance that every chapter employs as a preamble for the analysis of
the economic contribution of exports. Secondly, it describes the analytical
parameters that we shall use to conduct that analysis. The chapter closes
by briefly describing the contents of this volume.
4 S. Kuntz-Ficker
iews on Latin American Development

V
and Our Proposal
In the decades that followed World War II, Latin American scholarship
experienced a remarkable blooming that resulted in some of the more
persuasive and forceful ideas about the economic development of the
region since the last third of the nineteenth century. If structuralism was
the more pervasive one in terms of its influence upon international agen-
cies and the public policies of many governments in Latin America,6
dependency theory, in all its variants and shades, has perhaps been the
more enduring one in the economic culture of the region.7 In both
schools of thought, the first export era was depicted in a negative tone.
Even though it is not our intention to oversimplify this rich current of
ideas, it is also not our purpose to explain them in too much detail.8
Following some of the more representative proponents of these traditions
and referring only to what is of interest for our purposes, we can sum-
marize their views in the following broad lines.
According to dependency theory, in the last decades of the nineteenth
century, Latin American (peripheral) economies were incorporated into
the international division of labor as suppliers of primary goods for the
consumption of the more advanced (core) economies. This interaction
defined the relationships established between them as “dependency rela-
tions”, and the kind of development that emerged as a result as “depen-
dent” (Dos Santos, 2011, pp. 166, 172).
Inside the export economies, the production of goods destined for the
international market was increasingly controlled “from outside” by capi-
tals and firms originated in the central economies. This process took place
by means of the creation of production units scarcely related to the local
economy but closely associated to the rhythm and needs of the core econ-
omies, called “enclaves” for this very reason. Enclaves represented the
more dynamic sectors of the economy, as they were in fact “some sort of
technological and financial extension of the central economies” and con-
centrated most of the investment and wealth creation. Their dynamism,
however, hardly spread to the rest of the domestic economy: “benefits
generated by capital (taxes and wages) barely circulated within the depen-
dent nation, rather they increased the capital mass available for invest-
ment in the central economy” (Cardoso & Faletto, 1971, pp. 49, 53).
Low wages for native workers constrained the growth of the internal mar-
ket, while the concentration of resources in the export sector and the leak
of income abroad limited the possibilities for domestic capital accumula-
tion, distorting economic development and obstructing industrialization
(Bambirra, 1978, pp. 75–77).
A couple of decades before the thorough formulation of these ideas by
dependency theory, structuralism had provided the seed that gave birth to
this perspective. It consisted of the notion that, within the context of an
international division of labor that consigned Latin American countries to
a pattern of specialization in primary production, terms of trade for pri-
mary products deteriorated over the long run. This caused a persistent loss
of income for primary exporters, which, along with specific consumption
patterns favoring imported products, hindered capital accumulation and
delayed the possibility of industrialization. The perception of industrializa-
tion as a more desirable development path accentuated the negative view
regarding primary specialization and export-led growth (Prebisch, 1986).
The way in which these interpretive paradigms evolved is somewhat
odd. On the one hand, while the general picture they offered was con-
stantly repeated and even “applied” to the explanation of specific phe-
nomena, many of their main claims were never proven by means of
rigorous empirical evidence (Chilcote, 1994, p. 131). On the other, their
influence faded over time without being replaced by new, competitive
paradigms. Far from that, they kept their influence in broad academic
circles and were deeply internalized in the economic culture of Latin
America. In a recent appraisal on “The Paradigms of Development in
Latin American History” (Ocampo, 2008), José Antonio Ocampo
referred to structuralism and dependency theory as “the most salient
trends” in this realm. Around the same years, John Coatsworth celebrated
the renewed interest for the big questions once inspired by those schools
of thought, and highlighted their enduring contributions beyond their
interpretive flaws (Coatsworth, 2008). Not only has this conventional
wisdom not been replaced, but with few exceptions it has not been sys-
tematically criticized or utterly rejected either, which raises doubts about
the commonplace statement that structuralism and dependency theory
were overcome a long time ago.
6 S. Kuntz-Ficker
It is true that, in the past two decades, many works have questioned
the pertinence of both schools to understand the phase of Latin American
history known as the first export era. According to some, structuralism
was defeated by the crisis of the import substitution model that it boosted,
rather than by academic debate (Fishlow, 1987, p. 293). Dependency
theory has been subject to theoretical criticisms that highlight its meth-
odological weakness, its lack of empirical evidence, or the ideological bias
often associated with the scholarly approach.9 On occasions, the ques-
tions and outcomes of empirical studies differ or even contradict this
theory’s claims but do not confront them explicitly. In any event, the
accumulation of queries and reservations has fostered a rising consensus
about the limitations of those approaches to give an account of the phe-
nomenon in all its complexity and its variety when it comes to particular
nations, states, or economic sectors. This uneasiness, however, has not yet
led to a new interpretive paradigm that would replace the now conven-
tional one, although some very significant and embracing contributions
have come to light in the past couple of decades.
Let us provide a few representative examples of this recent literature. In
1994, Victor Bulmer-Thomas published a book on Latin American eco-
nomic development that constitutes an important contribution in this
realm. Especially appealing for our purposes is the idea of assessing the
performance of each country under the export model by means of some
uniform criteria (Bulmer-Thomas, 2014, pp. 55–73).10 Against what a
dependency theory follower would be ready to admit, this approach
implicitly assumes that there was a positive contribution of this pattern
of development, although to a varied extent. Another endeavor worth
mentioning is the work by Bértola and Ocampo (2012). The authors not
only provide an interesting historical synthesis for the entire region but
also pay special attention to issues relating to the effects of the different
patterns of growth upon wealth and income distribution. They also offer
new insights on the role of the State, public policies, and institutions in
economic development. In both cases, the aim of the inquiry is to pro-
vide a general view of Latin American development from independence
to the present, and thus the age of exports and the debate with specific
schools of thought are not at the center of their concern.
The purpose of this work is to provide a set of analytical parameters

that would allow for the assessment of the contribution of exports to the
economy and, by doing that, test some of the main claims made by con-
ventional interpretations, be it structuralism, dependency theory, or more
current approaches.11 Even though in general they consist of quantifiable
indicators, in cases in which statistical information is weak or not avail-
able at all, those indicators are presented as qualitative appraisals, which
must be, in any event, based upon empirical evidence. The aim is that
these parameters be used for the study of a series of representative cases of
export-led growth in Latin America in order to facilitate comparison and
evaluate in which countries and to what extent those claims are still valid
or should be left behind. Although the parameters are thought to be
employed for the study of countries, they may also be used to assess the
contribution of exports in certain regions (infra- or supranational), sec-
tors (operating inside a specific country or in different countries), or
products. Ideally, the accumulation of case studies will lead to some sort
of typology within which we would be able to state under which condi-
tions the contribution was larger, smaller, or nonexistent. At some point
it might also lead, by an inductive track, to a new interpretive synthesis
that incorporates general aspects and common features as much as shades,
differences, and specificities of the cases analyzed, that is to say, the
“anomalies” within the conventional wisdom. This would eventually lead
us to overcome what, in my opinion, is one of the main flaws of the con-
ventional wisdom, namely, an excessive generalization.12
It is not our intent to replace a negative view of the first export era with
an uncritical positive one. Some shortcomings of outward-looking devel-
opment are out of question, such as the influence of external forces (like
investment cycles or demand) in the growth process, or the structural
distortions that may generate an excessive specialization or monoculture
within an economy, among others. However, this approach adopts a dif-
ferent point of departure from the one that appears to underlie
conventional approaches. It consists of acknowledging that, under the
conditions prevailing in these economies by the last third of the nine-
teenth century (scant internal saving, small and fragmented markets,
high costs of domestic transport), inward-looking development was not a
real option either in the short- or midterm. Nothing suggests that, had
8 S. Kuntz-Ficker
those countries kept the same trajectory, an endogenously generated force

would have led them to sustained growth via industrialization oriented to
the domestic market. Under these conditions, integration to the world
economy opened up a window of opportunity for those countries to
restart a process of economic growth after decades of stagnation or decay
and begin a process of transit to modern economic growth. If we accept
this assumption as a starting point, perhaps we might agree that together
with negative features, export-led growth offered some important bene-
fits to the economies that adopted it. Inasmuch as the former have been
frequently presented in the structuralism and dependency theory tradi-
tions, our purpose is to assess if and to what extent the latter were present
in each particular case, in order to arrive to a new and more balanced
appraisal of this historical period. In sum, the idea is to evaluate if and to
what extent, within the frame of possibilities established by this pattern
of development, the boom of exports produced effects that favored eco-
nomic growth and structural change.13
This book presents studies on seven Latin American countries during
the first export era. The analysis takes the pattern of growth as given and
considers international prices, terms of trade, and other variables related
to the international economy as exogenous. Even though we do not
employ formal technics, we build qualitative and quantitative evidence to
study the export sector from the perspective of partial equilibrium analy-
sis. This means that changes in export volume and prices are exogenous
and exert direct and indirect effects upon the growth and performance of
the economy. At times this partial framework is extended to capture link-
ages among sectors and over time.
re-existing Conditions and Available

P
Alternatives: The Scope of the Possible Impact
The first export era has often been judged through the light of develop-
ment options that seem more convenient within some theoretical frame-
works. For one, it is common to sustain that inward-looking development,
based on internal savings and oriented to the domestic market, provides
more solid ground for long-term economic growth than a model based
upon external capital and demand, both subject to the cycles of the inter-
national economy. Equally spread is the notion that industrialization rep-
resents a more efficient path to development, one that is exempt from the
flaws of the primary sector (diminishing returns, inelastic demand, etc.).
These abstract prescriptions are presented as better alternatives relative to
those that were actually adopted: if they had been put in practice, they
would have yielded superior outcomes in terms of long-term economic
development.14 Even if these assertions were correct in terms of economic
reasoning (and that is also subject to discussion), they suffer from anach-
ronism, as they postulate development alternatives that were unfeasible
under the actual historical circumstances of the Latin American countries
in the last third of the nineteenth century.
We start from the idea that any effort at reevaluating the economic
contribution of exports to the Latin American economies should main-
tain a realistic appreciation of the situation in which they found them-
selves by the time in which conditions in the international economy
opened a window of opportunity to expand their export sectors. If the
domestic market was small and fragmented and internal savings rickety,
there is no reason to think that inward-looking growth was a feasible
option. The previous trajectory of most of the Latin American countries
confirms this diagnostic. Far from that, amid such conditions the resource
to external savings and external demand appears as sine qua non requi-
sites to start up a process of economic growth. Because of the same rea-
sons, a revaluation of export-led growth should not take as a departure
point the contrast between the growth achieved during the export era and
the one that would have been achieved under a pattern of growth based
on inward-oriented industrialization, since this last path was simply not
available. On the contrary, it should compare the growth achieved under
the former with the growth that would have been achieved had the previ-
ous trajectory been continued. Nothing in this path makes us think that
overall conditions for development would have changed dramatically
without the intervention of exogenous forces.
On the other hand, we need to consider that the dimensions of the
export boom depended on the resource endowment of each country,
including its geographic position, and its capacity to respond to the
stimulus of external demand. An economy with a varied resource
10 S. Kuntz-Ficker
endowment, able to produce exports that were in high demand during

a long period of time, should have experienced a more successful
export growth than one constrained by scarce resources, lack of trans-
portation, or the production of commodities that would soon find
synthetic substitutes. As for the impact of export-led growth, it was
necessarily subject to initial conditions and to the specific circum-
stances (internal and external) in which the whole process evolved,
which were not the same for all Latin American countries. In a small,
poor economy, the positive contribution of exports might have con-
sisted on facilitating some degree of economic modernization (like
infrastructure and public services, for instance). It would be unrealistic
to expect farther-reaching results, and it would be out of place to criti-
cize the export-led growth model for not yielding higher benefits. In
contrast, in a larger and more complex economy, successful export-led
growth should have sparked industrialization. That is the prism
through which we should judge the outcomes of the model; however,
these are not warranted, as there are factors that could have impeded
exports from benefiting the economy as a whole and that should be
detected by the analysis.15
Other aspects that need to be evaluated in this regard have to do with
the degree of diversification and geographic scope of the export sector,
inasmuch as both factors necessarily affected its performance and
potential for contributing to economic development. An economy in
which the export sector is constrained to a limited number of products
is more likely to suffer because of changes in external demand than one
that enjoys a broad productive diversification. Diversification, on the
other hand, is usually accompanied by a broader geographic diffusion
of export activities, at least to the extent that comes as a result of a var-
ied resource endowment within a country’s territory. Inversely, the con-
centration of the export sector within a limited area may restrict its
links with the internal sector and reduce spillovers and positive exter-
nalities upon the rest of the economy, particularly if that area is geo-
graphically distant from the rest of the country. A larger variety and
geographic diffusion of exports may thus increase their potential eco-
nomic contribution.
he Analytical Framework: Making

T
the Analysis Operational
One of the main criticisms that structuralism and dependency theory
have raised refers to the lack of empirical evidence supporting their
hypotheses. In the case of the latter, there seems to be a widespread resis-
tance to even build operational indicators, as many dependency thinkers
“view dependence as a situation which is unsuitable to empirical analy-
sis”, strongly opposing “anything other than a historical structural analy-
sis of dependency” (Farmer, 1999, p. 29).16 Our assertion is that those
ideas and hypotheses may be confronted to empirical evidence, so long as
we translate them into operational indicators. In order to do this, we start
by expressing some of their claims with the language of growth theory
(Kuznets, 1970).
Translated to this language, the criticism posed by those schools against
the primary-export model could be condensed into a few central ideas.
Firstly, the main problem of the first export era is that it stalled economic
growth and hindered or distorted structural changes that could have con-
tributed to the transit to a modern economy. For dependency thinkers,
an enclave economy would have represented a brake to growth because of
two main reasons: one, because of its scarce links with the internal sector
of the economy, and two, because of the outflow of benefits generated by
the export sector to the central economies. Secondly, structural change
would have been distorted or obstructed by the disconnection between
export enclaves and the rest of the economy. For instance, infrastructure
would have benefited enclave areas exclusively, leaving aside domestic
activities (Bambirra, 1978, p. 76); and population would have
concentrated in areas of agricultural or mining production (enclaves)
delaying urbanization and industrialization. Other changes would not
have taken place whatsoever or only to a negligible extent. For example,
the rather limited wage spillover would have deterred the conformation
of an internal market, while the leak of benefits abroad would have hin-
dered internal savings and domestic capital formation, delaying the
beginning of industrialization (Cardoso & Faletto, 1971).
12 S. Kuntz-Ficker
Even though the parallelisms between dependency theory and growth

theory should not be taken too far, the use of this language to identify
the possible limitations of an export-oriented model to generate eco-
nomic growth facilitates the construction of operative variables that
may be contrasted with empirical evidence. We must warn that the set
of indicators and parameters that we propose is by no means exhaus-
tive, as many others could be included. However, taken together, they
allow for a first assessment of the economic contribution of exports and
of the extent to which export expansion translated into export-led
growth. This set of indicators and parameters is adopted in the chapters
that follow to reevaluate the economic contribution of exports during
the first export era in each of seven Latin American countries selected
for this purpose.
Some Indicators of Export Performance

Each chapter starts by describing the historical context and characterizing
the export cycle under analysis. Then, they provide some indicators of the
overall trends and performance of exports during the first export era.
Among these indicators are the yearly series of export values, in current
and constant prices, as well as their rates of growth for specific periods,
the terms of trade, and the real exchange rate.
The estimate of the current value of exports allows us to observe the
intensity and pace of their growth, be it because of the increase in their
quantity or their price. It also permits identifying the cycles that exports
experienced in the long term and, by means of comparison with other
countries, distinguishing between ups and downs originated by internal
factors from those stemming from the international economy. With
regard to the value of exports at constant prices, it allows us to discount
the effect of prices upon value exported and to identify variations that
originated in the volume of exports, which provides a closer idea of the
performance of the export sector. Naturally, this indicator also allows us
to observe the behavior of the latter in specific junctures and its short-
and medium term cycles. Exports’ value series are also used to calculate
their average rates of growth (in current and constant prices) throughout
the period, which provides an objective measure of the intensity, scope,

and duration of the export era.
A second indicator of performance is terms of trade (or net barter
terms of trade), calculated as the export price index divided by the import
price index. By building this indicator we may test the structuralism
notion that there was a secular decline in Latin American terms of trade
and explore the meaning of this phenomenon. In its original formula-
tion, Prebisch used a rough estimation of the relationship between prices
for primary products and those for industrial final products between
1876 and 1947 published by the United Nations and adopted it as a
proxy for terms of trade between underdeveloped and advanced countries
in that period. He interpreted the outcome of his estimate as a proof of a
long-standing decline on the terms of trade of Latin American primary
exports relative to the industrial imports originating in advanced coun-
tries (Prebisch, 1986).17 This observation became the core of structural-
ism’s criticism of export-led growth and of its advocacy for industrialization.
In its more widespread version, declining terms of trade represented a loss
of income for primary exporters that benefited the industrial nations,
which exported manufactures, which resulted in lower capital accumula-
tion and insufficient economic modernization. The corollary of this was
that the export model had damaged in a lasting way Latin America’s
capacity for economic growth.
Criticism of this view has been oriented to its empirical as well as its
theoretical dimensions. With regard to the former, the type and quality
of the information used for the estimate have been questioned. The theo-
retical criticism has to do with the meaning given to declining terms of
trade. Let us assume that the prices of exports and imports are exogenous
variables (that is to say, that Latin American countries are price takers). A
decrease in the price of exports relatively higher than the one produced in
the price of imports represents a loss of income for the exporting e conomy
if the production cost of exports remains identical. However, when that
exogenous decrease coincides with an increase in productivity (e.g. a drop
in production costs) within the export sector, the outcome is not a loss of
income for the exporting country. In this scenario, the loss would be
limited to the difference between the decrease in prices and the fall in
production costs and could be in fact nonexistent. This means that
14 S. Kuntz-Ficker
changes in the terms of trade should be considered alongside changes in

productivity in the export sector, in order to be able to provide an inter-
pretation for each particular case. Despite these critiques, the notion that
“productivity gains were passed on to consumers abroad in the form of
low and falling prices” (Bértola & Williamson, 2006, p. 29) still
persists.
More recently, Jeffrey Williamson’s work has rendered the interpreta-
tion of this phenomenon even more complex (Gómez Galvarriato &
Williamson, 2009; Williamson, 2010). This author has shed light upon
the fact that a fall in terms of trade, by making more expensive manufac-
tured imports vis-à-vis primary products’ exports, provides an incentive
for industrialization. On the other hand, increasing terms of trade
would have the opposite effect, namely, affecting industrialization as
imports become relatively less expensive. The outcome would be
deindustrialization.
One more performance indicator that is of interest for our purposes is
the real exchange rate (RER). It compares the price of a country’s basket
of goods with that of another country or countries. It is generally
employed as an indicator of competitiveness: an appreciation of RER
means that the prices of that country have become dearer relative to those
of other(s), decreasing accordingly its ability to compete in the other
country’s market. Inversely, a depreciation of RER signals an improve-
ment in the capacity of that country to compete, as it denotes a relative
decrease in the price of its basket of goods. We estimate RER as:
 ERo 
RER =  × PIf  / PIo
 ERf 
where ERo represents the nominal exchange rate of the country in

question (“own country”) and ERf that of the foreign country, PIf the
price index of the foreign country, and PIo the price index of the own
country. Although it is possible to build a multilateral RER (that is to say,
with regard to many countries), for our purposes it suffices to have the
bilateral RER, preferably relative to the more important trading partner
of the country in question.
The purpose of calculating RER is to detect the existence of the so-

called Dutch disease. This term refers to the possible causal relationship
between a great success in a particular economic sector and failure in
others within the same country. It is particularly appropriate to describe
the negative effects brought about by a sharp inflow of foreign currency
leading to the real appreciation of the exchange rate. A RER appreciation
would suggest that export success generates counterproductive effects
upon the other economic activities by making other products less com-
petitive in foreign markets. Even though the literature on the subject
usually focuses on the effects that RER appreciation has upon manufac-
tures, leading to some form of deindustrialization, in the case of prein-
dustrial economies in which the agrarian sector prevails, an effect of
“de-agrarization” has been suggested.18 In this sense, a possible effect of
Dutch disease within the context of an agro-exporting economy could be
the slowing down of the diversification of the export sector and the favor-
ing of a monoculture of the more successful commodity.
he Economic Contribution of Exports:

T
The Analytical Parameters
Once we have characterized the way in which a particular country expe-
rienced its insertion into the international economy and provided descrip-
tive indicators of its export performance, we proceed to assess the
economic contribution of exports. For that purpose, we propose the use
of some analytical parameters, most of which are well known for eco-
nomic historians but have not necessarily been used together with this
aim. First, we use some criteria to assess the direct contribution of exports
to economic growth, and then we present some indicators to evaluate
their indirect contribution.
Export Boom and Economic Growth: The Direct Impact
In macroeconomic terms, the direct contribution of exports to the economy

is a function of the size of the export sector and its pace of growth. Apart
16 S. Kuntz-Ficker
from the degree of openness, this parameter allows us to assess, first, if

exports grow faster than gross domestic product (GDP), and second to what
extent they contribute to its growth. This variable represents the more suit-
able way to weigh the direct contribution of exports to economic growth.
We calculate the contribution of exports to economic growth (I) as:
a×b
I=
c
where a represents the rate of growth of exports, b the share of exports

in GDP, and c the annual rate of growth of GDP.
One may argue that this figure is an overestimation of the net impact
of exports upon growth, seeing as resources employed in export activities
would find an alternative use if the latter did not exist. This could be true
particularly in the case of export activities carried out with domestic
resources, as it is likely that foreign capital would not invest at all in an
alternative—non-export—use. Even under that assumption (of domestic
assets), it is not guaranteed that those resources would be employed pro-
ductively. Many lands that became available through frontier expansion
would have remained idle had it not been for the stimulus provided by
external demand. As for domestic capital, if export opportunities were
not available, it might very well be invested in public debt bonds or
abroad. In any event, if the opportunity cost of these resources can be
estimated, it should be discounted from I in order to get the net contribu-
tion of exports to economic growth.
It is likely that the contribution of exports to economic growth was not
linear or uniform throughout the export era. It might have been larger at
first (relative to the size of the economy), smaller in the later stage (due to
economic diversification), and more stable in the mature phase of export-
led growth, or it might have followed a different, country-specific pat-
tern. For this reason, it is desirable to calculate this impact for the entire
period and for some relevant subperiods in each case.
Along with the direct contribution to GDP growth, it is also of interest
to mention other direct benefits of export activities, such as those related
to the expansion of the agricultural and demographic frontier, productive
diversification, and geographic specialization, among others. On the

other hand, it is important to consider the difference between the impact
of the export sector at a national level and the one that it may have had
at a regional (state, local) level. The direct contribution of exports appears
diluted in national accounts when growth rates in exporting regions are
averaged with those of regions that remained tied to traditional activities
and did not participate in exports at all. For this reason, if sufficient infor-
mation is available, it is desirable to estimate the direct impact not only
at a national level but also by state, province, or other administrative
units, as this would allow for the comparison in performance of entities
with and without export activities.
As important as it may be, the direct contribution of exports is only a
part of its economic contribution and, as such, it should not be overesti-
mated. In fact, if the direct impact of exports upon growth was too big, it
would suggest a hypertrophy that could be damaging for the growth
potential of the internal sector and the economy as a whole. The export
sector would absorb most of the resources and energies of the economy,
generating unbalances that would be hard to overcome in the midterm
once the export era was over. A more desirable situation would be one in
which the export sector could offer a moderate direct contribution and a
variety of indirect effects benefiting the economy as a whole, favoring the
development of the internal sector as well.
xport Boom and Economic Modernization:

E
The Indirect Impacts
The Return Value (RV)
Earnings yielded from the sale of products abroad (namely, the value of
exports) have two possible destinations: to remain in the exporting coun-
try or to go abroad. The share of export value that remains within the
exporting nation is called the return (or retained) value of exports. This
figure may be broken down into its different uses. It includes the pay-
ment to domestic factors of production (land, labor, and capital), the
purchase of domestic inputs consumed in the production of exportable
18 S. Kuntz-Ficker
goods and of domestic wage goods for the labor force employed in the
export sector (internal consumption linkages), the payment of taxes (at
the local, state, and national levels), and the reinvestment of foreign capi-
tal’s profits.
Return value may be estimated through the quantification of its differ-
ent uses (as enlisted above) or as a residual from the share of export earn-
ings that went abroad. This share is composed of two magnitudes
susceptible to estimation. On the one hand, there is the payment of fac-
tors of production coming from abroad. It includes remissions of profits
of foreign capital invested in the export sector or in activities associated
with it (including interests and repayment of debts) and remittances of
savings made by immigrant workers. On the other, there is the purchase
of inputs and wage goods abroad for consumption within the export sec-
tor (external consumption linkages). Capital profits and immigrant
worker’s savings may be gathered from the balance of payments—pro-
vided that the export sector was the principal destination of foreign direct
investment in productive activities and that the use of resources obtained
from foreign indebtedness may be ascertained. With regard to the value
of imports consumed in the export sector, it may be estimated so long as
the composition of imports as well as the requirements of the export sec-
tor and the propensity to consume imports by immigrant workers are
known. Adding the value of external remittances (from capital and labor)
and the value of imports consumed in the export sector, we get an e stimate
of the amount of export earnings that left the country (also known as the
“leak” of export gains). By discounting this figure from the total value of
exports, we arrive to the share that remained in the country, that is to say,
the return value of exports.
This concept is not commonly used within structuralism and depen-
dency theory.19 However, both of these traditions implicitly refer to this
magnitude when they assess the limitations to capital accumulation
imposed by the transfer of resources abroad. This transfer or “leak” would
result from the presence of foreign capital and workers in exporting
enclaves and from the consumption patterns of domestic oligarchies
(Cardoso & Faletto, 1971, p. 53; Prebisch, 1986). More recently, Bulmer-
Thomas took up this concept and used it to analyze the specific juncture
of World War I, validating the conventional view.20
The fact is that authors belonging to different scholarly traditions have

considered that the return value of exports was small for most of the
Latin American economies during the first export era. According to
dependency theory, the return value was in fact negligible, due to the
assumptions from which it departs. Firstly, that payment to domestic fac-
tors was meager, as most of the capital came from abroad and domestic
workers were poorly paid. Secondly, that inputs purchased in the local
market were scant, due to the limited productive capacity of the domestic
economy (because of excessive export specialization). Thirdly, that taxes
were low and mostly used to favor the export sector (Bambirra, 1978,
pp. 75–76). For its part, Bulmer-Thomas assessed that, during World
War I, there were situations that “reduced the returned value associated
with export growth in many countries and undermined the stimulus to
the non-export sector associated with the export-led model”. This hap-
pened in those countries where “foreign penetration of the export sector
was particularly marked” and was aggravated because “the extremely gen-
erous contract terms open to foreign investors at the time led to low tax
yields and to high profit remittances” (Bulmer-Thomas, 2014,
pp. 182–183).
An estimate of this parameter, even if it is only as an order of magni-
tude, is crucial to test this broadly shared view. Any value other than a
negligible one (such as the one represented by the payment of low taxes
and wages, which are the sole local spillovers often recognized) would
lead to temper the appreciation according to which almost all of the
wealth generated by exports was transferred abroad. Once return value is
estimated, it is interesting to break down its different destinations as pre-
cisely as possible, seeing as they reveal the use and potential benefit of
those resources for the domestic economy. This means revaluating the
participation of native investors (land and capital owners), the existence
of backward linkages provided by the demand of inputs and wage goods
by the export sector in the domestic market, as well as assessing the size
of the wage and fiscal spillovers. Some of these indicators are susceptible
to statistical reconstruction (as wages and taxes); others may be subject to
an informed guess (as the share of domestic capital in each branch of
export activity), and some others, even if hard to quantify, may at least be
identified (as the existence of backward linkages).
20 S. Kuntz-Ficker
Any evidence about these components of return value would allow us

to revisit, one by one, the elements that conform the notion of enclave
and its implications about the connection (or lack thereof ) between the
export and the internal sectors of the economy. For instance, confirming
the existence of native owners of land and capital involved in the export
sector allows us to infer that their profits generally contributed to increase
internal savings. Part of it may have generated internal consumption
linkages (increasing aggregate demand), and another may have been rein-
vested within or outside the export sector, thus contributing to capital
formation in the agricultural, mining, or industrial sectors. Wage spill-
overs may be estimated, even if roughly, by knowing the size of the labor
force employed in the export sector and the average wage by branch. Its
economic contribution consisted of consumption linkages that not only
increased aggregate demand but also represented a stimulus for produc-
tive activities outside the export sector, from primary goods (foods) to
manufactured products (textiles, foods and beverages, soap, shoes, etc.).
As for the fiscal spillover, besides estimating its quantitative dimension, it
is interesting to assess its impact upon the provision of public works and
services, often neglected in conventional views.
e Purchasing Power of Exports (PPX), Commercial Policy,

Th
and the Composition of Imports
One of the novelties of structuralism was the attention given to currency

availability as “a critical determinant of economic growth in peripheral
countries”. The reason was that, as primary exports faced an inelastic
demand, “income yielded from exports could be insufficient to purchase
the indispensable imports on which steady growth depended” (Fishlow,
1987, p. 296). The reasoning is right, but the extent to which exports
yielded enough resources to furnish the economy needs to be empirically
measured in each case.
Exports provide the producing countries with foreign currency that
may be channeled toward the acquisition of other goods in the interna-
tional market. The amount of imports that may be purchased with these
resources depends not only on the nominal value of exports but also on
the price of imports (or import price index, MPI). This indicator is
known as the purchasing power of exports (PPX). If we add the flows of
foreign investment (FI), we obtain the capacity to import (CI). That is to
say:
X X + FI
PPX = and CI =
MPI MPI
Strictly speaking, what is useful for our purpose is to calculate the

capacity to import that originates in sales abroad, which is the first of
these indicators (PPX). It is useful to estimate the size and growth of this
variable over time, as it indicates the extent to which exports provided the
economy with the capacity to carry out productive activities and foster
economic growth.
However, this indicator is insufficient to prove that the capacity to
import provided by exports was used productively. In fact, structuralism
and dependency theory acknowledge the existence of this stream of
resources but minimize their economic contribution assuming that they
were largely wasted in luxury consumption, generating an external
demand linkage that nullified their usefulness for the national economy.21
However, the type of goods purchased with foreign currency stemming
from exports is not predetermined and thus needs to be analyzed in each
case. Furthermore, as the composition of imports is also influenced by
tariff policy, we should first deal with the evolution of this variable—to
the extent that information allows it.
In many Latin American countries, tariff policy was for a long time
merely a fiscal device, as public finances depended to a large extent on
import duties. Starting at some point, the growth and diversification of
income sources (often associated to export success) allowed governments
to use tariffs as an instrument to achieve specific goals, such as fostering
economic modernization and protecting infant industries (Bértola &
Williamson, 2006, pp. 40–44). The more efficient way to achieve this
purpose was the design of “cascade tariffs” that lowered import duties for
capital goods and imposed higher duties for imports competing with
domestic industries. When enough information is available, we provide
22 S. Kuntz-Ficker
indicators of the structure of the tariff, which allow us to identify areas of

liberalization and others of active protectionism. By doing this, we may
be able to reveal the intentionality of the commercial policy and the
extent to which the State was using the scarce instruments of economic
policy at hand to pursue development goals. When this was the case, the
State would have been playing a role that, according to structuralism, it
only adopted in the 1940s (Bértola & Ocampo, 2012, p. 163).
Then, in order to evaluate the use given to the purchasing power of
exports, we analyze the composition of imports and the way in which it
evolved throughout the export era. By these means, we are able to assess
if these resources were employed unproductively, as dependency theory
assumes, or if their use changed toward a more productive manner, which
would also be favorable to economic modernization and industrializa-
tion. To the extent that industrial endeavors were in the hands of domes-
tic entrepreneurs, this would be a vehicle for technology transfer and
innovation that should be added to those recognized by the literature—
namely, immigrants and foreign investment (Bértola & Ocampo, 2012,
pp. 166–167).
Spillover Investments and Positive Externalities
Generally speaking, conventional interpretations of the first export era

consider that outward-looking growth imposed serious limitations to
economic modernization because of the constraints it posed on capital
accumulation and the concentration of resources in the enclave or export
sector. In order to revisit that perception it is necessary to evaluate how
and to which extent investment realized in infrastructure and other activ-
ities directly associated with the export sector constrained its reach and
effects to the boundaries of that sector or, on the contrary, surpassed
those margins or exhibited positive external effects benefiting the rest of
the economy.
This is a threefold task. First, it requires departing from the assump-
tion that all infrastructure and public works that were carried out during
the export era had as their sole aim to benefit the export sector. It might
be the case that the State used surplus resources originated in export
activities outside the export sector. This could happen with public invest-
ment at different levels (municipal, state, national) in urban improve-
ments (street lighting and paving, drainage) and public building
construction (hospitals, markets, prisons), or by means of the State pro-
motion of private investment in any of those areas. In all these instances,
the impact of export expansion was indirect and hard to measure, as
booming public finances were the result of economic prosperity which
originated primarily but not exclusively in the export sector. In fact, it is
even possible that the direct fiscal contribution of exports was small, but
its indirect contribution (by means of taxes upon property or production
in the export sector) was high. To that should be added a “second degree”
of indirect contribution to public finances, stemming from activities
within the domestic sector that were encouraged (through backward
linkages) by the export sector.
Second, it is pertinent to consider the existence of foreign investment
that was first attracted by the export sector and later on spread its activi-
ties to the domestic sector of the economy. Many electric companies that
arrived in the exporting country to provide energy for mining later on
expanded their reach to supply neighboring towns with electrical utilities,
as public lighting and electric powered trams, or to provide electricity to
the industrial sector. Some railroad companies that aimed at first to facili-
tate exports, at a later moment, laid railroad track outside exporting areas,
intending to develop new regions or to expand internal markets.
Third, this reassessment implies considering that the very same invest-
ments that were conducted to favor the export sector may have had posi-
tive externalities upon the rest of the economy. This could have been the
case with regard to every investment in infrastructure that was carried out
during this period, from railways to ports, electrification, or irrigation
works. The sector that is more suitable for this kind of analysis is rail-
roads, as their sectorial contribution may be analyzed through the com-
position of cargo and their overall contribution may be assessed using the
social savings approach. The study of railroads’ cargo and routes helps to
reveal the extent to which this means of transport contributed to the
integration of a market for agricultural products, to the furnishing of the
economy, and to urbanization. In order to assess the distribution of ben-
efits provided by railroads, it suffices to estimate the share of railroad
24 S. Kuntz-Ficker
cargo that moved internally as opposed to that which headed for export
and to identify the recipients of benefits in the former: agricultural pro-
ducers, merchants, industrialists, and consumers.
For a long time, the study of railroads in Latin America was conducted
under the lens of dependency theory, at least in the sense that their con-
tribution has largely been constrained to providing a cheap and efficient
outlet to exports. Even social savings estimates, useful to quantify the
direct contribution of railroads to the economy, often concluded that
they concentrated in the export sector, with little, if any, benefit for the
economy as a whole.22 As is our claim in this volume, this may or may not
be true, but it needs to be proven without prejudice in each case.
Along with railroads, there were many investments related to exports
that had positive external economies and may be analyzed under this
light, even if their contribution cannot be quantified. For example, finan-
cial institutions or insurance companies introduced to provide services
for export activities could have enhanced the supply of credit and insur-
ance for other sectors of economic activity. In countries specialized in the
exportation of agricultural goods, technological improvements intro-
duced in export agriculture may have spilled out into agricultural a ctivities
oriented to the domestic sector. Harbor works conducted to expedite
exports may have had significant positive externalities, such as facilitating
the importation of inputs and machinery employed in economic mod-
ernization and industrial growth.
Forward Linkages: Exports and Industrialization
It is well known that export-led growth, as it evolved in the last third of

the nineteenth century, started with an export basket largely made of
primary products that were sold in the international market without fur-
ther processing. This initial feature accentuated the perception of rather
limited benefits upon the exporting economy, as value incorporated in
exports was negligible. In some cases, this trait held steady over the export
era, while in others changed progressively, both because of the incorpora-
tion of new products with more value added and because the original
products went through some kind of industrial preparation or elabora-
tion before being sent abroad. In the following chapters, we intend to pay
attention to those cases in which export products departed from the more
common case (of primary exports), as we understand that with the value
added to exports also increased their contribution to the national econ-
omy. In some cases, export economies started to get advantages from
their productive specialization in an additional way: by retaining part of
the exportable product in order to satisfy domestic demand, be it as con-
sumer goods or as inputs for industry. In the former case, they created
internal consumption linkages, while in the latter they fed domestic
industrial activities.
Both types of linkages (those incorporating an industrial phase in
export activities and those connecting with the domestic sector of the
economy) may be identified and their size and importance assessed. With
regard to the export basket, it is possible to distinguish the share of pri-
mary exports from those with some processing or value added. As for
industrial linkages oriented to the domestic market, it is generally possi-
ble to detect the appearance of some industrial activities and the origin of
the raw materials employed, and at times it is also possible to estimate
their output.
By now, it is perhaps unnecessary to reiterate that, under the assump-
tions made by conventional interpretations, these kinds of linkages were
hardly acknowledged or valued. Even more recent appraisals find it hard
to give this phenomenon the place it deserves in the interpretation of the
export-led era. Bulmer-Thomas underestimates the importance of manu-
factured exports by naming only a few of rather modest nature (like
“straw hats from Ecuador and Colombia”) or from agricultural origin (as
frozen meat and wheat flour from Argentina) (Bulmer-Thomas, 2014,
pp. 83, 198). Besides, even though he recognizes the emergence of a
manufacturing sector in several Latin American countries, he excludes
metallurgy from the picture, thus downplaying the importance of indus-
trial development in some of those nations (Bulmer-Thomas, 2014,
pp. 145, 206). With some nuances and variations, recent approaches
arrive to similar conclusions (Bértola & Ocampo, 2012, pp. 161–162;
Bértola & Williamson, 2006, pp. 48–50).23
Industrial linkages had an important positive impact upon economic
development because of what they implied in terms of technology trans-
26 S. Kuntz-Ficker
fer, learning effects, qualification of the labor force, and wage and fiscal
spillovers. Even when foreign capital withdrew after the 1929 economic
crash, sunk assets such as machinery, equipment, and industrial facilities
usually remained in the host country. Industrial linkages with the domes-
tic sector were the most important economic contribution of exports,
because they allowed full exploitation of resource endowments and com-
parative advantages to favor an industrialization effort. Reassessing the
historical meaning of the export era demands showing under which con-
ditions and to what extent industrialization appeared as an endogenous
outcome of the export boom, as some authors have suggested (Haber,
2006; Kuntz-Ficker, 2007; Salvucci, 2006).
Energy Transition
Transition to the use of modern energies has been acknowledged as an

important part of the structural changes that led to modern economic
growth, in the same way that the use of fossil energies has been associated
with industrialization (Gales, 2007; Rubio et al., 2010; Wrigley, 2010).
However, recent studies have suggested that, in contrast to what hap-
pened in advanced countries, Latin American countries experienced an
energy transition without an industrial revolution, merely “induced” by
the needs of railroad infrastructure—imposed by the export model—or
centered in the agro-exporting complex. Considering that many Latin
American countries lacked energy resources, this pattern represented
higher levels of energy dependence and is viewed as another dimension of
“the persistent consequences of primary-export growth under the first
globalization” (Travieso, 2015).
Our interest in this matter is twofold. On the one hand, we seek to
define the extent to which an energy transition actually took place during
the first export era. On the other, we seek to assess whether this transition
was in fact constrained to the needs of the export model or if it tran-
scended by contributing to overall economic modernization and indus-
trialization. While in some agro-export economies the use of modern
sources of energy could have been constrained to railroad transportation,
in countries that exported mining-metallurgical products, their use could
have been more widespread early on. The extent to which both of these
aspects are dealt with in the chapters that follow depends, of course, on
the availability of information in each case.
The Contents of this Book

This volume is different from many others that address the first era of
export-led growth in Latin America not only because of its analytical
framework but also because the analysis relies in evidence that was often
built from scratch using primary sources. In fact, in some cases it was
necessary to undertake a reconstruction (or revision) of the foreign
trade statistics during the first export era as a prerequisite for this exer-
cise.24 Many of the participants in this project are scholars renowned
for their work in assessing the accuracy and reliability of foreign trade
statistics. In order to estimate some of the indicators, contributors
searched for original sources and in many occasions undertook a critical
revision of the evidence commonly used in the literature. With this
information, also built new price indices for imports and exports, at
times contrasting them with those that already existed. In sum, the
analysis that we provide has been possible because of the construction
of new and more reliable evidence than the one that has supported
previous approaches.
The following chapters deal with each of the seven country case studies
that we have selected to analyze the economic contribution of exports
during the first export based on the abovementioned indicators and
parameters. This does not make them identical, though, for at least two
reasons: firstly, because information is not equally available for all the
countries comprised in this project. Despite our efforts at gathering and
building the necessary evidence, lack of data in some aspects of economic
activity impeded the estimation of all the parameters for every country.
In some cases they could not be calculated quantitatively, but were still
included as qualitative assessments. Secondly, because along with the
analysis of the parameters established for the entire project, contributors
were free to highlight and develop the specificities of their case study,
which renders each chapter different, at least to that extent. For the same
28 S. Kuntz-Ficker
motive, each essay adopts its own periodization, which corresponds to

the timeline of each country’s export era according to the authors of the
respective work. This explains why some chapters start early in the nine-
teenth century while others do so much later on. In addition, while in
most of the contributions the 1929 Great Depression represented a mile-
stone that signaled the end of the first export age, there is one case in
which, for specific reasons, export-led growth continued until after World
War II. Finally, there are cases in which the authors decided to focus on
the main export product(s) instead of the entire export sector, providing
an in-depth analysis of specific activities rather than an overall view.
Beyond those peculiarities, we have made an effort to make chapters
uniform and therefore comparable at least in some formal aspects. To that
aim, we present data in US dollars, estimate values at constant prices with
the same base year (1913), use a Fisher price index for imports and
exports, and try to employ the same benchmarks in the estimation of
growth rates and other indicators. All chapters include a map that illus-
trates the geographic location of export activities within each country.
Finally, in order to show the aftermath of the process under analysis and
to give a common ending to all chapters, they include an epilogue that
briefly describes the overall macroeconomic situation between the 1929
economic depression and the immediate post-World War II. The epi-
logue also assesses the extent to which economic modernization and (in
some cases) industrialization had taken hold during the export era and
facilitated the transit to an inward-looking pattern of growth in each
country.25 In sum, our aim is, rather than providing the reader with a new
collection of essays on Latin America, to use a common framework and
present a set of case studies that are comparable to each other in many
regards, and that overall may contribute to build a new interpretive syn-
thesis, for which this is only a start.
The following chapters present seven case studies in alphabetical order,
namely, Argentina, Bolivia, Brazil, Chile, Colombia, Mexico, and Peru.
In the last chapter, we evaluate our results under the light of the initial
propositions, provide some comparative assessments, and make a provi-
sional balance of our findings. Even though I am the author of the intro-
ductory and ending chapters, it is worth restating that this is the result of
a truly collective effort.
Notes
1. More about the characteristics and timing of this phenomenon in
O’Rourke and Williamson (1999).
2. Just to mention some of the more representative titles published in the
last decades, see Bulmer-Thomas (2014), Bértola and Ocampo (2012),
Moreno Brid and Pérez Caldentey (2009), Bulmer-Thomas et al. (2006),
Franco (1999), among others.
3. Many publications deal with Latin America on a country-by-country
basis. However, their aim is not necessarily to compare between cases or
to mount them up in order to arrive to a more embracing appraisal. For
this reason, they consist of chapters that do not always share common
analytical parameters or even deal with the same issues. For some exam-
ples, see Cárdenas, Ocampo, and Thorp (2000), Coatsworth and Taylor
(1998).
4. Of course, this is not the first time that somebody proposes an inductive
approach to assess the differential effects of patterns of development
upon a group of countries. However, such an undertaking is usually sug-
gested in current analysis and with the aim of finding the appropriate
development policies, rather than in studies with a historical perspective.
See, for instance, Fishlow (1987, p. 317).
5. This is important because, as Packenham has put it, some of these prem-
ises and hypotheses “fail to specify or imply types of data that would
disconfirm them”, incurring in “nonfalsificationism” (Packenham, 1992,
p. 41).
6. In the words of Albert Fishlow, “An unusual consensus both in the
method of analysis and in the development strategy… expanded over the
region” (Fishlow, 1987, p. 293).
7. About economic culture and the way it is shaped, see Krugman (1995).
8. For an excellent appraisal of structuralism, see Love (2005). Two recent
reviews of dependency theory by some of its best-known representatives
are Dos Santos (2002) and Marini (2008).
9. Two more recent examples are Haber (1997, Introduction) and
Packenham (1992). See also Seers (1987) and Kalmanovitz (1983).
10. The first edition of this book was published in 1994.
11. We focus on these so-called paradigms because they provide the more
articulated interpretations about Latin American development during
the export era. When it seems pertinent, we refer to other hypotheses
30 S. Kuntz-Ficker
and try to assess their validity for the cases and period under study. Thus
in some chapters we address questions such as Dutch disease, the rela-
tion between terms of trade and deindustrialization, “induced” energy
transition, among others. However, we do not deal here with broader
paradigms, such as Marxism, modernization theory, or neo-institution-
alism, since they do not specifically intend to explain Latin American
development. For a review of some of these approaches, see So (1990),
Peet and Hartwick (1999).
12. It should be noted that some works within this tradition were more care-
ful than others in terms of identifying specificities and shades. So, for
instance, Cardoso and Faletto suggest varying results depending on dif-
ferent initial conditions, even though they refer to “two extreme situa-
tions” within which all the rest within the vast Latin American specter
would hold. Cardoso and Faletto (1971, pp. 48–51).
13. Some scholars adopted a critical stand towards the, at the time, still
dominant interpretations on the Latin American export era since the
1980s and suggested analytical paths that are kindred to those that we
put forward in this volume. Worthy of mention among them are
Ocampo (1984) and Cortés Conde and Hunt (1985).
14. See, for example, the argument according to which if Mexico had
adopted “more nationalistic economic measures” in the construction of
railroads (such as the investment of resources and the fabrication of
inputs), by 1910 its GDP would have been much lower, but “in the
historical long run, however, the short run costs of slower initial growth
might have paid high dividends” (Coatsworth, 1981, p. 189). The prob-
lem is, however, whether it is realistic to think that measures that were
more nationalistic would have allowed Mexico to build, with its own
resources and technology, a national railroad system at that time.
15. Among them is the so-called Dutch disease, an undesirable effect of
export success with negative effects upon growth that have been identi-
fied in some nations during some phases of the export era. See Meisel
Roca (2010).
16. In this sense, we follow up on the work of scholars that have recently
tried to examine how some of the “key ideas of the dependency theorists
might fit into the modern literature on comparative development”
(Conning & Robinson, 2009, p. 360).
17. Prebisch’s work was originally published in English in 1950. Hans Singer
confirmed this diagnostic almost simultaneously. See Singer (1950).
18. This expression has been used for Colombia in the 1920s, where the sud-
den success of coffee exports would have induced an appreciation of
RER and with it a loss of competitiveness for the rest of exports, particu-
larly for banana exports (Meisel Roca, 2010). It is also often applied to
the current case of oil-exporting countries (Ismail, 2010).
19. According to Bulmer-Thomas, it was Clark Reynolds who pioneered the
use of this concept, in Reynolds (1965).
20. For another work sharing this idea see Cárdenas (1987, pp. 25–28).
21. In fact, some authors assess that not only luxury items were purchased
abroad but even those consumed by workers in enclave economies,
which were “very often brought directly from the metropolis” (Bambirra,
1978, p. 76).
22. See Coatsworth (1979 and 1981), Zanetti and García (1987), Herranz-
Locan (2011), Guajardo (2007), Pérez (2007), among many others.
Recently a collective project has taken as one of its aims revisiting this
view. See Kuntz-Ficker (2015).
23. As for national case studies, some recognize important industrial devel-
opment before import substitution industrialization policies, but grant
little significance to industrial linkages stemming from the export sector
(Cárdenas, 2015; Hora, 2010).
24. The resulting papers will be included as part of a special issue of the
Revista de Historia Económica—Journal of Iberian and Latin American
Economic History, to appear in 2018. In some cases, a reconstruction
of export statistics was not necessary, as previous works had provided
this information. This is the case of Ocampo (1984), for Colombia,
Kuntz-Ficker (2007, 2010) for Mexico, and Rayes (2013, 2015) for
Argentina.
25. The only exception to this rule is Bolivia. As export-led growth contin-
ued until the post-World War II period, there was no need for an epi-
logue that was separate from the balance.
References
Bambirra, V. (1978). El capitalismo dependiente latinoamericano (7th ed.).
México: Siglo XXI.
Bértola, L., & Ocampo, J. A. (2012). El desarrollo económico de América Latina
desde la Independencia. México: Fondo de Cultura Económica.
32 S. Kuntz-Ficker
Bértola, L., & Williamson, J. (2006). Globalization in Latin America before
1940. In V. Bulmer-Thomas, J. Coatworth, & R. Cortés Conde (Eds.), The
Cambridge economic history of Latin America (Vol. II: The long twentieth cen-
tury, pp. 11–56). New York: Cambridge University Press.
Bulmer-Thomas, V. (2014). The economic history of Latin America since indepen-
dence (3rd ed.). New York: Cambridge University Press.
Bulmer-Thomas, V., Coatsworth, J., & Cortés Conde, R. (2006). The Cambridge
economic history of Latin America. New York: Cambridge University Press.
Cárdenas, E. (1987). La industrialización mexicana durante la gran depresión.
México: El Colegio de México.
Cárdenas, E. (2015). El largo curso de la economía mexicana. De 1780 a nuestros
días. México: El Colegio de México - Fondo de Cultura Económica.
Cárdenas, E., Ocampo, J., & Thorp, R. (Eds.). (2000). An economic history of
twentieth-century Latin America (Vol. 1: The export age: The Latin American
economies in the late nineteenth and early twentieth centuries). Oxford: Palgrave.
Cardoso, F. H., & Faletto, E. (1971). Dependencia y desarrollo en América Latina.
Ensayo de interpretación sociológica (3rd ed.). México: Siglo XXI.
Chilcote, R. H. (1994). Dependency: A critical synthesis of the literature. In
J. I. Domínguez (Ed.), Latin America’s international relations and their domes-
tic consequences (Vol. 6, pp. 114–139). New York and London: Garland.
Coatsworth, J. (1979). Indispensable railroads in a backward economy: The case
of Mexico. The Journal of Economic History, 39(4), pp. 939–960.
Coatsworth, J. (1981). Growth against development: The economic impact of rail-
roads in Porfirian Mexico. DeKalb: Northern Illinois University Press.
Coatsworth, J. (2008). Inequality, institutions and economic growth in Latin
America. Journal of Latin American Studies, 40(3) (August), pp. 545–569. In
http://www.jstor.org/stable/40056706
Coatsworth, J., & Taylor, A. (1998). Latin America and the world economy since
1800. Cambridge and London: Harvard University Press.
Conning, J., & Robinson, J. (2009). Enclaves and development: An empirical
assessment. Studies in Comparative International Development,44,
pp. 359–385.
Cortés Conde, R., & Hunt, S. (1985). The Latin American economies: growth
and the export sector 1880-1930. New York: Holmes and Meier.
Dos Santos, T. (2002). La teoría de la dependencia: balance y perspectivas
(M. Bruckmann Maynetto, Trans.). México: Plaza & Janés.
Dos Santos, T. (2011). La crisis de la teoría del desarrollo y las relaciones de
dependencia en América Latina. In C. Gutiérrez (Ed.), El pensamiento sobre
el desarrollo en América Latina. Textos del siglo XX y XXI (pp. 145–177).
BUAP: México.
Farmer, B. (1999). The question of dependency and economic development: A quan-

titative analysis. Lanham, MD: Lexington Books.
Fishlow, A. (1987). El estado de la ciencia económica en América Latina.
Investigación Económica, 46(181), pp. 293–330.
Franco, P. (1999). The puzzle of Latin American economic development. Lanham;
New York; London; Oxford: Rowman & Littlefield.
Gales, B. et al. (2007). North versus South. Energy transition and energy inten-
sity in Europe over 200 years. European Review of Economic History, 11,
pp. 215–249.
Gómez Galvarriato, A., & Williamson, J. (2009). Was it prices, productivity or
policy? Latin American industrialization after 1870. Journal of Latin American
Studies, 41(4), pp. 663–694.
Guajardo, G. (2007). Tecnología, Estado y ferrocarriles en Chile, 1850–1950.
Madrid y México: Fundación de los Ferrocarriles Españoles-
CEIICH-UNAM.
Haber, S. (Ed.). (1997). How Latin America fell behind. Essays on the economic
histories of Brazil and Mexico, 1800–1914. Stanford, CA: Stanfotd University
Press.
Haber, S. (2006). The political economy of industrialization. In V. Bulmer-
Thomas, J. Coatsworth, & R. Cortés Conde (Eds.), The Cambridge economic
history of Latin America. (Vol. II: The long twentieth century, pp. 537–584).
Cambridge, MA: Cambridge University Press.
Herranz-Locan, A. (2011). The role of railways in export-led growth. The case
of Uruguay, 1870–1913. Economic History of Developing Regions, 26(2),
pp. 1–32.
Hora, R. (2010). Historia económica de la Argentina en el siglo XIX. Buenos Aires:
Siglo XXI.
Ismail, K. (2010). The structural manifestation of the ‘Dutch Disease’: The case of
oil exporting countries. International Monetary Fund. Retrieved on March
2017, from https://www.imf.org/external/pubs/ft/wp/2010/wp10103.pdf
Kalmanovitz, S. (1983). El desarrollo tardío del capitalismo: un enfoque crítico de
la teoría de la dependencia. México: Siglo XXI.
Krugman, P. (1995). Cycles of conventional wisdom on economic development.
International Affairs, 71, pp. 717–732.
Kuntz-Ficker, S. (2007). El comercio exterior de México en la era del capitalismo
liberal, 1870–1929. México: El Colegio de México.
Kuntz-Ficker, S. (2010). Las exportaciones mexicanas durante la primera global-
ización, 1870–1929. México: El Colegio de México.
34 S. Kuntz-Ficker
Kuntz-Ficker, S. (Ed.). (2015). Historia mínima de la expansión ferroviaria en

América Latina. México: El Colegio de México.
Kuznets, S. (1970). Crecimiento y estructura económica. Barcelona: Ed. Gustavo
Gili.
Love, J. L. (2005). The rise and decline of economic structuralism in Latin
America: New dimensions. Latin American Research Review, 40(3),
pp. 100–125. Retrieved from http://www.jstor.org/stable/3662824
Marini, R. M. (2008). América Latina, dependencia y globalización. Bogotá:
CLACSO, Siglo del Hombre Editores.
Meisel Roca, A. (2010). Enfermedad holandesa y exportaciones de banano en el
Caribe colombiano, 1910–1950. Cuadernos de Historia Económica y
Empresarial(26). Cartagena, Colombia: Banco de la República.
Moreno Brid, J., & Pérez Caldentey, E. (2009). Trade and economic growth: A
Latin American perspective on rhetoric and reality. Mexico: CEPAL-Naciones
Unidas.
Ocampo, J. A. (1984). Colombia y la economía mundial 1830–1910. Bogotá:
Siglo XXI.
Ocampo, J. A. (2008). Los paradigmas del desarrollo en la historia latinoameri-
cana. In O. Altimir, E. Iglesias, & J. Machinea (Eds.), Hacia la revisión de los
paradigmas del desarrollo en América Latina (pp. 19–57). Santiago de Chile:
CEPAL-SEGIB.
O’Rourke, K., & Williamson, J. (1999). Globalization and history. The evolution
of a nineteenth-century Atlantic economy. Cambridge and London: MIT Press.
Packenham, R. A. (1992). The dependency movement. Scholarship and politics in
development studies. Cambridge: Harvard University Press.
Peet, R., & Hartwick, E. (1999). Theories of development. New York: Guilford.
Pérez, G. (2007). Nos dejó el tren: la historia de los ferrocarriles colombianos y los
orígenes del subdesarrollo. Bogotá: Cisnecolor.
Prebisch, R. (1986, Oct-Dec). El desarrollo de la América Latina y algunos de
sus principales problemas. Desarrollo Económico, 26(103), pp. 479–502.
Rayes, A. (2013). En las puertas del Dorado. Las exportaciones argentinas,
1890–1913. Buenos Aires: Universidad Torcuato di Tella.
Rayes, A. (2015). La estadística de las exportaciones argentinas, 1875-1913.
Nuevas evidencias e interpretaciones. Investigaciones de Historia Económica,
11(1), pp. 31–42.
Reynolds, C. (1965). Development problems of an export economy: The case of
Chile and copper. In M. Mamalakis & C. W. Reynolds (Eds.), Essays on the
Chilean economy (pp. 201-361). Homewood, IL: Irwin.
Rubio, M., et al. (2010). Energy as an indicator of modernization in Latin

America, 1890–1925. The Economic History Review, 63(3), pp. 769–804.
Salvucci, R. (2006). Export-led industrialization. In V. Bulmer-Thomas,
J. Coatsworth, & R. Cortés Conde (Eds.), The Cambridge economic history of
Latin America (Vol. II: The long twentieth century, pp. 249–292). Cambridge,
MA: Cambridge University Press.
Seers, D. (1987). Teoría de la dependencia: una revaluación crítica. México:
Fondo de Cultura Económica.
Singer, H. (1950, March). The distribution of gains between investing and bor-
rowing countries. American Economic Review, 11, pp. 473–485.
So, A. (1990). Social change and development: Modernization, dependency, and
world-system theories. Newbury Park, CA: Sage.
Travieso, E. (2015). Transición energética bajo una era de exportaciones: el caso
de Uruguay, 1900–1950. Paper presented in the International Seminar La era
de las exportaciones (pp. 1–37). México: El Colegio de México.
Williamson, J. (2010, September). When, where, and why? Early industrializa-
tion in the poor periphery, 1870–1940. NBER Working Paper 16344.
Wrigley, E. (2010). Energy and the English industrial revolution. Cambridge:
Cambridge University Press.
Zanetti, O., & García, A. (1987). Caminos para el azúcar. La Habana: Editorial
de Ciencias Sociales.
Sandra Kuntz-Ficker is Professor of Economic History and researcher at El

Colegio de México. She specializes in the economic history of Mexico and Latin
America from the early nineteenth to the mid-twentieth century. She has pub-
lished 18 books as author or editor and more than 60 articles. Professor Kuntz-
Ficker was president of the Mexican Economic History Association and is
currently member of the Executive Committee of the International Economic
History Association (since 2015). Since 2013, she is coeditor of the Revista de
Historia Económica—Journal of Iberian and Latin American Economic History.
Personal website: http://www.colmex.mx/academicos/ceh/kuntz/
2
The Contribution of Argentine Exports
to the Economy, 1875–1929
Sandra Kuntz-Ficker and Agustina Rayes
Introduction
The performance of Argentine exports during the so-called first globaliza-
tion is a topic widely studied in the historiography. Recently, not only has
the interest in knowing about the main goods and markets been
relaunched (Bértola & Ocampo, 2013; Bulmer-Thomas, 2014; Cortés
This research has benefited from financial support by the National Council of Scientific and
Technical Research of Argentina through a postdoctoral scholarship given to Agustina Rayes. The
authors thank the contributors of the present volume and the participants of the session in
CLADHE IV where it was presented, as well as Eduardo Míguez and Daniel Moyano for
comments on previous drafts. Usual disclaimer applies.
S. Kuntz-Ficker (*)
A. Rayes
National Council of Scientific and Technical Research (CONICET),
Buenos Aires, Argentina

S. Kuntz-Ficker (ed.), The First Export Era Revisited, Palgrave Studies in
Economic History, https://doi.org/10.1007/978-3-319-62340-5_2
40 S. Kuntz-Ficker and A. Rayes
Conde, 2003; Míguez & Rayes, 2014), but also the concern to analyze
the reliability of the statistical sources for their study has developed
(Rayes, 2015; Tena-Junguito & Willebald, 2013). Less attention has been
given to the link between the export sector and the Argentine economy,
in contrast to research done in the 1960s and 1970s (Cortés Conde,
1974, 1985; Gallo, 1970; Gallo & Cortés Conde, 1973).
Accordingly, the purpose of this chapter is to examine the contribution
of exports to the Argentine economy between 1875 and 1929 by con-
structing several indicators.1 As well as calculating which part of the
Gross Domestic Product (GDP) and GDP growth was generated by
exports, we quantify the indirect contribution of the export sector analyz-
ing the return value, the fiscal contribution, the purchasing power of
exports, positive externalities, industrial linkages, and the use of modern
energies. The new evidence gathered for this endeavor is oriented to dis-
cuss some of the notions held by conventional interpretations dealing
with the trajectory and performance of the Argentine economy during
the First Export Era.
Argentina and the First Export Era

Existent Preconditions and Available Alternatives
After achieving Independence (in the 1810s), the region of the River
Plate specialized in the production of livestock goods, such as hides,
wool, jerked meat, tallow, and other cattle by-products, given the scarcity
of labor and capital and the relative abundance of land (Brown, 2002;
Salvatore & Newland, 2003). It was not until the last decade of the nine-
teenth century that products originated in agriculture were successfully
introduced into the export basket, like wheat, corn, and linseed (and to a
lesser extent, wheat flour, barley, rye, etc.). Additionally, exports of frozen
mutton, beef, and (since the early twentieth century) chilled beef grew
steadily. Since then, livestock and agricultural products coexisted, expand-
ing the export mix (forest goods, as quebracho extract and wood, also
participated in the export basket but its role was relatively smaller). In
2 The Contribution of Argentine Exports to the Economy... 41
fact, traditional exports fell only in relative terms inasmuch as their vol-
ume continued to increase at least until the First World War (WWI)
(Cortés Conde et al., 1965; Díaz Alejandro, 2002; Rayes, 2014). There
are different reasons to explain the expansion of exports. On the one
hand, it was possible thanks to transformations in the productive struc-
ture. Transatlantic immigration provided the necessary labor force.
Foreign investment facilitated the construction of infrastructure (e.g.,
railways and ports) that lowered domestic transportation costs. The
Argentine State extended the effective frontier—fighting the native pop-
ulation and settling disputes with bordering countries—and new lands
were incorporated into the export sector (Míguez, 2008, pp. 241–260;
Vitelli, 2012, pp. 131–132). On the other, the success of Argentine
exports was also due to the fact that, although in theory the country
adhered to the gold standard in 1883, in practice it could not keep the
parity and the currency was generally devalued (Cortés Conde, 1985,
p. 343; Williams, 1969).
Obviously, not only internal factors explain the outstanding perfor-
mance of Argentine exports. The fall in the cost of transoceanic transport
allowed Argentine products to compete successfully in distant markets
such as those from Europe (Bértola & Ocampo, 2013; Gerchunoff &
Llach, 2008) and Argentine exports responded to a growing demand for
raw materials and food from those countries that were experiencing a
process of industrialization (Cortés Conde, 1974; Platt, 1972). Actually,
exports were geographically diversified since they arrived not only to the
United Kingdom but also to other countries of continental Europe
(France, Germany, Belgium, the Netherlands, Italy, and Spain) and
America (the United States, Brazil, Chile, Uruguay, and Bolivia) (Badía-
Miró et al., 2016; Bulmer-Thomas, 2014; Vázquez Presedo, 1979).
Under the conditions of Argentina in the last third of the nineteenth
century, there was barely any alternative for development than those
provided by the abundance of natural resources apt for agriculture and
livestock raising. Forestry was also possible, but being mostly a recollec-
tion activity, it represented a less productive use of resources. Mining was
practically nonexistent, and oil extraction only started—with purposes of
internal consumption—in the first decades of the twentieth century.
Natural endowment and relative scarcity of capital and labor created clear
comparative advantages for the specialization in primary production for

export. Industrialization became an option only when the success of this
path created the preconditions for that.
Some Descriptive Indicators
Let us start by providing some indicators that describe the performance

of Argentine exports throughout the period. Figure 2.1 illustrates the
long-term evolution of export values.
Figure 2.1 shows that, after a halting start, Argentine exports had a
prominent growth until WWI, both in constant and current values. In
the earlier stage, growth was larger at constant values. During the inter-
national conflict, there is a gap between the two series; it indicates a
strong growth of current values because of inflation, which obviously did
not affect the series at constant prices. Both magnitudes restarted a
1,200
1,000
800
Millions
600
400
200
0
1875
1878
1881
1884
1887
1890
1893
1896
1899
1902
1905
1908
1911
1914
1917
1920
1923
1926
1929
Current prices Constant prices (1913)
Fig. 2.1 Argentine exports, 1875–1929 (FOB values in dollars, at current and con-
stant (1913) prices). Note: constant values were calculated with a Fischer price
index. Sources: Rayes (2015, unpublished)
growth trend in the 1920s, although the decline in the years before the
Great Depression yields a less favorable balance for the entire decade.
Table 2.1 summarizes the rates of variation of exports at current and
constant (1913) prices, of quantum, and of exports per capita.
As it can be observed, rates of growth were relatively low during the
phase of integration to international markets (1875–1889), in which, in
fact, there was a decrease in exports per capita. During this period, the
quantum performed better because the fall in costs of transport encour-
aged “heavy” baskets as that of Argentina, composed by agricultural
products of low unit value. In the last decade of the nineteenth century,
both values and volume took off; however, since then the rates of varia-
Table 2.1 Rates of variation of Argentine exports, 1875–1929

Value in the initial
year of each decade
(constant (1913)
prices, US dollars) Average rate of variation (%)
Exports at Exports at Exports
Total Per current constant per
Years (millions) capita prices (1913) prices Quantum capita
Maddison phases
1875–1913 5.5 4.6 4.7 2.1
1913–1929 3.9 2.7 2.6 1.2
Per decades
1880–1890 69.3 27.1 1.5 7.4 6.6 −1.6
1890–1900 141.8 40.9 7.1 4.1 3.6 3.9
1900–1910 211.7 45.1 9.3 5.9 5.7 5.3
1910–1920 374.5 55.8 6.7 1.6 1.4 3.8
1920–1929 438.8 48.9 2.7 6.4 6.4 −0.2
Other periods
1875–1889 0.6 1.4 3.3 −2.4
1890–1899 9.8 7.8 6.7 6.6
1900–1913 9.4 6.9 6.7 5.4
1914–1918 14.1 7.5 7.1 11.5
1919–1929 0.8 4.5 4.5 −1.9
1875–1929 5 4 4.3 2.0
Source: Idem Fig. 2.1
tion of the former grew faster. WWI was a significant international shock
because it affected tangentially or directly the markets in which Argentina
participated. Nonetheless, considered at current values, exports
experienced an increase. From 1890 to 1918, exports per capita grew at
high rates, contrasting with the previous and subsequent periods. After
the war, export value at current prices barely grew, while value at constant
prices and quantum experienced a new impulse. The contemporary belief
in “the return to normality” proved mistaken, as the international context
was changing and the export-led-growth model started to run out. This
was eventually visible during the Great Depression.
As Argentina became a competitive exporter of raw materials and
foods, it was an importer of raw materials and manufactures. According
to Winograd and Véganzones (1997, p. 29), between 1900 and 1929, the
degree of trade openness (estimated as total trade to GDP) was about half
of GDP. Some currents of thought, such as structuralism, have remarked
that declining terms of trade (TOT) were one of the main disadvantages
of the agro-export scheme. Figure 2.2 shows estimations of TOT for
Argentina during this period.
Figure 2.2 includes Ferreres data only for comparative purposes,
because the latter was calculated with official trade statistics that did not
consider the fall of international prices from 1870 to the mid-1890s. Our
TOT, by contrast, is estimated with indexes based upon market prices.2
Although there were peaks and slumps of a certain magnitude over the
period, there does not seem to be anything that may be interpreted as a
“secular deterioration” in the terms of trade, since they tended to improve
in the decades before WWI.3
According to our data, after the initial decline of relative prices, there
was a positive tendency between 1894 and 1914, only reversed by
WWI. Argentine’s TOT fell dramatically during the war due to surging
prices for imports—which clearly surpassed export prices. Despite fluc-
tuations in the early 1920s, TOT recovered up to the level of the base
year (1913). Gómez-Galvarriato and Williamson (2009) have suggested
that the improvement of the TOT, being positive in terms of short-term
income, would have the negative counterpart of discouraging industrial-
ization. With the growth rates of capital goods’ imports that these authors
provide, this might have been the case in the 1890s, which exhibited
140
120
100
80
Index
60
40
20
0
1875 1880 1885 1890 1895 1900 1905 1910 1915 1920 1925
TOT (Kuntz-Ficker and Rayes) TOT (Ferreres)
Fig. 2.2 Argentina’s terms of trade, 1875–1929 (1913 = 100). Note: TOT (Kuntz-
Ficker & Rayes, 2017) was estimated with an import price index calculated over
the export price index of five trade partners weighed by their share in Argentine
imports, and our own export price index (see Fig. 2.1). TOT (Ferreres) was calcu-
lated with Ferreres (2010, fig. 8.1.7). Sources: Kuntz-Ficker and Rayes (2017),
Ferreres (2010), and Rayes (n.d.)
zero growth of those imports, but not in the early twentieth century, as

they grew at an annual average rate of 11% between 1901 and 1911.
Finally, we would like to deal with the question of to what extent
export expansion could be counterproductive for the Argentine economy
due to the so-called Dutch disease. Its presence may be detected by means
of Argentina’s real exchange rate with respect to the United States.
Figure 2.3 reveals that only between 1884 and 1896 there was a visible
and consistent appreciation of the real exchange rate (RER). If there was
a negative effect on the competitiveness of Argentine’s export sector, it
may have consisted in temporarily slowing down the productive diversi-
fication that was taking place within the export sector. As we stated previ-
ously, in the early 1890s there was an increasing presence of agricultural
exports; therefore, one might ask whether their growth would have been
more intense in the absence of this factor. In the next two decades, RER
appreciation was very moderate and probably innocuous. What stands
180
160
140
120
100
Index
80
60
40
20
0
1875 1880 1885 1890 1895 1900 1905 1910 1915 1920 1925
Fig. 2.3 Real bilateral exchange rate (Argentina–United States), 1875–1930.

Sources: Nominal exchange rate and Argentine price index from Ferreres (2010,
Figs. 5.1.1 and 7.2). US price index from Officer (2007, Fig. 3). In both cases, the
base year was changed to 1913
out is a pronounced depreciation trend during the 1920s, which must

have played in favor of the export competitiveness of Argentina.
he Economic Contribution of Exports: Some

T
Parameters
xport Boom and Economic Growth: The Direct
E
Contribution
One way to estimate the direct contribution of exports to the national

economy is calculating which part of GDP was composed by them and
to what extent they contributed to GDP growth.
Table 2.2 shows phases and timing of the export-led growth process in
Argentina. At the beginning, GDP grew faster than exports, which means
Table 2.2 The direct impact of exports on GDP growth, 1875–1929 (percentages
calculated at current values of GDP and exports, in dollars)
Annual average rate of Contribution of
variation Exports’ exports to GDP
Periods GDP Exports share in GDP growth
1875–1890 3.1 1.1 15 5.3
1890–1913 7.1 8.4 20.8 24.6
1914–1918 7.4 14.1 20.4 38.9
1919–1929 4.1 2.1 19.4 9.9
1913–1929 5.3 3.9 19.8 14.6
1875–1929 5.4 5.0 19.6 18.1
Sources: Ferreres (2010, p. Fig. 3.3) and Rayes (2015, unpublished). Both series
were converted into dollars following Federico and Tena-Junguito (2016)
that the latter did not yet push GDP growth. According to this informa-
tion, export-led growth truly took off since the 1890s, and its significance
was particularly evident during WWI (though its effect upon growth
might be biased because of inflation that affected export prices more than
domestic prices). In the 1920s, other sources of growth replaced exports
as the most dynamic sector of the economy.
Table 2.2 also shows that since the 1890s exports contributed with a
fifth of GDP, an estimate that coincides with that by Winograd and
Véganzones (1997). Contrary to what could be expected by the export
success of Argentina during this period, the full adoption of export-led
growth did not imply a hypertrophy of the export sector in relation to the
rest of the economy. Far from that, export activities seem to have coex-
isted with others related to the internal sector that contributed to steady
GDP growth during the entire period.
Finally, Table 2.2 provides information about the direct contribution
of exports to GDP. As may be observed, this contribution varied over
time. It was modest in the beginning and considerable between 1890 and
1918, the stage in which exports led the growth of the Argentine econ-
omy. After 1920, this evidence suggests that other activities had taken
over as leaders of the growth process.
The direct contribution of exports to the Argentine economy was rather
unequal in regional terms. As Map 2 shows, most export activities concen-
trated around the coast of the River Plate basin and the provinces of Buenos
Aires, Santa Fe, Córdoba, and Entre Ríos. Progressively, other provinces or
more distant regions incorporated to export production. This was the case
of Patagonia, where sheep and bovine cattle exploitation took hold, the lat-
ter headed for Chile, and the territory of Chaco, where the production of
quebracho wood and its extract developed. Even if those regions also ben-
efited from export expansion, it would not be surprising that the direct
impact of exports concentrated in the pioneering region.
The regional balance also changed throughout the period according to
the relative importance that cattle and agricultural activities had, influ-
enced by the conditions of international markets (Girbal-Blacha, 2011).
This does not mean, naturally, that the other provinces, specialized in the
production of articles for domestic consumption, experienced no growth;
in fact, it seems reasonable to think that productive activities of those
spaces developed, thanks to a domestic market that was booming largely
because of the success of exports.
The Indirect Contribution

The Return Value
In another work we have calculated the return value of Argentine exports

by means of the “reciprocal”, that is to say, as the difference resulting
from the resources that, stemming from activities related to the export
sector, were remitted abroad (Kuntz-Ficker & Rayes, 2017, unpublished
manuscript). These remittances include interest and repayment of public
external debt and profits from foreign direct investment that we consid-
ered related to the export sector, an estimate of foreign workers’ savings
that were forwarded to their countries of origin, and inputs imported for
productive consumption in the export sector. The estimate is not accurate
for every concept and every year. In fact, there is a component of the
remittances that could not be estimated because of lack of data: the share
of profits of domestic capital (invested in export activities) that was used
to purchase consumer goods abroad. The absence of this component cre-
ates a downward bias in our estimate of the remittances and thus an
overestimation of the return value or, more precisely, of the resources that
actually remained within the Argentine economy. Notwithstanding that,

the outcome is a fair estimate of the yearly stream of funds that export
activities yielded to the economy, even if, in a later moment, some of
these funds left the country to create external consumption linkages. Our
estimate is illustrated in Figure 2.4.
Return value from Argentine exports was, in general, remarkably high:
in average, it represented 82% of the total value of exports. This outcome
may be attributed to the prominent presence in export activities of entre-
preneurs that were either natives or permanent immigrants, minimizing
the cost of capital services stemming from abroad. Foreign indebtedness
and remittances by immigrant workers were generally discrete with regard
to the value exported. In fact, the concept that generated the largest
remittances abroad was in reality positive for Argentina, namely, the
modernization of infrastructure and the furnishing of the productive
apparatus, both of favorable consequences in the mid and long terms.
The only period in which the retained value experienced a significant
reduction was in the early 1890s. The cost of railroad expansion (imports
for this purpose multiplied by 2.6 between 1885 and 1890) and the
impact of the international financial crisis (the Baring crisis) converged to
produce a disproportionate outflow of resources. In contrast, once
expenses in infrastructure were reduced (around 1914), the share of funds
remitted abroad as debt payments and productive inputs fell substan-
tially, even though this reduction was in part counteracted by an increas-
ing participation of foreign capital in the export sector. As Míguez (2016)
suggests, this presence was probably associated with the establishment of
cold-storage houses. Despite everything, the balance was positive, as since
that moment the share of the value retained increased visibly, with an
average of 86% until the end of the period.
The Fiscal Linkage
One of the components of the return value deserves especial consideration:

we refer here to the resources that exports left to the public treasury by
means of taxes. Albert Hirschmann (1981) stated that the fiscal spill that
exporting countries obtained from external sales was a doubtful b enefit.
Percentage
0
10
20
30
40
50
60
70
80
90
100
1880
1881
1882
1883
1884
1885
1886
1887
1888
1889
1890
Kuntz-Ficker and Rayes (2017)
1891
1892
1893
1894
1895
1896
1897
1898
1899
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
Fig. 2.4 The return value of Argentine exports (percentage upon total export value). Source: Own elaboration based on
1929
S. Kuntz-Ficker and A. Rayes 50
This was the case when primary goods were exported without generating
internal linkages or multiplier effects within the local economy, as in those
cases, taxes were the only compensation for the extraction of wealth. When
this was the case, a high tax upon exports could be in reality a bad signal.
In Argentina, duties levied on exports were generally ad valorem,
except specific duties applied to standing animals or old iron. Besides,
only some products paid export duties, which in average represented
4.8% of total value exported between 1875 and 1889 and barely 1.5% in
the next 15 years. Some articles (as jerky) were exempted by the end of
the nineteenth century and the exemption became widespread between
1906 and 1917. After this year, only some goods paid moderate specific
duties, for an average of 1.9% of total export value.4
With regard to Hirschmann’s assessment, the fiscal effect of Argentine’s
export boom has two positive features. First, that the weight of direct
taxes upon exports, which in the previous period had been high (more
than 30% of their value in the early 1860s) (Latzina, 1914, p. 75), fell
steadily during the export era. In this sense, the fiscal spill was far from
being the main contribution of exports to the Argentine economy. On
the other hand, import duties were the main source of fiscal income
throughout the period. By the early 1910s, they still provided 55% of
total public income (Latzina, 1914, pp. 74–75). Some additional duties
gathered from activities related to foreign trade (as storage, lighthouses,
health, and ports) made that share even larger.
The second positive feature of exports with regard to taxation is that,
in contrast with a modest direct contribution, multiplying effects that
export activities had upon the rest of economic activity generated sig-
nificant indirect fiscal spills, namely, those yielded by other productive
and commercial activities that were sparked by the success of the export
sector. The outcome of this phenomenon was a remarkable increase of
the fiscal capacity of the State, which in turn translated into growing
public spending and a larger borrowing capacity that was oriented to
economic modernization. Between1900 and 1929, total national
spending multiplied by five, and around 15% of those resources were
applied to public works (Salerno, 2007, p. 411). That allowed the
Argentine government, among other things, to build with its own
resources a railway network of significant dimensions, which by 1915

had added 5580 km to the privately owned network. Those lines ful-
filled a variety of goals, as building branches that broadened the reach
of the main lines, expand other lines to less profitable areas, which pri-
vate companies were not willing to cover, or linking certain productive
areas with regional markets or with those of the neighboring countries.
On the other hand, this process opened the door to human capital for-
mation, with the creation of an elite of engineers and technicians that
imposed organizational and efficiency standards similar to those of the
foreign companies (Palermo, 2006).
he Purchasing Power of Exports and the Change

T
in the Composition of Imports
The growth in export quantum translates, under favorable market condi-

tions, in a larger purchasing power of exports, whose magnitude is condi-
tioned by the price of imports. For the evolution of this indicator, see
Figure 2.5.
The purchasing power of exports grew steadily, albeit with varying
intensity, from the beginning of the boom until 1915. Starting in that
point, it was severely affected by surging import prices, an effect that only
subsided by the mid-1920s.
The growing capacity to import stemming from export growth was
accompanied by a change in the structure of imports that aimed at favor-
ing economic modernization. Only in the decade 1900–1909, the pro-
portion of imports considered “unproductive consumption articles” fell
from 67% to 48%, while those for productive consumption grew accord-
ingly (Latzina, 1914, p. 47). This change reflected significant advance in
the provision of transport infrastructure, harbors, electricity, and urban
services. Additionally, it made possible the mechanization of agriculture,
a phenomenon that was usually neglected by the literature.5 Finally, this
was the origin of the technology transfers that contributed to the start of
industrialization. According to Pineda’s estimate, machinery imports
multiplied by twelve between 1890 and 1929, keeping a consistent
growth rate of 7% throughout this period (Pineda, 2009, pp. 44–47).
800
700
600
500
400
Millions
300
200
100
0
1880 1885 1890 1895 1900 1905 1910 1915 1920 1925
2 The Contribution of Argentine Exports to the Economy...
Fig. 2.5 The purchasing power of Argentine exports, 1880–1929 (US dollars). Note: Own elaboration using the yearly
value of exports at current prices (Rayes, n.d.) and the price index of imports estimated by the authors
53
There is a debate about the role of commercial policy in this process.

We may find in the literature the more contrasting interpretations on this
subject: from those who consider that before the Second World War
(WWII), there was practically a free-trade regime to those that state that,
in reality, tariff policy in Argentina was always protectionist. Early studies
on this matter (Chiaramonte, 2012) suggest a series of features of the
tariff policy that, in general, have not been denied by more recent research.
First, that industrial protectionism goes back to 1875, when for the first
time differential tariffs were introduced, imposing heavier duties to
superfluous articles and to those that competed with the domestic indus-
try while liberalizing tariffs on necessary industrial inputs. Second, that
progressively, and particularly since the early 1900s, a more consistent
strategy in this regard may be observed.
Some time ago, Díaz Alejandro showed that starting in 1906 the aver-
age height of the tariff was 21% of official import value, though as a
result of inflation during and after WWI, the ad valorem average with
respect to official values of imports was then reduced to 14% vis-à-vis
their market value (calculated from world prices of imports) (Díaz
Alejandro, 1968, pp. 75–77). In any of those cases, the average ad valorem
underestimates the tariff barrier, inasmuch as it included 30% of imports
that were introduced duty free. The latter were large composed of pro-
ductive inputs and fuels, while the basket of articles that were protected
by the tariff exhibited a clear intention of industrial promotion. In a
representative group of manufactured products, the average tariff was
between 35% and 40% ad valorem by 1925, having experienced small
changes since 1913 (Díaz Alejandro, 1968, p. 81). This means that,
beginning at certain point, the change in the structure of imports was
fostered by commercial policy by means of a cascade tariff oriented by
developmentalist goals. As a result, a larger share of the purchasing power
of exports was devoted to the importation of goods that favored eco-
nomic modernization and the beginnings of industrialization.
Industrial Linkages and Industrialization
Following those views that have recognized the coexistence of primary

production for export with a growing industrial sector (as Gallo (1970),
Villanueva (1972), and Geller (1975)),6 our survey suggests that export
expansion was not an option that excluded industrialization. Furthermore,
it is likely that the former sparked the latter, by means of an economic
spill that was used to increase internal saving and capital formation or at
least due to the prosperity that attracted investors and immigrants. In this
regard, new research on the political history of Argentina has suggested
that in the early twentieth century, the landowning elite understood that
industrial interests were complementary to agrarian expansion (Hora,
2000).
Although it is true that backward linkages were scant, as export growth
did not spark the fabrication of agricultural machinery, there were signifi-
cant forward linkages stemming from the export sector (Díaz Alejandro,
2002, p. 30). Here we mention some of the more relevant.
Livestock raising was a clear example of inducing activities, as historiog-
raphy has emphasized. Meat, mainly bovine, provided other branches with
inputs. The paradigmatic case is that of the cold-storage houses, that pro-
duced frozen and cold meats, recognized as some of the exports with more
value added from Argentina (Sesto, 2005). Even though these goods were
largely destined for foreign markets, their consumption in domestic urban
markets was growing (Dirección General de Comercio e Industria, 1927,
pp. 169–176). Another industry originated in the livestock sector was that
of milk and dairy products, which adopted some technical improvements
and reached successfully some international markets starting in WWI
(Regalsky & Jáuregui, 2012). Something similar happened with wools
washers, since wool started to be an export commodity only during the war
(previously, Argentina only exported dirty wool, according to the official
statistics). Less sophisticated, and present in the international market even
before freezing chambers, were the fat-rendering plants, which used cattle
to extract several by-products (Giberti, 1956).
Among industries originated in agriculture, the more successful was
wheat flour. Here a forward linkage operated not only to supply the
domestic market but also the external one (for a recent review, see
Martirén and Rayes (2016)), even though the latter started losing impor-
tance since 1914 (Dirección General de Comercio e Industria, 1927,
p. 161). As a proof of its modernization, we may mention that, according
to official records, around 1925 nearly half of the mills from the Pampean
region were steam powered and used state-of-the-art technology.
Table 2.3 Exports with and without value added

Exports with no Exports with value Total value of exports
Year value added (%) added (%) (millions of dollars)
1880 99.6 0.4 67.9
1900 91.1 8.9 155.2
1923 73.5 26.5 568.9
Source: Own elaboration based on Rayes (2015, unpublished)
In a less developed sector like forestry, also grew an industry that

reached international markets. Here we speak of the quebracho extract,
employed in the tanning and leather industries in Europe and the United
States. The tannin was mainly produced out of the quebracho tree (Rayes,
2013), although some other species were also exploited. The extraction of
the substance was then another forward linkage. Table 2.3 presents the
share of exports with and without value added at different points in the
export era.
According to these figures, exports with value added increased during
the period and went from nearly zero in 1880 to more than a quarter in
the 1920s. Clearly, it was always about manufactures made with agricul-
tural or livestock inputs, as forest products had a rather small share of
total value exported.
Along with these industries that reached international markets, there
were others that were in part sparked by the dynamism that the export
sector gave to the domestic market, giving birth to a consumer society
(Rocchi, 1998, 2006). Many of these products did not necessarily become
part of the export basket. Among them were some regionally consoli-
dated agro-industries, as the sugar-alcohol complex of the north, the viti-
culture from the Cuyo region, and the herb production center in the
northeast. On the other hand, there were industries that, even though
appeared in different regions, predominated in the central Pampean
region, namely light metallurgy, shoes, textile and clothes, foods and bev-
erages, construction, furniture, paper, and tobacco, among others.
The growth rates of industry averaged 8% within the years 1875–1913,
fell to 0.28% between 1913 and 1920, and recovered thereafter with an
average growth rate of 5.4% in 1920–1948. Taking as base year 1900,
industrial output index was 14.4 in 1875, 266 in 1913, and 427 in 1929
Total consumption
Other manufactures
Yarns and fabrics
Grafic arts
Chemical products
Metallurgy
Art and ornament
Furniture and similars
Construction
Dressing and toilet
Foods and beverages
0 10 20 30 40 50 60 70 80 90 100
From domestic industry Imported
Fig. 2.6 Progress in import substitution: apparent consumption of manufactures,

1913 (percentage upon total value). Source: Dirección General de Comercio e
Industria (1927)
(Barbero & Rocchi, 2003, p. 265). That is to say, the industrial sector
experienced a remarkable progress during the export era.
An official report indicated that around 1913 imports were progres-
sively substituted with local production, as shown by the proportion of
domestic to foreign-manufactured goods in total consumption (Dirección
General de Comercio e Industria, 1927, p. 155). Figure 2.6 reproduces
the data that support that assessment.
According to official data, the importation of foods, beverages, and
textiles represented less than 35% of the total value imported in 1913,
while it had represented 55% twenty years before (Dirección General de
Estadística de la Nación, 1875–1929). It is likely that industrial progress
continued at an intensified pace during the 1920s.
Externalities
For our purpose, external economies refer to the effects that investments

originally aimed at fostering export expansion, exerted over other areas of
economic activity or over the economy as a whole. In the case at hand, we
may talk of positive external effects of many activities that were intro-
duced during this period, from financial institutions to insurance compa-
nies, going through ports and railroads. Because of the dimensions of
their impact, we will refer here to railroads, which contribution to the
non-export economy has not always been acknowledged by the
literature.
The conventional interpretation sustains that in Argentina railroads
were built to provide an inexpensive outlet to exports (Scalabrini Ortíz,
1995). This is in principle true: most of the lines that were created in this
period had as their goal to connect areas producing exportable goods
with the Buenos Aires port. However, the meaning of this fact should be
broadened in at least a twofold sense. First, to explain that this process
was not constrained to give an exit to what was already being produced,
but involved a substantial expansion of the agricultural and demographic
frontier, a process whose significance should not be underestimated. On
the one hand, it allowed incorporating to economic activity resources
that remained idle and had a rather low opportunity cost; on the other, it
promoted an intense growth of exports and of the Argentine economy as
a whole. In the Pampean region, the cultivated area multiplied by eleven
between 1885 and 1912, at the same time that its production diversified
from the wheat basis to include corn, linseed, and oatmeal, among others
(Regalsky & Salerno, 2015, pp. 304–305). Secondly, the meaning of this
assessment should be broadened to make clear that, once that initial goal
started to be achieved, export success made possible the laying of railway
lines that had different purposes, namely, the territorial integration of the
nation and intra-regional connection.
Both aims, essential for the consolidation of the national State and for
the conformation of the internal market, would have not been possible in
the absence of a successful process of economic growth sparked by
exports, and for this reason they should not be treated separately. Beyond
the specific areas of economic activity that could be favored by the exis-
tence of railroads, it has been proved that their impact upon economic
growth was significant. According to recent estimates, railroads contrib-
uted 16% of the total growth of per capita GDP between 1865 and 1913
(Herranz-Loncán, 2011, p. 47).
Furthermore, now we know that the fact that railroads were built to
facilitate the exit for exports and had fulfilled that purpose does not
mean that they were not able to benefit the economy as a whole, as
previously thought. In this sense, we should note, first, that not all
Argentine’s exports required railroads to reach the external market. As
contemporary sources explained, at the end of the nineteenth century
there were products, like salty and dried beef skins, that were processed
in salteries that had their own dock, “providing large amounts of hides
for export… which do not appear in railroad cargo” (Dirección General
de Estadística de la Nación, 1875–1929). Besides, many products that
were transported by railroad to the ports could in reality be destined for
the inhabitants of cities and exit ports rather than for export. As much
as 60% of dried meat and 50% of wheat moved by railroads were con-
sumed within the country (Regalsky & Salerno, 2015, p. 305). In addi-
tion, a considerable volume of articles was commercialized in the
interior regions and cities, without reaching the coastline. In fact,
among the main goods transported by railroad in 1901 are some that
were not headed for the export market, as sugar, wines and aguardientes,
tobacco, poles and firewood, construction materials (stone, sand, lime),
and, to a lesser extent, other agricultural products (canary seed, pota-
toes, peanuts, etc.) (Dirección General de Estadística de la Nación,
1875–1929; Latzina, 1914, p. 23).
It deserves to be emphasized that railroads performed a crucial role in
exploiting comparative advantages in agricultural production. To provide
an example of that, let us mention the case of sugarcane. Contemporary
reports indicate that its cultivation only acquired importance by means of
“the direct action of railroads that put in contact the cane region with the
consumption centers in the coastline”, that is to say, thanks to the con-
struction of the railroad line between Rosario and Tucumán. The area
dedicated to cane cultivation went from 2400 hectares in 1876 to 130
thousand in 1925, and production rose from 3000 tons per year to 394
thousand over the same period. As is well known, cane cultivation is the
first phase of an agro-industry that prospered in parallel (Dirección
General de Estadística de la Nación, 1875–1929), and of which we will
speak more later.
Another activity that developed in this period with an initial inward

orientation and whose existence must be attributed to railroads was viti-
culture. As a specialist states:
The railroad allowed the fast shipment of wine to the main consumption
markets; it was decisive in the location of wineries, which were established
in its proximity in order to facilitate load and unload operations and works;
by means of railroad the first instruments and machinery to furnish winer-
ies and industrial distilleries arrived; it was, lastly, the means used by immi-
grants to move from Buenos Aires and settle in the expanding oasis. (Pérez
Romagnoli, 2000, own translation).
Recent research shows that the way in which the expansion of these
sectors fostered the emergence of other industries “induced” by the main
activity, which also relied on railroad transport to achieve their markets
(Moyano, 2013). Finally, railroad accelerated the introduction of modern
organizational forms, as the limited liability company, led to the estab-
lishment of large workshops in which accessories and wagons were fabri-
cated, and contributed to human capital formation (López, 2007,
pp. 49–50).
Something similar may be said of the services provided by port facili-
ties, fluvial and maritime. While the conventional interpretation empha-
sized the image, apparently obvious, of ports as the platform by excellence
to give exports a way out toward the external market, evidence indicates
that a large part of commodities, domestic and foreign, were traded
among them to supply local consumers. In 1901, fluvial and coastline
trade represented almost 65 million gold pesos. Out of this value, 55%
consisted of articles produced in Argentine territory (sugar, wheat flour,
wine, dirty wool, tallow, peanuts), and the rest originated in imports
(Dirección General de Estadística de la Nación, 1875–1929).
Consumption of Modern Energies
The production of energy, and the use of new energy resources, is syn-
onym of economic growth, under the assumption that productivity grows
with the development of modern energies, as it also reflects industrial
progress. In the case of Argentine, reliable statistics on the primary sources

of production and of consumption of electricity before 1925 are scarce
(Bartolomé & Lanciotti, 2012, p. 2); on the other hand, there is a com-
plete lack of estimates that account for organic energies (Bartolomé &
Lanciotti, 2015, p. 94). Despite this absence, research has advanced con-
siderably in this regard in the last decades.
According to Bartolomé y Lanciotti (2015, p. 82), the lack of coal and
hydraulic resources delayed the electrification of the European periphery
and some Latin American countries until well into the twentieth century,
when transportation improvements lowered freight rates for fossil fuels
and hydroelectricity developed enough. According to Rubio et al. (2010,
pp. 789–796), Argentina, one of the Latin American economic modern-
ization, did not rank first in apparent consumption of energy (used as a
proxy for modernization) due to its agricultural profile. That is to say,
energy use concentrated in railroad transport and urban centers. In fact,
per capita consumption of modern energies grew slower in Argentina
than in Latin America as a whole, with an average rate of 5.1% for the
latter and 4.7% for the former.
As is known, the country had no energy alternatives but that of fossil
fuels. In this sense, since its integration in the international economy coal
stood out among imported fuels, going from 319 thousand tons in
1870–1874 to 11 million tons in 1904–1909. In fact, by the mid-1920s,
Argentina imported more than half the coal purchased by all Latin
America (Bartolomé & Lanciotti, 2015, p. 86).
Even though oil production began in 1907, it was only after 1916
that its production surpassed 100 thousand tons and started substitut-
ing imports. If in the beginning its exploitation was entirely in the
hands of the State, in 1916 private interests entered the activity and
made rapid progress, to the extent that by 1925 contributed with one
third of national production (Dirección General de Comercio e
Industria, 1927, p. 132).
According to Rubio and Folchi (2012, pp. 57–58), energy transition
in Argentina was similar to that of the western world, that is, long and
smooth. As in other Latin American countries, oil was relevant only since
the 1920s, and only starting in 1928 its use was permanently above coal.
The authors explain this situation by the early start of industrialization
(adapted to the use of coal) and by the close relationship with England,
the main origin of coal.
Between 1893 and 1929, imports of fossil fuels grew at an average
yearly rate of 8.5% (Pineda, 2009, pp. 44–47). Even though part of these
were destined for railroads, another part satisfied the demand of industry
and electricity (Latzina, 1914, p. 30). By 1913, the industrial sector con-
sumed nearly 680 thousand horsepower, consisting of steam motors
(76%), electricity (13%), explosion (8%), and others (3%) (Tornquist,
1920, p. 35).
According to Bartolomé and Lanciotti (2015, p. 82), the introduction
of electricity in Argentina led to a transition in the consumption patterns
of modern energy, but at first did not generate structural changes in the
economy or assured energy emancipation. The expansion of urban mar-
kets was the main appeal for capitals invested in the provision of electric
services (street lighting). The big leap took place in the 1920s, when
industrial consumption of electricity intensified (Bartolomé & Lanciotti,
2012, pp. 40–41). In fact, while before WWI consumption concentrated
in lighting and transport, by 1926 there was a more widespread use of
electricity: about 37% was consumed by industrial activities (concen-
trated in the Pampa area), 21% in transport, and the rest distributed
between residential and commercial use and street lighting (8%)
(Bartolomé & Lanciotti, 2015, pp. 90–94).
In short, even though there were significant changes in the energy
matrix as the growing use of oil at the expense of coal, the latter contin-
ued being relevant since it became the main source of energy by the end
of the nineteenth century—prevailing over vegetable fuels. Besides, the
electrification process, which reached the main urban centers, only expe-
rienced a qualitative change in the 1920s.
Balance
In this chapter we have aimed at providing a more nuanced response to
those interpretations—characteristic of structuralism and dependency
theory—which assessed that the export sector had limited or counterpro-
ductive effects on the Argentine economy during the First Export Era. To
do so, we have constructed and examined some indicators and analytical

parameters.
Descriptive indicators show, on the one hand, an outstanding growth
of exports, both in value and volume, in different phases. On the other,
they proved the inexistence of a “secular deterioration” of the terms of
trade—as they improved between 1890 and WWI and then from the
mid-1920s to the Great Depression.
Second, we have used some parameters to analyze the contribution of
exports to economic growth. The direct contribution was estimated in
about 18% of GDP growth over the entire period, although with large
variations around the mean. Their contribution was particularly relevant
between 1890 and 1918, with an average of 30%. In indirect terms, the
contribution has been measured with different parameters (the return
value, the fiscal contribution, the purchasing power of exports, positive
externalities, industrial linkages, and the use of modern energy).
Our analysis shows that exports were not an important source of pub-
lic income, a positive feature because they did not generate a strong fiscal
dependence. Most of the return value of exports originated in payment to
productive factors, and its magnitude was attributed to the significant
presence of native capital invested in the export sector. Most of the
resources transferred abroad were oriented to the payment of external
debt and the purchase of machinery and equipment used to modernize
infrastructure and to furnish the productive plant, benefiting the export
sector and the economy as a whole. Indeed, railway expansion, the
improvement of ports, and the use of modern energy did not only favor
export activities but also activities related to the domestic sector. In fact,
the exports’ spillovers and multiplier effects contributed to increase inter-
nal saving and capital formation, which in turn was used for the
development of industries, some of which were projected to external
markets and others, the majority, were oriented to the local market.
One aspect that requires a deeper analysis is the trade policy. Available
studies point out the existence of a protectionist intentionality, reflected
in a tariff design that favored the importation of capital goods while tax-
ing goods competing with the nascent industry. However, future research
needs to determine the pace and consistency of these efforts and to answer
if and to what extent Argentine trade policy really contributed to change
the structure of imports.
Finally, it is important to emphasize that the Argentine case was a suc-

cessful example of export-led growth in the Latin American region not
only because of its dimensions but also because of its duration. In con-
trast with countries where the rise of exports started late or where boom-
ing cycles were shorter, in Argentina the export cycle lasted, practically
without interruption, for more than five decades. Even more, after the
takeoff the two main activities (livestock and agriculture) jointly boosted
economic growth. This not only increased the geographical margins of
productive activities within the territory, allowing the incorporation of
previously idle resources, but also provided a greater diversification to the
export basket, giving more dynamism to the export sector.
Epilogue
After the 1929 international economic crisis, Argentina lost its momen-
tum in the process of growth, as the fall in international trade forced it to
reorient its activity toward the internal market and industrial develop-
ment. In both, the country was at disadvantage relative to the more
advanced economies (Míguez, 2008, p. 336).
The fall in export prices was such that by 1933 provoked a one-third
decrease in the purchasing power of exports (Gerchunoff & Llach, 2007,
p. 113). As both dimensions of trade fell, public income fell accordingly,
pushing the government to increase taxes in other areas with further
recessive effects. The economic crisis also generated fluctuations in the
availability of money and financing as well as changes in the productive
sector, as the relocation of resources from the agricultural to the
manufacturing sector and rural-urban migrations (O’Connell, 1984).
Beyond the impact of the Great Depression, prices and volume of exports
varied constantly because of growing agricultural protectionism and the
formation of blocks with preferential policies among trading partners.
Additionally, the end of multilateralism complicated the dynamics of
trade relations, as the country had a surplus balance with the United
Kingdom and a deficit with the United States that had now to be bal-
anced bilaterally.
In contrast with the previous period, this new stage was characterized
by a growing participation of the State in the economy. Balance of pay-
ment problems also fostered changes in economic policies. Exchange
regulations were established to limit the exit of gold, and toward the end
of 1933, Argentina quitted the gold standard and devaluated its currency,
also creating an “exchange margin” that was used as a source of financing
by the government and helped in the successful conversion of the internal
debt. The creation of a Central Bank in 1935 provided the State with
further instruments for intervention, that the government used to imple-
ment countercyclical monetary policies (Cortés Conde, 2005). The State
also intensified its presence in other fields. To address the difficult situa-
tion in the countryside, it invested in infrastructure and established price
controls. Cultivated area grew during the 1930s, but exports of some
products (as corn and linen) fell during WWII due to the closure of the
European markets. By contrast, hides and meats, especially frozen and
canned, increased during the war.
By the end of the export era, industrialization had made important
progress in Argentina. Import substitution was considerable in con-
sumer and intermediate goods, with about 90% of aggregate con-
sumption supplied by the domestic industry (Ferrer, 1967). The
collapse of international trade accelerated industrial development, as
currency devaluation, the increase in tariffs, and exchange regulation
created considerable barriers toward imports. Public policies and infra-
structure investment contributed to this. More than a radical shift
from a primary specialization for export to industrialization, we
observe a progressive transition, with industrial growth taking place
amid—and in part as an effect of—export success. The cotton textile
industry, operating since the previous period, led the industrial expan-
sion, along with more recent branches as oil extraction and refining,
and the production of tires for the new automobile industry, fruit pre-
serves, and edible oils (Gerchunoff & Llach, 2007, p. 143). The main
problems facing industrial development were financing and the strong
dependence upon imported inputs and fuels. Import substitution poli-
cies and a more decisive State intervention provided the solution in the
after war years.
Notes
1. It is important to warn the reader that this work does not address the
economic impact of the export sector in the different regions (or prov-
inces) of the country, beyond some specific mentions. Nor does it address
the distribution of profits generated by exports.
2. Both TOT estimates differ from Berlinski (2003, p. 199) for the period
1913–1929.
3. In fact, a recent research claims that there was an improvement in the
terms of trade from Independence to WWI and that this was decisive for
the Argentine export boom (Francis, 2017).
4. Estimates based on information from the Contaduría Nacional, which
was considered a more reliable source than the customs administration.
5. Nowadays it is accepted that “agrarian expansion would have not been pos-
sible without the threshing machine, the mechanic seed drill, etc.” (Kabat,
2005, p. 29). In 1926, an official source reported that, in agro-cattle exploi-
tations throughout the country, there was machinery and equipment for a
total value of 405 million pesos, distributed, in order of relevance, among
carts, carriages and cars, windmills, machinery, equipment, and agricultural
tools (Dirección General de Comercio e Industria, 1927, p. 119).
6. For an exhaustive historiographic review of the history of industry and
enterprises in Argentina, see Korol and Sábato (1997), Barbero and
Rocchi (2004), and Regalsky (2011).
References
Badía-Miró, M., et al. (2016). La diversificación del comercio de exportación
latinoamericano, 1870–1913. Los casos de Argentina, Chile y Perú. In
M.-A. Lopes & M. C. Zuleta (Eds.), Mercados en común. Estudios sobre con-
exiones, negocios y diplomacia en las Américas (siglos XIX y XX) (pp. 45–77). El
Colegio de México: México.
Barbero, M. I., & Rocchi, F. (2003). Industry. In G. Della Paolera & A. Taylor
(Eds.), A new economic history of Argentina (pp. 261–294). Cambridge:
Barbero, M. I., & Rocchi, F. (2004). Cultura, sociedad, economía y nuevos sujetos
de la historia: empresas y consumidores. In B. Bragoni (Ed.), Microanálisis.
Ensayos de historiografía argentina (pp. 103–143). Prometeo: Buenos Aires.
Bartolomé, I., & Lanciotti, N. S. (2012). Análisis comparado de los sistemas
eléctricos en España y Argentina, 1890–1950. Estrategias globales y experi-
encias divergentes de la electrificación en dos países de industrialización tar-
día. Working Paper FUNCAS (660), pp. 1–53.
Bartolomé, I., & Lanciotti, N. S. (2015). La electrificación en países de indus-
trialización tardía: Argentina y España, 1890–1950. Revista de Historia
Industrial, 59(2), pp. 81–113.
Berlinski, J. (2003). International trade and commercial policy. In G. Della
Paolera & A. Taylor (Eds.), A new economic history of Argentina (pp. 197–232).
Cambridge: Cambridge University Press.
Bértola, L., & Ocampo, J. A. (2013). El desarrollo económico de América Latina
desde la Independencia. Mexico: Fondo de Cultura Económica.
Brown, J. (2002). Historia socioeconómica de la Argentina,1776–1860. Buenos
Aires: Instituto Torcuato Di Tella.
Bulmer-Thomas, V. (2014). The economic history of Latin America since
Independence (3rd ed.). New York: Cambridge University Press.
Chiaramonte, J. C. (2012). Nacionalismo y liberalismo económicos en Argentina,
1860–1880 (6th. ed.). Buenos Aires: Edhasa.
Cortés Conde, R. (1974). Hispanoamérica: la apertura del comercio mundial,
1850–1930. Buenos Aires: Paidós.
Cortés Conde, R. (1985). The export economy of Argentina, 1880–1920. In
R. Cortés Conde & S. Hunt (Eds.), The Latin American economies: Growth
and the export sector, 1880–1930 (pp. 319–381). New York: Holmes.
Cortés Conde, R. (2003). Argentina. Las vicisitudes de una economía exporta-
dora. In E. Cárdenas, J. A. Ocampo, & R. M. Thorp (Eds.), La era de las
exportaciones latinoamericanas. De fines del siglo XIX a principios del siglo XX
(pp. 360–417). México: Fondo de Cultura Económica.
Cortés Conde, R. (2005). La economía política de la Argentina en el siglo XX.
Buenos Aires: Edhasa.
Cortés Conde, R., et al. (1965). Evolución del comercio exterior argentino.
Exportaciones. Buenos Aires: Instituto Torcuato Di Tella.
Díaz Alejandro, C. F. (1968). The Argentine tariff, 1906–1940. New Haven: Yale
University.
Díaz Alejandro, C. F. (2002). Ensayos sobre la historia económica argentina.
Buenos Aires: Amorrortu.
Dirección General de Comercio e Industria. (1927). Anuario de la República
Argentina. Nociones útiles. 1926. Buenos Aires.
Dirección General de Estadística de la Nación. (1875–1929). Anuarios de com-
ercio exterior argentino. Buenos Aires: Several.
Federico, G., & Tena-Junguito, A. (2016). World trade, 1800–1938: A new

data-set. EHES Working Paper, pp. 1–300.
Ferrer, A. (1967). The Argentine economy. Berkeley and Los Angeles: University
of California Press.
Ferreres, O. (2010). Dos siglos de economía argentina (1810–2010). Historia
argentina en cifras. Buenos Aires: El Ateneo.
Francis, J. (2017). Globalisation, the terms of trade and Argentina’s expansion
in the long nineteenth century. Journal of Latin American Studies, pp. 1–30.
doi:10.1017/S0022216X17000025.
Gallo, E. (1970). Agrarian expansion and industrial development in Argentina
(1880–1930). St. Antony’s Papers, pp. 13–25.
Gallo, E., & Cortés Conde, R. (1973). La formación de la Argentina moderna.
Buenos Aires: Paidós.
Geller, L. (1975). El crecimiento industrial argentino hasta 1914 y la teoría del
bien primario exportable. In M. Giménez Zapiola (Ed.), El régimen
oligárquico: materiales para el estudio de la realidad argentina (hasta 1930)
(pp. 152–200). Buenos Aires: Amorrortu.
Gerchunoff, P., & Llach, L. (2007). El ciclo de la ilusión y el desencanto. Un siglo
de políticas económicas argentinas. Buenos Aires: Emecé.
Gerchunoff, P., & Llach, L. (2008). Antes y después del “corto siglo XX”. Dos
globalizaciones latinoamericanas (1850–1914 y 1980s–2000s). In XXI
Jornadas de la Asociación Argentina de Historia Económica (pp. 1–52). Caseros:
Asociación Argentina de Historia Económica.
Giberti, H. (1956). Historia económica de la ganadería argentina. Buenos Aires:
Solar.
Girbal-Blacha, N. (2011). La Argentina agro-exportadora y el desequilibrio
regional, 1880–1930. Documentos de trabajo de la Sociedad Española de
Historia Agraria, pp. 1–35.
Gómez-Galvarriato, A., & Williamson, J. (2009). Was it prices, productivity or
policy? Latin American industrialization after 1870. Journal of Latin American
Studies, 41(4), pp. 663–694.
Herranz-Loncán, A. (2011). El impacto directo del ferrocarril sobre el creci-
miento económico argentino durante la primera globalización. Revista
Uruguaya de Historia Económica, 1(1), pp. 34–52.
Hirschman, A. O. (1981). A generalized linkage approach to development, with
special references to staples. In Essays in Trespassing. Economics to Politics and
Beyond (pp. 59–97). Cambridge: Cambridge University Press.
Hora, R. (2000). Terratenientes, empresarios industriales y crecimiento indus-
trial en la Argentina: los estancieros y el debate sobre el proteccionismo
(1890–1914). Desarrollo Económico, 40(159), pp. 465–492.
Kabat, M. (2005). Del taller a la fábrica. Buenos Aires: Ediciones RyR.

Korol, J. C., & Sábato, H. (1997). La industrialización trunca: una obsesión
argentina. Cuadernos del CISH, 2(2–3), pp. 7–46.
Kuntz-Ficker, S., & Rayes, A. (2017). El valor de retorno de las exportaciones
argentinas, 1880–1929. Unpublished manuscript.
Latzina, F. (1914). Sinopsis estadística argentina. Buenos Aires: Compañía
Sudamericana de Billetes de Banco.
López, M. J. (2007). Evolución de la política ferroviaria argentina, 1857–2006.
In M. J. López & J. E. Waddell (Eds.), Nueva historia del ferrocarril en la
Argentina. 150 años de política ferroviaria (pp. 15–54). Buenos Aires: Lumiere.
Martirén, J. L., & Rayes, A. (2016). La industria argentina de harina de trigo en
el cambio de siglo. Límites y alcances, 1880–1914. H-Industria. Revista de
historia de la industria, los servicios y las empresas en América Latina (18),
pp. 1–27.
Míguez, E. J. (2008). Historia económica de la Argentina. De la conquista a la
crisis de 1930. Buenos Aires: Sudamericana.
Míguez, E. J. (2016). Las tierras de los ingleses en la Argentina (1870–1914).
Buenos Aires: Teseo-Universidad Abierta Interamericana.
Míguez, E. J., & Rayes, A. (2014). La naturaleza de la dependencia, la depen-
dencia de la naturaleza. Las exportaciones argentinas 1890–1938 en perspec-
tiva comparada. Desarrollo Económico 53(211), pp. 313–344.
Moyano, D. (2013). Industria azucarera y actividad metalúrgica en Tucumán
(1870–1940). Revista de Historia Industrial, 53(3), pp. 79–108.
O’Connell, A. (1984). La Argentina en la depresión: los problemas de una
economía abierta. Desarrollo Económico, 23(92), pp. 479–514.
Officer, L. H. (2007). An improved long-run consumer price index for the
United States. Historical Methods: A Journal of Quantitative and Interdisciplinary
History, 40(3), pp. 135–148.
Palermo, S. A. (2006). Del Parlamento al Ministerio de Obras Públicas: la con-
strucción de los Ferrocarriles del Estado en Argentina, 1862–1916. Desarrollo
Económico, 46(182), pp. 215–243.
Pérez Romagnoli, E. (2000). Migración, industrialización e innovación tec-
nológica en Argentina: industrias inducidas y derivadas de la vitivinicultura
en Mendoza y San Juan (1885–1930). Scripta Nova. Revista electrónica de
Geografía y Ciencias Sociales, Fascículo 69 (Extraordinario 4).
Pineda, Y. (2009). Industrial development in a frontier economy. The industrializa-
tion of Argentina, 1890–1930. Stanford: Stanford University Press.
Platt, D. (1972). Latin America and British trade, 1806–1914. London: Adam
and Charles Black.
Rayes, A. (2013). Más allá de la ganadería y la agricultura. Las exportaciones

argentinas de quebracho, 1890–1913. Folia Histórica del Nordeste, 21,
pp. 141–154.
Rayes, A. (2014). Sobreviviendo en el cambio. Las exportaciones argentinas de
lanas y cueros en tiempos de cereales y frigoríficos, 1890–1913. Quinto Sol,
18(1), pp. 1–22.
Rayes, A. (2015). La estadística de las exportaciones argentinas, 1875–1913.
Nuevas evidencias e interpretaciones. Investigaciones de Historia Económica,
11(1), pp. 31–42.
Rayes, A. (n.d.). Serie de estadísticas de exportaciones argentinas, 1875–1929.
Unpublished manuscript.
Regalsky, A. (2011). Los comienzos de la industrialización en Argentina,
1880–1930. Revista Digital de la Facultad de Arte y Humanidades de la UNR
(2), pp. 75–106.
Regalsky, A., & Jáuregui, A. (2012). Comercio exterior, mercado interno e
industrialización: el desarrollo de la industria láctea argentina entre las dos
guerras mundiales. Actores y problemas. Desarrollo Económico, 51(204),
pp. 493–527.
Regalsky, A., & Salerno, E. (2015). Argentina. In S. Kuntz-Ficker (Ed.), La
expansión ferroviaria en América Latina (pp. 280–316). Mexico: El Colegio
de Mexico.
Rocchi, F. (1998). Consumir es un placer: la industria y la expansión de la
demanda en Buenos Aires a la vuelta del siglo pasado. Desarrollo Económico,
37(148), pp. 533–558.
Rocchi, F. (2006). Chimneys in the desert. Industrialization in Argentina during
the export boom years, 1870–1930. Stanford: Stanford University Press.
Rubio, M., & Folchi, M. (2012). Will small energy consumers be faster in tran-
sition? Evidence from the early shift from coal to oil in Latin America. Energy
Policy, 50, pp. 50–61.
Rubio, M., et al. (2010). Energy as an indicator of modernization in Latin
America, 1890–1925. The Economic History Review, 63(3), pp. 769–804.
Salerno, E. (2007). La evolución y los problemas de los Ferrocarriles del Estado
durante la primera mitad del siglo XX. In M. J. López & J. E. Waddell (Eds.),
Nueva historia del ferrocarril en la Argentina. 150 años de política ferroviaria
(pp. 395–437). Buenos Aires: Lumiere.
Salvatore, R., & Newland, C. (2003). Between independence and the golden
age: The early Argentine economy. In G. Della Paolera & A. Taylor (Eds.), A
new economic history of Argentina (pp. 19–45). Cambridge: Cambridge

University Press.
Scalabrini Ortíz, R. (1995). Historia de los ferrocarriles argentinos. Buenos Aires:
Plus Ultra.
Sesto, C. (2005). Historia del capitalismo agrario argentino. La vanguardia
ganadera bonaerense, 1856–1900. Buenos Aires: Universidad de Belgrano-
Siglo XXI.
Tena-Junguito, A., & Willebald, H. (2013). On the accuracy of export growth
in Argentina (1870–1913). Economic History of Developing Regions, 28(1),
pp. 28–68.
Tornquist, E. (1920). El desarrollo económico de la República Argentina en los
últimos cincuenta años. Buenos Aires: Ernesto Tornquist y Cía.
Vázquez Presedo, V. (1979). El caso argentino: migración de factores, comercio
exterior y desarrollo, 1875–1914. Buenos Aires: Editorial Universitaria de
Buenos Aires.
Villanueva, J. (1972). El origen de la industrialización argentina. Desarrollo
Económico, 12(47), pp. 451–476.
Vitelli, G. (2012). Los dos siglos de la Argentina. Historia económica comparada.
Buenos Aires: Centro Cultural de la Cooperació Floreal Gorini-Universidad
Nacional de Quilmes.
Williams, J. H. (1969). Argentina international trade under inconvertible paper
money, 1880–1900. New York: Greenwood.
Winograd, C., & Véganzones, M. (1997). Argentina en el siglo XX: crónica de un
crecimiento anunciado. Paris: Organización para la Cooperación y el Desarrollo
Económico.
Sandra Kuntz-Ficker is an economic history professor and researcher at El

lished 18 books as author or editor and more than 60 articles. Kuntz-Ficker was
president of the Mexican Economic History Association and is currently mem-
ber of the Executive Committee of the International Economic History
Association (since 2015). Since 2013, she is coeditor of the Revista de Historia
Económica—Journal of Iberian and Latin American Economic History. Personal
website: http://www.colmex.mx/academicos/ceh/kuntz/
Agustina Rayes is a researcher at the National Council of Scientific and

Technical Research (CONICET) in Argentina. She specializes in the economic
history of her country and she has studied international relations topics of Latin
America from the mid-nineteenth century to the present days. She has pub-
lished more than 20 articles. Rayes has taught at the Universidad Torcuato Di
Tella, Universidad del Salvador, and FLACO-Argentina, among others. Personal
website: https://socunicen.academia.edu/AgustinaRayes
3
The Bolivian Export Sector (1870–1950)
Jose Alejandro Peres-Cajías and Anna Carreras-Marín
Introduction
The analysis of the Bolivian export sector and its impact on the Bolivian
economy may give critical insights to the Latin American historiography
because of four salient features which have in common an extremely high
This research has benefited from the financial support of the Science and Innovation Ministry of
Spain through the project Market integration and its spatial impact: Latin American regions in the
very long term (1890–2010) (ECO2015-65049-C2-2-P; MINECO/FEDER, UE). Peres-Cajías
also thanks the financial support from the Swedish Research Links/Vetenskapsrådet through the
project Sustainable Development, Fiscal Policy and Natural Resources Management: Bolivia, Chile
and Peru in the Nordic countries’ mirror (2016-05721). The authors thank the editor and the
participants of the present volume for comments on previous drafts. Research assistance has been
provided by Maira Dávalos, Adriana Sanjinés and Turfa Vargas. Usual disclaimer applies.
J.A. Peres-Cajías (*)

Escuela de la Producción y la Competitividad, Universidad Católica Boliviana
“San Pablo”, La Paz, Bolivia
A. Carreras-Marín
Departament de Història i Institucions Econòmiques, Universitat de
Barcelona, Barcelona, Spain

76 J.A. Peres-Cajías and A. Carreras-Marín
concentration. On the one hand, since the beginning of the export-led

growth model (Cortés Conde, 1992), Bolivian exports have been con-
centrated in few natural resources, one of which tended to acquire dis-
proportionate relevance in specific periods. For instance, from the ending
of the First World War (WWI) to 1950, tin exports represented between
65% and 75% of the total value exported. On the other hand, the geo-
graphical location of Bolivian exports has been systematically concen-
trated in the west mountains and, sporadically, in the north east of the
country (see Map 3.1).1 Moreover, Bolivian exports have tended gradu-
ally to be in the hands of very few local producers who, thanks to the high
concentration of profits from the exploitation of natural resources,
became part of the Bolivian or even the global capitalist elite. Silver pro-
ducers such as Gregorio Pacheco and Aniceto Arce were presidents of
Bolivia during the periods 1884–1888 and 1888–1892, respectively. In
the same vein, Simón I. Patiño, the most successful Bolivian tin producer,
was one of the most influential actors in the world tin market since the
early 1920s. The destination of Bolivian exports shows also a very high
concentration. Indeed, whereas Bolivian foreign trade statistics may have
some minor biases in terms of geographical assignment (Peres-Cajías &
Carreras-Marín, 2018), 90% of Bolivian exports were destined to no
more than five countries during the first half of the twentieth century.
The high concentration in terms of product composition, local produc-
ers, the geographical location of production, and markets have given
ground to a pessimistic assessment on the impact of the export-led growth
model in Bolivia.2
This chapter aims at contributing to this debate from a new perspec-
tive. On the one hand, it assesses the evolution of Bolivian exports by
using a new corrected series which subtracts re-exportations and exports
of specie from the original official sources. Whereas this problem has
been identified long time ago (Ruiz Gonzáles, 1955, p. 62), it has been
corrected just recently (Peres-Cajías & Carreras-Marín, 2018).3 On the
other hand, it offers a set of indicators that show both the direct and
indirect contribution of Bolivian exports on the overall economy. Two of
them have been calculated for the first time in the Bolivian case: the
direct contribution of exports to economic growth and the changing
composition of imports from 1913 to 1927. Moreover, all these i ndicators
have a methodological homogeneity regarding the other case studies cov-

ered in this volume, which allows studying the Bolivian experience in a
broader comparative perspective.
Although the Bolivian historiography identifies the 1870s as the for-
mal beginning of the export-led growth model, this chapter covers mostly
the first half of the twentieth century. The restricted analysis of the period
1870–1900 is determined by the lack of statistical information, as has
been explained before (Peres-Cajías, 2017). Moreover, in contrast to the
other case studies discussed in this volume, the time coverage goes beyond
1929. Truly, the political context of the country changed during the
1930s and 1940s (Klein, 2011), as well as some of the domestic critical
conditions that determined the evolution of exports before the global
crisis (Contreras, 1990; Peres-Cajías, 2014). However, given that the
concentration of the Bolivian export sector continued after 1929, and
that mining production from the most important local producers was
nationalized in the early 1950s (which supposed a radical change in the
political economy of mining), the study goes until 1950.
Before going further into the analysis, it is necessary to summarize the
precedent literature on the export-led growth model in Bolivia. In that
sense, it is critical to identify the main explanations and the empirical
evidence that have been used in the debate on the impact of Bolivian
exports. Firstly, it should be stressed that the debate has been strongly
influenced by the heritage of the colonial period. In fact, the current
Bolivian economic territory was integrated to the world economy from
the very beginning of the settlement of the Spanish Empire in South
America (mid-sixteenth century). The product that allowed the link to
international markets was the silver extracted from the mines of Potosi,
which was the main exporting region of this metal in the Americas from
the late sixteenth to the early seventeenth century (Bakewell, 1984).4 In
this context, it stands out the work by Assadourian (1982) who, in con-
trast to other proposals inspired by the dependency theory, suggested that
the development of silver exports from Potosi did not prompted an
enclave economy but a regional economic integration in South America.5
Secondly, it must be noted that, throughout the period under study, it
is not unusual to find complaints by Bolivian authorities in the same
terms that will be used thereafter by some scholars.6 For instance,
a ccording to Prado (1988, pp. 63–72), official documents in the 1910s

claimed the need to protect the national economy through tariffs, to fos-
ter diversification or even to nationalize mining exploitation in order to
prevent capital outflows from the country.
Thirdly, whereas these complaints appeared time to time since the
beginning of the twentieth century, there is no doubt of a greater disaf-
fection to world markets since the Great Depression. For instance, Ruiz
Gonzáles (1955) explicitly recognizes Prebisch’s work in his analysis of
the Bolivian economy inspired in the center/periphery approach. Indeed,
according to this author, Bolivia was an extreme case of monoproduction
and dependence, which, in turn, was a consequence of colonialism and
imperialism (Ruiz Gonzáles, 1955, pp. 19–20). This monoproduction
created an extreme vulnerability of the Bolivian economy on the evolu-
tion of the international price of tin, and, therefore, the author suggested
the need to diversify the economy through the development of the agrar-
ian and industrial sectors. Nevertheless, given the small size of the
Bolivian internal market, he also mentioned the relevance to strengthen
the impact of trade through a diversification of trade partners, an option
that would include the Soviet Union.
Fourthly, it has also been suggested that the success of the export-led
growth model in Latin America was related with the ability to transfer
productivity gains from the export sector to the non-export sector of the
economy (Bulmer-Thomas, 1995). Often Bolivian historiography identi-
fies the behavior of mining elites as one of the reasons or even the reason
that restricted such transfer of productivity during the first half of the
twentieth century.7 This is certainly clear in the work of Peñaloza Cordero
(1985), a figure related with the main party of the National Revolution
of 1952 (the process which led to the nationalization of the most impor-
tant mines) and who authored one of the best known collections of
Bolivian economic history. This is also true in Albarracin Millan (1995),
who identified the decision of Patiño to create his holding in Delaware
(United States) in 1924 as the critical moment when Bolivia lost the
opportunity to take advantage of tin exports. The detrimental role of the
elites has also been pointed out by Gómez (1978), who stressed that “…
the main restriction [for export led growth] from 1900 to 1950 has
undoubtedly been the behavior of mining owners” (Gómez, p. 154)8
since they sent their profits abroad and did not reinvest into the Bolivian
economy. Given the centrality of smelters in the global market of tin
(Ingusltad, Pechard, & Storli, 2015; Whitehead, 1972), it has been par-
ticularly criticized the lack of investment in smelters in Bolivia and the
constant export of raw materials.9
In contrast to these assertions, Geddes (1984, pp. 152–171, 344–346)
has suggested that Patiño tried to reinvest its gains into the Bolivian econ-
omy, but that these projects were not profitable because of different
restrictions imposed by the Bolivian government or by the structural
weaknesses of the internal economy. Regarding the latter, he also states
that, given the poor development of the Bolivian agrarian sector and the
backwardness of Bolivian manufactures, Patiño had little option but to
import most of the inputs used in its mines (1984, pp. 341–344). In a
slightly different way, Granados (2015, p. 61) has pointed out that, given
the particularities of the global market of tin, Bolivian mining producers
were more interested in the vertical integration of their companies and
investing in tin-related ventures in other parts of the world, than in diver-
sifying its assets in the Bolivian economy. Both contributions suggest
that, in order to fully understand the mining elites’ behavior, it is neces-
sary to take into consideration the profitability and feasibility of diversi-
fication projects in Bolivia, as well as the opportunity cost for capital
investors operating in global markets.
Finally, a remaining issue deals with the direct and indirect effects that
mining production had on the economy. In this context, it stands out the
work by Contreras (2003) who suggests that mining exports gave the key
resources for both state-building and the modernization of the economy
during the first third of the twentieth century. As for the first issue, he
points out the critical increase of central government’s revenues derived
from the upsurge of trade taxes (including both custom import duties
and export taxes) and its reinvestment in public education. Regarding
modernization, he stresses the importance of railways construction, the
consolidation of financial institutions and the effects of mining growth
on urbanization.
We aim to contribute to the previous debates with new quantitative
trade evidence that may help to reassess the impact of the export-led
growth model in Bolivia. While high concentration could be an obstacle
for the export sector to promote sustainable growth, the new data reveals
and quantifies its contribution to the Bolivian economy. It is out of the
scope of the present study to develop a counterfactual about how Bolivia
could have been in the absence of mining exports or to identify the struc-
tural restrictions that limited a higher economic diversification. Thus, we
offer a quantitative analysis of Bolivian exports and its contribution to
the economy, without considering whether there was a better option or
not.
The Evolution of the Bolivian Export Sector

Bolivia became an independent country in 1825, and, despite the exis-
tence of other export products such as copper or quinine, silver produc-
tion continued to be the most important link between the country and
international markets (Ballivián, 1943; Dalence, 1851). Both the evolu-
tion and the impact that silver had on the economy have been subject of
debate. Regarding the former, there is no clear consensus on the level or
cycles of production. Indeed, according to Mitre (1981), the sector was
plunged into a deep crisis and stagnation since the beginning of the nine-
teenth century (still under the colonial rule) to the mid-1850s. By con-
trast, Platt (1996) has emphasized the existence of an initial recovery
during the 1830s. The rise identified by Platt ends abruptly in the early
1840s at a level far below those reached during the colonial boom which
ended at the beginning of the century. This short-lived and small recovery
gives ground to the pessimistic view on the Bolivian export sector after
Independence. However, recent estimations by Langer (2016) shows
that, due to smuggling, silver production would have been constantly
undervalued during the first post-independence decades, which contests
the pessimistic view.
Regarding the effects of mining production on the overall economy,
Mitre (1986) points out that silver production from Potosí continued
having a positive impact on different regional economies of South
America. This influence was not the result of higher levels of production,
nor a higher demand of inputs (as happened during the colonial period),
but a consequence of the monetary depreciation implemented by the
Bolivian government in 1829. Thus, the issue of the so-called moneda

feble (weak currency) would have generated the necessary liquidity to
maintain the trade flows that characterized the colonial period. By con-
trast, Prado (1995) has suggested that, far from being an engine of
regional economic dynamism, monetary depreciation just generated
inflation in a context where the economic center of South America was
moving from the mountains to the coast.10
While these debates are still open, there is less ambiguity on the effects
that the development of the coastal region during the 1850s had on silver
production in the old mining district of Potosí. In fact, the great discov-
eries and exploitation of guano, saltpeter and nitrate in the Chilean and
Peruvian coasts generated a positive shock to the Bolivian economy for
three main reasons: they encouraged the exploration and discovery of
natural resources in the Bolivian coast, allowed the arrival of new tech-
nologies to the coast and the rest of the country and facilitated the lend-
ing of capital from Chilean and Peruvian capitalists and traders to their
Bolivian partners (Klein, 2011). Therefore, even though the companies
that settled on the Bolivian coast were mostly foreign-owned and the
sovereignty of the Bolivian government was constantly challenged in this
region (Pérez, 1994), the economic development of the Bolivian coast
had an indirect positive impact on silver mining in Potosí.
These external shocks, altogether with the reduction of the international
price of mercury—a key input for silver refining—and the development of
a new domestic capitalist class prompted the recovery of the Potosi silver
mining toward the middle of the 1850s (Klein, 2011). Despite these
improvements, the Bolivian historiography identifies the 1870s as the for-
mal beginning of the export-led growth model during the republican era
because of two main reasons. On the one hand, because of the instauration
of two critical measures related with silver production which modified the
mercantilist policies inherited from the colonial period toward more liberal
policies (Mitre, 1981).11 Liberalization, in turn, allowed the arrival of inter-
national investments to the sector, and thanks to that, after more than 70
years, silver production in Bolivia could finally recover and surpass the lev-
els exhibited during the last colonial silver boom (Klein, 2011).
At the end of the 1870s, the new economic perspectives had to face
unexpected challenges. Indeed, the Bolivian defeat in the War of the
Pacific (1879), forced the transfer of the Bolivian coastal department to

Chile and the loss of sovereign access to the sea. As a result, Chile got
control of the ports most used by Bolivian traders (Antofagasta and Arica,
the latter previously in Peruvian hands), which negatively affected the
transaction costs and logistics of Bolivian trade. The effect of these
changes was of such magnitude that the Bolivian government had no
choice but to accept an Armistice Pact (1884) that had strong negative
implications in geopolitical terms and in commercial transaction costs
(Peres-Cajías, 2017). It was at this very moment when Bolivia became a
landlocked country, a feature that would define its trade connections
with the international markets ever since.
In spite of this negative shock, the new political elites that consoli-
dated in power after the war reinforced the export-led growth model
through the promotion of railway infrastructure. In this regard, the gov-
ernment provided the necessary legal support for the construction of the
first railway line between Uyuni (near the main silver mine in the depart-
ment of Potosi, Huanchaca) and Antofagasta. This line, which was built
with private capital, was inaugurated in 1889 and three years later was
extended to Oruro, another important mining center. This railway line
was critical in a context were the ore content of silver was decreasing;
moreover, it made profitable the exploitation of all those mineral deposits
accumulated since colonial times in the Bolivian mountains (Mitre,
1981).
The competitiveness gains derived from railway expansion were unable
to compensate for the sharp drop in international silver prices that took
place in the early 1890s (Fig. 3.1). This negative shock was mitigated by
a transition to tin production. Located in the same zones where silver was
exploited before, tin could take advantage of the infrastructure and skills
of the past decades.12 It was also during this period that rubber produc-
tion in the north of the country started (Gamarra Téllez, 2007). Whereas
this region was previously integrated to world markets through quinine
exports (Ballivián, 1943), it was hardly integrated into the Bolivian econ-
omy since it was far away—both in geographic and economic senses—
from the main population centers (see Map 3.1). As it can be seen in
Fig. 3.1, the emergence of both tin and rubber exports was also a response
to an increase in their international price.
250 800
700
200
600
500
150
400
1890 = 100
1890 = 100 (n)
100
300
200
50
100
0 0
3 The Bolivian Export Sector (1870–1950)
Silver Rubber Tin
Fig. 3.1 Prices of the main Bolivian export commodities, 1870–1950. Note: Tin prices are plotted in the right axis. Sources:
83
MOXLAD
Thus, at the eve of the twentieth century, the Bolivian economy was
changing its export basket from silver to a, for a while, more diversified
composition. This process was contemporaneous to the beginning of the
publication of Bolivian official foreign trade statistics (1895) (Peres-
Cajías, 2017).13 The availability of these statistics allows analyzing the
composition of Bolivian exports (Fig. 3.2), which highlights the continu-
ous decrease in the relative importance of silver and the consolidation of
tin as the main export already in the first decade of the twentieth century.
Figure 3.2 also shows that rubber exports were the second most impor-
tant item until 1914, when its production started to decrease consider-
ably due to Asian competition. In addition to the prevalence of tin, most
of the Bolivian export basket was composed by other minerals such as
silver, copper, lead, zinc, antimony, bismuth and wolfram. Thus, with the
exception of the first decade of the twentieth century (and presumably
the last decade of the nineteenth century), 90% of exports were concen-
trated in mining products. Furthermore, from 1918 to 1950, tin exports
represented between 65% and 75% of the total value exported. This high
degree of concentration highlights the Bolivian case as one of the most
concentrated in Latin America. Indeed, the relative importance of tin is
similar to the relative importance of nitrates in Chile from 1900 to 1920
or that of coffee in Colombia during the 1920s, but much greater than
export concentration in Argentina, Mexico or Peru (see the respective
articles in the present volume).
After the 1929 economic crisis, the business concentration of mining
production increased: almost three-quarters of tin production were con-
trolled by the so-called Tin Barons (Peñaloza Cordero, 1985). During this
process, tensions arose between the main mining owners and other rele-
vant economic agents such as small miners, mining workers, importers,
manufacturers and railway companies (Whitehead, 1972, pp. 73–79).
Thus, the social environment was turning gradually against the tin busi-
nessmen. As a consequence, and especially after the defeat of the Chaco
War against Paraguay (1932–1935), a large part of the Bolivian society
saw in mining concentration the main cause of an alleged small contribu-
tion of the sector to the whole economy (Gallo, 1991). In this context, it
is no by coincidence that one of the first measures taken by the leaders of
the National Revolution of 1952 was the nationalization of the companies
100
90
80
70
60
50
Percentage
40
30
20
10
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
Tin Silver Copper Lead Zinc Anmony Wolfram Bismuth Rubber
Fig. 3.2 Composition of Bolivian exports, 1900–1950 (%). Notes: Data for bismuth and rubber were unavailable in
85
1936–1941, 1943–1944, 1946–1947 and 1949. Sources: Bolivian official foreign trade statistics
owned by the “Tin Barons” and the creation of the state-owned company
Corporación Minera de Bolivia (COMIBOL). This measure, in turn, is
embedded in the change of the economic strategy adopted by the country
since the 1950s that implied a greater state intervention in the economy.
The consequences of the political change in 1952 are not included on this
chapter, but its roots are directly connected with our analysis, since they
relied on the mass perception of a negligible contribution of tin exports to
the whole economy.

Bulmer-Thomas (1995) identifies that a necessary (but not sufficient)
condition for a successful export-led growth relies in the continued
expansion of exports. In his theoretical model, the annual growth rate of
exports should reach minimum targets in order to produce a process of
economic convergence to developed countries. As for the period
1850–1912, these targets would have only been achieved by Argentina
and Chile and, to a lesser extent, by Cuba and Uruguay. The rest of Latin
American countries, including Bolivia, would have experienced insuffi-
cient annual growth rates.14
Figure 3.3 shows the evolution of Bolivian exports according to
Bolivian official foreign trade statistics after the correction explained in
Peres-Cajías and Carreras-Marín (2018). In order to enable international
comparisons, current values are presented in US dollars; real values have
been obtained by the calculation of a Fisher export price index
(1913 = 100), which considers the prices of tin, rubber and silver. These
three products represented on average 83% of Bolivian exports, with a
minimum of 60% to a maximum of 94% over the period under study.
The export series show a clear upward trend (both in nominal and real
terms) with some oscillations from 1904 to 1920. This was suddenly
stopped during the 1920–1921 crisis and, whereas it recovered thereafter,
export levels during the 1920s were below those obtained during
WWI. Again, the 1929 crisis negatively affected the evolution of Bolivian
exports which, just after the beginning of the Second World War (WWII),
recovered an upward trend. In nominal terms, this increase persisted
until 1950; however, in real terms, it reversed after the end of WWII.
Millions
0
20
40
60
80
100
120
1900
1901
1902
1903
1904
1905
Carreras-Marín (2018)
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
Current Values
1924
1925
1926
1927
1928
1929
1930
Constant values
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
Fig. 3.3 Bolivian exports, 1900–1950 (millions US$ at current and constant values). Sources: Peres-Cajías and
1950
87 3 The Bolivian Export Sector (1870–1950)
Table 3.1 shows the (geometric) export growth rates, in current as well
as in constant prices, for the whole period and for some time subsamples;
it also presents the standard deviation of annual variations of exports.
From 1900 to 1950, it stands out an average annual growth rate of 3.97%
in nominal terms and 2.09% in real terms. Whereas the periods under
study are not necessarily similar, it stands out that long-term growth rates
of Bolivian exports were lower than those obtained by the other countries
analyzed in this volume. This lower growth rate is more related with a
considerably volatility (see the high standard deviation throughout the
period) rather than the existence of constant low growth rates. This evi-
dence points out that beyond the existence of high export growth rates, it
is also necessary to take into account volatility.
The table also points out that, in real terms, the highest and more sta-
ble growth was achieved between the beginning of the twentieth century
and the end of WWI. Whereas the growth rate decreased during the
1920s, it was still higher than that of Chile. Furthermore, there is a huge
difference in export growth rates in real terms before and after the Great
Depression. This is related with the poor performance of exports from
1930 to 1938 (both in nominal and real terms) and the decrease (in real
terms) from 1945 to 1950. The latter suggests the need to analyze criti-
cally the high nominal growth rates of exports during and after WWII.
Table 3.1 Export growth rate, volatility and exports per capita
Current σ Constant σ Exports per capita, US$
Long-term rates
1900–1950 3.97 28.61 2.09 20.22 1900 7.59
1900–1929 4.12 28.64 3.50 21.27 1913 17.09
1929–1950 3.77 28.57 0.18 19.30 1920 23.11
Madisson periods 1929 18.64
1900–1913 7.44 18.37 5.68 18.14 1938 10.92
1913–1929 1.50 34.39 1.76 23.36 1950 33.48
Cycles
1900–1920 6.72 25.82 5.04 18.43
1920–1929 −1.43 33.77 0.14 26.70
1929–1938 −4.98 37.42 −5.21 20.09
1938–1950 10.85 20.00 4.42 18.46
Sources: Authors’ own work based on Bolivian official foreign trade statistics
Note: σ = standard deviation of exports annual variation
In order to understand the trends and growth rates before presented,

the following paragraphs will analyze the evolution of tin exports. This is
instructive given the centrality that tin had on Bolivian exports and given
the fact that the characteristics of tin exports and its production changed
throughout time (Contreras, 1994; Mitre, 1993). Indeed, the boom in
tin production that took place at the beginning of the twentieth century
(tin production multiplied 2.3 times from 1900 to 1910 according to
Contreras (2003)) was more a consequence of the high ore content of
minerals than of large investments; this production, in turn, was destined
predominantly to Great Britain. By contrast, during the early 1910s,
modern companies increased their investments and, as a consequence of
higher requirements of capital, the tin industry began to be concentrated
in few national and international capitalists.15
This process was consolidated after WWI since modern companies
were able to take advantage of the changes generated by the international
conflict. Indeed, whereas the first year of the war implied a sharp reduc-
tion in exports and the consequent closure of small companies, the sec-
ond year generated higher opportunities to tin producers thanks to the
opening of tin smelters in the United States (Contreras, 2003). Thus, the
increase in Bolivian exports during the external conflict was in part a
consequence of changes in international prices of tin (they recovered its
prewar level in 1916 and doubled it in 1918) as well as an increase of the
tin output (which recovered its prewar levels in 1917). Exports’ increase
during the war was also driven by a sudden raise in the quantities exported
of different minerals such as antimony, copper and wolfram. The relative
importance of these three minerals into the export basket increased from
3% in 1913 to a maximum of 31% in 1916 and to 12% at the end of the
conflict. These shares would not have been achieved again until WWII.
Once the war ended, a lower demand and the accumulation of stocks,
reduced dramatically the international price of tin and, as a consequence,
both domestic production and total exports were reduced. International
prices recovered in 1923 and local production started a sharp increase
from 1922 to 1929, when tin output achieved its maximum level of the
first half of the twentieth century. This expansion was the result of signifi-
cant investments in the sector made both by national and international
capitalists. There was also a higher concentration of local production as
the result, mainly, of the purchase of different mines by Simon I. Patiño.

It is worthy to note that, at this point, tin exports were again predomi-
nately sent to the United Kingdom.
According to Whitehead (1972), the Great Depression made visible
the fragile bases that sustained the export-led growth model in Bolivia. In
this context, from 1930 to 1932, exports were reduced in nominal terms
to 30% of the export value of 1929. Tin exports, and therefore, total
exports, recovered in 1933 thanks to a new regulatory international
framework, derived from the creation of the International Tin Committee
and the imposition of quotas on the market which strongly affected inter-
national prices.16 However, it was not until the beginning of WWII that
Bolivian exports increased again in a more sustainable way. This recovery
was a consequence of an increase in tin output (which, as during WWI,
was redirected to the United States), rather than changes in the interna-
tional price of tin.17 After the war, prices increased but tin output
decreased. This was in part a consequence of the lack of investments that
affected the sector since the early 1930s due to the international context
and the political instability of the country (Contreras, 1994). This stresses
again the need to analyze the evolution of Bolivian exports during the
1940s with caution.
It stands out that most of the worst reductions of Bolivian exports
(1914, 1921 and 1930) were related with sharp reductions in the inter-
national price of tin. This fact may give ground to the Prebisch-Singer
thesis according to which the export-led growth model would be doomed
as a promoter of economic growth due to a long-term trend toward the
fall of export prices in relation to prices of imports. Figure 3.4 shows
three different estimations of Bolivian Terms of Trade which, altogether,
show a similar trend. Our new series have been calculated using the Fisher
Price Index of tin, silver and rubber, for the numerator, and, for the
denominator, a geographical Paasche Price Index based on the CPIs of
the United States, the United Kingdom, Germany, France, Argentina
and Brazil, which were weighted according to its share in Bolivian
imports.
During the 1880s and 1890s, since silver exports accounted for most
of Bolivian exports, the fall in silver prices determined a decline of
Bolivian terms of trade which is not shown in Fig. 3.4. This decline came
140
120
100
80
Index
60
40
20
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
Own Esmaon Arroyo&Maurer Gómez
Fig. 3.4 Terms of trade of Bolivia, 1900–1950 (1913 = 100). Sources: Gómez (1978), Arroyo-Abad and Maurer (2011) and
91
own estimation based on Bolivian official foreign trade statistics and MOXLAD
to a halt at the turn of the century thanks to the growth in importance of

tin and rubber. Thereafter, the three series shows a clear decline (despite
some oscillations) in Bolivian terms of trade from 1914 to 1921. This
reduction is related with the sharp decline in the international price of
rubber, the volatility of tin prices and an accelerated increase of import
prices. During the 1920s, there was a certain recovery that was abruptly
slowed by the crisis of 1929. It was not until the mid-1930s that Bolivian
terms of trade began to recover again, due to an improvement in mining
prices, which stresses the effects of price regulations on tin. This evolution
suggests that, rather than a “secular deterioration”, Bolivian terms of
trade stand outs by its volatility, an issue that is also stressed in the analy-
sis of the Colombian experience in this volume. Thus, as has been high-
lighted in the Bolivian historiography (Gómez, 1978, p. 164) and is
commented for the Argentinean and Mexican cases in this volume, the
evolution of terms of trade would help to understand certain episodes but
not necessarily the overall impact that exports had on the Bolivian econ-
omy during the first half of the twentieth century.
It could also be argued that the increase of mining exports hindered
the economic growth of the Bolivian economy through the Dutch
Disease. Although the study of this problem may require the use of com-
plex methodologies (Barja Daza, Fernández Tellería, & Zavaleta Castellón,
2016) which are beyond the scope of this chapter, it is possible to analyze
the evolution of the exchange rate, a variable which is identified as one of
the most correlated with the Dutch Disease. Indeed, it is assumed that an
export windfall may generate an appreciation of local currency that hin-
ders the competitiveness of exports and reduce the cost of imports; this,
in turn, reduces the potential of diversification of the economy. Figure 3.5
shows the behavior of both the nominal and the real exchange rate from
1900 to 1950. The nominal exchange rate is calculated as the ratio
between the Bolivian currency (Bolivianos) to US dollars; the real
exchange rate shows the prices of foreign goods in terms of local goods.
Thus, in both cases, a decrease (an increase) in the exchange rate reveals
an appreciation (depreciation) of the Boliviano.
The quantitative evidence shows a relative stagnation of the Bolivian
nominal exchange rate from the beginning of the twentieth century until
1931. Thereafter, a depreciation process started that accelerated in 1937,
70 6
60
5
50
4
40
30
2
20
1
10
0 0
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
Nominal Real
Fig. 3.5 Nominal and real exchange rate of Bolivia related to US$, 1900–1950. Note: The real exchange rate is plotted in
the right axis. Sources: The nominal exchange rate has been obtained from Mc Queen (1925) and Bolivian Central Bank
93
Yearbooks. The real exchange rate comes from authors’ own work based in the Bolivian nominal exchange rate, the US
Consumer Price Index presented by Officer and Williamson (2017) and the Consumer Price Index calculated by Herranz-
Loncán and Peres-Cajías (2016)
which is related with the mounting inflation that Bolivia presented dur-
ing the late 1930s and the 1940s. This last feature may help to under-
stand the relative stability of the Bolivian real exchange rate. Indeed, the
real exchange rate moved around 2.6 and 2.8 throughout the period
under study and the noticeable appreciations took place in very specific
periods: 1902–1903, 1916–1918, 1934–1936 and 1945–1950. Thus, in
contrast to the experience of Chile during the last quarter of the nine-
teenth century, mining exports in Bolivia did not prompt a sustainable
appreciation of local currency.
The Direct Contribution of Exports

Taking into account the previous analysis, it is now possible to highlight
the existence of four cycles in the evolution of the Bolivian export sector
and, consequently, in its capacity of influencing the economy as a whole.
A first cycle during the last quarter of the nineteenth century, which is
characterized by the recovery of silver exports but also by its sudden fall,
precedes the coverage of our data. A second cycle, between the beginning
of the twentieth century and the end of WWI, is characterized by a transi-
tion from silver exports to rubber and tin exports. This period stands out
by a rapid growth of exports, due both to higher output and, particularly
in the case of tin, to higher international prices. A third period witnessed
the concentration of exports on tin as well as a considerable instability
which lasted from 1921 to 1938. Thereafter, a fourth period during and
after WWII is characterized by the sporadic recovery of exports, the deter-
mination of international prices through non-market mechanisms and a
greater political instability and animosity toward local producers.
We have calculated the direct contribution of exports to the economy
(I) as the ratio of the average of percent annual variations of exports (a)
to the average of percent annual variations of GDP (y), multiplied by the
share of exports over GDP (b) (see Table 3.2). The estimated direct
contribution of exports to Bolivian economic growth for the entire period
under study is 20%. This share is below that achieved by Mexico from
1895 to 1929, but in line with the average contribution of exports in
Argentina, Chile and Peru from the 1870s to 1929.
These similarities should be considered prudentially since they could

be a consequence of strong export dynamism, as in the case of Argentina,
or could be also reflecting the weakness of the domestic economy, as it
happened sometimes in Bolivian history. Indeed, the direct contribution
of Bolivian exports peaks to a maximum of 29% from 1900 to 1920,
when exports were expanding but the dynamism of the domestic econ-
omy was weak. The 1921–1922 crisis reduced the impact of exports on
the economy to 20%, which may be explained by the lower dynamism of
Bolivian exports. The Great Depression and the consequent reduction of
exports played a negative role in the growth performance of the Bolivian
economy from 1929 to 1938; this could be also related with the growing
importance of manufacture production in the country. In fact, this last
event is certainly behind the lower direct impact that Bolivian exports
had on GDP growth during and after WWII.
Anyway, the direct contribution of exports during the period of export
expansion (1904–1920) and the 1920s must not be minimized. Indeed,
this increase is in line with a sharp increase in the relative importance of
mining in the Bolivian GDP, according to Herranz-Loncán and Peres-
Cajías (2016) estimations. Furthermore, GDP estimates from these
authors reveal that the Bolivian economy experienced one of the highest
growth rates of its history during this period. Even more, the Bolivian
economy put an end to a divergent trajectory (experienced, at least, since
the mid-nineteenth century) toward the most developed economies of
the world and Latin America.
Table 3.2 Direct contribution of exports to GDP growth

a b y I
1900–1950 8.25 16.42 6.60 20.54
1900–1929 8.74 18.15 6.05 26.22
1929–1950 7.72 13.90 7.29 14.72
1900–1920 9.89 20.67 7.06 28.94
1920–1929 5.39 12.90 3.50 19.89
1929–1938 2.24 11.26 −2.47 −10.21
1938–1950 10.01 16.28 13.39 12.17
Sources: Authors’ own work based on Peres-Cajías and Carreras-Marín (2018)
and Herranz-Loncán and Peres-Cajías (2016)
We can also analyze the contribution of exports by its capacity to gen-

erate foreign currencies to import. In that sense, we have calculated the
purchasing power of exports as follows:
 X 
PPE =   ×100
 PIM 
where X is the current value of exports in US dollars and PIM is a Price

Index of Imports, in our case the one built to compute the Terms of
Trade. Figure 3.6 shows the purchasing power of Bolivian exports, which
reflects three clear periods: (a) a noticeable improvement from 1903 to
1918, (b) a clear worsening during the instable period of 1920–1938,
and (c) a fast and sustainable recovery during and after WWII. Beyond
the series trend, high volatility seems again to be a constant feature of
Bolivian trade.
The increase of import capacity was used by some Latin American
countries to promote the structural change needed to foster a more sus-
tainable path of economic growth. For instance, machinery imports were
critical for the early steps toward industrialization. Thus, an interesting
question which derives from the previous calculus relies on the final use
of the wealth created by exports, more precisely on the nature of imports.
Table 3.3 gives this information for 1913, 1920, 1923 and 1927.
Although some changes can be noted, particularly regarding the import
of oil, the relative order of the main import categories did not change
throughout time. Thus, our estimations suggest that Bolivia used its rev-
enues from exports mainly to acquire consumer goods from abroad,
which increased its relative importance on total imports from 50% to
58%. Likewise, although its relative importance decreased, imports of
intermediate goods, either for agrarian or industrial activities, represented
the second most important item. Imports of capital goods maintained a
relative importance around 15% of total imports.18
It has often been assumed that most of Latin American imports were
compound by textiles. Nevertheless, our estimation suggests that, among
consumer goods, most of Bolivian imports were food and beverages. This
finding gives support to those scholars that have emphasized the
Index
0
20
40
60
80
100
120
140
160
180
200
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
and Carreras-Marín (2018) and MOXLAD
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
Fig. 3.6 Purchasing power of Bolivian exports, 1900–1950 (1913 = 100). Sources: Authors’ own work based on Peres-Cajías
1950
Table 3.3 The composition of Bolivian imports, 1913–1927 (%)

1913 1920 1923 1927
Consumption goods 51.31 56.14 59.96 58.46
Food and beverages 20.41 24.62 17.84 24.29
Textiles 15.69 20.93 31.47 21.27
Weapons 0.59 0.37 n.d. 0.15
Luxury goods 3.54 2.01 3.17 2.65
Others 11.07 8.22 7.48 10.08
Intermediate goods 30.53 25.11 19.07 20.33
Capital goods 13.77 11.49 14.31 14.74
Energy 4.39 7.25 6.66 6.48
Coal 4.39 5.07 2.00 1.02
Oil 0.00 2.18 4.66 5.46
Number of goods 207 341 265 433
Sources: Authors’ own work based on Bolivian official foreign trade statistics
eaknesses of the domestic economy and the backwardness of the agrar-

w
ian sector.19 We have also data on the relative importance of luxury goods
imports, which according to several dependentist scholars absorbed most
of Latin American imports. Our calculation shows that imports of prod-
ucts such as caviar, champagne, silk textiles, gemstones, jewelry and the
like represented only around 2% to 3.5% of total imports.20 Regarding
the import of energy inputs, our figures capture the energy transition
from coal to oil around the early 1920s.21
The return value of exports is another popular indicator used to ana-
lyze the direct contribution of exports. In the Bolivian case, there is an
estimation of this variable which, however, starts just in 1935. This has
been constructed as the ratio of the return value of exports to net exports;
the latter is a variable frequently used in the Bolivian historiography
which makes references to total exports minus the cost of transports and
smelting of Bolivian minerals (according to the literature 20% of total
exports during the first half of the twentieth century) (see Fig. 3.7).
Although the obtained ratio is below other Latin American economies
such as Argentina (view the article in this volume), it still represented half
of Bolivian net exports. This value could be assumed as an upper bound
since mining taxes increased considerably after the Chaco War
(1932–1935). Indeed, whereas there is no estimation of the return of
value of mining before the 1930s, Fig. 3.7 presents the evolution of one
Percentage
0
5
15
60
10
20
25
30
35
40
45
50
55
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
Mining taxes/Total exports
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
Mining taxes/Mining GDP

1933
1934
1935
1936
1937
1938
1939
1940
1941
Gómez (1978)
1942
1943
Fig. 3.7 The return value of mining, 1900–1950 (%). Sources: Peres-Cajías (2015a, 2015b) and Gómez (1978)
1944
1945
1946
1947
1948
1949
1950
of its critical components, taxes. Both the share of mining taxes on total
taxes and the share on mining GDP stress that, beyond the popular
knowledge, fiscal pressure on mining producers changed considerably
throughout the first half of the twentieth century (Peres-Cajías, 2015a,
2015b). This also reflects that potential tensions between the Bolivian
government and mining producers were neither static nor insignificant.
The Indirect Contribution of Exports

There are several indirect contributions of the export sector to the whole
economy that must be considered. First of all, exports generated an
increase of fiscal revenues; this was caused directly by the increase of
exports taxes and indirectly through the expansion of imports and the
consequent payment of import taxes. In the case of silver exports, its
expansion during the early 1870s allowed the fiscal transition from the
inherited colonial capitation tax on indigenous people to trade taxes
(Peres-Cajías, 2014). This fiscal modernization, in turn, freed more
resources to be spent on basic administrative expenditures, justice and
defense. Given the political instability of Bolivia during the first decades
after independence, these basic expenditures were crucial for the very exis-
tence and consolidation of the Bolivian State. Regarding the period of tin
exports, its expansion went by hand of a considerable increase of Bolivian
central government’s revenues. This time, these resources were spent in
basic administrative tasks, but also in a considerable expansion of educa-
tion spending, particularly during the first decades of the twentieth cen-
tury and the post-Chaco War period (1935–1950) (Peres-Cajías, 2014).
Beyond this fiscal stimulus, the dynamism of mining exports allowed
the emergence of new economic services (like trade businesses specialized
in the overseas trade) and the modernization of Bolivian cities (that
means electricity, tramways, public sewage).22 This connection is even
clearer in the case of banking services. Indeed, the “Banco Boliviano”
(1867) was the first bank inaugurated in Bolivia. Next, on July 1869, the
first mortgage bank appeared, the “Crédito Hipotecario de Bolivia”,
which could grant loans with the guarantee of real estate or land. Two
years later, in 1871, the “Banco Nacional de Bolivia” was created. This
bank had rights to issue, discount, have deposits and give loans and it had
among its shareholders important English merchants, Chilean capitalists
and the top representatives of the national silver export companies. This
new institution absorbed the “Banco Boliviano” in 1872. A few years
later, Bolivian capitalists gained control on the bank, which, as early as
the 1880s, expanded with branches in the main cities of the country.
Subsequently, a new mortgage bank was created—the “Banco Hipotecario
Garantizador de Valores” in Sucre; in 1892, a new bank linked with silver
exporters was created: the “Banco Francisco Argandoña”. Thereafter,
Patiño founded the “Banco Mercantil” in 1905, which later became one
of the most important banks in the country. It was also during this period,
and thanks to mining businesses, that several foreign banks were set up,
among which the “Banco Alemán Trasatlántico” has to be highlighted.
Also thanks to export success, the country was able to access international
credit markets in 1911 to the creation of a mixed capital bank—“Banco
de la Nacion Boliviana”—which centralized money issuing in 1914.23
Railways construction was another indirect consequence of export
expansion. In fact, after the construction of the first railway line in 1889
and it expansion in 1892, several lines were implemented during the first
decades of the twentieth century: La Paz-Guaqui (1905), Río Mulatos-
Potosi (1912), Arica-La Paz (1913), Uyuni-Atocha (1913), Oruro-Viacha
(1913), Viacha-La Paz (1917) and Oruro-Cochabamba (1917). Thus, by
the mid-1910s, the main mineral-producing areas and the four most
important cities of the country were connected among each other and
with Peruvian and Chilean ports in the Pacific. This generated a consider-
able decrease of transport costs in the west of the country which increased
the competitiveness of exports but also that of imports. This last feature
affected several regional economies which previously supplied the west
markets. This fact has generated a vivid debate in the Bolivian historiog-
raphy that one of the authors of the present chapter has revised previously
(Peres-Cajías, 2017). Thanks to new quantitative evidence it has been
stressed that, beyond the undeniable negative impact that railways con-
struction had on different regional economies of the center and east of
the country, it is also necessary to consider that competitiveness differ-
ences toward imports could be also generated by wide differences in
productivity.
A further indirect contribution of exports is linked with industrial-

ization. Indeed, the expansion of exports in Latin America during the
last quarter of the nineteenth century enabled the creation of modern
industries. In the Bolivian case, however, modern industries were largely
confined to few factories related mostly with food or beer elaboration.
Thus, it was not until the mid-1920s when industrial production
increased consistently (CEPAL, 1958). Nevertheless, it should be
stressed that the consolidation of the sector during the 1930s was in
part determined by the availability of foreign exchange generated by
mining exports.
A final issue to take into consideration is the forward linkages gener-
ated by mining exports. Indeed, since colonial times, silver production
was carried out within the mine-mill complex: the ore was mined or
extracted in the mines, then processed in the mining mills and finally
exported to world markets. In Huanchaca, the country’s main silver
mine, this process persisted until 1885 (Mitre, 1981, p. 207). Then, due
to the fall in silver prices, the decline of the ore content and railways con-
struction, this dynamic changed. Thus, at least in the case of the country’s
main silver mine, while raw ore exports tended to increase, silver pro-
cessed exports tended to decline since 1882; this reversal is explained by
the railway potential to export large volumes of raw ore. Finally, by 1892,
the building of the “Playa Blanca” smelting industry in Antofagasta gen-
erated the relocation of value-added activities to Chile. Thus, the integra-
tion of Bolivia to international markets through railways caused a degree
of deindustrialization in silver mining.
The initial takeoff of tin exports allowed an initial recovery of the met-
allurgical activity in the country. In fact, the export of high volumes of
raw silver was initially combined with the export of high-value units of
tin thanks to its processing in the previously existing mills. However, this
“resurgence” was only a temporary phenomenon determined by a broad
access to cheap fuel of local origin—yareta. Once this fuel began to disap-
pear, it was again more profitable to export high volumes of low-value
unit ore rather than refining them in modern furnaces that required high
investment levels and coal, a product whose import was expensive
(Contreras, 1994). Thus, it stands out that modern smelting factories
were not implemented in the country until the late 1960s.
Balance
Previous works have stressed the prevalence in Bolivian historiography of
a pessimistic assessment of the export-led growth model in the country
(Contreras, 1994). Extreme concentration of exports in one single prod-
uct and few markets has been often identified as the main cause of the
lack of impact of exports on the rest of the economy. This argument is in
line with the international historiography which underlines that the
potential of the export-led growth model is determined by the continu-
ous increase of exports through a constant diversification of products and
markets (Bulmer-Thomas, 1995). In this chapter, we have recurrently
suggested that product and market concentration could have restricted
the impact of exports on the economy because of high volatility.
But regardless the neutralizing effects of high volatility, it does not
mean that there were no positive effects. Indeed, in contrast to the pes-
simist assessment, this chapter has stressed that Bolivian exports per-
formed quite well from the beginning of the twentieth century to the end
of WWI. Different indicators support this idea: the constant increase of
exports, their direct contribution to economic growth, the performance
of the Bolivian economy relative to the most developed economies of the
world and South America (a modest convergence in GDP per capita) and
the improvement of the purchasing power of exports. But it all ended
abruptly at the beginning of the 1920s and did not recover until the late
1930s. This behavior was heavily determined by the evolution of the
international price of tin, which certainly reflect the “fragile bases” of the
export-led growth model in Bolivia (Whitehead, 1972). However, would
not these bases been weaker in the absence of the previous growth of
Bolivian exports? Was there a feasible alternative to exports as a growth
engine?
Another argument, which has been several times pointed out, relates
to the weak connection of the Bolivian export sector to the rest of the
economy, that is, its weak impact on agrarian and industrial production,
the negative effects on different regional economies and the lack of for-
ward linkages. Furthermore, these restrictions have been often attributed
to the concentration of exports in few local producers. In spite of this, it
cannot be neglected the positive impact that exports had on state-
building, public spending in education and the modernization of the

economy. Moreover, data presented in this chapter, on the evolution of
both mining taxes and the return value of mining, questions the idea of
an alleged political omnipresence of mining elites’ interests on the
Bolivian government throughout the period under study. Likewise, the
early dependence of the Bolivian economy on consumer goods imports,
particularly on food imports, which has been presented in this chapter,
questions again the causality between mining and agrarian production.
Was the lack of connection between both sectors a consequence of min-
ing elites’ self-interest? Or was a consequence of the backwardness of the
agrarian sector and the economic disintegration of the country? Thus, a
next step in the analysis of the export-led growth model in Bolivia requires
analyzing how the different sectors of the economy were connected and
how this economic structure affected (or not) the incentives to private
investment for diversification.
Notes
1. Map 3.1 deploys current borders of Bolivia, which were set in 1935.
Territorial losses against Chile in the War of the Pacific (1879) implied
the loss of a territory rich in mining exports; territorial losses against
Brazil in the Acre War (1903) implied the loss of a territory rich in rub-
ber exports.
2. The local origin of most export businessmen would suggest that most of
profits were reinvested in Bolivia. However, the Bolivian historiography
has stressed that local capitalists sent most of their profits abroad. For a
discussion on this issue, see Peres-Cajías and Carreras-Marín (2018).
3. It must be stressed that these corrections does not substantially modify
the main trends identified in the original Bolivian official foreign trade
statistics.
4. Although the sector went into crisis from the middle seventeenth to the
middle eighteenth century, Potosi mining experienced a second boom in
the last third of the eighteenth century (Tandeter, 1992).
5. The colonial heritage can also be seen in Map 3.1, as the location of
exports during the republican era was located in the same geological rich
region of Potosí.
6. These complaints can be found in different official documents such as

the yearbooks of the Ministry of Finance or in speeches of Bolivian
Presidents.
7. This approach departs from the notion that Bolivian mining elites were
politically powerful. For instance, Almaraz Paz (1976, pp. 65–123)
stresses the ability of tin elites to control the Bolivian Government indi-
rectly through different mechanisms and influences. It is argued that this
political empowerment supposed a restriction to the development of the
overall Bolivian economy since mining elites were able to oppose and
eliminate any policy which affected their interests. This author, among
others such as Walter Montenegro, has been very influential on the
Bolivian historiography as well as on the Bolivian common knowledge.
Not by hazard, the three main mining producers of the first half of the
twentieth century (which produced 75% of tin output from the early
1930s to the early 1950s) are known as the Tin Barons, which, in order
of importance, are Simón I. Patiño, Mauricio Hochschild and Victor
Aramayo.
8. Own translation. Gómez (1978) identifies other critical determinants
such as technological restrictions, the prevalence of cheap labor and the
weakness of the national government.
9. As it has been shown in Peres-Cajías and Carreras-Marín (2018), the
value added of Bolivian exports of tin was quite low. The main smelter of
Bolivian tin was in Britain, a feature that explains the high concentration
of Bolivian ore exports to that country.
10. This idea has been explored by Gelman (2009). Another promising debate
is related with the effects that silver production and the legislation erected
by the new republic may had on the distribution of exports gains, particu-
larly in terms of social classes and ethnic identification (Langer, 2009).
11. These measures are the prohibition of the issue of weak currency and the
elimination of the silver monopsony enjoyed by the Bolivian State since
Independence.
12. According to Mitre (1993, pp. 82–87), the understanding of this process
requires to distinguish between mining production in silver, mixed and
tin districts. Regarding the former, mining production persisted until
that moment when the decrease of the international price of silver made
unprofitable the gains derived from railway construction. As for mixed
districts, mining production depended on the ore content of tin and the
distance to the railway line. In those mines that were far away from the
train, tin exports were profitable only if ore content was high—either by
luck or by its enrichment through rude smelting; in those mines that

were close to the railway line, it was still profitable to export silver depos-
its which, in turn, reduced railway transport costs and allowed exporting
tin of lower quality. Finally, in the case of tin districts, a higher dyna-
mism was identifiable in those mines where the ore content was high and
the distance to the railway line was shorter.
13. The first publications were restricted to aggregate trade data between
Bolivia and its main trading partners. From 1912 onward, detailed
information on exports and imports was published according to the
Brussels Convention. Anyway, the first volume of this collection shows
information about the destination, composition and value of exports
since 1908.
14. For the 1850–1912 period, the obtained annual growth rate for Bolivia
is 2.5%, a figure that fits outside the ideal target which ranged between
3.2% and 11%.
15. In 1913, foreign capitals were mostly from Chile, the United Kingdom
and, to a lesser extent, the United States (Contreras, 2003).
16. This agreement operated between 1931–1933, 1934–1936 and
1937–1941 (Hillman, 1988).
17. This last feature has generated another significant debate in the Bolivian
historiography. On the one hand, it has been suggested that, given the
existence of price agreements between Bolivia and the United States, the
Bolivian economy did not take full advantage of its privileged position as
tin supplier during the war (see, for instance, Ruiz, 1955, pp. 80–84).
However, Hillman (1990) has stressed that Bolivia did not really have
the opportunity to increase the price of tin because of the existence of tin
stocks in developed economies and the available option to control tin
content in those industrial products that used it as an input.
18. Whereas the comparability between our series and that of CEPAL
(1958)—which starts in 1925—is not perfect, data from this source
shows that this relative order between consumer and intermediate and
capital goods was maintained during the 1930s. By contrast, during the
1940s, intermediate imports would have been of greater importance.
19. Notice that according to CEPAL (1958) estimations, the relative impor-
tance of food imports maintained during the 1930s and increased dur-
ing the 1940s.
20. Another well-known argument here relates to military spending. In this
case, reliability of trade data is not granted since military expenditure
was strategic information that not always was made public. We only have
an approach to that, through the importance of imports of different

kinds of weapons. It has to be said here that we do not know if these
goods were for private or public consumption. In any case, the share of
weapons imported from abroad is quite small, below 0.6%.
21. Whereas local oil production started in the early 1920s, Bolivia substi-
tuted its oils imports just in 1954.
22. The next paragraphs are based on Lema and Peres-Cajías (2015) and
Peres-Cajías (2015a, 2015b).
23. It is still necessary to account for the impact that banking had on the
Bolivian economy during the years covered in this work.
References
Albarracin Millan, J. (1995). El poder financiero de la gran mineria Boliviana. Los
republicanos en la Historia de Bolivia. La Paz: Ediciones Akapana.
Almaraz Paz, S. (1976). El poder y la caída. El estaño en la historia de Bolivia. La
Paz/Cochabamba: Los amigos del libro.
Arroyo-Abad, L., & Maurer, N. (2011). Charter cities and fiscal receiverships:
Lessons from the U.S. in Latin America, 1904–1934. Mimeo.
Assadourian, C. S. (1982). El sistema de la economía colonial: mercado interno,
regiones y espacio económico. Estudios Históricos. Lima: Instituto de Estudios
Peruanos.
Bakewell, P. J. (1984). Miners of the Red Mountain. Albuquerque: University of
New Mexico Press.
Ballivián, R. (1943). El comercio de exportación de Bolivia. Trimestre Económico,
9(36), 536–559.
Barja Daza, G., Fernández Tellería, B., & Zavaleta Castellón, D. (2016).
Disminución de precios de los commodities y fuga de capitales en un contexto de
“enfermedad holandesa” y “bendición/maldición de los recursos naturales” 1: el
caso de Bolivia. La Paz: Universidad Católica Boliviana.
Bulmer-Thomas, V. (1995). The economic history of Latina America since
Independence. Cambridge: Cambridge University Press.
CEPAL. (1958). Análisis y proyecciones del desarrollo económico. IV. El desarrollo
económico de Bolivia. México: Naciones Unidas, Departamento de Asuntos
Económicos y Sociales.
Contreras, M. E. (1990). Debt, taxes, and war: The political economy of Bolivia,
c. 1920–1935. Journal of Latin American Studies, 22(2), 265–287.
Contreras, M. E. (1994). Tecnología moderna en los Andes: Minería en Bolivia en

el siglo XX. La Paz: Asociación Nacional de Mineros Medianos.
Contreras, M. E. (2003). Bolivia, 1900–1939: minería, ferrocarriles y edu-
cación. In E. Cárdenas, J. Ocampo, & R. Thorp (Eds.), La era de las exporta-
ciones latinoamericanas de fines del siglo XIX a principios del XX (pp. 259–296).
México, DF: Fondo de Cultura Económica.
Cortés Conde, R. (1992). Export-led growth in Latin America: 1870–1930.
Journal of Latina American Studies, 24, 163–179.
Dalence, J. M. (1851). Bosquejo estadístico de Bolivia. La Paz: Universidad Mayor
de San Andrés.
Gallo, C. (1991). Taxes and state power: Political instability in Bolivia, 1900–1950.
Philadelphia: Temple University Press.
Gamarra Téllez, M. P. (2007). Amazonía Norte de Bolivia, economía gomera
(1870–1940). Bases económicas de un poder regional. La casa Suárez. La Paz:
CIMA.
Geddes, C. (1984). Patiño. Rey del estaño. Ginebra: A.G. Grupo.
Gelman, J. (2009). ¿Crisis postcolonial en las economías sudamericanas? In
E. Llopis & C. Marichal (Eds.), Latinoamérica y España, 1800–1850. Madrid:
Instituto Mora/Marcial Pons.
Gómez, W. (1978). La minería en el desarrollo económico de Bolivia, 1900–1970.
La Paz: Editorial Los Amigos del Libro.
Granados, O. (2015). Bankers, entrepreneur and Bolivian tin in international
economy, 1900–1932. In M. Ingusltad, A. Perchard, & E. Storli (Eds.), Tin
and global capitalism. A history of the Devil’s metal (pp. 46–73). New York:
Routledge.
Herranz-Loncán, A., & Peres-Cajías, J. A. (2016). Tracing the reversal of fortune
in the Americas: Bolivian GDP per capita since the mid-nineteenth century.
Cliometrica, 10, 99–128.
Hillman, J. (1988). Bolivia and the international tin cartel, 1931–1941. Journal
of Latin American Studies, 20(1), 83–110.
Hillman, J. (1990). Bolivia and British tin policy, 1939–1945. Journal of Latin
American Studies, 22(1–2), 289–315.
Ingusltad, M., Pechard, A., & Storli, E. (2015). Introduction: ‘The path of civi-
lization is paved with tin cans’: The political economy of the global tin indus-
try. In M. Ingusltad, A. Perchard, & E. Storli (Eds.), Tin and global capitalism.
A history of the devil’s metal, 1850–2000 (pp. 1–21). New York: Routledge.
Klein, H. S. (2011). A concise history of Bolivia. Cambridge and New York:
Langer, E. (2009). Bringing the economic back in: Andean Indians and the
construction of the nation-state in nineteenth-century Bolivia. Journal of
Latin American Studies, 41(3), 527–551.
Langer, E. (2016). Smuglers all: Merchants, miners, Indians, and economic
development. Mimeo.
Lema, A. M., & Peres-Cajías, J. A. (2015). Alcances y límites del comercio exte-
rior como motor del crecimiento, 1872–1900. In R. Barragán, A. M. Lema,
& P. Mendieta (Eds.), Bolivia, su historia. Tomo IV. Los primeros cien años de
la República, 1825–1925 (pp. 153–164). La Paz: Sagitario.
Mc. Queen, C. (1925). Bolivian public finance. Trade Promotion Series N° 6.
Washington: Department of State.
Mitre, A. (1981). Los Patriarcas de la plata: estructura socioeconómica de la min-
ería boliviana en el siglo XIX. Lima: Instituto de Estudios Peruanos.
Mitre, A. (1986). El Monedero de los Andes: región económica y moneda boliviana
en el siglo XIX. La Paz: Hisbol.
Mitre, A. (1993). Bajo un cilo de estaño: fulgor y ocaso dle metal en Bolivia (Vol.
6. Biblioteca Minera Boliviana). La Paz: Asociación Nacional de Mineros
Medianos.
Officer, L., & Williamson, S. (2017). The Annual Consumer Price Index for the
United States, 1774–2015. Measuring Worth.
Peñaloza Cordero, L. (1985). Nueva historia económica de Bolivia. El Estaño.
Enciclopedia boliviana. La Paz/Cochabamba: Los Amigos del Libro.
Peres-Cajías, J. A. (2014). Bolivian public finances, 1880–2010. The challenge
to make social spending sustainable. Revista de Historia Económica/Journal of
Iberian and Latin American Economic History, 32(1), 77–117.
Peres-Cajías, J. A. (2015a). Public Finances and Natural Resources in Bolivia,
1883–2010: Is there a fiscal curse? In M. Badia-Miró, V. Pinilla, &
H. Willebald (Eds.), Natural resources and economic growth: Learning from
history (pp. 184–203). London: Routledge.
Peres-Cajías, J. A. (2015b). Hacia una nueva época económica. In R. Barragán,
A. M. Lema, & P. Mendieta (Eds.), Bolivia, su historia. Tomo IV. Los primeros
cien años de la República, 1825–1925 (pp. 251–262). La Paz: Sagitario.
Peres-Cajías, J. A. (2017). Bolivian tariff policy during the late nineteenth and
early twentieth century: High average tariff and unbalanced regional protec-
tion. Journal of Latin American Studies, 49(3), 433–462.
Peres-Cajías, J. A., & Carreras-Marín, A. (2018). Bolivian official trade statistics
(1910–1949): Landlockness and the limits of a standard accuracy approach.
Forthcoming in Revista de Historia Económica. Journal of Iberian and Latin
American Economic History.
Pérez, A. (1994). El Estado oligárquico y los empresarios de Atacama (1871–1878).

La Paz: Ediciones Gráficas EG.
Platt, T. (1996). Producción, tecnología y trabajo en la Rivera del Potosí durante
el Siglo XIX. Cuadernos de Historia Latinoamericana, 3, 58.
Prado, G. (1988). La apertura de la economía boliviana al comercio mundial
(1825–1925). Santa Cruz de la Sierra: Instituto de Investigaciones Económicas
y Sociales.
Prado, G. (1995). Efectos económicas de la adulteración monetaria en Bolivia,
1830–1870. Revista de Humanidades y Ciencias Sociales, 1, 35–76.
Ruiz Gonzáles, R. (1955). La economía boliviana y el comercio exterior. Oruro:
Editorial Universitaria.
Tandeter, E. (1992). Coacción y mercado: la minería de la plata en el Potosí colo-
nial, 1692–1826. Historia y cultura. Buenos Aires: Sudamericana.
Whitehead, L. (1972). El impacto de la Gran Depresión en Bolivia. Desarrollo
Económico, 12(45), 49–80.
José Alejandro Peres-Cajías is a professor at the Escuela de la Producción y la

Competitividad (Universidad Católica Boliviana “San Pablo”). He holds a PhD
in Economic History from the University of Barcelona. His research interests are
long-term economic growth, public finance in developing economies, trade in
Latin America and regional inequality. His articles have been published in inter-
national journals, which include Cliometrica, Journal of Latin American Studies,
Revista de Historia Económica and Economic History of Developing Regions. He
has also contributed different chapters in books published by Routledge and
Springer.
Anna Carreras-Marín is a tenured assistant professor and researcher in eco-

nomic history at the University of Barcelona, Spain. She specializes in Latin
American international trade between 1870 and 1950. She has contributed nine
peer-reviewed articles in journals and six book chapters. She has been awarded
with the Hamilton Distinction for the best article published in international
journals by the Spanish Association of Economic History (AEHE), coauthored
with Badia-Miró and Peres-Cajías. She has been a member of the editorial board
of IHE, Investigaciones de Historia Económica, from 2012 to 2015. Personal web-
site: https://webgrec.ub.edu/webpages/personal/ang/000921_annacarrerasma-
rin.ub.edu.html
MAP 4: BRAZIL’S EXPORT ECONOMY, c. 1990.
VENEZUELA
DUTCH FRENCH
GUYANA GUYANA
COLOMBIA BRITISH
GUYANA
AMAZONAS
PARÁ
RIO GRANDE
CEARÁ DO NORTE
MARANHÃO
PARAÍBA
PIAUÍ
PERNAMBUCO
ALAGOAS
BAHIA
MATO GROSSO GOIÁS SERGIPE
PERU
BOLIVIA
MINAS GERAIS
ESPÍRITO SANTO
SÃO PAULO
RIO DE JANEIRO
CHILE PARANÁ
PACIFIC OCEAN ATLANTIC OCEAN
SANTA CATARINA
ARGENTINA Export activities:

Cacao Mining
RIO GRANDE
DO SUL Coffee Rubber
URUGUAY
Cotton Sugar
Source: Own elaboration, based on Corrêa do Lago 2014, p. 61. Livestock Tobacco
Note: Location of export activities is indicative only. The map is representative of Erva Mate
Brazil’s geographic integrity in 1913.
4
The Brazilian Export Economy,
1822–1913
Christopher David Absell and Antonio Tena-Junguito
Introduction
This chapter provides an overview of the development of the Brazilian
export economy from independence in 1822 to the eve of the First World
War. This period would include a series of important developments with
long-run consequences for Brazil’s economy. To begin with, the country
would experience changes in its political regime that affected the institu-
tional basis of the export economy. The first of these was, obviously, inde-
pendence from the Portuguese Empire (Abreu & Corrêa do Lago, 2001;
Haber & Klein, 1997). The second was the fall of the Brazilian Empire and
founding of the Republic in 1889. The abolition of slavery in 1888 consti-
tuted another major institutional change. Before abolition, the expansion
of the export economy, together with the consequent direct and indirect
economic effects of this expansion surveyed below, relied on the exploita-
tion of a large population of African slaves (Corrêa do Lago, 2014;
C.D. Absell (*) • A. Tena-Junguito

Universidad Carlos III de Madrid, Madrid, Spain

114 C.D. Absell and A. Tena-Junguito
Dean, 1976; Klein & Luna, 2010). The change to a regime of free labor
thus constituted a major institutional change that broke with a long estab-
lished and retrograde mode of production.
The gradual integration of the world economy during the first global-
ization resulted in a sharp increase in the degree of competition between
primary product producers in the tropics (Federico & Tena-Junguito,
2017). Competition in the periphery was imperfect in the sense that not
all producers gained access to important European markets. In the case of
cane sugar, European colonial preferences effectively excluded politically
independent producers from the market (Batista, 1980; Crespo, 2006).
Over the century, the dire state of the world market for cane sugar,
together with the high fertility of soils, lower costs of entry and ideal cli-
matic conditions for coffee in the southeast of the country, triggered a
gradual change in Brazil’s comparative advantage from cane sugar to cof-
fee (Dean, 1995; Klein & Luna, 2003). While other agricultural com-
modity sectors continued exporting and experienced varying degrees of
success (most notably Amazonian rubber during the last half of the cen-
tury), for better or for worse, coffee became the motor of the Brazilian
economy.
The Age of Exports, as surveyed in this volume, was not Brazil’s first
experience with export commodity cycles. Brazil had experienced periods
of high export growth prior to the first globalization. Thus, as will be
discussed in the next section, the most dynamic period of coffee export
growth took place during the 30 years following independence. What
makes the Age of Exports so vital for an understanding of Brazil’s long-
run economic development, however, is its links to the development of
the domestic economy. The expansion of the export economy, despite
being contingent on widespread human and environmental destruction,
paved the way for the structural changes in the economy that occurred on
the eve of the twentieth century (Cardoso de Mello, 1982; Dean, 1969).
The chapter is structured as follows. The next section provides an over-
view of the development of the export economy from independence to
1913. We explore Brazil’s export growth performance in greater detail,
discuss its size relative to the economy and examine trends in the terms of
trade and exchange rate. The following section provides an estimate of
the direct contribution of exports to economic growth. We then explore
the indirect contribution of exports to the development of the Brazilian

economy. The final section concludes by ruminating on the future of
research on the Brazilian export economy.
The Development of the Export Economy

Figure 4.1 displays the logs of the total value of exports at current and
constant (1913) prices. While convention suggests that the belle époque
of Brazilian export growth was the period from 1880 onward, recent revi-
sions show that the post-independence period to mid-century was the
most dynamic period in terms of export growth during the nineteenth
century. The value of Brazil’s exports in constant prices more than tripled
during the period 1880–1913, increasing from 107 to 362 million (1913
US$). However, this value more than quadrupled in the post-independence
period to mid-century, from 14 to 65 million (1913 US$). Thus, it is
perhaps more realistic to interpret Brazil’s nineteenth-century export per-
formance in terms of three phases: a dynamic post-independence period,
a mid-century period of slower growth associated with the trend toward
specialization, and a turn of the century growth spurt. Moreover, when
placed in a comparative perspective, it is evident that the early period of
export growth was quite positive. Figure 4.1 also shows Brazil’s exports
per capita compared to those of the United States. Brazil rapidly con-
verged with the United States during the 1820s, and exports per capita
increased until the mid-1850s, despite the substantial importation of
African slave labor (Klein & Luna, 2010). This suggests that the expan-
sion of the agricultural frontier kept pace with export growth during the
post-independence decades. This period was followed by the relative stag-
nation of export growth until the 1890s, which roughly equaled the rate
of population growth. The period after the creation of the Republic is
particularly impressive, given rapid population growth fueled by mass
European immigration.
This picture is strengthened by an examination of Brazil’s export
growth performance across the nineteenth century. Table 4.1 displays the
general trend of Brazil’s export growth. Growth over the whole period, at
3.7 percent per annum, was neither miserable nor spectacular. When
21.0
20.0
19.0
Logs
18.0
17.0
16.0
15.0
Current Constant
30
25
20
Dollars
15
10
BRA US
Fig. 4.1 Brazil’s export performance. Above: total exports (logs), values at cur-
rent and constant (1913) prices, 1821–1913. Below: exports per capita, US$, Brazil
and the United States, values at constant (1913) prices, 1821–1913. Sources:
Brazilian export value: Absell and Tena-Junguito (2016). Brazilian population:
Yáñez, Rivero, Miró, and Marín (2014). United States population and export value:
Carter et al. (2006). Notes: The current value of exports is deflated by a Fisher
export price index that includes the international prices of six products (cacao,
coffee, cotton, hides, sugar and rubber), the base year being 1880–1882, indexed
to 1913
Table 4.1 Per annum growth rates of total, coffee, sugar, cotton and rubber
exports, values at constant (1913) prices, 1821–1913
Total (%) Coffee (%) Sugar (%) Cotton (%) Rubber (%)
1821–1850 5.90 9.70 4.50 1.30 –
1821–1870 4.60 6.90 2.70 3.00 –
1821–1890 3.60 5.40 2.00 0.30 –
1821–1913 3.70 5.10 −2.10 1.40 –
1850–1870 2.80 3.00 0.10 5.60 7.70
1850–1890 2.00 2.40 0.20 −0.40 6.70
1850–1913 2.80 3.10 −5.10 1.50 5.60
1870–1890 1.30 2.00 0.30 −6.50 6.00
1870–1913 2.80 3.20 −7.50 −0.40 4.80
1890–1913 4.30 4.30 −14.60 4.90 3.90
Source: Absell and Tena-Junguito (2016)
isaggregated into sub-periods, however, a different story emerges. The

d
period spanning independence to mid-century was the most dynamic of
all, evincing growth rates comparable to the United States during this
period. Thus, while it might have had negative consequences for Brazil’s
public finances, independence was not particularly detrimental to export
growth. Such dynamism would decline, however, after mid-century,
picking up again only during the final period. Disaggregation by product
shows that two principal tendencies drove this export growth perfor-
mance. Firstly, being the dominant export commodity, the growth of
coffee tended to shape Brazil’s overall growth performance over the nine-
teenth century. This dynamism is most notable during the post-
independence period, when international prices were generally declining
in the aftermath of the Napoleonic Wars. Secondly, coffee’s performance
was at once offset by the contraction of Brazil’s other important export
sectors, namely, sugar and cotton, and buttressed by the rapid growth of
rubber exports after mid-century.
Reflecting this growth performance, the composition of Brazil’s
exports, seen in Table 4.2, experienced several important changes over
the period in question. Coffee moved from occupying a quarter of Brazil’s
export value in the first decade after independence to over 60 percent on
the eve of the First World War. Coffee’s emergence as Brazil’s principal
export commodity would come at the expense of the country’s previously
dominant export commodities, sugar and, to a lesser extent, cotton,
Table 4.2 Commodity composition of exports, percentage of total exports, values

at current prices, 1821–1913
Cacao Coffee Cotton Hides Rubber Sugar Other
(%) (%) (%) (%) (%) (%) (%)
1821–1829 1.40 25.70 13.50 11.60 0.00 30.40 17.40
1830–1839 0.80 37.40 9.90 8.00 0.00 31.50 12.30
1840–1849 1.40 38.60 4.50 8.70 0.00 32.10 14.70
1850–1859 1.10 48.20 6.20 7.70 2.10 21.60 13.20
1860–1869 0.80 47.00 17.90 5.70 3.30 11.50 13.80
1870–1879 1.00 55.80 10.60 4.70 5.30 12.80 9.90
1880–1889 1.70 60.10 4.20 3.20 10.90 11.40 8.50
1890–1899 1.60 68.00 1.70 2.80 13.80 3.80 8.30
1900–1909 3.00 53.60 2.40 4.10 26.50 1.20 9.30
1910–1913 2.40 61.00 2.20 5.90 19.80 0.10 8.60
Source: Absell and Tena-Junguito (2016)
which moved from occupying substantial to minuscule shares over the

same period. Later in the century, rubber would also emerge as an impor-
tant commodity, peaking at over a quarter of Brazil’s exports around the
turn of the century.
A set of estimates of the openness of the Brazilian economy, measured
as the percentage of total exports in gross domestic product (GDP), is
presented in Figure 4.2. The veracity of the historical GDP series is a
controversial topic, given the paucity of data for most of the nineteenth
century. Here we present three openness estimates, based on two seminal
contributions (one by Cláudio Contador and Cláudio Haddad, the other
by Raymond Goldsmith) and a recent estimation by Guilherme Tombolo
and Armando Vaz Sampaio. All three series are based on assumptions
taken in the absence of empirical information.1 However, a comparison of
all three provides a general idea of the degree of openness of the Brazilian
economy. For the period before mid-century, we must rely on the Tombolo
and Sampaio series. Given the rapid growth of the export economy, how-
ever, it is not too far-fetched to posit that exports occupied around 30
percent of the economy during the post-independence period. Both the
Goldsmith and Tombolo and Sampaio series show that this degree of
openness declined from mid-century onward alongside the development
of the domestic economy. In fact, the openness indicator is useful because
it at once tells us about the expansion of the export economy and the
0.6
0.5
0.4
Percentage
0.3
0.2
0.1
Tombolo & Sampaio Contador & Haddad Goldsmith
Fig. 4.2 Openness of Brazilian economy, percentage of total exports in GDP, val-
ues at current prices, 1821–1913. Sources: Exports: Absell and Tena-Junguito
(2016); GDP: Tombolo and Sampaio (2013), Contador and Haddad (1975),
Goldsmith (1986)
development of the domestic economy. Thus, the expansion of the domes-

tic economy alongside the development of transport infrastructure is the
other side of the coin of the decrease of the openness of the economy.
After a late-century export surge, the pre-First World War degree of open-
ness fell between 17 and 19 percent.
Figure 4.3 displays the trends in Brazil’s import and export price indi-
ces, together with the terms of trade. The export price index reflects the
weight of coffee in the overall composition of Brazil’s exports, moderated
by the century-long decline in sugar prices, the spike in cotton prices
during the American Civil War and the increase in rubber prices on the
eve of the First World War. The import price index largely reflects the fall
in British cotton manufacture prices due to advances in productivity,
moderated by the trends of other important import products, such as
American wheat flour, dried meat (charque) from the Rio de la Plata and
British coals. The division of the export price index by the import price
index yields the terms of trade, which gradually increased over the cen-
tury, culminating in a terms of trade boom during the coffee price spike
of the 1890s. As Sandra Kuntz-Ficker discusses in the introduction to
180
160
140
120
100
Index
80
60
40
20
0
Terms of trade Exports Imports
Fig. 4.3 Indices of import and export prices and terms of trade (1913 = 100),
1821–1913. Sources: Export price index: Absell and Tena-Junguito (2016); Import
price index: Absell and Tena-Junguito (2017)
this volume, Raúl Prebisch originally argued that Latin America’s terms
of trade were characterized by a long-run secular deterioration. For the
case of Brazil, Gonçalves and Barros (1982) examined the Prebisch thesis
over the period 1850–1979 and found that the period that Prebisch had
analyzed (1870–1939) was the period of greater deterioration of the
Brazilian terms of trade. Our analysis shows that while the new terms of
trade estimate displays a slight positive tendency, it is characterized by the
absence of a secular trend. This reflects other studies on the Brazilian
terms of trade, which have both confirmed and rejected the presence of a
secular deterioration (Kannebley & Gremaud, 2003; Leff, 1982,
pp. 81–82). This goes to show that the interpretation of the behavior of
the terms of trade is sensitive to both the data used and the scope of the
period under analysis.
Figure 4.4 shows the trends in a common indicator of export competi-
tiveness: the export-weighted real effective exchange rate (REER). This is
calculated as the nominal exchange rate moderated by the ratio of foreign
to Brazilian price indices, weighted by the share of each partner in Brazil’s
exports. Here the index includes 11 of Brazil’s principal trading partners.
250
200
150
Index
100
50
Fig. 4.4 Index of trade-weighted real effective exchange rate (REER) (1913 = 100),
1821–1913. Sources: Bilateral nominal exchange rates: Denzel (2010), Nunes,
Mata, and Valério (1989), Braun-Llona et al. (2000); Partner price indices: Mitchell
(2007a, 2007b), Nunes, Mata, and Valério (1989), Braun-Llona et al. (2000). Brazil
price index: see endnote. Geographical distribution of exports: Sturz (1837), Brazil
(Various years), Brazil. Ministério da Fazenda (Various years), Brazil. Sebastião
Ferreira Soares (Various years), Brazil. Alfândega do Rio de Janeiro (Various years),
Brazil (1939)2
A rise of the index signifies a depreciation. In the case of the REER, this
can be interpreted as a rise in export competitiveness. Being a composite
of three indicators (the nominal exchange rate, the Brazilian price index
and the foreign price index), such a rise in competitiveness may occur for
two reasons. Firstly, when the nominal exchange rate depreciates relative
to all other currencies, Brazil’s export commodities gain competitiveness
at the cost of import consumption. Secondly, domestic inflation (defla-
tion) depreciates (appreciates) the REER; conversely, foreign inflation
(deflation) appreciates (depreciates) the REER. Thus, the sharp deprecia-
tion of the real exchange rate, and consequent gain in export competi-
tiveness, from 1825 to 1830 was driven by both the depreciation of the
nominal exchange rate and deflation in Europe and the United States.
Other episodes of rapid depreciation (during the Paraguayan War and
after the fall of the empire) were driven by domestic inflation and nomi-
nal exchange rate depreciation.
Given the primacy of Brazilian coffee exports during most of the nine-
teenth century, several scholars have posited that Brazil’s less dominant
export sectors were subjected to a perverse form of Dutch disease, in
which the exchange rate, influenced heavily by a single export commod-
ity, effectively priced Brazil’s other export commodities out of the world
market (Catão, 1992; Leff, 1972a; Monastério, 2005). The seminal con-
tribution by Eliana Cardoso demonstrated that the nominal exchange
rate was indeed influenced by coffee export revenues. Per Cardoso’s
results, a percentage point increase in coffee export revenues during the
second half of the century was associated with a −0.62 decline in the
milréis-sterling nominal exchange rate, that is, an appreciation (Cardoso,
1983, p. 175). In balance, however, it is questionable whether the Dutch
disease can be blamed for the decline of Brazil’s other export industries.
It was North American world market dominance that decimated the rela-
tively inefficient cotton export sector, not the Dutch disease. The rapid
growth of European beet sugar after mid-century, fueled by governmental
subsidization, was the leading factor in the decline of world sugar prices
below Brazilian production cost levels. Furthermore, Brazil experienced a
second commodity boom, that of Amazonian rubber, in the period when
revenues from coffee exports were supposedly serving to appreciate the
exchange rate. Thus, while rising revenues from coffee exports might have
served to place appreciative pressures on the exchange rate, there were
stronger exogenous factors at play (Eisenberg, 1974; Pereira, 2016).
he Contribution of Exports to the Brazilian

T
Economy
The Direct Contribution to GDP
Among other scholars, Nathaniel Leff observed that the export economy
was the growth motor of the Brazilian economy during the nineteenth
century. Given the relative stagnation of the domestic economy, the con-
tention is that export growth fueled a large part of economic growth until
the expansion of the domestic economy. Thus, for most of the century,
the economy consisted of a predominantly large agricultural sector,
Table 4.3 Direct contribution of exports to GDP, values at current prices,

1821–1913
Export growth, Percentage of GDP growth, Contribution of
current prices exports in GDP current exports to GDP
(%) (%) prices (%) growth (%)
1821–1850 3.60 33 3.04 40
1850–1870 3.19 30 5.70 17
1870–1890 2.15 23 2.35 21
1890–1913 4.15 24 4.68 21
1821–1913 3.23 28 3.75 24
1850–1913 3.11 25 4.13 19
1870–1913 3.15 23 3.52 21
Sources: Absell and Tena-Junguito (2016); GDP: Tombolo and Sampaio (2013)
including the export economy but also an even larger subsistence econ-
omy, a relatively small tertiary sector including commercial services and
an extremely small (or nonexistent) secondary sector (Leff, 1982,
pp. 15–16). One can use the GDP series previously surveyed and the
export series to quantitatively assess this contention. Table 4.3 displays an
estimate of the direct contribution of the export economy to economic
growth, in current prices. As previously mentioned, the export sector was
more important for the growth of the economy during the earlier part of
the century. This had as much to do with the rapid expansion of coffee
exports as it did with the low productivity of the non-export economy.
After 1850, the stagnation and contraction of other export sectors and
the slowing of the growth of coffee exports were coupled with the aboli-
tion of the slave trade and the subsequent diversion of capital into domes-
tic economic activity. Thus, the mid-century period was characterized by
the reduction in the importance of the export economy in overall growth.
While the importance of the export economy rose during the late-century
coffee export boom, it did not reach the heights observed during the
post-independence period.
Although we present estimates at the national level, export growth and
economic development took on an important geographical dimension.
While the country possessed a relatively superior endowment of fertile
land that favored the cultivation of tropical products, land was not a
homogenous factor, driving different regions to specialize in the cultiva-
tion of different commodities (see Map 4) (Delfim Netto, 1981; Leff,
1973; Stein, 1985). Thus, in 1850, those states specializing in sugar

(Bahia, Pernambuco, Maranhão, Sergipe) and cotton (Ceará, Alagoas)
were located in the northeast, while those states that specialized in coffee
(Rio de Janeiro, São Paulo) were located in the southeast. The southern
states (Rio Grande do Sul, Santa Catarina) specialized in leather and food
stuffs (rice, flour) principally for the regional (Rio de la Plata) market,
while Pará in the north exported cacao, rubber and food stuffs. Over the
period 1850–1913, both the northern and southeastern states
demonstrated the most dynamic performance in terms of export growth,
principally due to the rubber and coffee export booms, respectively. The
south remained buoyant over the period. The northeast as an aggregate,
however, showed signs of stagnation. These divergent performances had
much to do with the product mix at play. Generally, those states that
diversified away from initial specializations in shrinking export industries
showed the greatest resilience. Ceará, for example, would move away
from an almost complete specialization in cotton (88 percent of export
composition in 1850) to a diversified product mix (including animal,
cotton and rubber products) in 1913. Bahia, one of the principal export-
ers of sugar during the century, by 1913 had replaced sugar with a diverse
array of export products, including tobacco, hides and cacao. Sergipe,
however, which demonstrated the worst export performance, maintained
its specialization in the export of sugar until the turn of the century. A
similar case is observed in Pernambuco, which largely replaced sugar with
cotton, much to the detriment of its export performance. Given the geo-
graphical performance of export growth and its close link with the devel-
opment of the Brazilian economy, it is not surprising that those areas that
experienced higher rates of growth were also the first to show signs of
structural change.
Retained Value of Exports
Here we pause to ponder the question: how much of the earnings derived
from export growth remained in the country? This is a particularly perti-
nent question for the period of the first globalization, when foreign capi-
tal is perceived to have taken a particularly parasitical form (Dowbor,
1978; Frank, 1967; Pereira da Silva, 2015b). As a framework for the

study of the degree of foreign surplus drain and its flipside, the retained
value of exports, we apply the concept of the commodity chain to the
coffee export economy during the last decades of the nineteenth century.
Unlike many of the enclave-type export economies in Latin America, the
production and processing stages of the coffee commodity chain were
dominated principally by Brazilians (Klein, 1992, p. 513). The financing
and final part of the distribution stages, however, became increasingly
dominated by foreign capital over the nineteenth century alongside the
development of the commodity chain.
After harvesting and processing, the product was sent to coffee factors
(comissários) who acted as intermediaries in the distribution stage of the
chain. Given the underdevelopment of the credit market during much of
the nineteenth century, the coffee factor played several important roles.
Firstly, given that the production of coffee required a considerable amount
of investment with a delay of around 5 years until harvesting and thus
return on investment, during most of the Imperial period, the factor
served as a vital source of credit for the producer for the continuous pro-
cess of cultivation and the purchase of slave labor (Sweigart, 1987).
Secondly, the factor acted to reduce search costs by transacting with the
exporting houses to receive the best price. For this service, the factor
charged from 2 to 3 percent of the sale price. As mentioned, while the
producers and factors largely represented national capital, the exporters
were increasingly represented by foreign capital during the last half of the
century.
The increased penetration of foreign capital in the exporting stage of
distribution can be seen in Table 4.4, which combines Gustavo Pereira da
Silva’s data on the portion of exports of coffee from Santos (São Paolo) rela-
tive to local and foreign exporting houses during the last two decades of the
nineteenth century with our own calculations for Rio de Janeiro.
Interestingly, foreign capital had consolidated its presence in Rio de Janeiro
far earlier than in Santos, Rio being the first important coffee-producing
region and the country’s principal port. Thus, foreign exporting houses
accounted for almost all the coffee shipments from Rio de Janeiro during
the period 1858–1880. In fact, Rio de Janeiro was one of only three states
(alongside Rio Grande do Sul and Pará) that contained a higher presence of
Table 4.4 Share of exporting houses in total export of coffee from Rio de Janeiro
and Santos, 1858–1899
Rio de Janeiro Santos
1858–1859* 1873–1874 1880 1885–1886 1895–1899
(%) (%) (%) (%) (%)
Foreign 97 93 94 67 80
British – – – 6 32
French – – – 10 7
American – – – 23 23
German – – – 28 18
Brazilian 1 4 3 13 –
Unspecified 2 3 3 20 20
% of national – 69 – 68 61
exports
Sources: de Janeiro: Jornal do Commercio (Various years), Laemmert (Various
years); Santos: Pereira da Silva (2015a, p. 225)
Note: * December only
foreign-owned enterprises around mid-century (Taunay, 1939, p. 161).

Between 1854 and 1864, this foreign-national ratio dropped in many
states, particularly in the northeast (Ceará, Sergipe), but also in the south-
east (Espírito Santo) and the south (Paraná, Santa Catarina). Although this
ratio increased for São Paulo, it was not until the region became the coun-
try’s principal coffee producer that foreign capital came to dominate the
export sector. By the turn of the century, foreign export houses dealt with a
minimum of four fifths of the product traveling through the Santos port
(probably higher if foreign houses are included in the unspecified category),
which represented over half of national output. Of these foreign export
houses, the data shows that the inflow of British capital overtook Brazilian,
French and German export houses.
It is evident that the final stage of distribution of the coffee commodity
chain was largely owned by foreign capital. The question remains, how-
ever, as to what degree this drained resources from the domestic economy.
Using data available from coffee accounts regarding the costs associated
with the commodity chain, we aim to estimate a ballpark figure for the
value retained by both local and foreign entities. We focus first on the
value retained from the production and distribution stages of the chain.
In the next section, we focus on returns to public and private foreign
investment.
Here we exploit data taken from Afonso de Taunay on the costs associ-
ated with the production and distribution of a unit of coffee (sack of
60 kilograms) originating 171 kilometers from Rio de Janeiro in the
1880s. In this case, the selling price per unit at the port (i.e., the f.o.b.
price) was 26$520 réis (roughly US $12). We have categorized each of
the associated costs into each stage of our simplified commodity chain.
The A stage includes the cost of production. The B stage refers to the cost
derived from transporting the coffee from plantation to port. The C stage
concerns costs associated with the exporting houses. While this is by no
means a precise estimate, it allows us to approximate the amount of
retained value derived from the export of coffee. As can be seen in
Table 4.5, of the final price of a sack of coffee, costs of production
accounted for 11 percent; transportation, export duties and fees associ-
ated with the factor, warehousing and grading accounted for 45 percent;
and the fees associated with the exporting houses assumed 3 percent of
Table 4.5 Cost per sack of coffee, in réis and US dollars, and percentage of final
price retained for each stage of the commodity chain, Rio de Janeiro, 1880s
Cost/sack of % of selling price at
Stage 60 kgs In US$ port at 26$520
(A) Production cost 2$992 $1.33 11
(B) Distribution cost
Transport 3$987 $1.77 15
Taxes 2$752 $1.22 11
Other services 5$022 $2.22 19
(C) Distribution cost: exporting $690 $0.31 3
house services
Total costs 15$562 $6.89 59
Return to producer 10$958 $4.85 41
Selling price at port 26$520 $11.75 100
Source: Taunay (1939, pp. 80–81, 123)
Notes: The purpose of this table is to provide an idea of the cost associated with
each stage of the commodity chain, and by no means should be interpreted as
a precise estimate. Distribution costs were undoubtedly higher during the early
part of the century. Production costs include interest and amortization on
loans, the cost of slave rentals and free labor hire for pulping, land servicing
and harvesting. Distribution costs include mule-packing costs from plantation
to station, rail freights, factor commission, provincial and national export taxes
and fees for sampling, inspection, weighing, bagging, marketing, brokerage
and fire insurance.
the end price. Thus, the return on investment for the producer amounted
to around 40 percent of the sale price.
Using these figures and data for average prices over the decade, one can
calculate roundabout estimates of the average portions awarded to each
actor. Returns to the producer and returns to the two portions of the dis-
tribution chain are negatively related due to the relative inelasticity of dis-
tribution and marketing costs relative to price changes. Thus, falling prices
fell most heavily on producers. Regarding the exporting houses, during
this period they received around 3 percent of the final price. Assuming
that 67 percent of the exporting houses are foreign, this corresponds to 2
percent of the total value of coffee exported. Of course, this figure most
likely changed over the decade as foreign capital consolidated its hold on
the export houses. Furthermore, this estimate does not consider returns to
other foreign entities in the first stage of the distribution chain.
While 2 percent is a relatively small figure when put in the context of the
commodity chain, this covers merely the administration costs awarded to
the export houses. They made their real money in price-making strategies.
Such strategies were possible due to the control that the export houses pos-
sessed in the supply of coffee to foreign consumer markets. As Rui Barbosa
observed in the Annual Report of the Ministry of Finance of 1889–1890,
foreign interests possessed a ‘monopoly of the export of our products, exer-
cised solely by foreign houses in Brazil, affiliates of parent companies situ-
ated in European and American markets, which exploit the trade of the
fruits of our culture at prices dictated by the arbitrariness of uncorrected
speculation’ (Brazil. Ministério da Fazenda, 1891, p. 343). Without infor-
mation on purchase and sale differentials, calculating the precise amount
that foreign firms retained from this activity is speculative at best. The
nature of these price-making strategies and their repercussion on the
Brazilian export economy is an interesting avenue for future research.
Investment and Positive Externalities
The most important development derived from the expansion of the

export economy during the nineteenth century was the coming of the
railroads. Given its relative size, the geographic spread of Brazil’s network
of railroads was limited. While Brazil’s total length of railway in 1913 was
second only to Argentina (24,614–32,494 kilometers, respectively),
Brazil’s railroad penetration (length/area) was comparable to that of Peru
or Ecuador (Sanz Fernández, 1998). Moreover, this level of penetration
was not evenly distributed between regions. Railroads were first inaugu-
rated in the most important coffee-exporting region of the time, Rio de
Janeiro, followed by the leading exporters of sugar and cotton in the
northeast, Pernambuco and Bahia, and then by the emerging center of
coffee exports, São Paulo. The distribution between regions, however,
would follow the divergent pattern of regional export growth; while Rio
de Janeiro and São Paulo possessed almost 40 percent of the total length
of railroads around the turn of the century, the northeastern states
(including Alagôas, Ceará, Maranhão, Rio Grande do Norte and Paraíba
alongside Bahia and Pernambuco) shared only 20 percent. Furthermore,
the degree of railroad penetration in the southeast was much higher than
in other regions (Brazil, 1905).
Here we explore three areas related to the link between the export
economy and investment in the railroads. First, we evaluate the portion
of total public and private investment that was associated with exports.
Second, we examine the size of the debt service and returns to private
investment related to the export economy and represent both in terms of
the fiscal revenues derived from the taxation of foreign trade and the cur-
rent export value. Finally, we briefly outline several of the positive exter-
nalities associated with these investments.
Table 4.6 displays estimates of foreign public investment associated
with the export economy. The selection criteria for this were quite
straightforward, as with a few exceptions most of the loans associated
with the export economy focused on the construction of the railroads.
Other loans include the 1860 bailout of three private companies con-
nected to the export economy (two associated with railroads and one
with navigation). Before the turn of the century, practically all public
foreign investment was contracted through the sale of government bonds
in London. We estimate that the portion of foreign public investment
associated with the export economy occupied around one quarter of total
investment during the Imperial period. Most of this debt was accrued
after 1870, in parallel with the development of the railroads. During the
Table 4.6 Foreign public and private investment attributed to the export econ-
omy, 1824–1913
Associated Debt Debt service Debt
with % service related to service
export export related to exports as as % of
Total (£ sector (£ sector exports (£ % of export export
millions) millions) in total millions) revenues value
Public investment
1824–1850 4.3 0.0 0 0 – –
1850–1870 15.6 2.6 17 2.4 13 1
1870–1889 41.4 12.0 29 12.2 34 2
1890–1913 133.3 74.3 56 70.8 72 6
1824–1889 61.3 14.6 24 14.6 26 2
1824–1913 194.7 89.0 46 85.4 55 4
Associated Private
with % Private return
export export Private return as % as % of
Total (£ sector (£ sector return (£ of export export
millions) millions) in total millions) revenues value
Non-public investment
1840 1.3 0 0 – – –
1840–1865 7.2 5.4 75 9.0 59 3
1865–1875 10.6 6.4 60 5.2 31 2
1875–1885 24.4 17.1 70 17.0 94 6
1885–1895 40.6 33.1 82 32.9 131 10
1895–1905 41.1 25.6 62 25.0 55 6
1905–1913 135.2 61.6 46 49.2 109 9
1840–1913 259.1 149.2 58 138.4 91 7
Sources: Public investment: Summerhill (2015, p. 54), Bessa Maia and Sombra
Saraiva (2012, p. 116), Brazil. Various. (Various years), Cavalcanti (1923,
pp. 28–73), Bouças (1942), Brazil. Ministério da Fazenda (Various years).
Crosschecked with series from IBGE (1990, pp. 586–588); Non-public: Abreu M.
(2000, pp. 385–386), Summerhill (1998, p. 553).
Republican period, the state governments retained the right not only to
charge export taxes but also contract external loans. Thus, the period
from 1890 until 1913 witnessed a sharp rise in the public debt owing to
foreign sources. Of the loans contracted during this period, including
those assumed as part of the government’s attempt to regulate the price of
coffee in world markets by purchasing product from producers (‘valoriza-
tion’), we estimate that just over half were directly associated with the
export economy. The others were destined for public works (especially for
water, sewage and lighting works) and to cover municipal government
deficits. Most private investment was also channeled into the export
economy and the construction of the railroads, averaging around 58 per-
cent of total private investment for the period 1840–1913.
Government expenditure was largely reliant on loans plus the taxation
of trade: revenue derived from import tariffs and export taxes constituted
a considerable sum of total fiscal revenue. Depending on the period in
question, producers paid both a provincial and general export tax, calcu-
lated as either a specific tax on the weight after sacking or an ad valorem
quota based on an official list of prices (the pauta). During the Imperial
period, general export taxes contributed to an average of 10 percent of
fiscal revenue, while import taxes contributed 51 percent (Brazil, 1914,
pp. 14–17). The Republican Constitution devolved the right to earn
export duties to the regional governments. The size of the export duty on
a single commodity could thus differ across regions; for example, the
export duty on cacao from Bahia in 1913 was 14 percent, while that from
Pará was 6 percent. The fiscal dependency on exports across state govern-
ments depended on the performance of the export sector. Thus, in states
such as Amazonas, Rio de Janeiro and São Paulo, one observes large
export to total revenues ratios, while in states that suffered from the stag-
nation or contraction of their export economies, such as Maranhão, rev-
enue from export taxes occupied a minuscule share of overall government
revenue (Brazil. Various., Various years).
During certain periods during the empire, the guarantee of funding
for amortization and interest payments was specified as the country’s cus-
toms’ revenue (Bouças, 1942; Summerhill, 2015). Since we are particularly
interested in the export economy, we represent the debt service (includ-
ing amortization, interest and commission payments) from loans related
to the export economy as a percentage of revenue derived from exports.
This effectively gives an idea of the magnitude of the fiscal spillover to
external debt repayment associated with the taxation of the export econ-
omy.3 We also present the debt service as a percentage of current export
value, to provide a picture of the size of the debt relative to the size of the
export economy. First, we start with aggregate estimates of payments on
public foreign investment. As can be seen in column six of Table 4.6, the
total debt service repayments associated with the export economy owing
to foreign entities was 26 percent of total export revenues during the
Imperial period (1824–1889). In terms of export value, debt service
accounted for a mere 2 percent. During the Republican period
(1890–1913), this rose to 72 percent of export revenues and 6 percent of
export value. On average (1824–1913), foreign financial entities received
55 percent of total export revenues in the form of amortization, interest
and commission derived from investments in the export economy. While
this seems like a high amount, it accounted for only 4 percent of total
export value over the entire period.
Until around the turn of the century, almost all nonpublic investment
was British and was also channeled into the construction of the railroads.
Such investment was incentivized by government guarantees of minimum
dividends. Annual return on private investment was generally higher than
5 percent. In times when the rate of return was below the guaranteed divi-
dend, the government paid out the difference. By applying William
Summerhill’s estimates of the aided internal rate of return (which implic-
itly includes the paid dividend guarantees) to the amount invested in the
railroads, it is possible to obtain an approximation of the private return to
foreign direct investment. As above, these are represented as a percentage
of both the fiscal revenue derived from exports and the current export
value. As can be seen in the bottom half of Table 4.6, except for the period
1895–1905, private returns increased alongside the expansion of the rail
network. What’s more, when represented in terms of the percentage of
government revenue from taxing exports or current export value, it is
tempting to argue that the returns from private investment signified a
considerable surplus drain on the economy. Summerhill’s estimates of the
average social rates of return, however, show that the gains from the reduc-
tion of transport costs for income and output were quite large. Of course,
these gains differed depending on the location of lines and corresponding
demand for freight services (Summerhill, 1998, pp. 554–561).
Such gains took the form of positive externalities that affected both the
export and domestic economies. Perhaps most importantly, the railroads
served to expand the agricultural frontier. This allowed for expansion in
the southeast where railroad penetration was highest due to the consoli-
dation of coffee monoculture. It also served to attract labor and capital
into export industries. The reduction of internal transport costs, coupled
with the government’s subsidization of European immigration, drove an

explosion of immigration to Brazil after the 1870s, despite the stagnation
of wages (Corrêa do Lago, 2014; Leff, 1972b, p. 494). Capital formation
took the form of the expansion of coffee plantations, which quadrupled
in São Paulo between 1886 and 1915 (Summerhill, 2003a, 2005, p. 89).
Although the construction of the railroad network was initially deter-
mined by the expansion of the export economy, the gains were larger for
the domestic market. While the penetration of railroads was heavily
biased toward exporting regions, the structure of freight charges largely
favored domestic produce. This served to expand Brazil’s market poten-
tial by lowering internal transport costs for domestic goods. The five
major export goods listed on 29 lines dropped from 35 percent of total
freight shipments in 1887 to 18 percent in 1913 (Summerhill, 2005,
p. 90). This was due principally to the structure of freight charges, which
were higher for agricultural exports than for domestically consumed
products. For example, freight rates on the Leopoldina line in 1909 were
46$250 réis (US $14.25) per ton for coffee and 3$200 (US $0.99) per
ton for corn, rice, manioc flour and beans (Summerhill, 2003b, p. 146).
The domestic agricultural sector was not the only beneficiary of this pro-
cess. The market for domestic manufacturing products was also positively
affected. Thus, the most intensive period of railroad expansion was paral-
leled by the expansion of the domestic cotton textile industry (Stein,
1957). Backward linkages were limited, with most inputs instead coming
from overseas. While products such as wood, fuel and ties were generally
of local origin, most manufacturing equipment was sourced from abroad
(Mattoon, 1977, p. 292).
Purchasing Power of Exports and Import Composition
Elements of the structural change wrought by the expansion of the export

economy can also be discerned in the composition of imports. Here we
present a series of benchmarks spanning the period 1841–1913.
Unfortunately, in the case of imports at the national level, we are lacking
benchmarks for both 1880 and 1890. We thus perform the same exercise
for Rio de Janeiro during the period 1870–1913, which accounted for an
average of 41 percent of total imports during the period. Table 4.7 pres-
134
Table 4.7 Composition of imports by categories, percentage in total imports, Brazil and Rio de Janeiro, 1841–1913
Brazil 1841–1842 (%) 1851–1852 (%) 1861–1862 (%) 1871–1872 (%) 1901 (%) 1913 (%)
Live animals 0 0 0 0 1 1
Raw materials 5 3 4 19 15 21
Food stuffs 24 19 25 17 44 22
Manufactured articles 70 79 71 64 39 56
Cotton manufactures 36 36 30 30 9 6
Woolen manufactures 4 7 4 8 2 1
Linen manufactures 4 4 2 4 1 1
Machinery, appliances 6 3 7 3 2 11
and accessories
Other manufactured 19 28 28 20 26 38
materials
C.D. Absell and A. Tena-Junguito
Rio de Janeiro 1870–1871 (%) 1879–1880 (%) 1890 (%) 1901 (%) 1913 (%)
Live animals 0 0 0 1 0
Raw materials 13 14 14 17 24
Food stuffs 25 28 37 42 20
Manufactured articles 62 58 49 41 58
Cotton manufactures 28 23 15 10 6
Woolen manufactures 9 9 6 2 1
Linen manufactures 4 4 2 1 1
Machinery, appliances and accessories 3 2 3 2 10
Other manufactured materials 18 20 23 26 40
Sources: Brazil (1855), Brazil. Ministério da Fazenda (Various years), Brazil. Sebastião Ferreira Soares (1876), Brazil (1902),
Brazil (1915), Brazil. Alfândega do Rio de Janeiro. (Various years).
ents the composition of imports for both Brazil and Rio de Janeiro, disag-
gregated into four categories following the nomenclature of the Brazilian
sources. Given that the manufactured articles category occupied the
greater portion of the import composition over most of the period in
question, we also decompose this category into its principal constituent
parts. Two trends are important for the purposes of our analysis. Firstly,
during the period 1871–1913, there was a noticeable reduction in the
presence of textile manufactures. Furthermore, this tendency was driven
principally by the reduction of the importation of Brazil’s principal
import commodity, cotton manufactures, which declined from 30 per-
cent of the country’s import composition in 1871–1872 to 6 percent in
1913. An examination of the data for Rio de Janeiro shows that this
change occurred principally after 1880. This reflected the nascent process
of industrialization in the country that was largely focused on cotton
textile manufacturing. Secondly, both the national and Rio de Janeiro
data show an important increase of raw materials in the composition of
imports. This reflected the increased importation of coals, which, as we
discuss in the final section, were most likely consumed by the transport
services sector.
The period encompassing the rapid change in Brazil’s import composi-
tion also included a terms of trade boom that provided the country
increased capacity to import complementary inputs to industrial produc-
tion. This occurred due to a coffee price hike as well as an unprecedented
rise in output and the corresponding current value of exports. The link
between Brazil’s income terms of trade and the increased import of com-
plementary inputs to industrial production can be approximated by an
examination of the country’s purchasing power of exports and the impor-
tation of industrial and manufacturing inputs. The purchasing power of
exports (shown in Figure 4.5), calculated as the current value of exports
deflated by the import price index, followed a similar trend to export
growth, demonstrating post-independence dynamism (5.1 percent
per annum from 1821 to 1850) that was moderated during the second
half of the century (2.5 per annum from 1850 to 1900) and then renewed
again around the dawn of the twentieth century (5.1 percent per annum
from 1900 to 1913). Following Galvarriato and Williamson (2008,
pp. 8–10), who assume that manufacturing machinery, iron and steel,
450
400
350
300
250
Millions
200
150
100
50
0
1827
1831
1835
1839
1843
1847
1851
1855
1859
1863
1867
1871
1875
1879
1883
1887
1891
1895
1899
1903
1907
1911
Fig. 4.5 Purchasing power of exports, 1827–1913. Source: Export value: Absell
and Tena-Junguito (2016); Import price index: (Absell and Tena-Junguito, 2017).
Note: Calculated as the current value of exports deflated by the import price
index. The import price index is the geometric average of six chained Laspeyres
indices, each constructed using a different base year. See Absell and Tena-Junguito
(2017) for complete description
and coal imports are suitable proxies for industrial production, we exam-
ine the imports of these commodities for selected benchmarks spanning
the period 1841–1913. Unlike Galvarriato and Williamson, however, we
rely on the official sources and thus include imports from all trading
partners, not only from the United States and Great Britain. This is
important for the period from 1880 onward, when France and Germany
increased their importance in the geographical distribution of Brazil’s
imports. Between 1841 and 1913, imports of iron and steel, coal and
machinery grew at 6, 7 and 4 percent per annum, respectively. Once
disaggregated into sub-periods, however, the period 1901–1913 was the
most dynamic in terms of iron and steel and machinery imports, which
grew at 18 and 23 percent per annum, respectively. With respect to Rio
de Janeiro, we observe a similar tendency, although the period 1880–1890,
missing from the national estimates, forms the second most dynamic
period under analysis. What’s more, during this period the number of
patents per capita, particularly those concerning machinery and metal-
lurgy, rose sharply, indicating the growth of inventive activity (Aldrighi &
Colistete, 2013, pp. 11–12). It is evident that there were two booms dur-
ing the period 1870–1913: one during the decade before the fall of the
empire and one during the first decade of the twentieth century.
An examination of Suzigan’s (2000) series of machinery imports from
Great Britain, the United States, Germany and France provides a glimpse
of the sectoral development of industry. Suzigan’s aggregated series
accords with the growth narrative outlined above: a dynamic spurt in the
1880s followed by contraction and unprecedented dynamism around the
turn of the century. The changes in the composition of machinery imports
show some interesting trends. Until the 1890s imports of machinery
mostly consisted of power generators, sewing machines and locomotives.
During the 1890s the composition changed significantly. Textile machin-
ery grew to occupy an important portion of the composition of machin-
ery imports, while other sector-specific inputs, such as machinery for
brewing, began to emerge. After 1900, Brazil’s import composition diver-
sified considerably, including machines related to metalwork, woodwork,
footwear, milling and sugar refinery. This indicates significant diversifica-
tion of industry during this period, related to the increased purchasing
power of exports.
Energy Transition
The expansion of the export economy and internal economic activity, not
to mention the requirements of an expanding population, generated
increasing demands for energy. In the Atlantic Forest and Amazonian
rainforest, Brazil possessed a considerable natural resource endowment
capable of maintaining an expanding population without the pressures of
catering to the rapidly increasing European demand for tropical prod-
ucts. Slash and burn techniques used to clear the land for coffee planta-
tions, together with the voracious appetite of the railroads, rapidly
diminished the geographic coverage of the Atlantic Forest. Besides the
use of slave labor, environmental degradation was the most important
negative externality derived from the expansion of the export economy.
Data regarding the domestic consumption of firewood in the nineteenth
century is difficult to come by; Warren Dean estimated that total domestic
consumption in São Paulo during the first half of the twentieth century
ranged between 2.0 and 2.4 cubic meters of forest per capita. Assuming a
gravity of 750 kilograms per cubic meter, consumption can thus be esti-
mated to have fallen between 1.5 and 1.8 tons per capita. Furthermore,
assuming that the energy equivalent in coal is around 400 kilograms, one
arrives at a per capita figure of between 0.8 and 0.96 tons (Dean, 1995,
pp. 252–253). Such a figure serves as a useful yardstick for evaluating the
consumption of energy and the use of imported forms of energy. While
greenwood gathered from the deforestation derived from the expansion of
coffee plantations served as a medium of supplying coal to the domestic
economy, over the nineteenth century Brazil imported an increasing pro-
portion of its supply of coal from Great Britain (and, to a lesser extent, the
United States). In per capita terms, however, consumption of imported
coals did not come close to Dean’s estimates of firewood consumption in
the first half of the twentieth century: at 0.07 tons per capita in 1913, con-
sumption of imported coals per person was more than ten times lower than
that of Brazilian firewood. Thus, imported coals were not a substitute for
domestic resources, but rather a complement. Given the high cost of
importing energy inputs from the other side of the Atlantic, and the cor-
responding high cost of internal transportation, foreign coals were most
likely used by activities with high energy input demands and links to the
ports: the railroads and maritime transport.
Likewise, per capita consumption of imported petroleum-based prod-
ucts from the United States did not exceed domestic consumption of
firewood nor overtake imported coals until the 1940s (Brannstrom,
2005; Rubio & Folchi, 2012). Imports of petroleum-based products did,
however, increase rapidly from the 1870s onward, growing at a rate of 7
percent per annum to the eve of the First World War. In terms of gross
consumption, however, the supply of petroleum lagged considerably
behind both Brazilian firewood and imported coals.
Freights for both British coals and American petroleum were extremely
high: our calculations suggest that the freight factor for coals averaged 56
percent for the period 1870–1913, while that for petroleum was as high as
85 percent (Absell & Tena-Junguito, 2017). Thus, the relative efficiency of
imported fossil fuels was offset by their almost prohibitive cost. Due to
these factors, an energy transition was not an immediate consequence of
the expansion of Brazil’s export economy during the nineteenth century.
Balance
This chapter has provided an overview of the development of Brazil’s
export economy during the nineteenth century. Of course, being a syn-
thetic overview, we have had to leave many important details by the way-
side. Three conclusions, however, emerge from our synthesis. First,
Brazil’s export growth performance during the nineteenth century was
quite positive prior to mid-century, especially in the context of the
American continent. There were three phases of export growth, each of
which corresponded with changes in the composition of exports: a first
stage of rapid growth associated with the emergence of coffee, a mid-
century slowdown alongside the consolidation of monoculture and a
final export spurt associated with coffee and rubber booms before crisis.
The second conclusion questions the idea that much of Brazil’s value was
drained by foreign entities. While the flow of foreign capital was neces-
sary due to the imperfect (or inexistent) nature of domestic capital mar-
kets, and foreign interests dominated the export trade, the major part of
the capital accumulation associated with the expansion of the export
economy went into Brazilian hands. How the Brazilian elite distributed
this income, however, is another story. Finally, like many of the studies in
this volume, we have argued that there existed a clear link between the
expansion of the export economy and the development of the non-export
economy. This is by no means a revolutionary claim, being a message
repeated for the better half of a century. It is instructive, however, to
review such conclusions considering the (ever-increasing) empirical evi-
dence at hand.
Although the Brazilian export economy is a heavily researched topic,
there are areas still in need of further investigation. Given the amount of
work undertaken for the period of the first globalization, it would be use-
ful to shift our attention to the period before 1850. Moreover, it might
be instructive to focus on commodity and regional studies, given the
splintered nature of the Brazilian export economy during the post-
independence period. Research might explore the mechanism underlin-
ing the rapid growth of coffee, the stagnation of sugar exports despite
expanding international demand, the decline of the cotton industry or
the tendency of the exchange rate and its relation to the export economy.
While focusing on specific commodities or regions, work should strive to

be comparative, on not only a local but also an international scale. Only
then will we gain better insights into the evolution of Brazil’s export sec-
tor and the country’s role in the global economy during the nineteenth
century.
Epilogue
The coming of the First World War signaled the end of Brazil’s nineteenth-
century Age of Exports, the beginning of a tumultuous period of export
growth and the detachment of the export economy from the develop-
ment of the domestic economy. While export growth stagnated during
the period from 1913 to the eve of the Second World War, this perfor-
mance included the twin shocks of the First World War and the Great
Depression, as well as rapid growth episodes during the intervening
periods.
Exports contracted by almost 2 percent during the First World War,
not recovering to prewar levels until 1919. The closure of maritime trade
radically increased transport costs. This had much to do with the absence
of shipping services that, being dominated by European interests, were
diverted to the wartime cause. Interestingly, the short period of the war
represented a reversal of fortunes of sorts with respect to the growth pat-
tern observed during the nineteenth century. Coffee was not of strategic
importance to the Allies, and German merchants, important actors in the
coffee trade, found themselves blacklisted (Albert, 1983, p. 79). Thus,
coffee export growth contracted at a rate of −14.5 percent per annum.
The nadir of the period for the coffee trade was 1917, when the British
prohibited coffee imports and American involvement restricted con-
sumption. Likewise, both cotton and rubber exports suffered violent
contractions, the latter reinforced by the rapid emergence of Asian com-
petition, a tendency already present before the commencement of hostili-
ties. Sugar exports, on the other hand, grew at rates not witnessed since
the first half of the nineteenth century. Prices surged during the final
years of the War to heights unseen since the Napoleonic Wars and output
followed suit.
This trend would reverse again, however, following the end of hostili-
ties. During the post-war period to the onset of the Great Depression,
exports grew at a similar pace to the average rates during the nineteenth
century. The impact of the Great Depression on Brazil’s exports was dra-
matic; the total value of exports in constant prices contracted by 28 per-
cent from 1929 to the trough of the crisis in 1932. Although the effect
was not as extreme as the First World War, coffee exports contracted vio-
lently as prices plummeted. This had as much to do with the rapid fall in
demand as it did with an excess of supply: the bumper harvest of 1931,
the result of the coffee support program of the 1920s that pushed prices
to a peak in 1925—the highest prices in a century—and the correspond-
ing lagged output of investment in coffee groves. The Brazilian govern-
ment responded by effectively nationalizing the coffee valorization
program with the formation of the Conselho Nacional do Café (Peláez,
1971). Although most of Brazil’s export sectors experienced moderate to
rapid export growth after 1932, the most astonishing of all performances
was that of cotton, the result of the transfer of the geographical center of
cotton growing from the northeast to São Paulo (Brannstrom, 2010).
The quantum exported of cotton increased from 32 thousand metric tons
in 1932 to over 20 million 7 years later.
Traditionally, the exogenous shocks represented by the World Wars
and the Great Depression were interpreted as the drivers of a shift from
an export-led growth regime to one based on import substitution indus-
trialization (Furtado, 1962; Prado Júnior, 1990). While the structural
shift experienced by the Brazilian economy did not favor the dominance
of industry until mid-century, there was a noticeable increase in the share
of industry in gross domestic product during the period leading up to the
Second World War (Abreu & Bevilaqua, 2000). The importance of the
export economy for the development of the domestic economy gradually
diminished during the interwar period: the percentage of exports in GDP
fell from around 19 percent on the eve of the First World War to fluctuate
around 10 percent during the interwar years. Despite the twin shocks of
the First World War and Great Depression, the effects of which were
generally pernicious for exports and mixed for local manufacturing and
industry (Baer, 1979; Haber, 1992; Marson, 2015), the dynamic of capi-
tal accumulation gradually became endogenous to the non-export econ-
omy. It was not so much the externalities derived from the functioning of
the export economy, but rather governmental intervention (including
exchange and import controls) during the 1930s that spurred import
substitution industrialization (Abreu, Bevilaqua, & Pinho, 2000). Not
until the next globalization would Brazil’s export economy come close to
the protagonism that it possessed during the Age of Exports.
Notes
1. The Contador and Haddad series is based on exports, imports, govern-
ment spending, the consumption of cement and the total installation of
electricity, each series covering different periods. The Goldsmith series is
based on an average of wages, imports and exports, government spending
and the money supply, plus 5 per cent depreciation. The Tombolo and
Sampaio series is calculated by regressing nominal GDP over the popula-
tion, government revenue, imports and exports and the money supply
(M2) for the period 1900–1947, followed by a test of co-integration. The
resulting coefficients were then used to calculate the values for the nine-
teenth century.
2. Our partner sample includes Belgium (1835–1913), Chile (1830–1913),
Denmark (1821–1913), France (1821–1913), Germany (1821–1913;
the period before 1880 corresponds to the Hanseatic Cities), Great Britain
(1821–1913), Italy (1861–1913), Portugal (1833–1913), Spain
(1821–1913), Sweden and Norway (1830–1913) and the United States
(1821–1913). With respect to the partner price indices, preference is
given to consumer price indices. Unfortunately, in some cases (France,
Spain), we were obliged to resort to the use of wholesale indices due to the
paucity of data available for the earlier years. Regarding the Brazilian price
index, existing price indices, while being important contributions, are
either not sufficiently representative (Lobo et al., 1971), do not cover the
entire period in question (Goldsmith, 1986; Ónody, 1960) or are based
on questionable assumptions (Contador & Haddad, 1975). The most
commonly used in Brazilian historiography, elaborated by Eulalia Lobo
and coauthors while covering over a century (1820–1930), contains an
extremely limited commodity coverage (minimum of 3, maximum of 9)
and a questionable weighting system. Thus, we construct a new index of
36 products using current domestic market price information gleaned

from various sources. Most of the price information was obtained from
Brazilian newspapers referring to quotations in Rio de Janeiro. Sources
include Semanario Mercantil, Diario do Rio de Janeiro, Diario Mercantil,
Jornal do Commercio, O Cruzeiro, Correio Mercantil, Rio Commercial
Journal, O Despertador, Rio Mercantile Journal and the Anglo-Brazilian
Times. Several of Brazil’s principal export products (coffee, sugar and raw
cotton) were taken from the reconstructed price series in Absell and Tena-
Junguito (2016). The price of cotton manufactures is the unit value of
British exports to Brazil, adjusted for transport and tariff costs (United
Kingdom, various years; United Kingdom, Board of Trade, various years).
Due to the scarcity of information regarding the consumption basket of
the average individual in Brazil (if such a thing existed) over the period,
we utilize data on foreign and local (cabotage) imports for the fiscal year
1870–1871 as a weighting system (Brazil. Sebastião Ferreira Soares 1876).
We assume that the relative weights of each of the product in our sample
derived from the import data provide a useful albeit imperfect indicator of
the demand structure. We chain our index to Luis Catão’s (1992) whole-
sale price index for the period 1870–1913.
3. We calculate the total annual debt service of each loan as the sum of inter-
est payments, amortization and commission. The data for the value of
amortization paid each year for each loan is taken from the Annual Report
of the Ministry of Finance. The data for interest repayments and commis-
sion is estimated using the rates specified in the original loan contracts
and the implicit rates calculated from the figures for 1890, 1900 and 1912
given in Bouças (1942, pp. 28–29). In effect, we use the ex ante contrac-
tual rate of return for most loans. Although this is problematic in the
sense that the return on interest might deviate from that stipulated con-
tractually, we are prevented from calculating the real rate of return due to
a lack of loan-specific data on interest and commission payments. The
series of average yearly ex post rate of return on Brazilian bonds in Abreu
(2006, p. 777) suggests that the ex ante rate may be undervalued by
between 1 and 2 percentage points. Certain loans did not reach full amor-
tization and were subsequently discounted by funding or conversion loans
(as was the case of the 1871 and 1875 loans for railway extensions which
were rolled into the 1889 conversion loan, which effectively discounted
the interest rate from 5 per cent to 4 per cent).
Bibliography
Abreu, M. de P. (2000). British business in Brazil: Maturity and demise. Revista
Brasileira de Economia, 54(4), pp. 385–386.
Abreu, M. de P., & Corrêa do Lago, L. (2001). Property rights and the fiscal and
financial systems in Brazil: Colonial heritage and the Imperial period. In
M. Bordo & R. Cortés-Conde (Eds.), Transferring wealth and power from the
old to the new world: Monetary and fiscal institutions in the 17th through the
19th centuries (pp. 327–377). Cambridge: Cambridge University Press.
Abreu, M. de P., & Bevilaqua, A. S. (2000). Brazil as an export economy. In J. A.
Enrique Cardenas (Ed.), An economic history of twentieth century Latin
America, Volume 1: The export age: The Latin American economies in the late
nineteenth and early twentieth centuries (pp. 32–54). London: Palgrave
Macmillan.
Abreu, M. de P., Bevilaqua, A. S., & Pinho, D. M. (2000). Import substitution
and growth in Brazil, 1890s–1970s. In J. A. Enrique Cardenas (Ed.), An
economic history of twentieth century Latin America, Volume 3: Industrialization
and the state in Latin America: The postwar years (pp. 154–175). London:
Palgrave Macmillan.
Absell, C. D., & Tena-Junguito, A. (2016). Brazilian export growth and diver-
gence in the tropics during the nineteenth century. Journal of Latin American
Studies, 48(4), pp. 677–706.
Absell, C. D., & Tena-Junguito, A. (2017). The reconstruction of Brazil’s foreign
trade series. Working Papers in Economic History, 17–05, Universidad Carlos
III de Madrid.
Albert, B. (1983). South America and the First World War. Cambridge: Cambridge
University Press.
Aldrighi, D., & Colistete, R. P. (2013). Industrial growth and structural change:
Brazil in a long-run perspective. Working Paper Series No. 2013-10,
Department of Economics, FEA-USP.
Baer, W. (1979). The Brazilian economy: Growth and development. London:
Praeger.
Batista, P. N., Jr. (1980). Política tarifária britânica e evolução das exportações
brasileiras na primeira metade do século XIX. Revista Brasileira de Economia,
34(2), pp. 203–239.
Bessa Maia, J. N., & Sombra Saraiva, J. (2012). A paradiplomacia financeira no
Brasil da República Velha, 1890–1930. Revista Brasileira de Política
Internacional, 55(1), pp. 106–134.
Bouças, V. F. (1942). Finanças do Brasil, História da Dívida Externa Estadual e

Municipal, Volume X. Rio de Janeiro: Impresso no Jornal do Commercio.
Brannstrom, C. (2005). Was Brazilian industrialisation fuelled by wood?
Evaluating the wood hypothesis, 1900–1960. Environment and History,
11(4), pp. 395–430.
Brannstrom, C. (2010). Forests for cotton: Institutions and organizations in
Brazil’s mid-twentieth-century cotton boom. Journal of Historical Geography,
36, pp. 169–182.
Braun-Llona, J., Braun-Llona, M., Briones, I., Diáz, J., Lüders, R., & Wagner,
G. (2000). Economía Chilena 1810–1995: Estadísticas Históricas. Documento
de Trabajo No. 187, Catholic University of Chile, Instituto de Economía.
Brazil. (1855). Collecção dos mappas estatisticos do commercio e navigação do
Imperio do Brasil com suas províncias e paizes estrangeiros no anno financeiro de
1849–1850. Rio de Janeiro: Typographia Nacional.
Brazil. (1902). Commercio Exterior do Brasil. Rio de Janeiro: Directoria de
Estatistica Commercial.
Brazil. (1905). Estatística das Estradas de Ferro da União e das fiscalisadas pela
União no anno de 1905. Rio de Janeiro: Imprensa Nacional.
Brazil. (1914). Finanças, Quadros synopticos da receita e despeza do Brasil, período
de 1822 a 1913. Rio de Janeiro: Typgraphia do Ministerio da Agricultura.
Brazil. (1915). Commercio Exterior do Brasil. Rio de Janeiro: Directoria de
Estatistica Commercial.
Brazil. (1939). Annuario estatistico do Brasil (1939/1940). Rio de Janeiro: Tip
Departamento de Estatistica e Publicidade.
Brazil. (Various years). Collecção de mappas estatisticos do commercio e navegação
do Imperio do Brasil. Rio de Janeiro: Typographia Nacional.
Brazil. Alfândega do Rio de Janeiro. (Various years). Mappas estatisticos do com-
mercio e navegação do Porto do Rio de Janeiro. Rio de Janeiro: Typographia
Nacional.
Brazil. Ministério da Fazenda. (1891). Relatorio do ano de 1890 apresentado em
Janeiro de 1891. Rio de Janeiro: Imprensa Nacional.
Brazil. Ministério da Fazenda. (Various years). Relatorio do Ministerio da Fazenda.
Rio de Janeiro: Typographia Nacional.
Brazil. Sebastião Ferreira Soares. (1876). Estatistica do Commercio Maritimo do
Brazil do exercício de 1870–1871, 2a parte, Commercio de longo curso por
províncias. Rio de Janeiro: Typographia Nacional.
Brazil. Sebastião Ferreira Soares. (Various years). Estatistica do commercio mari-
timo do Brazil. Rio de Janeiro: Typographia Nacional.
Brazil. Various. (Various years). Provincial presidential reports. Obtenido de

Centre for Research Libraries. http://www-apps.crl.edu/brazil/provincial
Cardoso, E. A. (1983). Exchange rates in nineteenth-century Brazil: An econo-
metric model. Journal of Development Studies, 19(2), pp. 170–178.
Cardoso de Mello, J. M. (1982). O capitalismo tardio: contribuição a revisão
crítica da formação e desenvolvimento da economia brasileira. São Paulo: Editora
Brasiliense.
Carter, S. B., Gartner, S. S., Haines, M. R., Olmstead, A. L., Sutch, R., &
Wright, G. (2006). Historical statistics of the United States: Millennial edition.
New York: Cambridge University Press.
Catão, L. A. (1992). A new wholesale price index for Brazil during the period
1870–1913. Revista Brasileira de Economia, 46(4), pp. 519–533.
Cavalcanti, J. (1923). Histórico da Dívida Externa Federal. Rio de Janeiro:
Imprensa Nacional.
Contador, C. R., & Haddad, C. L. (1975). Produto real, moeda e preços: a
experiência brasileira no período 1861–1970. Revista Brasileira de Economia,
36, pp. 407–440.
Corrêa do Lago, L. A. (2014). Da Escravidão ao Trabalho Livre. São Paulo:
Companhia das Letras.
Crespo, H. (2006). Trade regimes and the international sugar market,
1850–1980: Protectionism, subsidies, and regulation. In C. M. Steven Topik
(Ed.), From silver to cocaine: Latin American commodity chains and the build-
ing of the world economy, 1500–2000 (pp. 147–173). Durham: Duke
University Press.
Dean, W. (1969). The Industrialization of São Paulo, 1880–1945. Austin:
University of Texas Press.
Dean, W. (1976). Rio Claro: A Brazilian plantation system, 1820–1920. Stanford:
Stanford University Press.
Dean, W. (1995). With broadax and firebrand: The destruction of the Brazilian
Atlantic forest. California: University of California Press.
Delfim Netto, A. (1981). O problema do café no Brasil. São Paulo: Instituto de
Pesquisas Econômicas.
Denzel, M. A. (2010). Handbook of world exchange rates, 1590–1914. Surrey:
Ashgate.
Dowbor, L. (1978). A formação do capitalismo dependente do Brasil. Estudios
Latinoamericanos, 4, pp. 53–72.
Eisenberg, P. (1974). The sugar industry in Pernambuco, modernization without
change, 1840–1910. California: University of California Press.
Federico, G., & Tena-Junguito, A. (2017). Lewis revisited: Tropical polities

competing on the world market 1830–1938. The Economic History Review.
doi:10.1111/ehr.12467
Frank, A. G. (1967). Capitalism and underdevelopment in Latin America:
Historical studies of Chile and Brazil. New York: Monthly Review Press.
Furtado, C. (1962). Formación económica del Brasil. México, DF: Fondo de
Cultura Económica.
Galvarriato, A. G., & Williamson, J. G. (2008). Was it prices, productivity or
policy? The timing and pace of Latin American industrialization after 1870.
NBER Working Paper Series, Working Paper 13990.
Goldsmith, R. W. (1986). Brasil 1850–1984: Desenvolvimento Financeiro sob um
século de inflação. São Paulo: Harper & Row.
Gonçalves, R., & Barros, A. C. (1982). Tendências dos termos de troca: a tese de
Prebisch e a economia brasileira—1850/1979. Pesquisa e Planejamento
Econômico, 12(1), pp. 109–132.
Haber, S. H. (1992). Business enterprise and the great depression in Brazil: A
study of profits and losses in textile manufacturing. Business History Review,
66(2), pp. 335–363.
Haber, S. H., & Klein, H. S. (1997). The economic consequences of Brazilian
independence. In S. H. Haber (Ed.), How Latin America fell behind: Essays on
the economic histories of Brazil and Mexico, 1800–1914 (pp. 245–258).
Stanford: Stanford University Press.
IBGE. (1990). Estatísticas históricas do Brasil: séries econômicas, demográficas e
sociais de 1550 a 1988. Rio de Janeiro: IBGE.
Jornal do Commercio. (Various years). Retrospecto commercial. Rio de Janeiro:
Typ. do Jornal do commercio de Rodrigues & c.
Kannebley, S., Jr., & Gremaud, A. P. (2003). The secular trend of Brazilian
terms of trade revisited—1850 to 2000. Brazilian Review of Econometrics,
23(1), pp. 111–142.
Klein, H. S. (1992). The social and economic integration of Spanish immigrants
in Brazil. Journal of Social History, 25(3), pp. 505–523.
Klein, H. S., & Luna, F. V. (2003). Slavery and the economy of São Paulo,
1750–1850. Stanford: Stanford University Press.
Klein, H. S., & Luna, F. V. (2010). Slavery in Brazil. Cambridge: Cambridge
University Press.
Laemmert, E. V.. (Various years). Almanak Administrativo, Mercantil e Industrial
do Rio de Janeiro. Rio de Janeiro: Eduardo e Henrique Laemmert.
Leff, N. H. (1972a). Economic development and regional inequality: Origins of
the Brazilian case. The Quarterly Journal of Economics, 86(2), pp. 243–262.
Leff, N. H. (1972b). Economic retardation in nineteenth-century Brazil. The

Economic History Review, 25(3), pp. 489–507.
Leff, N. H. (1973). Tropical trade and development in the nineteenth century:
The Brazilian experience. Journal of Political Economy, 81(3), pp. 678–696.
Leff, N. H. (1982). Underdevelopment and development in Brazil. Volume 1:
Economic structure and change, 1822–1947. London: Allen & Unwin.
Lobo, E. M., Madureira, L. B., Canavarros, O., Feres, Z., & Gonçalves, S.
(1971). Evolução dos preços e do padrão de vida no Rio de Janeiro,
1820–1930—resultados preliminares. Revista Brasileira de Economia, 25(4),
pp. 235–265.
Marson, M. D. (2015). A industrialização brasileira antes de 1930: uma contri-
buição sobre a evolução da indústria de máquinas e equipamentos no estado
de São Paulo, 1900–1920. Estudos Econômicos (São Paulo), 45(4),
pp. 753–785.
Mattoon, J. R. (1977). Railroads, coffee, and the growth of big business in São
Paulo, Brazil. The Hispanic American Historical Review, 57(2), pp. 273–295.
Mitchell, B. (2007a). International historical statistics, 1750–2005: The Americas.
London: Palgrave Macmillan.
Mitchell, B. (2007b). International historical statistics, 1750–2005: Europe.
London: Palgrave Macmillan.
Monastério, L. M. (2005). FHC errou? A economia da escravidão no Brasil
meridional. História e Economia Revista Interdisciplinar da Brazilian Business
School, 1(1), pp. 13–28.
Nunes, A. B., Mata, M. E., & Valério, N. (1989). Portuguese economic growth,
1833–1985. Journal of European Economic History, 18, pp. 291–330.
Ónody, O. (1960). A Inflação Brasileira (1820–1958). Rio de Janiero: s/d.
Peláez, C. M. (1971). Análise Econômica do Programa Brasileiro de Sustentação
do Café—1906–1945: Teoria, Política e Medição. Revista Brasileira de
Economia, 25(4), pp. 5–211.
Pereira, T. A. (2016). Was it Uruguay or coffee? The causes of the beef jerky
industry’s decline in southern Brazil (1850–1889). Nova Economia, 26(1),
pp. 7–42.
Pereira da Silva, G. (2015a). O predomínio das casas estrangeiras sobre a expor-
tação cafeeira em Santos no século XIX. America Latina en la Historia
Económica, 22(3), pp. 213–246.
Pereira da Silva, G. (2015b). As brechas ao capital nacional: a liderança da casa
J. F. de Lacerda & Cia. sobre a exportação cafeeira em Santos na década de
1880. Economia e Sociedade, 24(3), pp. 541–571.
Prado Júnior, C. (1990). História Econômica do Brasil, 38a edição. São Paulo:
Editora Brasiliense.
Rubio, M. d., & Folchi, M. (2012). Will small energy consumers be faster in
transition? Evidence from the early shift from coal to oil in Latin America.
Energy Policy, 50, pp. 50–61.
Sanz Fernández, J. (1998). Historia de los ferrocarriles de Iberoamérica. Madrid:
Ministerio de Fomento.
Stein, S. J. (1957). The Brazilian cotton manufacture. Cambridge: Harvard
University Press.
Stein, S. J. (1985). Vassouras: A Brazilian coffee county, 1850–1900: The roles of
planter and slave in a plantation society. New Jersey: Princeton University
Press.
Sturz, J. J. (1837). A review, financial, statistical, & commercial, of the empire of
Brazil and its resources. London: Wilson.
Summerhill, W. R. (1998). Market intervention in a backward economy:
Railway subsidy in Brazil, 1854–1913. The Economic History Review, 51(3),
pp. 542–568.
Summerhill, W. R. (2003a). Productivity in the Paraiba Valley: Assessing agricul-
tural efficiency in the 19th century Brazil. Unpublished manuscript,
Department of History, UCLA, Los Angeles, CA.
Summerhill, W. R. (2003b). Order against progress: Government, foreign invest-
ment, and railroads in Brazil, 1854–1913. Stanford: Stanford University
Press.
Summerhill, W. R. (2005). Big social savings in a small laggard economy:
Railroad-led growth in Brazil. The Journal of Economic History, 65(1),
pp. 72–102.
Summerhill, W. R. (2015). Inglorious revolution: Political institutions, sovereign
debt, and financial underdevelopment in Imperial Brazil. New Haven: Yale
University Press.
Suzigan, W. (2000). Indústria Brasileira: Origem e Desenvolvimiento. São Paulo:
UNICAMP.
Sweigart, J. E. (1987). Coffee factorage and the emergence of a Brazilian capital
market, 1850–1888. New York: Garland.
Taunay, A. d. (1939). Historia do Café no Brasil, no Brasil Imperial, 1822–1872,
tomo III. Rio de Janeiro: Edição do Departamento Nacional do Café.
Tombolo, G., & Sampaio, A. V. (2013). O PIB brasileiro nos séculos XIX e XX:
duzentos anos de flutuações econômicas. Revista de Economia, 39(3),
pp. 181–216.
United Kingdom. (Various years). Tables of the revenue, population, commerce,

&c. of the United Kingdom, and its dependencies. London: Clowes and Sons.
United Kingdom. Board of Trade. (Various years). Annual statement of the trade
of the United Kingdom with foreign countries and British possessions. London:
Eyre and Spottiswoode.
Yáñez, C., Rivero, R., Miró, M. B., & Marín, A. C. (2014). Nuevas series anu-
ales de población de América Latina desde el siglo XIX hasta el 2000. Scripta
Nova: Revista electrónica de geografía y ciencias sociales, 18, pp. 463–499.
Christopher David Absell is a PhD candidate in Economic History in the

Department of Social Sciences at the Universidad Carlos III de Madrid. He
holds an honors degree in Political Science from the University of Queensland
(Australia) and a master’s degree in International Economic Relations from the
Centro Universitario de Ciencias Económico Administrativas (CUCEA),
Universidad de Guadalajara (Mexico). His research focuses on the Brazilian
export economy during the early nineteenth century.
Antonio Tena-Junguito is an associate professor in the Department of Social

Sciences at the Universidad Carlos III de Madrid. He did his postgraduate stud-
ies in the Department of History and Civilization at the European University
Institute and PhD in economics at the Universidad de Alcalá de Henares. He
served as chief editor of the Revista deHistoria Economica—Journal of Iberian and
Latin American Economic History and director of the Figuerola Institute of Social
Science History. His research interests are in the field of the International
Economic History of the nineteenth and twentieth centuries, especially in South
Europe and the Latin American regions. Personal website: http://portal.uc3m.
es/portal/page/portal/dpto_ciencias_sociales/profesorado/antonio_tena
5
The Impact of Nitrates on the Chilean
Economy, 1880–1930
Marc Badia-Miró and José Díaz-Bahamonde
The authors acknowledge the efforts done by Sandra Kuntz in boosting the project around the
Latin American trade statistics during the export-led growth and the comments received by the
participants in the session “La era de las exportaciones: la teoría de la dependencia revisitada” in
CLADHE—V, Sao Paulo, Brazil. The authors are especially grateful to comments of Anna
Carreras-Marín, Santiago Colmenares, José Peres Cajías, Luís Felipe Zegarra and Antonio Tena.
Marc Badia-Miró acknowledges the financial support provided by the Swedish government to
the Swedish Research Links (2016-05721), the Spanish government research project
ECO2015-65049-C2-2-P and ECO2015-65049-C2-1-P (MINECO/FEDER, UE) and the
Catalan government (2014SGR1345). José Díaz-Bahamonde acknowledges the financial support
of CONICYT/Programa de Investigación Asociativa SOC 1102.
M. Badia-Miró (*)
Departament d’Història Econòmica, Institucions, Política i Economia
Mundial, Universitat de Barcelona—School of Economics, Barcelona, Spain
Centre d’Estudis “Antoni de Capmany” d’Economia i Història Econòmica,
Barcelona, Spain
Barcelona Economic Analysis Team, Barcelona, Spain
J. Díaz-Bahamonde
Instituto de Economía y EH Clio Lab, Pontificia Universidad Católica de
Chile, Santiago, Chile

S. Kuntz-Ficker (ed.), The First Export Era Revisited, Palgrave Studies in Economic
History, https://doi.org/10.1007/978-3-319-62340-5_5
154 M. Badia-Miró and J. Díaz-Bahamonde
Introduction
After independence (1818), and as the processes of industrialization and
globalization advanced, Chile began to formally integrate itself into the
international market through the export of natural resources, like other
Latin American countries. This phenomenon was made possible both by
the international expansion of trade and by the institutional structure of
the country which, unlike other Latin American experiences, rapidly
constituted a stable political organization.1
The process of integration into the world market was fundamental at
the beginning of the republic. Firstly, it allowed to collect tax revenue
easily. Secondly, it allowed for the import of goods that were not in
enough supply in the country after the collapse of the colonial markets.
While the productive pattern during the Hispanic period was based on
tallow and wheat, after Independence silver, copper and wheat were the
main tradable products. Figure 5.1 presents the evolution of Chilean
450
400
350
300
250
Millions
200
150
100
50
0
1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930
Total Exports Mill. Current $US Total Exports Mill. Constant $US 1913
Fig. 5.1 Chilean exports, 1830–1930 (in current and constant (1913) million $US).
Source: Díaz et al. (2016)
5 The Impact of Nitrates on the Chilean Economy, 1880–1930 155
exports between 1830 and 1930, showing a very low starting point an
intensive growth in the late nineteenth century.
Table 5.1 shows the annual growth rates for exports and exports per
capita in specific periods. While the high growth rate of the first period
was the result of the expansion related to trade (1830–1870, 4.7% and
5.14%), the low figures for the last period were the result of the aftermath
of World War I (1913–1930, 0.65% and 0.16%). The evolution of the
exports per capita confirms these results.
The history of Chilean exports during the nineteenth century was
dominated by the exploitation of saltpeter (nitrates), a product that
became the main Chilean exportable good from 1880 until the Great
Depression (see Fig. 5.2). Although we could also consider other
products (see Map 5), this chapter will focus on the performance of
saltpeter.2 Between 1906 and 1910, the relative participation of nitrates
in total Chilean exports reached 76% and the direct contribution of its
export taxes represented around 58% of total fiscal revenues.3
The role of saltpeter in several aspects of the Chilean economy has
been studied using very different approaches. For example, the acquisi-
tion of the nitrate area by Chile and its international effects is still a topic
of debate, the best known being the border change that meant the loss of
coastline for Bolivia.4 Another aspect is related to the industrial relations
and labor studies which constituted the root of the Chilean labor move-
ment.5 Regarding the cost analysis of production, the expansion of the
nitrate industry was done through private firms that had to pay a unitary
tax to export.6 In that sense, another key point was the dependence of tax
revenues on the fluctuations of the nitrate business, which has also been
the subject of analysis by other authors.7 Finally, the quality of the infor-
mation available on this product is relatively better than that of other
exportable goods, which allows for a more in-depth analysis.
The saltpeter sector has been central in the discussion around Chilean
“dependence and underdevelopment”. To some degree, the controversy is
a clash between two opposite views: the one of Chile’s “frustrated devel-
opment” pointed out by Pinto (1959) and the “journey toward progress”
postulated by Hirschman (1963). While some researchers have argued
that nitrate mines in Chile operated as an enclave economy, leaving few
to no local benefits,8 others have emphasized the presence of a dynamic
demand for other sectors and regions of the Chilean economy.9
Table 5.1 Rate of variation and value of Chile’s commodity exports, 1870–1930
156
Value in the initial year

(constant 1913 prices, US$) Average rate of variation (%)
Current Current Constant
prices, Constant prices, total (1913) prices,
total (1913) prices, exports per total exports
Total (millions) Per capita exports total exports capita per capita Quantum
Maddison phases
1830–1870 0.12 0.11 4.70 8.55 3.17 5.40 5.14
1870–1913 3.25 1.67 4.17 9.23 2.78 6.33 4.55
1913–1930 144.65 41.74 0.65 0.05 −0.71 −2.63 0.16
Per decade
1830–1840 0.12 0.11 5.12 10.02 3.63 6.93 6.47
1840–1850 0.32 0.26 6.01 13.76 4.51 10.57 6.84
1850−1860 1.15 0.80 6.65 12.60 5.00 9.13 4.34
1860−1870 3.77 2.25 1.12 −1.49 −0.37 −4.38 2.94
1870−1880 3.25 1.67 2.56 8.39 0.96 5.03 4.49
1880−1890 7.27 3.19 5.07 12.61 3.55 9.38 7.71
M. Badia-Miró and J. Díaz-Bahamonde
1890−1900 23.83 9.06 1.51 3.04 0.32 0.65 2.57

1900−1910 32.16 10.87 6.97 11.87 5.69 9.21 4.23
1910−1920 98.71 29.59 9.01 9.84 7.64 7.10 1.41
1920−1930 252.33 66.67 −5.49 −5.33 −6.83 −7.99 −0.51
Source: Own elaboration based on Díaz et al. (2016)
100
90
80
70
60
Percentage
50
40
30
20
10
0
1880 1890 1900 1910 1920 1930
Fig. 5.2 Nitrate exports, 1880–1930 (percentage share over total exports). Source:
Own elaboration based on Díaz et al. (2016)
The main contribution of this work is the study of the general effects
of nitrate exports on the Chilean economy between 1880 and 1930,
based on the recent quantitative evidence available and following the
theoretical framework proposed by Kuntz-Ficker (2007, 2014). In order
to do that, the chapter is organized as follows. In the second section, we
present the background that puts the analysis in context: characteristics
of the Chilean saltpeter industry between 1880 and 1930, a brief expla-
nation of the availability of sources and the description of the aggregate
evolution of exports during the period. In the third section, we conduct
an analysis that combines quantitative and qualitative approaches to bet-
ter understand the contribution of nitrate exports to the Chilean eco-
nomic performance. Specifically, we examine (i) the direct contribution
to economic growth, (ii) the return value of exports, (iii) the ability to
import, (iv) external economies and (v) linkages. Finally, we provide
some concluding remarks.
Framework, Sources and General Overview

In this section, we present the general characteristics of the evolution of
the nitrate industry between 1880 and 1930. We then briefly discuss the
origin and quality of the series used for the descriptive and quantitative
analysis of the evolution of the nitrate sector and, at the same time, the
evolution of the foreign trade sector. Finally, the trends of the main sta-
tistical series are described to characterize and contextualize Chilean
export performance.
The Chilean Nitrate Industry, 1880–1930
Saltpeter became a product in great demand internationally due to its

rich content in nitrogen. Hence, its main use was as fertilizer for the
development of agriculture and, to a lesser extent, for the manufacture of
gunpowder. The saltpeter production zone is located at latitude 19° to
25°30′ south and comprises the present Chilean northern regions of
Tarapacá and Antofagasta (incorporated after the Pacific War), as well as
the northern part of the Region of Atacama. The production of saltpeter
followed several stages: firstly, the raw material (called “caliche”) was
obtained from deposits (called “pampas”) located at low depths or out in
the open air. This material was then processed in a plant (called oficina)
where the final product was a saltpeter (nitrate) with a degree of purity of
90% or more. Some of the by-products of the extraction included iodine.
Finally, the refined product was put in sacks and transported to the near-
est port for shipment.
Prior to the Pacific War (1879–1883), nitrate production was con-
ducted in a small-scale and artisanal way. After 1870, the creation of large
companies, along with foreign investment, the diffusion of railways and
the introduction of the Shanks system, increased the volume of produc-
tion, a fact that progressively moved away deposits from the oficinas.
The Shanks system also introduced British machinery for grinding and
refining, but the process was sustained by the intensive use of workers
and the exploitation of high-quality nitrate caliches. It has been argued
that this strategy of no innovation in the use of other caliches, together
120
100
80
Tons
60
40
20
0
1880 1890 1900 1910 1920 1930
Average product per worker. Tones per worker
Fig. 5.3 Average product per worker, 1880–1936 (in tons per worker). Source:
Own elaboration based on Cariola Sutter and Sunkel (1983)
with some attempts at cartelization of the producers, contributed to the

progressive loss of international competitiveness of Chilean saltpeter.10
Figure 5.3 shows this decreasing trend of productivity of nitrate per
worker between 1880 and 1930.11
Between 1926 and 1930, the Guggenheim system was introduced by
American investors in the oficinas named María Elena and Pedro de
Valdivia.12 The procedure combined large-scale production systems that
sought to exploit low-concentration nitrate caliche using mechanical
shovels, narrow railways to transfer the caliche to the oficinas and new
methods for decanting and filtering the fertilizer. According to data pro-
vided from the Ministerio de Hacienda (1934), the Guggenheim system
allowed for the extraction of 10 tons of caliche per worker day while the
Shanks method extracted only 2.5 tons. In addition, the Guggenheim
system produced savings of between 50 and 75% in the use of fuel.
Regarding the organization of the saltpeter industry, we should distin-
guish between nitrate companies (firms) and oficinas (production
plants). For example, in 1909, Reyes (1994) points out the existence of
95 firms and 129 oficinas in operation, with an important British pres-

ence (around 44% in each case). Since 1884 there have been at least five
attempts to organize the production among firms in combinaciones with
the objective of influencing prices in the international market, a strategy
that did not seem to be effective, as we have said.13
The saltpeter companies paid an export right per metric quintal
(100 kilos) that constituted an important share of total fiscal revenue for
the Chilean state. This mechanism lasted until 1929, at the beginning of
the Great Depression, with the creation of the Compañía de Nitratos de
Chile (COSACH), an agency that replaced the tax regime by an associa-
tion of the State with the nitrate industry. COSACH acquired the nitrate
companies with the intention of managing them, though it went bank-
rupt and was liquidated in 1933.
In 1934, the State set up the Corporación de Ventas de Salitre y Yodo de
Chile (COVENSA). The export of saltpeter and iodine was declared a
monopoly of the State granted by this agency, which acquired nitrate at
cost price FAS (free alongside ship, value before shipment) and kept the
difference with respect to the selling price in the international markets
(net of freight and insurance costs). Of this expected utility, it was estab-
lished that 25% would enter as fiscal revenue.14 These regulatory efforts,
however, did not modify the general situation because the nitrate market
had changed radically. The saltpeter gradually lost relevance in the
Chilean exports during the 1920s and finally became marginal with the
impact of the Great Depression.15
The Sources
Most of the sources for the study of the Chilean foreign trade come from
the records of the movement of customs published regularly by the
Chilean statistical agency. These publications, usually of annual periodic-
ity, were the Statistical Yearbook of the Republic of Chile, the Commercial
Statistics of the Republic of Chile and the Geographical and Statistical
Synopsis of the Republic of Chile. In addition to these regular publications,
other authors compiled, revised or updated this information, such as the
works of Cuevas (1901) and Ibáñez (1912). Since 1925 the commercial
records have been published by the Central Bank of Chile.
Customs records usually wrote down the export value for goods, in
some cases grouping by category, as well as an indicator of the physical
quantity exported. However, the criteria used for the origin or destina-
tion of the product were not systematized until the end of the nineteenth
century. Although the valuation of international trade was done in ster-
ling pounds, the aforementioned publications used different units of
account during the nineteenth century: between 1844 and 1884 the
information was given in current pesos, but then they considered “pesos
of n pence”, where “n” took the value of 38 (1885–1896), 18 (1897–1925)
and 6 (1925–1930). The expression “peso of n pence” referred to a simple
procedure of obtaining a measure that facilitated the inter-annual com-
parison of the commercial movement in the context of the devaluation of
the Chilean currency. As Llona-Rodríguez (2012) points out, the valua-
tion in “pesos of n pence” implied the use of a fictitious unit of account
with fixed gold content.
The accuracy of the Chilean foreign trade statistics has been examined
by several authors based on the contrast with registries of their main trad-
ing partners, either in aggregate form or by product.16 Considering these
works, we could assume the information to be reliable enough to rely on
it. Import data may present valuation problems due to the use of refer-
ence prices as a way of pricing rather than observed prices. Other prob-
lems affecting the reliability of these figures are related to the inaccuracy
of geographical allocation in the statistics of the trading partners. This
bias is high in countries which are further away from their trading part-
ners (as is the case for Chile in many instances), but it can be solved with
the use of Chilean statistics.
This abundancy and regularity of trade statistics information for a
small economy like the Chilean one is related to the fact that a large part
of the tax revenue came from taxes on foreign trade, both imports and
exports, and the administration needed to control these records.17
This chapter uses foreign trade figures elaborated by Díaz et al.
(2016), which rely on two main sources: Statistical Yearbook of Chile
(1862–1930) and the balance of payments elaborated by the Central
Bank of Chile (1944–2010). We also have considered Chilean bilateral
trade series with the Southern Cone countries and their main trading
partners from Badia-Miró et al. (2017), Badia-Miró et al. (2016) and
Carreras-Marín et al. (2013). We also consider export composition figures
between 1844 and 2010 from Díaz et al. (2016), bilateral product fig-
ures of Badia-Miró et al. (2017), the series of imports by products of
Díaz and Wagner (2004), Palma (1979) and Badia-Miró and Ducoing
(2015) and from the industrial production by sectors of Muñoz Gomá
(1968) and Palma (1979). We also consider the series of terms of trade
of Díaz et al. (2016). In the case of prices, we consider FAS and FOB
(free on board) figures presented in Díaz et al. (2016). Although the
original information was in different currencies, these authors con-
verted the data into current dollars per ton. The sources of nitrate prices
(FAS) for the period 1880–1905 are DGECH (1933) and for the
period 1906–1949 are ECLAC (1951). The prices of nitrate (FOB)
come from Ministerio de Hacienda (1925) for the period 1890–1923
and from Vera (1964) for the period 1938–1963.
For production costs, the main sources are case studies or reports such
as Semper and Michels (1908) who visited different oficinas in the early
twentieth century. Ministerio de Hacienda (1925) also provides average
figures of production costs, which indicate the probable maximum and
minimum values, but without identifying the origin of the information.
Finally, we have also considered Reyes (1994) and Fernández (2009),
who estimated a rate of profit for the nitrate sector considering data on
costs based mainly on international sources.
The most complete information available for wages is given by Matus
(2012). Considering different primary sources, this author builds series
of remunerations for different activities, among them the mining ones.
One of its conclusions is that the mining salaries were between the high-
est ones in the period 1880–1930.
In conclusion, based on previous research, we present a wide range of
indicators for the Chilean economy that will facilitate the exercise of
identifying the aggregate effect of the export sector and specifically of the
nitrate sector.
General Overview
In the next section, we discuss the performance of the main figures of the
Chilean trade. Figure 5.4 showed the exports as a percentage of real GDP,
30
25
20
Percentage
15
10
0
1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930
Share of Exports over GDP Share
Fig. 5.4 Exports, 1880–1930 (percentage as a share of GDP). Source: Díaz et al.
(2016)
for the period under study, as an indicator of the opening rate of the
Chilean economy. The general trend shows an increasing pattern during
the late nineteenth century as an indicator of the integration of the
Chilean economy into the international markets.
The arrival of the saltpeter cycle appeared when these figures were
already high, oscillating around 20%, and remained so later, although
with strong fluctuations, especially in the years around World War I. This
is quite remarkable because it coincides with a period of strong product
expansion (especially into the mining, government, services and con-
struction sectors). The late 1920s and the onset of the Great Depression
led to an abrupt decline of this indicator, reaching levels lower than those
observed before the nitrate expansion.
When we observe the composition of Chilean exports between 1880
and 1930, we see the great predominance of mining exports with per-
centages that always exceed 75% of the total, compared to agricultural
exports with values below 20% (see Fig. 5.5).
100
90
80
70
60
Percentage
50
40
30
20
10
0
1880 1890 1900 1910 1920 1930
Exports composion (mining) Share Exports composion (services) Share
Exports composion (agriculture) Share
Fig. 5.5 Export composition, 1880–1930 (as a percentage of total). Source: Díaz
et al. (2016)
On the other hand, the evolution of trade prices in the long term
shows a rise in the price of exports from the end of the nineteenth cen-
tury, with the beginning of nitrate expansion. As for the series of import
prices, we see that there is a clear downward trend, which began during
the mid-nineteenth century and lasted until World War I, due to the
strong volatility associated with the conflict. From then until the arrival
of the Great Depression, prices became stagnant (see Fig. 5.6).
These differences appear clearly when we analyze the terms of trade
(see Fig. 5.7), observing two big periods in the long term: (1) a first period
of stagnation and a certain decline until 1890 and (2) a great expansion
between the end of the nineteenth century and the Great Depression
(coinciding with the nitrate cycle).
If we look in detail at what happened during the first globalization (in
the first period), the fall in terms of trade can be explained by a further
drop in export prices in the context of a general fall in prices. In the second
period, which began during the mid-1890s, we observe a change in
the trend of export prices coinciding with the recovery of saltpeter prices.
The price of imports continued falling until World War I, when a slight
250
200
150
Index
100
50
0
1880 1890 1900 1910 1920 1930
Export unit prices 1913=100 Import unit prices 1913=100
Fig. 5.6 Export and import prices, 1880–1930 (1913 = 100). Source: Díaz et al.
(2016)
160
140
120
100
Index
80
60
40
20
0
1880 1890 1900 1910 1920 1930
Terms of trade 1913=100
Fig. 5.7 Terms of trade, 1880–1930 (1913 = 100). Source: own elaboration based
on Díaz et al. (2016)
recovery started and continuing during the 1920s although with a strong
volatility. The divergent trends between both trajectories in the years prior
to World War I gave Chile a very significant improvement in the terms of
trade, that lasted until the Great Depression.
Díaz et al. (2016) have also estimated the real exchange rate for the
Chilean economy by considering the United Kingdom and the United
States, as well as the relative contribution of each of these economies to
Chilean trade. The real exchange rate is defined as the cost of a unit of
foreign merchandise in terms of units of Chilean products. Thus, an
increase in the real exchange rate is a real depreciation for Chile and a
drop in the real exchange rate is an appreciation for the country. Figure 5.8
shows the evolution of the Chilean real exchange rate for the period
1810–1940. A notable feature is the appreciation (fall) from the 1870s
until 1890 with a stagnation until approximately 1910. In fact, only in
the 1930s did the real exchange rate recover to the level observed in the
1860s. This profile of the real exchange rate is consistent with the loss of
competitiveness associated with a slight “Dutch disease”, although other
signs are not clear enough.18
300
250
200
Index
150
100
50
0
1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940
Real Exchange rate 1913=100
Fig. 5.8 Real exchange rate of Chile, 1830–1940 (1913 = 100). Source: Díaz et al.
(2016)
Exports’ Economic Contribution

In this section, we observe the quantitative and qualitative sources of
the economic contribution of saltpeter exports to Chilean economic
growth. We also go deeply into the following points: (1) exports’ direct
contribution to the economic growth, (2) export return value, (3)
import capacity, (4) external economies and (5) forward and backward
linkages.
Direct Contribution to Economic Growth
We define the direct contribution of exports to economic growth I as:
a·b
I= (1)
c
where a is the export growth rate, c is the GDP growth rate and b is the
average share of exports in GDP, observed in the starting and ending year
considered for the growth rate calculus (openness share, Fig. 5.4). The
figures obtained show us the contribution of the export sector to GDP (as
a share). Table 5.2 presents some figures for the different sub-periods and
figures for GDP excluding the mining sector (only from 1860 onward).19
Although the results depend on the selection of periods, it seems quite
clear that since 1870 there has been an increase in the direct contribu-
tion of exports, intensified during the 1880s and the 1890s coinciding
with the maximum expansion of the nitrate cycle. Due to the relatively
low share of the mining sector in GDP, the contribution to growth
calculated considering the total GDP and non-mining GDP shows no
significant differences. The only exception, in terms of magnitudes,
occurred precisely during the 1880s and the 1890s.
To better appreciate the evolution of this phenomenon and taking
advantage of the information available, we constructed an annual estima-
tor of the contribution of exports to economic growth (It). This estimator
represents, for each year in which it is calculated, the contribution made
by exports to the growth of GDP in the last 10 years. For each moment
t, we obtain the growth rate of GDP and the growth rate of real exports
Table 5.2 Direct contribution to economic growth, several periods (%)

c a b I (GDP total) I (GDP excluding mining)
Ad hoc phases
1810–1930 2.8 4.0 9.9 14.2 –
1860–1930 2.9 3.2 14.5 16.0 16.9
1870–1929 3.1 4.0 16.9 21.8 24.0
Maddison phases
1810–1870 2.8 4.7 8.1 13.9 –
1860–1870 3.4 2.9 12.7 11.0 10.8
1870–1930 2.8 3.2 14.2 16.4 17.6
1870–1913 3.2 4.2 16.0 20.9 22.9
1913–1930 1.3 0.2 17.8 2.1 2.0
Considering the Pacific War and the Civil War
1810–1880 3.0 4.7 8.4 13.2 –
1860–1880 3.7 3.6 12.9 12.7 13.0
1880–1890 2.8 7.4 16.6 43.7 61.2
1890–1930 2.5 1.9 18.2 13.8 14.0
Considering openness turning point years
1810–1872 2.7 5.0 9.8 18.0 –
1860–1872 3.1 4.8 14.4 21.9 22.3
1872–1895 3.5 4.9 18.9 26.5 29.4
1895–1930 2.4 1.5 19.0 11.9 12.2
Source: Own elaboration based on Díaz et al. (2016)
compared with the figures observed at time t–10, as well as the average
share of exports over the product at both years (see Fig. 5.8). Specifically,
the formula employed is:
a  b + b 
I t =  t ,t −10   t t −10  (2)
 ct ,t −10   2 

Observing Fig. 5.9 we were able to better understand the long-run

trend and put the evolution of the contribution of the nitrate period in
a global perspective. Firstly, since the incorporation of saltpeter areas,
the contribution of exports to economic growth increased at a faster
rate than before. It is interesting to note that this indicator was falling
before 1880, which leads us to assume that the nitrate period was, at
least at the beginning, an opportunity to regain the levels observed
around 1870, when the export cycle of wheat and copper ended.
40
35
30
25
20
15
10
0
1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940
–5
–10
Direct contribution to economic growth
Fig. 5.9 Direct contribution to economic growth, 1830–1945 (as a percentage of

GDP). Source: Own elaboration. To avoid any bias due to atypical levels, the series
were smoothed with the Hodrick-Prescott filter
Secondly, there was an increase in the contribution that reaches a peak

toward 1890, bordering 35% and then returning to a range around
20%. The turning point of the century and the years before World War
I already showed the exhaustion of the export boost. Finally, the contri-
bution decreased from the early 1920s and collapsed during the Great
Depression.
In summary, between 1880 and 1920 the contribution of the exports
to the Chilean economic growth surpassed levels of 20% and was signifi-
cant in the initial nitrate period, between 1880 and 1900. This figure is
in line with those who emphasize the contribution of the export-led
model boosted by saltpeter to the Chilean economic performance.
However, these figures also warn us that this contribution experienced
stronger fluctuations over time and was not necessarily assured.
Considering this, which were the mechanisms of transmission? We want
to answer this question in the following sections.
Return Value
There are other indicators that already showed the significance of the
return value of the nitrate cycle. On the one hand, according to Sunkel
(2011) fiscal revenues were substantial. On the other hand, there was a
huge direct investment20 that led to the implementation of nitrate oficinas
during the mining cycles. One should also consider the share of produc-
tion costs that remained in the country (wages, inputs, etc.), the boost in
demand for other areas of the country21 and, lastly, the external benefits
(which could be ruled out because the ownership of most of the compa-
nies was foreign and there were no major technological changes in the
period).
After the Pacific War and the occupation of the nitrate zone, the gov-
ernment of Chile applied a fixed tax system that remained almost
unchanged for 50 years. Since 1880 the metric quintal of exported salt-
peter had to pay the equivalent of 1.6 pesos, while the iodine would pay
0.6 pesos (at a constant exchange rate of 38 pence per 1 peso). In 1897,
the tax changed to 3.38 pesos per metric quintal yard of exported saltpe-
ter, and the one for iodine was set at 1.27 pesos (now at a constant
exchange rate of 18 pence per 1 peso).22 Fiscal income from saltpeter
amounted to about 60% of total State’s fiscal revenues between the end
of the nineteenth century and World War I. It is also true that the avail-
ability of such resources led to the elimination of other taxes and the
delay in the modernization of the tax system.23
Figure 5.10 presents a first estimate of the return value of nitrate
exports expressed as a percentage of nitrate exports valued at the London
price. In this case, the sum of the two components is considered as a
proxy for return value: costs per ton exported multiplied by the nitrate
production (a measure of payment to local productive factors) and duties
paid to the total nitrate export tax (a measure of direct taxes).24
Figure 5.10 shows that until the beginning of the twentieth century,
the return value of nitrate exports was around 60% of the exported value.
Considering the whole period, 1880–1924, on average taxes accounted
for 25% of the exported value and costs about 37% of it. The maximum
value observed in 1918–1919 corresponded to an atypical increase in
production costs, related to the end of World War I.25 Nevertheless, we
90
80
70
60
Percentage
50
40
30
20
10
0
1880 1890 1900 1910 1920
Tax Cost
Fig. 5.10 Cost and tax, 1880–1923 (percentage share over Saltpeter exports).
Source: own elaboration based on Reynolds (1965)
should be cautious. On the one hand, we have not corrected for indirect
taxes or for the payment of import duties. In that sense, our figures
underestimate the actual value of return. On the other hand, our indica-
tor may be overestimating the return value because it does not discount
the payment of imported inputs.26
However, even with the warnings abovementioned, the calculations
presented seem to be quite robust. Firstly, because if we only consider the
tax paid for saltpeter exports, this magnitude reaches on average one
quarter of the value exported, and this is a lower threshold. Second,
because even discarding payments to imported inputs, the fraction of
costs for domestic inputs would remain relevant. To illustrate this last
point, we rely on the decomposition of production costs reported by
Semper and Michels (1908). In their analysis, wages and salaries accounted
for 25% of the cost of making saltpeter, even before shipping the prod-
uct. The difference (75%) corresponded to payments for materials and
included mule maintenance (1%), supplies for repairmen’s equipment
(10%) and coal consumption (64%). The authors mentioned that coal
came almost exclusively from England and Australia.27 If we assumed the
value of 64% as a reference of imported inputs, a clear overestimation of
the real figures, the cost of producing saltpeter net of imported inputs
would be on average equal to 13% of the export value. When you add
taxes, the average estimated return value is 38%.28
But, if we assume a threshold between 38 and 60% for the nitrate
return value, what is the magnitude of this value in international compari-
sons? It was so high when comparing it with other periods and different
mining cycles related to other products: the net value of copper return in
Chile in 1959 was around 32%.29 However, when we compare it with
other Latin American experiences, even considering the existence of some
methodological differences, our value of return would be placed within
the lower range. For example, in the case of Mexico, the return obtained
were around 77% in 1909 and 65% in 1926,30 while for Argentina, recent
research showed average figures around 82% for the same period.31
xport’s Purchasing Power and Import Capacity

E
(and Use)
One of the key points in an analysis of the impact of export cycles on the
economy as a whole is the behavior of exports, their prices and hence the
export’s purchasing power (exports at current prices/index of import
prices). In our period of study, as we have already indicated, the evolution
of export prices follows a U-shaped trend. A long fall in export prices
between 1870 and 1895, which was followed by a significant recovery
that lasted throughout the 1910s and 1920s, with a strong growth during
World War I. The nitrate cycle was behind this pattern and was also
responsible for the collapse observed during the Great Depression. On
the contrary, import prices showed a decreasing trend, similar to that
observed in export prices, but without showing any signs of recovery
until the arrival of 1910, when the fall stops. From then until the end of
the period, we observe a clear stagnation.
In this sense, it seems clear that the export cycle associated with the
nitrate cycle had a positive impact on prices. The growth in saltpeter
500
450
400
350
300
250
200
150
100
50
0
1870 1880 1890 1900 1910 1920 1930
Export purchase power 1900=100
Fig. 5.11 Export’s purchasing power, 1870–1930 (1900 = 100). Source: Díaz et al.
(2016)
prices, combined with the drop in import prices, at least until World War
I, significantly improved the purchasing power. The exception of this ten-
dency was the crisis of 1920, associated with the end of World War I and
the disruptions on the global markets. This is confirmed by the exports’
purchasing power figures (see Fig. 5.11). We observe the highest improve-
ment of this magnitude since the mid-1890s, and even earlier, as a result
of the expansion of aggregate exports and the strong downward trend in
import prices.
External Economies and Investments
This section explores an external dimension of the impact of nitrate

exports, namely, the impact of the construction of some infrastructures
and the diffusion of other activities that were originally intended to
respond to the demand of the nitrate sector, but that, once installed, had
positive effects on other sectors of the economy. Some examples of this
were some transport network infrastructures such as the railroads. The

main railway company in the saltpeter area was the Nitrate Railways Co.
Ltd., known as Ferrocarril Salitrero, which operated as a monopoly for
almost a decade.32 Once competition was introduced in this market, the
cost of transport from the office to the port fell from values ranging from
35 to 40% of the price of the product at the port, to 15%.33
However, we could assume that the external economies derived from
the construction of railways were not significant. Firstly, the saltpeter
deposits were in the north of Chile, an arid and inhospitable area, and
although the distance between offices and ports was small, the route had
a steep slope (the return to the oficina meant an increased fuel consump-
tion). Secondly, the area had a low population density. The branches car-
ried the nitrate production from the oficinas to the nearby ports of
Pisagua, Caleta Junín, Caleta Buena, Tocopilla, Mejillones, Antofagasta
or Taltal. On the way back, trains loaded only 65% of their total capacity
with both inputs for the processing of caliche (coal, oil, etc.) and provi-
sions for workers and their families.34 Then, except for the Antofagasta
Railroad to Bolivia, all the nitrate railways had a near-total dependence
on nitrates, and when the activity was reduced in the 1920s, the traffic of
these trains and the profitability of the companies declined
significantly.35
Another relevant external economy expected, related to transport
infrastructure, was that of ports. By its location, Chile is a country whose
Pacific Ocean coast has an extension of more than 8000 kilometers, with
several ports operating since the beginning of the Republic. However, as
Guajardo (2007) points out, these ports did not have enough infrastruc-
ture for a good connection to the international markets. In the nitrate
zone, the location of piers was scattered and without breakwaters. As an
example, the best dock in Iquique, the most important port for nitrate
exports, had a depth of only 6 meters. The saltpeter was shipped by
boats and workers and on average ships took a month to complete their
load.36 The rudimentary technology of the Chilean port system did not
necessarily inhibit external economies in this area, though it diminished
its capacity to stimulate export diversification. The high and persistent
concentration of Chilean exports around saltpeter was only a result of
this aspect.
A third aspect in which the realization of external economies was

expected was through the configuration of a modern financial sector, and
a strong commercial sector for both the international and the domestic
market. Although banks were located mainly in Santiago and Valparaiso,
at the beginning of the twentieth century, there was a banking network
that covered all the country, from Tacna to Punta Arenas. However, pro-
vincial banks were particularly weak in obtaining a critical portfolio of
profitable clients and their services were small, being basically reduced to
representatives of the bigger matrices.37
Regarding commercial distribution, although in the ports of the salt-
peter area there was some incentive to install small shops, in the oficinas
the distribution corresponded to each administration under monopoly.
In practice, between 1880 and 1920 the payment of wages was not made
with legal tender, but rather with salary tokens, units that allowed work-
ers to purchase goods solely in the office store (pulpería).38 This situation
was one of the triggers of social conflicts in saltpeter oficinas, especially
at the beginning of the twentieth century.39 In summary, the available
evidence does not allow us to argue that nitrate exports would have
stimulated significant external economies, at least not in the northern
regions of the country.
Forward and Backward Linkages
We understand by linkages those mechanisms of transmission from the

external sector to other sectors of the economy. Following Hirschman
(1977), there are two types of linkages: backward linkages, which arise
from the expansion of the demand from the external sector to the rest of
the economy, and forward linkages that are related to the creation of
value in exports.
The nitrate cycle, due to its long temporal duration, its extremely high
spatial concentration and its enormous economic impact, generated sig-
nificant backward and forward linkages (as we have seen, more than two-
thirds of the Chilean exports and more than half of public revenues).
Despite this remarkable impact, the Chilean economy was not able to lay
down the bases of a sustained growth as other sectors could not take
advantage of this push and did not become the new engines of economic
growth. One of the reasons behind that could be found in the difficulties
that the industry faced in becoming a dynamic and strong sector on
which the Chilean economy could establish a solid economic base in the
context of a loss of competitiveness in the nitrate sector. Therefore, it is
important to understand in more detail the intensity and depth of the
linkages that appeared during this period, both forward and backward.
Cariola Sutter and Sunkel (1983) point out the importance of the
expansion of aggregate demand in the northern regions of the country,
related to the nitrate cycle, due to the rise in nominal wages and the spa-
tial concentration of this demand. This led to a significant expansion of
demand for nondurable consumer goods, boosting manufacturing pro-
duction in the same region and in other regions of the country that had
some manufacturing tradition and could respond with an expansion of
their production, mainly textiles, foods and beverages.40 When we com-
pare this period with the cycles of copper and coal, we observe that they
were unable to generate an impact of the same magnitude. In the case of
the copper cycle, it was more capital intensive and with much lower labor
requirements which, even though they had higher wages than the rest of
the sectors, did not have a comparable aggregate impact on demand. In
addition, this mining cycle was much more spatially dispersed. The coal
cycle, although it was highly spatially concentrated, was not capable of
generating linkages on the demand side due to relatively low wages and
its short duration.41
The evolution of the Chilean industry during the early twentieth cen-
tury is still under debate. On the one hand, we find authors with a pes-
simistic view of the process, who defend that manufacturing production
was closely linked to the economic cycle, and especially to the evolution
of the aggregate demand which, at the same time, was linked to the
export cycle, at least until the Great Depression.42 On the other hand,
there is a more optimistic vision defended by Palma (1979, 1984). He
posits the existence of a positive dynamic of the modern sectors of the
industry, starting in World War I.43 Between them, we find an intermedi-
ate view, which detects a certain manufacturing diversification, which did
not become intense enough to pull the whole economy. The result was a
progressive loss in industrial competitiveness. This conclusion comes
after observing a certain substitution of imports in nondurable and semi-

durable goods, compared to the stability observed in other sectors.44 In
this sense, we would point out the existence of certain backward linkages,
connected to the expansion of demand and the responsiveness of domes-
tic production to the emergence of these stimuli (see Fig. 5.12).
Although this argument coincides with the one raised by Palma (1979),
it is also true that the growth rates observed in the industry were not
enough to promote sustained economic growth.45 In addition, there is
another source of discrepancy between these two approaches due to the
existing differences in the aggregation methodology used when compar-
ing sectors. A more refined aggregation based on the import data offered
by Díaz and Wagner (2004) shows a clear stagnation in the substitution
of imports of intermediate goods. Moreover, those sectors that show sig-
nificant declines in imports were precisely those in which there were
lower levels of transformation. This is because, although there were very
35
30
25
20
15
10
0
1882 1892 1902 1912 1922 1932 1942
Imports (consumer goods) Share Imports (capital goods) Share
Imports (intermediate goods) Share
Fig. 5.12 Imports by type of goods, 1882–1950 (as a %). Source: Badia-Miró and
Ducoing (2015)
intense backward linkages related to the expansion of demand, there were

no forward linkages because the transformation requirements associated
with the saltpeter cycle were scarce (and other linkages and infrastructure
investments were also small).
Similar results are observed when analyzing the evolution of the sub-
stitution of intermediate goods during this time. It seems that all the
observed figures would indicate that this process was slow and short-
lived. Although this would change with copper, the intensity, a higher
spatial dispersion, external technology needs and capital requirements
also reduced the extent of forward linkages.
Balance
Since 1880 the development of the Chilean economy was strongly associ-
ated with the export performance of the saltpeter sector. This chapter
examined the general effects of nitrate exports on the Chilean economy
between 1880 and 1930, using a new set of series, measurements and
other studies carried out. Our main conclusion is that the impact of
nitrate export was very significant according to many factors.
Between 1880 and 1920 the direct contribution of exports to eco-
nomic growth exceeded 20%. This contribution was particularly intense
at the beginning of the nitrate cycle, between 1880 and 1900. But, in
what way did nitrate performance affect the Chilean economy?
Specifically, through two mechanisms: the purchasing power of exports
and the existence of forward and backward linkages. In the case of the
purchasing power of exports, this indicator improved significantly, espe-
cially since the mid-1890s, because of both the expansion of aggregate
exports and the downward trend in import prices. At the same time,
regarding linkages, we can affirm the existence of backward linkages,
related to the expansion of aggregate demand in the mining zone that
boosted the manufacture of nondurable consumer goods in the same
region and in zones which were able to respond to this expansion.
However, there were two other transmission mechanisms that do not
seem to have worked well during the nitrate cycle. The first was the return
value. In examining the value of return of the nitrate cycle, we find that,
although we observe a high level, this figure did not seem relevant from a
Latin American perspective. The second mechanism which failed was the
external economies. The available evidence does not support the view
that nitrate exports could have stimulated significant external economies
since few infrastructures were developed and a large part of the ones that
were developed had a small impact in the economy after the end of the
mining cycles (longitudinal railways linking sparsely populated areas and
backward ports). Neither the finance nor the distribution sector was
developed and modernized, at least not in any area directly associated
with the mining activity.
This case study illustrates that the evaluation of economic performance
during the export cycle is a complex process. This is because the mecha-
nisms which provide dynamism can have contradictory effects and the
result is not clear. A proper approach requires an effort to clarify the scope
of such effects. For the Chilean case, it seems that positive effects over-
whelmed the negative effects during most of the age of exports.
Epilogue
In a long-term perspective, the nitrate cycle was central during the expan-
sion of the international market and provided opportunities for the
Chilean economy. A deeper analysis should consider two additional
aspects: the role of other relevant goods exported and the boost of foreign
trade beyond the mining cycle.
As we have indicated early in this chapter, between 1880 and 1930 the
main Chilean exports consisted of mining products, mainly saltpeter.
Despite the high dependence of fiscal revenues on nitrate, and the threat
caused by the development of potential substitutes (both issues discussed
by contemporaries), there were no major transformations in the sector
until the end of World War I.46
However, since the beginning of the twentieth century, another min-
ing product began to become relevant: copper. This product had been
exploited by Chilean entrepreneurs during the mid-nineteenth century
until the high-grade deposits were exhausted. The US-based firms lead
the new stage of copper exploitation based in low-grade deposits and

technology-intensive capitals after World War II.47
The share of copper exports, in any case, would not exceed those of
nitrate until the collapse of saltpeter exports during the Great Depression.
After World War I, the government made an effort to save nitrate by
improving its marketing in the world markets and modifying the tax
structure. However, these efforts failed. Only after World War II, during
the Cold War, did the discussion regarding the role played by copper
start.48
Regarding the performance of the Chilean foreign trade beyond the
nitrate cycle, the predominance of mining exports during the two centu-
ries of commerce is notorious, with a brief exception in the second half of
the twentieth century. Manufactures only expanded its exports at the end
of that century.
The evolution of import and export prices in the long term shows the
ups and downs of Chilean trade. On the one hand, there is a rebound in
export prices from the end of the nineteenth century, with the saltpeter
expansion, and a second period of price expansion with the boom of
natural resource prices around the turning point of the twenty-first cen-
tury (ended recently in 2007). Import prices followed a downward trend
which started in the mid-nineteenth century and lasted until World War
I, when prices became stagnant during the 1920s until the arrival of the
Great Depression. During World War I, prices also suffered a high
volatility.
The trajectories just mentioned can be seen more clearly when we ana-
lyze the real exchange ratio. The evolution of this relation allows us to
identify five periods in the long term: (i) a first period of stagnation, and
a certain decline, until 1890; (ii) a great expansion between the end of the
nineteenth century and the Great Depression (coinciding with the nitrate
cycle); (iii) a certain recovery during the years of ISI (between 1930 and
1970, after having suffered a great contraction with the Great Depression);
(iv) a new contraction and stagnation coinciding with the debt crisis and
the lost decade of the 1980s; and (v) from the turn of the century, a great
expansion with the arrival of the commodity price boom (copper in the
Chilean case) due to the soar of Asian demand.
Thus, in the long run, the performance of the Chilean economy can-
not be understood without analyzing the characteristics of its export sec-
tor. Additionally, due to its size, Chile has the challenge of taking
advantage of opportunities and facing the difficulties of a globalized
world.
Notes
1. A good Chilean policy history synthesis could be found in Collier and
Sater (2004), Sagredo (2014).
2. Butelmann, Cortes-Douglas, & Videla (1981).
3. Meller (1998).
4. Bermúdez (1963, 1984).
5. Ortiz (1985); Reyes (1971).
6. O’Brien (1982); Soto (1998); Vayssiere (1980).
7. Sicotte, Vizcarra, & Wandschneider (2009).
8. Fernández (1981, 2009); Monteón (1982).
9. Badia-Miró (2008); Badia-Miró & Ducoing (2015); Badia-Miró &
Yáñez (2015); Cariola Sutter & Sunkel (1983); Ortega Martínez &
Pinto Vallejos (1990).
10. Collier & Sater (2004).
11. The Shanks system was based in the heat dissolution of the caliche
obtaining saltpeter through phases of washing and clarification in ponds
Bermúdez (1987).
12. O’Brien (1982).
13. González Miranda (2013).
14. Fermandois (1997).
15. González Miranda, Calderón Gajardo, & Artaza Barrios (2016).
16. Badia-Miró & Díaz-Bahamonde (2017); Carreras-Marín & Badia-
Miró (2008); Llona Rodríguez (2012).
17. Something similar is observed in other Latin American countries as they
indicate (Coatsworth & Williamson, 2004).
18. Around the discussion of the “Dutch disease” in Chile, see Badia-Miró
& Ducoing (2015).
19. We want to observe the contribution to the GDP excluding the mining
sector. As we will observe, there are no major differences in the results.
To obtain GDP corrected, we have excluded the mining GDP without

the production in the mining sector.
20. Stone (1977).
21. Badia-Miró (2008, 2015); Badia-Miró & Yáñez (2015); Cariola Sutter
& Sunkel (1983).
22. Bermúdez (1987); Sater (1984).
23. Díaz & Wagner (2004); Gallo (2008); Miller & Greenhill (2006).
24. To avoid any bias due to atypical levels and to correct mismatches
between production and export, figures, we have considered 3-year mov-
ing averages.
25. Estimations consistent with the one provided by Reyes (1994) and
Fernández (2009).
26. Reynolds (1965).
27. Semper & Michels (1908, p. 87).
28. As we have said, this was mainly wages. We should consider that workers
engaged in nitrate exploitation were a minority in the labor force. As a
reference, between 1880 and 1930 the average number of workers
engaged in mining did not exceed 4% (figures by Díaz et al., 2016). The
value of 0.13 is obtained by multiplying 0.37 by 0.36, which in turn is
obtained by subtracting to 1 the value of 0.64.
29. Mamalakis & Reynolds (1965, p. 385).
30. Kuntz-Ficker (2017).
31. Kuntz-Ficker & Rayes (2017).
32. Alliende (1997); Thomson (1997).
33. Thomson (2008).
34. Thomson (2005).
35. Guajardo (2007); Thomson (2003).
36. Steenhuis (2007).
37. Ross (2003, 2006).
38. Calvo (2009); Segall (1964).
39. González (2002); Pinto Vallejos (1998).
40. Badia-Miró (2008, 2015); Badia-Miró & Yáñez (2015).
41. This is confirmed by Badia-Miró (2008), Badia-Miró and Yáñez (2015)
when the natural resources endowments were not significant until the
copper cycle.
42. Kirsch (1977); Muñoz Gomá (1968).
43. Palma (1979, 1984).
44. Badia-Miró & Ducoing (2015).
45. Confirmed by the estimates of industrial GDP did by Ducoing and
Badia-Miró (2013).
46. Reyes (1990).
47. Sutulov (1975).
48. Meller (1998, 2002).
References
Alliende, M. (1997). Historia del ferrocarril en Chile. Santiago de Chile, Chile:
Pehuen.
Badia-Miró, M. (2008). La localización de la actividad económica en Chile,
1890–1973. Su impacto de largo plazo. Ph.D. Thesis, Universitat de Barcelona,
Spain.
Badia-Miró, M. (2015). The evolution of the location of economic activity in
Chile in the long run: A paradox of extreme concentration in absence of
agglomeration economies. Estudios de Economía, 42(2), pp. 143–167.
Badia-Miró, M., Carreras-Marín, A., & Meissner, C. M. (2017). Geography,
policy, or productivity? Regional trade in five South American Countries,
1910–1950. The Economic History Review. doi:10.3386/w20790
Badia-Miró, M., Carreras-Marín, A., & Rayes, A. (2016). La diversificación del
comercio de exportación latinoamericano, 1870–1913. Los casos de
Argentina, Chile y Perú. In M. A. Lopes & M. C. Zuleta (Eds.), Mercados en
común. Estudios sobre conexiones transnacionales, negocios y diplomacia en las
Américas (siglos XIX y XX). México, DF: El Colegio de México.
Badia-Miró, M., & Díaz-Bahamonde, J. (2017). Chilean trade and saltpetre,
1880–1930: Sources of information for the age of exports. Mimeo.
Badia-Miró, M., & Ducoing, C. (2015). The long run development of Chile
and the Natural Resources curse. Linkages, Policy and Growth 1850–1950.
In M. Badia-Miró, V. Pinilla, & H. Willebald (Eds.), Natural resources and
economic growth: Learning from history. London: Routledge.
Badia-Miró, M., & Yáñez, C. (2015). Localization of industry in Chile,
1895–1967: Mining cycles and state policy. Australian Economic History
Review, 55(3), pp. 256–276.
Bermúdez, O. (1963). Historia del salitre: desde sus orígenes hasta la Guerra del
Pacífico. Santiago de Chile, Chile: Universidad de Chile.
Bermúdez, O. (1984). Historia del salitre: desde la Guerra del Pacífico hasta la
Revolución de 1891. Santiago de Chile, Chile: Pampa Desnuda.
Bermúdez, O. (1987). Breve historia del salitre. Síntesis histórica desde sus orígenes
hasta mediados del siglo XX. Santiago de Chile, Chile: Pampa Desnuda.
Bulmer-Thomas, V. (2003). The economic history of Latin America since indepen-
dence. Cambridge, MA: Cambridge University Press.
Butelmann, A., Cortes-Douglas, H., & Videla, P. (1981). Proteccionismo en

Chile: Una visión retrospectiva. Cuadernos de Economía, 18(54), pp. 141–194.
Calvo, M. (2009). Dinero no veían, solo fichas. El pago de salarios en las salitre-
ras de Chile hasta 1925. De Re Metallica, 12, pp. 9–30.
Cariola Sutter, C., & Sunkel, O. (1983). Un siglo de historia económica de Chile
1830–1930: dos ensayos y una bibliografía. Madrid: Cultura Hispánica.
Carreras-Marín, A., & Badia-Miró, M. (2008). La fiabilidad de la asignación
geográfica en las estadísticas de comercio exterior: América Latina y el Caribe
(1908–1930). Revista de Historia Económica, 26(3), pp. 355–373.
Carreras-Marín, A., Badia-Miró, M., & Peres Cajías, J. (2013). Intraregional
trade in South America, 1912–1950: The cases of Argentina, Bolivia, Brazil,
Chile and Peru. Economic History of Developing Regions, 28(2), pp. 1–26.
Coatsworth, J. H., & Williamson, J. G. (2004). Always protectionist? Latin
American tariffs from independence to Great Depression. Journal of Latin
American Studies, 36(2), pp. 205–232.
Collier, S., & Sater, W. F. (2004). A history of Chile, 1808–2002. Cambridge,
MA: Cambridge University Press.
Cuevas, J. (1901). Resumen de la Hacienda Pública de Chile desde la Independencia
hasta 1900. Santiago de Chile, Chile: Dirección General de Contabilidad.
DGECH. (1933). Sinopsis geográfico-estadística de la República de Chile 1933.
Santiago de Chile, Chile: Soc. Imp. y Lit. Universo.
Díaz, J., Lüders, R. J., & Wagner, G. (2016). Chile, 1810–2010. La república en
cifras. Historical statistics. Santiago de Chile, Chile: Ediciones Universidad
Católica de Chile. Retrieved from http://cliolab.economia.uc.cl/BD.html
Díaz, J., & Wagner, G. (2004). Política comercial: Instrumentos y antecedentes.
Chile en los siglos XIX y XX. PUC Economics Institute Working Paper, 223.
Ducoing, C., & Badia-Miró, M. (2013). El PIB industrial de Chile durante el
ciclo del salitre, 1880–1938. Revista Uruguaya de Historia Económica, III(3),
pp. 11–32.
ECLAC. (1951). Economic survey of Latin America, 1949. Santiago de Chile,
Chile: United Nations. Department of Economic Affairs. Secretariat of the
Economic Commission for Latin America.
Fermandois, J. (1997). Abismo y cimiento. Gustavo Ross y las relaciones entre Chile
y Estados Unidos. Santiago de Chile, Chile: Ediciones Universidad Católica de
Chile.
Fernández, M. (1981). El enclave salitrero y la economía chilena, 1880–1914.
Nueva Historia, 1(3), pp. 2–42.
Fernández, M. (2009). La coyuntura económica durante la huelga de la Escuela
Santa María. In M. Fernández (Ed.), A cien años de Santa María de Iquique
(pp. 315–335). Santiago de Chile, Chile: Lom.
Gallo, C. (2008). Tax bargaining and nitrate exports: Chile 1880–1930. In

D. A. Bräutigam, O. Fjeldstad, & M. Moore (Eds.), Taxation and state-
building in developing countries (pp. 160–182). Cambridge, MA: Cambridge
University Press.
González, S. (2002). Hombres y mujeres de la pampa: Tarapacá en el ciclo de
expansión del salitre. Santiago de Chile, Chile: Centro de Investigaciones
Diego Barros Arana—DIBAM.
González Miranda, S. (2013). Las combinaciones salitreras: el surgimiento del
empresariado del nitrato en Chile (1884–1910). Diálogo Andino, 42,
pp. 41–56.
González Miranda, S., Calderón Gajardo, R., & Artaza Barrios, P. (2016). El fin
del ciclo de expansión del salitre en Chile: la inflexión de 1919 como crisis
estructural. Revista de Historia Industrial, 65(25), pp. 83–110.
Guajardo, G. (2007). Tecnología, Estado y ferrocarriles en Chile, 1850–1950.
México DF, México: Fundación de los Ferrocarriles Españoles—UNAM.
Hirschman, A. O. (1963). Journeys toward progress. Studies of economic policy
making in Latin America. New York, USA: Twentieth Century Fund.
Hirschman, A. O. (1977). Enfoque generalizado del desarrollo por medio de
enlaces, con referencia especial a los productos básicos. El Trimestre Económico,
XLIV(173), pp. 199–236.
Ibáñez, G. (1912). Recopilación de las disposiciones vigentes relativas a la conver-
sión y emisión de billetes, a la acuñación de monedas y a los bancos. Santiago de
Chile, Chile: Imprenta Universitaria.
Kirsch, H. W. (1977). Industrial development in a traditional society. The conflict
of entrepreneurship and modernization in Chile. Gainesville, FL: The University
Press of Florida.
liberal, 1870–1930. México DF, México: El Colegio de México.
Kuntz-Ficker, S. (2014). The contribution of exports to the Mexican economy
during the first globalisation (1870–1929). Australian Economic History
Review, 54(2), pp. 95–119.
Kuntz-Ficker, S. (2017). México en la era de las exportaciones: Auge exportador,
modernización económica e industrialización. In S. Kuntz-Ficker (Ed.), The
first export era revisited. London: Palgrave.
Kuntz-Ficker, S., & Rayes, A. (2017). La contribución de las exportaciones
argentinas a la economía, 1875–1929. In S. Kuntz-Ficker (Ed.), The first
export era revisited. London: Palgrave.
Llona-Rodríguez, A. (2012). On the accuracy of Chilean foreign trade statistics
during the nitrate boom: 1870–1935. Mimeo.
Mamalakis, M., & Reynolds, C. (1965). Essays on the Chilean economy.

Homewood: Richard Irwin, Inc.
Matus, M. (2012). Crecimiento sin desarrollo. Precios y salarios reales durante el
ciclo salitrero en Chile (1880–1930). Santiago de Chile, Chile: Universitaria.
Meller, P. (1998). Un siglo de economía política chilena (1890–1990). Santiago de
Chile, Chile: Andrés Bello.
Meller, P. (2002). Dilemas y debates en torno al cobre. Santiago de Chile, Chile:
Dolmen.
Miller, R., & Greenhill, R. (2006). The fertilizer commodity chains: Guano and
intrate, 1840–1930. In S. Topik, C. Marichal, & Z. Frank (Eds.), From silver
to cocaine: Latin American commodity chains and the building of the world
economy, 1500–2000. Durham, NC: Duke University Press.
Ministerio de Hacienda. (1925). Antecedentes sobre la industria salitrera. Santiago
de Chile, Chile: Soc. Imp. y Lit. Universo.
Ministerio de Hacienda. (1934). La industria del salitre de Chile. Santiago de
Chile, Chile: Soc. Imp. y Lit. Universo.
Monteón, M. (1982). Chile in the nitrate era. The evolution of economic depen-
dence, 1880–1930. Wisconsin, USA: The University of Wisconsin Press.
Muñoz Gomá, Ó. (1968). Crecimiento industrial de Chile: 1914–1965. Santiago
de Chile, Chile: Instituto de Economía y Planificación.
O’Brien, T. (1982). The nitrate industry and Chile’s crucial transition: 1870–1891.
New York, USA: New York University Press.
Ortega Martínez, L., & Pinto Vallejos, J. (1990). Expansión minera y desarrollo
industrial: un caso de crecimiento asociado (Chile 1850–1914). Santiago de
Chile, Chile: U. de Santiago, Departamento de Historia.
Ortiz, F. (1985). El movimeitno obrero en Chile (1891-1919). Antecedentes.
Madrid, Spain: Ediciones Michay.
Palma, J. G. (1979). Growth and structure of Chilean manufacturing industry
from 1830 to 1935. Ph.D. Thesis, University of Oxford, UK.
Palma, J. G. (1984). Chile 1914–1935: De economía exportadora a sustitutiva
de importaciones. Colección de Estudios Del CIEPLAN, 12(81), pp. 61–88.
Pinto, A. (1959). Chile, un caso de desarrollo frustrado. Santiago de Chile, Chile:
Universitaria.
Pinto Vallejos, J. (1998). Trabajos y rebeldías en la pampa salitrera: el ciclo del
salitre y la reconfiguración de las identidades populares (1850–1900). Santiago
de Chile, Chile: Editorial Universidad de Santiago.
Reyes, E. (1971). El desarrollo del ciclo salitrero y su influencia en el desen-
volvimiento de la conciencia proletaria en Chile (Postguerra del Pacífico—
crisis capitalista de 1929). Boletín de La Universidad de Chile, 114, pp. 15–28.
Reyes, E. (1990). Alejandro Bertrand y algunos de los principales problemas de

la industria salitrera en su paso al siglo XX. Camanchaca, 12(13), pp. 47–74.
Reyes, E. (1994). Salitre de Chile. Apertura, inversión y mercado mundial,
1880–1925. Santiago de Chile, Chile: Universidad Católica Blas Cañas.
Reynolds, C. (1965). Development problems of an export economy. The case of
Chile and copper. In M. Mamalakis & C. Reynolds (Eds.), Essays on the
Chilean economy (pp. 201–398). Homewood, USA: Richard D. Irwin Inc..
Ross, C. (2003). Poder, mercado y estado. Los bancos de Chile en el siglo XIX.
Santiago de Chile, Chile: Lom.
Ross, C. (2006). Chile 1860–1895: El impacto del sector bancario en los secto-
res productivos. América Latina En La Historia Económica, 25, pp. 73–93.
Sagredo, R. (2014). Historia mínima de Chile. México DF, México: El Colegio
de México.
Sater, W. F. (1984). El financiamiento de la Guerra del Pacífico. Nueva Historia,
3(12), pp. 237–273.
Segall, M. (1964). Biografía social de la ficha salario. Revista Mapocho2–35.,
2(2), pp. 2–35.
Semper, E., & Michels, W. (1908). La industria del salitre en Chile. Santiago de
Chile, Chile: Imprenta, Litografía i Encuadernación Barcelona.
Sicotte, R., Vizcarra, C., & Wandschneider, K. (2009). The fiscal impact of the
War of the Pacific. Cliometrica, 3(2), pp. 97–121.
Soto, A. (1998). Influencia británica en el salitre: origen, naturaleza y decadencia.
Santiago de Chile, Chile: Universidad de Santiago de Chile—Lom.
Steenhuis, A. (2007). La travesía del salitre chileno. De la pampa a la tierra holan-
desa. Santiago de Chile, Chile: Lom.
Stone, I. (1977). British direct and portfolio investment in Latin America before
1914. The Journal of Economic History, 37(3), pp. 690–722.
Sunkel, O. (2011). El presente como historia: dos siglos de cambio y frustración en
Chile. Santiago de Chile, Chile: Catalonia.
Sutulov, A. (1975). El cobre chileno. Santiago de Chile, Chile: Corporación del
Cobre.
Thomson, I. (1997). Historia del ferrocarril en Chile. Santiago de Chile, Chile:
Dibam.
Thomson, I. (2003). Red Norte: la historia de los ferrocarriles del norte chileno.
Santiago de Chile, Chile: Instituto de Ingenieros de Chile.
Thomson, I. (2005). The Nitrate Railways Co. Ltd.: La pérdida de sus derechos
exclusivos en el mercado del transporte de salitre y su respuesta a ella. Historia,
38, pp. 85–112.
Thomson, I. (2008). La competencia entre la carretera y el ferrocarril en Chile: una

perspectiva histórica. Santiago de Chile, Chile: Ferronor.
Vayssiere, P. (1980). Un siècle de capitalisme minier au Chili, 1830–1930. París,
France: CNRS.
Vera, M. (1964). Una política definitiva para nuestras riquezas básicas. Santiago
de Chile, Chile: Prensa Latinoamericana.
Marc Badia-Miró is a tenured Assistant Professor in Economic History at the

University of Barcelona, Spain. His research has been focused in Latin American
economic geography in the long run and in Latin American trade before World
War II. He has published some peer-reviewed articles in Economic History
Review, European Economic History Review, Revista de Historia Económica,
Australian Economic History Review, Business History and Economic History of
Developing Regions. He is the coeditor of the book Natural Resources and Economic
Growth: Learning from History, published by Routledge Explorations in
Economic History. Personal website: http://www.ub.edu/histeco/cat/badia.htm
José Díaz-Bahamonde is Lecturer and Researcher in Economic History at

Instituto de Economía and Economic History and Cliometrics Lab, Pontificia
Universidad Católica de Chile. His research has been focused in Chilean and
Latin American economic development in the long run. He has recently pub-
lished the book Chile 1810–2010. La República en Cifras. Historical Statistics
(with Gert Wagner and Rolf Lüders). He is member of the editorial board of
RHE—Journal of Iberian and Latin American Economic History. Personal web-
site: http://economia.uc.cl/profesor/jose-diaz/
–
6
Exports and Economic Development
in Colombia: A Regional Perspective,
1830–1929
José Antonio Ocampo
and Santiago Colmenares Guerra
Introduction
During the second half of the nineteenth century and the beginning of
the twentieth century, the countries of Latin America experienced a pro-
cess of growth based on commodity exports, implementing a develop-
ment model that was characterized by structuralism and dependency
theory as outward looking development. The depth of this model varied,
however, throughout the subcontinent; while some countries, such as
those in the Southern Cone or Cuba, were able to create highly dynamic
exporting economies, other countries, such as the Andean states (with the
exception of Chile) or Central America, had a slower or less successful
J.A. Ocampo (*)

Columbia University, New York, NY, USA
S. Colmenares Guerra
University of Barcelona, Barcelona, Spain

192 J.A. Ocampo and S. Colmenares Guerra
export development. Within this context, Colombia was among the

countries that experienced relatively slow export growth in the second
half of the nineteenth century, which became very dynamic in the first
decades of the twentieth century.
In the Colombian economic historiography, one can find different
positions regarding the liberal reforms of the mid-nineteenth century,
which can be considered as the starting point of this process. The more
traditional interpretations tended to hold a pessimistic view on the liberal
period, based on the negative effects of increased imports on domestic
artisanal production. Thus, for example, Nieto Arteta (1973, p. 243)
characterizes this period as one of “full and total free trade and, conse-
quently, crisis and disappearance of the manufactures of eastern
Colombia” (own translation). Although hardly conclusive in his position,
Ospina Vásquez (1979, pp. 274–275) also suggests that the path that the
country followed after the liberal reforms was not necessarily the only
fruitful road to economic development. McGreevey (1982 [1971]), for
his part, argues that although the period that began with liberal reforms
was one of growth, its benefits were highly concentrated.
In more recent historiography, on the contrary, and especially follow-
ing research by Ocampo (1984), the third quarter of the nineteenth cen-
tury tends to be considered as the period of strongest economic growth
during the first century of national history. According to Ocampo (1984),
under the conditions of nineteenth-century Colombia, the development
of the exporting sector was the only path to build a broad mercantile
economy. Only it would break with the dynamics of an endless number
of isolated local economies, characterized by a very narrow market and a
strong rigidity of the labor and land markets (in spite of the abolition of
slavery and the dissolution of indigenous resguardos in much of the coun-
try during the mid-nineteenth century). Recently, Kalmanovitz and
Lopez (2009) have confirmed the relatively better performance of the
country during the liberal period, based on a rough estimate of GDP per
capita throughout the nineteenth century.
In contrast to these debates regarding the nineteenth century, there is
general agreement that the coffee boom of the early twentieth century
represented a definite takeoff of economic development in Colombia.
Not only did it generate strong export growth but also helped build the
6 Exports and Economic Development in Colombia: A Regional... 193
beginnings of modern infrastructure and industrial development, which

in the latter case sped up during the Great Depression of the 1930s.
The purpose of this essay is to take stock of the current state of our
knowledge regarding Colombia’s export development during the nine-
teenth and early twentieth centuries. The text is divided into five sections,
the first of which is this introduction. The second presents some ideas
about the export sector, in light of the prevailing agricultural structures in
the country. In the third, the main foreign trade series of the Colombian
economy during the period in question are discussed. The fourth section
analyzes the impact of agro-export from the point of view of regional
development, based on the cases of tobacco and coffee. The last section
presents an overall balance of the export age and, as an epilogue, some
considerations on the period that begins with the Great Depression.
egional Economy and Export Sector

R
in the Nineteenth Century
Throughout the nineteenth century, Colombia moved from having an
export sector that depended mostly on gold to one that exported mainly
agricultural (including forest) products. The production of gold and its
export was a direct legacy of the colonial period, which in the early repub-
lican years underwent a serious economic crisis in areas where such
production was based on slave labor. This crisis had begun at the end of
the colonial period but was accentuated by the disorder generated by the
war of independence (Tovar, 2015). Mining experienced a slow recovery
throughout the nineteenth century based on new mining sites in the
region of Tolima, the mid-Cauca river basin, and, above all, Antioquia,
where production had had a major expansion in the last century of the
colonial period. Nevertheless, different agricultural products began to
take over from gold as the link of the country with the global market,
especially toward the middle of the century, when it could be said that the
agro-export growth model was properly born.
When this model took off in the mid-nineteenth century, it belonged
to a country whose population was overwhelmingly rural but whose
characteristics varied according to the agrarian structure in each region.
The vast majority of the population was concentrated in the three Andean
mountain ranges and the plain of the Caribbean region, though in rela-
tively isolated subregions.1 The infrastructure of roads and transport
inherited from the colonial period was quite precarious, and the moun-
tainous and rugged geography of the Colombian Andes presented diffi-
culties for better interregional connections.2 Thus, if every agro-export
process is essentially a regional phenomenon, in Colombia this had par-
ticularly drastic connotations: its effects were usually confined to the
region that developed the agricultural product being exported. This is
particularly true of the second half of the nineteenth century, as the cof-
fee expansion of the early twentieth century did begin to have national
impacts. From the start of the agro-export era, most of the transport
infrastructure that was created had the objective of connecting the pro-
duction zones of exportable goods with the ports of the country. For
example, the introduction of steam navigation along the Magdalena
River was associated with the development of the export of tobacco pro-
duced in the region of Ambalema in the center of the country. Although
this continued to be true during the era of coffee exports of the early
twentieth century, at the end of this expansion it can be said that the
foundations of a national transport network were laid down.
The peasant population of Colombia in the nineteenth century was
linked to agricultural production in four main ways. The first one con-
sisted of peasants (agregados) permanently working and living in h aciendas
that existed since the colonial period, or haciendas created during the
republican period, stemming from the policy that conceded the nation’s
vacant lands. In this respect, there was a great variety of arrangements
between the landowners and the peasants, which included concertaje,3
sharecropping, and debt peonage. A second group was granted access to
the land by renting from the large landowners. The distinction between
this type of arrangement and the previous one was not very clear, for the
lease of the land could sometimes include the imposition of certain obli-
gations on the peasants, such as personal labor in the hacienda, payment
of rent in kind, and mandatory sale of surplus production to the land-
lord, among others. Thirdly, after the process of the dissolution of the
indigenous resguardos which was introduced during the Bourbon reforms
and was extended with the liberal reforms of the mid-nineteenth century,
some indigenous and mestizo independent peasant populations emerged
in Boyacá, Cundinamarca, and Nariño. In other areas, such as Antioquia
and North and South Santander, populations of farmers, miners (in
Antioquia), and artisans (in some regions of South Santander) existed
from the colonial period. And in fourth and last place, there was a large
portion of farming families who obtained access to their land through the
colonization of new areas located in the agricultural frontier. These new
areas were available thanks to the opening of the nation’s vacant lands or
lands that had been awarded long ago to large landowners who had not
formally taken possession of the land and exploited it.
In this latter case, conflicts between colonial settlers and major land-
owners often arose, given the lack of clarity regarding the boundaries of
large estates. This was also due to the higher value that the land acquired
in areas of colonization, which aroused the interests of landowners and
gamonales,4 or because of the opportunities they offered for agro-export
development, as LeGrand (1980) argues. Although various legislative
provisions tended to protect the rights of settlers since 1870, the truth is
that in most cases the alliance between landowners, local officials, and
public forces represented a coalition that was too powerful. So much so
that the nineteenth century consolidated in Colombia an agrarian struc-
ture characterized by large estates coexisting with a diversity of smaller
peasant properties (minifundios). An important exception was in the
southern colonization regions of Antioquia, in what became the central
coffee zone of Colombia in the early twentieth century. Here conflicts led
to certain parts of old land concessions being broken up and handed over
as small- and medium-sized properties, in what can perhaps be consid-
ered as a first agrarian reform (which, as all the ones that Colombia
enacted subsequently, was regional and limited in scope).
Given this basis of relatively isolated regions, each with different histo-
ries regarding their processes of settlement and agrarian structures and,
therefore, their forms of socioeconomic stratification, different export
cycles succeeded one another during the nineteenth century. Each one of
these cycles was linked to one or two specific products, produced in a
specific region. On the demand side, a critical factor was the emergence
of a major imbalance in the European markets for that good, which

increased the price of the product in question, thus creating the opportu-
nity of attractive profits without the need for large investments.
On the supply side, the production of exportable goods took place in
the regions that had the natural conditions or the necessary resources for
that purpose. Furthermore, this occurred in areas not very far from towns
or cities where there was a merchant class, landowners, or entrepreneurs
with enough capital to organize the production and marketing of the
product. Once an interest would arise in starting an export endeavor by
a handful of entrepreneurs or “speculators” (as they were often called),
production was organized in such a way that the productive system and
the regime for labor control were adapted to the prevailing conditions in
the region while also attracting a flow of labor from surrounding areas.
The emergence of an agro-export activity in some region did not depend,
therefore, on the existence of a specific type of agrarian structure or pro-
duction relations. Instead, there were various exporting cycles based on
different land tenure and labor control regimes throughout the second
half of the nineteenth century and the beginning of the twentieth cen-
tury. In fact, the central role of export development was to allow the
growth of the product and the income of capitalists and workers linked
to the exporting sector (in addition to increasing tax revenues), without
this necessarily requiring a radical rupture of the rigidities proper to an
economy that continued to be largely organized around haciendas and
relatively self-sufficient peasant economies.
A different story characterized the export economies when the demand
and the international prices went down. Under those conditions, the
export cycle of a particular region could come to an end or fall into
decline if the productive system based on the prevailing agrarian struc-
ture was not able to compete at lower international prices. This occurred
very clearly in the case of tobacco in Ambalema (as opposed to Montes de
María in the Caribbean region, which was able to adapt to low interna-
tional prices) and partly in the case of the coffee plantations in
Cundinamarca. And this was also the case for products such as cinchona
bark and rubber, among the forest products, and indigo or cotton, among
the agricultural ones, which did not withstand the unfavorable conjunc-
tures of the international market. This pattern of the export sector in
Colombia during the nineteenth century, where the production of agri-

cultural or forestry goods was organized in order to take advantage of
favorable international conjunctures without planning or making the
necessary investments in order to achieve sustained production in the
long term, was characterized as “production-speculation” by Ocampo
(1984).
The paradox of the Colombian agro-export sector during the century
that followed the liberal reforms of the mid-nineteenth century was that
it could only be sustained in cases where the agricultural production was
adapted to the peasant mode of production, but normally failed in larger-
scale plantations and did not develop agro-industrial companies that
allowed for productivity improvements.5 In this regard, the agro-export
sector differs from the mining of precious metals (gold and silver), which
could be rebuilt in the last decades of the nineteenth century on the basis
of modern firms, a subject, however, that we do not address in detail in
this paper. Many of these companies also did not survive the transition
into the twentieth century.
An assessment of the export era varies greatly depending on whether
the coffee boom of the early twentieth century is considered a continua-
tion of the trends of insertion into the global market initiated in the mid-
nineteenth century or if, on the contrary, it is seen as a landmark that
opened a new era in the country. Given the magnitude of the phenome-
non in terms of production and the amount of territory and people
engaged in cultivation, as well as the implications of this for capital
accumulation and the industrial development of the country, the second
of these interpretations is more appropriate.
Indeed, the coffee boom of the early twentieth century not only trans-
formed the national economy but occurred in the context of a State that
was fundamentally different from the one that existed in the nineteenth
century. The Colombian State during the nineteenth century was charac-
terized by its weakness and its precarious and uneven presence through-
out the national territory. This had two profound implications for the
country’s history. The first was the formation (initially de facto and later
de jure) of a federal state structure between the mid-nineteenth century
and the 1880s, in which the different regions had a strong political
autonomy, and where the regional caudillo figure was very important as
a reference for power and in order to fill the void left by the precarious
institutional development (Fals Borda, 2002, pp. 150B–161B). Secondly,
there was great political instability, which led to seven national civil wars
between 1840 and 1902, innumerable local civil wars, and deficiencies in
the electoral processes for the formation of public powers at both national
and regional levels.
After the Thousand Days’ War (1899–1902) and the separation of
Panama, and the consequent economic crisis that these events provoked,
the State underwent a series of transformations, especially during the
presidency of Rafael Reyes (1905–1909), and later on with the constitu-
tional reforms of 1910. The State initiated a process of modernization,
which generated political stability and a greater control of key institu-
tions, such as the security forces and the currency.
These changes at the political level and in the development of the State,
which would give way to the longest period without civil wars or wide-
spread violence in the country’s history (1902–1946), would prove
important for the coffee boom in at least two senses: on the one hand, by
providing the necessary stability so that production would not be affected
by political conflicts, and on the other hand, by ensuring that the eco-
nomic interests were well represented in both political parties and thus in
the legislative and executive branches, which reassured commercial capi-
tal that the State would develop policies that would benefit its interests.
The coffee boom that occurred since the second decade of the twentieth
century took place within this political context and inaugurated, in terms
of Colombia’s economic history, the true export era.
eneral Overview of the Phases of Export

G
Development, 1830–1929
During the century between 1830 and 1929, the evolution of the export
sector can be divided into four phases. The first is a period of stagnation
between 1830 and 1850, when the prevailing levels of export from the
end of the colonial period barely recovered. During this period, the
decline in gold production and exports was partially offset by the increase
in output of agricultural and forestry products. The second is a
period of sustained growth in the export sector between 1850 and 1882,
though with a few temporary crises, and fundamentally based on agricul-
tural and forest products but also partially on the recovery of gold pro-
duction. Third is the period between 1883 and 1910, characterized by
very sharp cyclical movements but a slow growth in aggregate terms.
During these years there was a strong depression in the 1880s, a recovery
in the 1890s, and a further decline in the late nineteenth and early twen-
tieth centuries. Finally, the period of 1910–1929, in which exports had
an unprecedented expansion, was largely led by coffee. The evolution of
the value of exports throughout the period from 1835 to 1929 can be
seen in Figure 6.1.
The four phases identified can be seen more clearly by observing the
growth rates of exports in Table 6.1. In both the period of 1841–18836
and 1905–1929, there were significant growth rates of real and per cap-
ita exports, especially during the years of the coffee boom. However, in
80
70
60
50
Millions
40
30
20
10
0
1835– 1841– 1855– 1865– 1871– 1876– 1879– 1882– 1888– 1894– 1898 1905–9 1910– 1915– 1920– 1925–
39 45 58 70 75 78 81 83 91 97 14 19 24 29
Goods + Gold (Specie) Goods
Fig. 6.1 Value of exports 1835–1929 (millions of dollars at constant prices of

1910–1914). Sources: Goods + Gold: until 1898 Ocampo (1984); afterwards GRECO
(2002). Goods: until 1905–1909 Ocampo (1984); afterwards GRECO (2002). Note:
Nominal values of exports were deflated with the export price index of Ocampo
(1984, Table 2.4, series 3 (for 1854–1910), series 2b (for 1835–1854)) and in Ocampo
and Montenegro (1984, Table A-2 series 4A). The data was then converted into
dollars at the exchange rate of 1910–1914
Table 6.1 Annual growth rate (%)

Exports at Exports at constant Real exports
Periods current prices prices of 1910–1914 per capita
Four main exporting phases
1835/1839–1841/1845 0.2 0.9 −0.7
1841/1845–1882/1883 4.0 3.6 1.9
1882/1883–1905/1909 −0.3 0.8 −1.0
1905/1909–1925/1929 11.0 5.9 3.9
Coffee boom vs. previous period
1835/1839–1905/1909 2.1 2.4 0.6
1905/1909–1925/1929 11.0 5.9 3.9
Maddison periods
1835/1839–1871/1875 3.1 3.1 1.4
1871/1875–1925/1929 4.6 3.2 1.3
Total period
1835/1839–1925/1929 4.0 3.2 1.4
Sources: Same as Fig. 6.1. Per capita rates were deflated with population series
in Flórez and Romero (2010) and Flórez (2000, p. 132, Table A.1)
the three decades that followed independence and in the last two
decades of the nineteenth century, real exports grew very slowly and
actually declined in per capita terms. Considering the “short” nine-
teenth century that goes from 1835 to 1905, the growth of real exports
per capita barely reached 0.6% per annum, which contrasts with the
annual 3.9% during the great coffee boom. Therefore, the growth rate
of real exports per capita was 1.4% per annum for the whole century of
1835–1929, but made up of a period of slow growth and a period of
rapid growth. The two great periods of Maddison (1820–1870 and
1870–1930) show no great differences, since both include phases of
expansion and stagnation.
Regarding the behavior of the export sector by specific products, the
period prior to 1850 saw an exporting sector dominated by gold, while
the post-1910 period was dominated by coffee. The period between 1850
and 1910 is characterized by successive booms and crises of various prod-
ucts, mainly tobacco, coffee, and cinchona bark.7 Banana exports since
the beginning of the twentieth century and oil exports since the mid-
1920s also supported the export boom of the two decades prior to 1929.
Figure 6.2 shows the share of the five historical products in total exports
100
90
80
Others
70
Banana
60
Percentage
Cinchona
Bark
50
Coffee
40
Tobacco
30
Gold
20
10
0
1835– 1841– 1855– 1865– 1871– 1876– 1879– 1882– 1888– 1898 1906– 1910– 1915– 1920– 1925–
39 45 58 70 75 78 81 83 91 10 14 19 24 29
Fig. 6.2 Share of the five main products in total exports (%). Sources: up to
1906–1910, Ocampo (1984, Table 2.7); onwards GRECO (2002) and Ministerio de
Hacienda (1919)
and Map 6 roughly places the different commodity booms in space and
time.
Due to the scarce dynamism of the country’s export sector until 1910,
the per capita import capacity of the economy depended fundamentally
on the terms of trade (Figure 6.3). Throughout the nineteenth century,
there was a tendency for the terms of trade to improve in Colombia,
albeit amid strong cyclical fluctuations; this positive trend was dramati-
cally reversed in the late nineteenth century and the first decade of the
twentieth century. During the period of 1910–1929 the terms of trade
were characterized by their volatility, largely depending on the conjunc-
tures of international coffee prices: crisis after WWI, recovery in the
1920s, and a new crisis generated by the Great Depression.
In some cases, the improved terms of trade served to compensate for
the poor performance of exports, so that the country’s import capacity
improved or at least wasn’t greatly harmed. This is what happened during
the period before 1850 and between 1885 and 1892, periods of crisis in
the export sector but significant improvements in the terms of trade. By
250
200
150
100
50
0
1827
1831
1835
1843
1847
1851
1855
1859
1867
1871
1875
1879
1883
1891
1895
1899
1903
1907
1911
1915
1919
1923
1927
1839
1863
Gold / Textiles 1855–58 1865–75 1879–83 1887 1888–91 1905–10 1905–1928
Fig. 6.3 Terms of trade (1870 = 100). Sources: Ocampo (1984, Table 2.5); for
1905–1928, Ocampo and Montenegro (1984). Note: For the earliest period, the
relationship between the price of gold and textiles is used; in the next period the
price of exports was weighted based on the composition of exports in 1855–1858,
and so on. The price of imports was weighted based on the composition of
imports during the period 1890–1899 for all but the oldest curve. Laspeyres
indexes are used in all cases
contrast, during some years of the 1860s, the early 1880s, and the coffee
crisis of the turn of the century, there was a deterioration in the terms of
trade that accentuated the export crisis in terms of the capacity to import.
During the coffee boom (1910–1930), the macroeconomic impact of
terms of trade volatility was softened by the steady growth of the quanti-
ties exported.
Overall, although real per capita exports grew very slowly during the
nineteenth century (57% between 1835 and 1905), as a result of the
improved terms of trade, the purchasing power of exports grew by 166%
in per capita terms during that same period (see Table 6.2).8 In the first
decades of the twentieth century (1905–1929), the purchasing power of
exports multiplied by 5.2 and in per capita terms grew by 250%. But
unlike what happened during the nineteenth century, this was not so
much due to the improvement in the terms of trade but rather because of
Table 6.2 Foreign trade indexes
Export quanta Real exports per Purchasing power of Purchasing power of
(1910–1914 = 100)a capitab exportsc exports per capita
Years Total Gold excl. (1910–1914 = 100) (1910–1914 = 100) (1910–1914 = 100)
1835–1839 9 2 54 6 22
1841–1845 10 3 52 8 27
1855–1858 17 14 66 20 52
1865–1870 21 18 68 20 44
1871–1875 29 28 89 29 59
1876–1878 27 25 79 34 63
1879–1881 35 35 93 49 87
1882–1883 108 55 94
1888–1891 36 32 80 50 76
1894–1897 97 76 103
1898 57 59 130 88 114
1905–1909 56 63 85 54 59
1910–1914 100 100 100 100 100
1915–1919 134 143 124 103 93
1920–1924 207 224 159 140 115
1925–1929 267 320 183 280 208
Source: until 1905–1909, Ocampo (1984, 2010); from 1905 to 1909, GRECO (2002)
Note: Indices that are in per capita terms were deflated with the population series in Flórez and Romero (2010) and
Flórez (2000)
a
Although the quantum of exports is expressed as 1910–1914 = 100, the index was created with the prices of 1865–1870
6 Exports and Economic Development in Colombia: A Regional...
b
Actual exports per capita were obtained with the procedure explained in the note to Fig. 6.1
c
Until 1905–1909, the value of exports was deflated using the import price index in Ocampo (1984: Table 3.4, pp. 146–
147); from 1910 to 1914, the value of exports was deflated using the import price index in GRECO (2002, Statistical
Annex, Table 13.1, column 8)
203
the increase in the quantities exported as a result of the strong coffee

boom.
This explains why during the nineteenth century real imports had a
much more dynamic growth than real exports. Between the beginning of
the 1830s and the end of the century, the value of imports at current
prices increased by an average of 2.5% per year, which went down to
1.9% per year if calculated until the early years of the twentieth century
(Ocampo, 1984, p. 145). However, measuring imports in quantum
terms, they grew at an annual average rate of 3.9% between the early
1830s and 1898. Thus, while imports per capita in value terms only
increased by 91% in this period, real imports per capita increased by
350% (Ocampo, 1984, p. 152). On the other hand, in the first decades
of the twentieth century when the terms of trade were not favorable, the
great dynamism of imports was a result of the coffee boom and also, in
1925–1928, of external capital flows. Between 1905–1909 and
1925–1929, the value of imports grew at an average rate of 12.3%
per annum.
Both in the case of exports as well as imports, over the century that we
are analyzing, only in the periods 1850–1882 and 1910–1929 was growth
higher than that of the population. In fact, throughout the century of
1830–1929, imports had a behavior more or less symmetrical to that of
the exporting sector, with a generally positive trade balance, which is not
surprising given the country’s limited possibilities of attracting capital in
considerable quantities (Figure 6.4). Only in the 1920s did the country
receive significant foreign resources as a result of the United States’
indemnification to Colombia for the separation of Panama, the increase
in foreign direct investment, and access to international credit. This
explains why during the last 5 years reported here the country ran a trade
deficit.
On the other hand, we must not forget that Colombia was a case of a
country with a relatively small exporting sector in relation to the rest of
the economy. Unfortunately, the estimates of Colombia’s GDP for the
period prior to 1905 are quite fragmentary. The series estimates by
Kalmanovitz and López (2009) would seem to indicate that throughout
the nineteenth century the share of exports in GDP was around 10%.
The direct contribution of exports to overall growth may have been
140
120
100
80
Millions
60
40
20
0
1835– 1841– 1855– 1865– 1871– 1876– 1879– 1882– 1888– 1894– 1898 1905–91910– 1915– 1920– 1925
1925–
39 45 58 70 75 78 81 83 91 97 14 19 24 29
Imports Exports
Fig. 6.4 Exports and imports (millions of dollars). Sources: until 1898 Ocampo
(1984); onwards GRECO (2002)
s omewhat greater during the period of greatest exporting growth, revolv-

ing around 19%, between the middle of the nineteenth century and the
beginning of the 1880s. Subsequently, during the last two decades of the
nineteenth century and the years of the Thousand Days’ War, exports
were practically stagnant (even negative in per capita terms, as shown in
Figure 6.1) and therefore did not contribute to GDP growth. For the
period of 1905–1929, which includes the coffee boom, real GDP (calcu-
lated from the data in GRECO 2002) grew at a similar rate to that of real
exports: 5.7% per year for the former and 5.9% per year for the latter.
Therefore, the direct contribution of exports to overall growth was similar
to that of their share of GDP: around 10%. The reason why exports did
not have a growing weight in GDP during these years, despite the coffee
boom, was that the GDP also experienced very rapid growth, in large
part as a consequence of the first phases of structural change in the
Colombian economy, sparked by that very coffee boom, as will be seen in
the fourth section.
Unlike other countries in the continent, in Colombia foreign direct
investment in the production of exportable goods was very scarce. Said
investment was restricted to a few of the gold and silver companies and
to the banana and oil sectors in the first decades of the twentieth century.
Therefore, although we do not have data on factor payments and taxes,
we can assume that the return value of exports was high, except in the
case of oil at the end of the export age.
Foreign capital also played a role in the commercialization of export
goods. However, in many cases such export companies were run by
immigrants who had settled in the country, meaning that the foreign
presence did not necessarily imply that the profits made in export trade
were sent abroad. On the other hand, these trading companies, especially
the foreign ones, combined business from exports with the importation
of consumer goods, trafficking of exchange bills, wholesale and retail
sales, and credit, among others. Thus, it is almost impossible to know in
precise terms the share of the profits made in commercial exporting activ-
ities, though we can assume that it was significant.
This describes the evolution of Colombia’s exporting sector through-
out the nineteenth and early twentieth centuries. The different bonanzas
that occurred in the second half of the nineteenth century were the result
of the particular cycles of a small number of products alternating as the
leading sector in the country’s exports. These cycles were determined by
particular elements of the specific product market rather than by general
trends in the international economy. After the period of ups and downs
of 1883–1910, the country had its golden age of exports in the following
two decades, based mostly in coffee.
Regional Impact of Export Cycles

In view of what was established in the second section, regarding the large
importance of the different regions as stages where the development of
the agro-export model concentrated in different periods, and the impor-
tance of the rather varied effects on the peasant populations of the differ-
ent regions, in this section we will analyze the Colombian agro-export
model looking at its regional impact in the cases of tobacco and coffee.
We will focus on two elements: the effect of exports in terms of income
and its distribution and their capacity to generate linkages with other
economic sectors and externalities favorable to economic development.
Tobacco
Colombia’s tobacco exports began very timidly in the 1830s, when

tobacco leaf trading was still a state monopoly, and started to grow in the
late 1840s, when it began to be exported from the Ambalema region.
Subsequently, by the mid-1850s, under the regime of free production
and marketing, the Caribbean region of Montes de María would join this
export activity, becoming the main exporting region of tobacco leaf from
1863 onward.9
The different tobacco-producing regions of Colombia had been under
the influence of similar external forces since the mid-nineteenth century:
the emergence of a new demand for black raw tobacco by European man-
ufacturing houses, especially in Bremen and Hamburg, and the expan-
sion of German and English commercial capital, which manifested itself
in the arrival of commercial houses in these regions, establishing the busi-
ness of exporting tobacco and importing manufactures. These globalizing
forces, however, arrived in regions whose agrarian structures were very
different. Whereas in the middle of the century, in the region of Ambalema
the agricultural frontier was relatively closed and the land was in the
hands of large landowners, in Montes de María the land was overabun-
dant in relation to labor, and it was freely available to the peasant popula-
tion. This meant that each of these regions experienced different
trajectories of insertion into the international market and that the effects
on tobacco-growing populations were different as well.
In Ambalema, tobacco cultivation had been introduced since the eigh-
teenth century with commercial and fiscal purposes (Bejarano & Pulido,
1986, p. 74). Prior to the mid-century tobacco boom, most of the peas-
antry was engaged in subsistence agriculture. As for tobacco growers,
there were those who cultivated plots of land of different sizes, although
the majority grew small tracts of less than 6000 bushes.10
At the onset of the tobacco export boom in the 1840s, the leaf started
to be grown on larger plots of land within the haciendas. The landowners
turned their attention to this crop and went on to control production
and marketing in the first link of the chain, this being the intermediation
between the harvesters and the merchants and export houses (McGreevey,
1982 [1971], p. 78). This was due to changes in the policies implemented
by the State tobacco monopoly. The landowners of the region began to

apply for permissions (matrículas) of around 20,000 bushes to be planted,
and the State began to grant them. This was partly due to the fact that the
government had used tobacco monopoly funds to cover the expenses
generated by the civil war of 1839–1841, which caused great delays in
payments to the tobacco growers. This situation led Herran’s conservative
government (1841–1845) to seek some mechanism to allow private capi-
tal to enter into business and finance the fiscal gap left by government
debts to merchants and tobacco growers (Safford, 1965, chap. 5).
What followed was very symptomatic of the change that tobacco had
undergone when the prospect of attractive export earnings arose. A strong
competition broke out between merchants and export houses in Bogotá
and other regions for the privileges, granted by the government, of mar-
keting and/or exporting the leaf. Thus, throughout the 1840s, Ambalema
went from a State monopoly in the tobacco sector, with a meager export
performance, to an exporting boom controlled by private commercial
capital and strong intervention by the landowners in the marketing chain
(Safford, 1965, chap. 5).
In this context, the relationship between farmers and landowners was
based on a combination of tenancy and piecework payment, with ele-
ments of debt peonage. Basically, the farmer was forced to deliver a por-
tion of the tobacco he harvested to the landowner for rent while also
having to sell the rest of the harvest to the landowner at a fixed price
(piecework component). At the same time, an interest was deducted from
the resources that the landowner had provided in advance (Ocampo,
1984, pp. 248–249).
In the next phase of the chain, the type of arrangements established
between the landowners and the commercial houses varied a lot. Generally
speaking, the larger the landowner, the better conditions he obtained in
his bargaining with the export house, which in the 1840s and 1850s was
mainly Montoya and Saenz from Antioquia. The landowners imposed a
very high brokerage income, which in the end would render the export
economy of tobacco in Ambalema unfeasible. Figure 6.5 shows the prices
paid to the farmer, the broker (landowner), and the exporter in the mar-
keting chain, for the years where data are available (1849–1863).
40
35
30
25
Pesos de ley
20
15
10
0
1849–50 1852 1853 1854 1855 1856 1857 1858 1860– 1861– 1862 – II 1863
1861 1862
Peasant - Landowner Landowner - Exporting house Import price in Bremen
Fig. 6.5 Ambalema—Price of tobacco in three nodes of the commodity chain

(pesos de ley/quintal). Sources: The prices paid to the farmer and the landowner
were converted to pesos de ley per quintal from data provided by Sierra (1971,
pp. 147–148) and Safford (1965, chap. 5). The import price in Bremen was con-
verted to pesos de ley per quintal from data in Ocampo (1984, pp. 222–223). Note:
The import price of 1849–1850 is that of 1850; the import price of 1860–1861 and
1861–1862 is the average of each pair of years; the import price for the second
half of 1862 (1862-II) is that of 1862. Note about currency: In those years there
were two monetary account units: the old peso de 8/10, inherited from colonial
times, in which 1 peso is formed out of 8 reales, and the republican peso de ley
that worked with the decimal system. One peso de 8/10 was thus equal to 0.8
pesos de ley, although both were based on silver
In Montes de María, the abundance of free lands, at least with regard

to province of El Carmen (which comprised the northern half of the
region), led to the formation of a typical peasant society, where produc-
tion was organized predominantly in small- and medium-sized plots,
exploited by family labor force.11 The cultivation system was one of slash-
ing and burning the forest in order to plant tobacco and products for
direct consumption (productos de pan coger) during a few years, maybe
two or three harvests. No fertilizers were used, and plows were only intro-
duced well into the twentieth century.12 During the second half of the
nineteenth century, land was so much available in Montes de María that,
in fact, it only acquired commercial value so long as it had been improved

by human labor (by slashing, cleaning, cultivating, etc.).
Before 1850, Montes de María was a peasant economy in which, even
though there were markets supplied with production surpluses, families
were highly self-sufficient in terms of foodstuffs. This system was not
overhauled in a radical way by the increase in the cultivation of tobacco
sparked by the export boom. Rather, it adapted to the new situation by
providing families with a quick—and easy—selling cash crop, which
increased the weight of the market in their strategy for economic
reproduction.
The tobacco commodity chain was governed by mechanisms of pay-
ments in advance and indebtedness. Small local merchants (some of
whom were also peasants) received a certain amount of money from an
export house, to be paid with tobacco at a prefixed price or at the current
price in commercial centers (towns) at the time of delivery. Merchants
used real state and livestock as collateral for their debts. With these capi-
tals, merchants, for their part, made payments in advance to peasant
families, who were then committed to deliver a certain amount of tobacco
from the next harvest.13 Figure 6.6 shows tobacco prices in the main
nodes of the commercial chain.
What this information shows is, first, that from the beginning of the
export boom until the crisis of WWI prices received by peasants (lower
line) ran parallel to the tobacco export cycle during this same period: an
upturn until the mid-1870s, a downturn from the second half of the
1870s and during the 1880s, a recovery in the 1890s, and a new down-
turn in the early twentieth century. Secondly, the data shows that the
margin of brokerage of small merchants diminished as the Hanseatic
market became more competitive during the second half of the nine-
teenth century: an average of 40.2% within the period 1856–1865, 23%
in 1866–1876, and 18.8% in 1890–1900 (Colmenares, 2017).
On the other hand, the figure illustrates that export prices, on which
earnings from export houses depended, experienced high volatility. The
large increase observed toward the end of the 1890s obeyed not only the
growing prices in the German market but also the devaluation of silver
relative to gold, which benefited exporters.14
60
50
40
30
Pesos de ley
20
10
1855
1883
1902
1863 – I
1865 – I
1867 – I
1869 – I
1880 – I
1889 – I
1891 – I
1893 – I
1899 – I
1905 – I
1907 – I
1895 – I
1897 – I
1871 – II
1873 – II
1875 – II
1877 – II
1886 – II
1911 – II
1859–1860
Peasant-Trader Trader-Exporting house 100pounds packed in a leather bag Price of exp-imp
Fig. 6.6 Montes de María—Price of raw tobacco in the four main nodes of the commodity chain, 1855–1913 (constant
pesos de ley of 1892/quintal). Sources: for prices paid to the grower, the broker, and the bag’s value, Colmenares (2017).
For import price in Bremen, Ocampo (1984, pp. 222–223). Note: To estimate constant pesos, nominal prices were deflated
211
with a series of prices of food in Barranquilla, available for the interested reader upon request
The contrast between relative prices in the commodity chain of

Ambalema and those of Montes de María is noticeable. In Ambalema,
the price paid by export houses to landowners increased much more than
the price paid to producers, which resulted in a decreasing share for peas-
ants, from 66% in 1849–1850 to 48% in 1858 (although data for 1863
is again 60%), with an average of 59% for the entire period (Fig. 6.5). By
contrast, in Montes de María, during the period of 1856–1863, there is
no evidence that the price received by peasants, as a proportion of the
merchants’ selling price, experienced a downward trend. The share for
peasants ranged between 53 and 85%, with an average of 70%.
In the case of Ambalema, the growing liability represented by land-
owners for the competitiveness of the region in the international market
may also be observed by comparing prices received by brokers relative to
import prices received by export houses. During the 1850s, landowners
absorbed an increasing share of the price received by exporters in the
Bremen market, going from 24 to 74% between 1849 and 1858, even
though in 1863 that share fell back to 54% (the average for the period
being 51%). In contrast, the price received by merchants from Montes de
María as a proportion of the one received by the export houses (settled in
Barranquilla and El Carmen) in Bremen ranged between 36 and 49%,
with an average of 42%. Moreover, in years with overlapping data for
both regions (1856, 1858, and 1863), peasants were receiving similar
prices per 100 pounds of tobacco (a 16% difference in favor of Ambalema),
while the difference in prices for the brokers was remarkable (65% in
favor of Ambalema, see Table 6.3).
The factors mentioned by historiography to explain the early deca-
dence of the tobacco cycle in the zone of Ambalema include the lack of
entrepreneurial organization to promote the tobacco sector (Safford,
1965), as well as the lack of incentives to improve the quality and com-
petitiveness of the product (Bejarano & Pulido, 1986; Harrison, 1951;
Ocampo, 1984). However, what comparative regional history shows is
that the structure of land tenure and the agrarian production regime that
comes from it were crucial for the endurance or disappearing of the
tobacco export sector vis-à-vis changes taking place in the external mar-
ket. Since the mid-1870s the market for black raw tobacco in the
Hanseatic League became much more competitive as tobaccos from Java
Table 6.3 Tobacco prices received by different social classes: Ambalema vs. Montes de María
Price paid to Price paid to Favorable Price paid to Price paid to Favorable
peasant peasant (Montes percentage for landowner trader (Montes percentage for
Year (Ambalema) de María) Ambalema (Ambalema) de María) Ambalema
1856 9.6 7.58 26.60 19.2 11.43 68.00
1858 9.6 8.30 15.66 20 10.40 92.31
1863 9.6 9.015 6.49 16 12 33.33
Favorable average for Ambalema 16.25 64.55
Sources: Ambalema: for 1856 and 1863, Safford (1965, chap. 5); for 1863, Sierra (1971, pp. 147–148). Montes de María:
Colmenares (2017)
213
and Sumatra started to arrive, which caused prices to fall. Adding to this
was Germany’s return to a rather protectionist commercial policy starting
in 1879. In this way, typical globalization pressures determined that in
order to be competitive in this market, it was necessary to be able to
export at low prices. In the absence of technical improvement, peasant
production from Montes de María was able to compete with low prices,
while haciendas in Ambalema were not. The cultivation of tobacco under
the parameters of small ownership and a peasant mode of production,
like the one in the Caribbean, was functional to this purpose, mainly
because food production for self-consumption inside the peasant family
substantially reduced monetary costs. Additionally, the abundance of
vacant public lands made rents on land nonexistent.
In retrospective, the main benefit brought about by tobacco exports
during the nineteenth century was an improvement in the standards of
living of the population involved in the production and commercializa-
tion of the leaf during booming phases, particularly in the Caribbean
region, inasmuch as their contribution to long-term development was
meager. The most important externality was to finance import trade,
which took place going up the Magdalena River, with the exports of a
commodity that was valuable abroad. In this way, starting in the mid-
nineteenth century, river transport companies had enough demand in
both directions, which made the introduction of steam navigation
through the main fluvial artery of the country profitable (Gilmore &
Harrison, 1977). The speculative nature of the tobacco export, largely
depending on international prices, prevented the State or particulars
from engaging in the adventure of building railroad lines, even though
several plans for building them were planned. Throughout the export
cycle, lines connecting producing zones with the river continued being
rather rudimentary: horseshoe roads, difficult for transit during the rainy
seasons.
As for linkages with other productive sectors, practically the only one
was with the production of leather bags, necessary to pack black raw
tobacco. Both in Ambalema and in Montes de María, there was cattle
raising during the export cycle, which meant that tobacco exports created
a market for this by-product of the livestock industry.15 Finally, the
tobacco sector generated a significant demand of labor force for the tasks
of classifying, fermenting, and packing the leaf; however, as with cultiva-

tion, this did not involve permanent structural changes, but barely a tem-
porary benefit in terms of income, also dependent on the different phases
of the export cycle.
Coffee
In the case of coffee, the process held some similarities with that of
tobacco, in the sense that it was the peasant production within small- and
medium-size plots in the zone of colonization in Antioquia, in the west
of the country, which would eventually show a great capacity to compete
in the international market within the context of volatile and not-so-
favorable prices in the early decades of the twentieth century. Besides,
this would be the kind of production that would exhibit an extraordinary
capacity to expand, whereas the haciendas, based on a set of semiservile
social relations of production, while not disappearing entirely, would suf-
fer a tortuous path during the twentieth century. Indeed, the latter would
be overwhelmed by indebtedness, volatility in the external sector, and the
fight carried out by tenants and sharecroppers trying to get rid of the set
of restrictions to which they were submitted in this context.
Even though the cultivation of coffee was present throughout the cen-
tury going from 1830 to 1929, it was around 1910 when this activity
started to have important qualitative effects for national development,
and when the external sector of the economy started to rely heavily on the
luck of this crop. Until this moment, the cultivation and exportation of
coffee had had, in terms of economic development, the same features
than tobacco and other agricultural and forestry products that were
exported in the nineteenth century. Its impact was circumscribed to the
increase in income for certain layers of the population at a regional level,
without further implications for the structural transformation of the
economy at the national level.
Until the large expansion in the twentieth century, coffee had devel-
oped in the North Santander since the 1830s and soon after in South
Santander, in the Cundinamarca/Tolima region since the 1870s, and in
Antioquia since the mid-1880s. In all these cases, its production was
based upon the hacienda system, with some presence of small plot prop-
erties in the margins. In all three regions, the impulse for the formation
of haciendas came from commercial capital, accumulated during previous
export cycles (Palacios, 1983, p. 189).
The hacienda system was based upon two central elements: first, mini-
mizing monetary investments both in fixed capital and in payments to
labor force. Merchants who became hacendados were absentee landown-
ers who lived in the cities taking care of other businesses. They were not
particularly interested in improving productivity, meaning that the vol-
ume of their coffee business depended on how much land and labor force
they were able to obtain (Bejarano, 1980, p. 128; Palacios, 1983). Almost
all fixed capital investment was already comprised in the purchase of
land. Therefore, its profitability depended on minimizing monetary labor
costs. Therefore, besides producing coffee, food production by tenants
and sharecroppers within the hacienda, as well as arrangements in which
part of the compensation for labor was paid by providing some land for
food cultivation, was also important. This allowed for the isolation of the
labor costs of the hacienda from the market for goods.
The second element was the retention of the workforce inside the haci-
enda, so that the latter had to resort as little as possible to the hiring of
wage laborers. The practice of giving up some land to peasant families for
them to grow their food and have their house was also the main mecha-
nism to achieve this retention. Besides, it was important to keep the eco-
nomic dependence of workers on the hacienda, hence the prohibition to
grow commercial crops in their plots, the limitations to commercialize
their surpluses, the systems of fines and punishments, and so on. With
these systems the hacienda not only detached costs from the goods mar-
ket but also kept workers away from it and, especially, from the incipient
and weak labor market (Bejarano, 1980, p. 132).
With this system, haciendas’ profitability during the booming years
was very attractive. At the prices of the time, coffee was sold abroad for
22–24 gold pesos per bag of 60 kilos, which left the owner between 12
and 15 gold pesos. Even assuming that the working capital required
equaled the cost of producing and transporting all of the country’s coffee
in a year (around 10 million gold pesos) and taking as a basis for the cal-
culation the total value of haciendas by the end of the century (15 million
gold pesos), the resulting profitability is relatively high: from 30 to 40%.

Estimates based in data from haciendas yield a similar outcome. However,
Palacios assesses that profitability was much lower and did not surpass an
average of 16% per year for the period of 1880–1900 (which included
some years of economic crisis), which was, in any event, higher than what
could be obtained in alternative investments (Ocampo, 1984; Palacios,
1983).
When prices went down at the end of the nineteenth century, this prof-
itability evaporated rapidly. Besides, the impossibility of harvesting all the
coffee and keeping plantations in good shape during the Thousand Days’
War generated irreparable damages in many cases (Bejarano, 2015).
Hacendados that had incurred in debts abroad in order to develop their
plantations faced their growing burden: as coffee prices fell, the exchange
rate depreciated and it was impossible to export the coffee bean. Many lost
their plantations during the War. From that moment on, coffee haciendas
gave way to small- and medium-sized exploitations, while large capitals
focused on controlling commercialization (Palacios, 1983, p. 269).
If we ask ourselves why, from that moment on, coffee became the
product that was cultivated by the peasant families that were formed
from the colonization of Antioquia, and not tobacco, two fundamental
factors arise. The first is an external factor, and has to do with the extraor-
dinary demand for coffee generated in the US market in the first decades
of the twentieth century, and the desire of US importers to have alterna-
tive supply sources to Brazil. The second is an internal factor and has to
do with the characteristics of the crop: tobacco is a non-perennial crop,
which is very demanding in nutrients for the soil. This means that in the
absence of modern methods of plowing and fertilization, the cropping
system requires the continuous transfer of the plantation, which means
that it can only take place on a wide open agricultural frontier. Coffee, on
the other hand, is a perennial tree. Therefore, it is a type of crop that
implies spatial stability, and that therefore was well adapted to the agrar-
ian structure that arose from the Antioquia colonization, which was char-
acterized by small- and medium-sized peasant properties in hillside areas,
and surrounded by large estates in flatter areas, that is to say, a closed
agricultural frontier with inequality in the distribution of the land, but
with an important presence of small- and medium-sized farms.
The comparison of these two agrarian structures, which shared the fact
that small farmer production was important in both, but differed in that
the agricultural frontier was relatively open in one and relatively closed in
the other, is reflected in the evolution of the price of land in each one (see
Figure 6.7). In Montes de María, the price of pasture land moved slightly
in the same direction as the tobacco cycle, but in general the price
reflected more the cost of labor to sow the land with pastures than the
relative scarcity of land (a scarcity that did not exist). By contrast, in the
coffee zones of Cundinamarca and Antioquia, uncultivated land rose rap-
idly in price from the export boom of haciendas in the 1870s.
Even though colonization in Antioquia in the second half of the nine-
teenth century reproduced the pattern of an unequal land tenure that
prevailed in the rest of the country, the peculiar coalition between a com-
mercial elite from Medellín and some of the peasants engaged in the
expansion of the agricultural frontier, against the intentions of old land-
owning families in possession of property titles stemming from the colo-
nial period, generated a framework of social relations more favorable to
social mobility, and an increasing freedom for merchants and producers,
even inside the haciendas. Besides, the previous development of this
region, based on the mining of gold, which gave great impulse to a variety
of commercial activities, also contributed to this sort of social openness
in Antioquia’s colonization zone. Existing sharecropping activities in
haciendas from Antioquia at the end of the nineteenth century were more
of an association between the landowner and peasant families. In fact, the
living conditions and material wealth of these peasants were likely to be
similar to those of peasant families who owned individual plots. Besides,
hacendados did not oppose the establishment of small- and medium-size
peasant properties, from which in fact they benefited by creating a “clien-
tele” of small producers dependent on haciendas and large producers for
the processing and marketing of their own production. Even more, by
generating agglomeration economies, they valorized their land.
The competitive advantage of coffee production in peasant economies
is the one that haciendas had been eagerly seeking since the nineteenth
century: the self-sufficiency of the goods necessary for the reproduction
of the labor force. Peasants combined the cultivation of coffee with that
of corn, beans, yucca, and banana (which also provided shadow for the
35
30
25
20
15
Pesos de ley
10
0
1865 1875 1879 1886 1891
Montes de María - Grazing land Cundinamarca (Viotá - El Colegio) - Non cultivated land Antioquia (Fredonia - Amagá) - Non cultivated land
Fig. 6.7 Land prices in three exporting regions (pesos de ley/hectare). Sources: Montes de María: Colmenares (2017);
Cundinamarca and Antioquia: Palacios (1983)
219
coffee trees), the first being the commercial crop that provided the peas-
ant family with monetary income. The scarce requirements of monetary
investments under these conditions (barely some basic work tools) made
the continuation of coffee production possible even when external prices
were unfavorable, as was the case at the beginning of the twentieth cen-
tury and in the 1930s. As we saw in the third section, it was on this base
that the actual export era took place in Colombia.16
Coffee production in small- and medium-sized properties not only
generated low monetary costs but also ended up having a larger capacity
to improve productivity. By providing, in the eyes of the worker, a direct
relationship between his/her labor productivity and his/her monetary
income, incentives to increase the former were significant. According to
the coffee census of 1932, productivity of the small property in Caldas
(by coffee tree and by area) was twice that of Cundinamarca and three
times that of North and South Santander. Among the technical innova-
tions introduced by peasants in this region in the early decades of the
century were the “interplanting” of coffee, the use of animal and vegetal
fertilizers obtained from pulping, drainage systems, and weeding with
machete instead of hoe, among others (Kalmanovitz, 2003, pp. 197–198).
The transition from the coffee expansion based on the hacienda to the
expansion based in parcel production also involved some significant
changes in commercialization. Production and commercialization, which
in the old system were joined in the figure of the merchant-hacendado,
now split, as the former was in the hands of peasant families and the latter
of local traders (called fonderos in Antioquia) and the export houses
(Bejarano, 2015). This gave a greater stability to the structure of produc-
tion and marketing, as in periods of low prices the peasant would con-
tinue to produce, while in the hacienda system, bad expectations could
lead the hacendado-merchant to devote his land to more productive
work, to the detriment of the export activity (Bejarano, 2015). This
meant that the fall in coffee prices no longer posed a threat to the conti-
nuity of production in the twentieth century, as was often the case with
the export cycles of the nineteenth century.
The effects upon national development generated by the coffee boom
at the beginning of the twentieth century were considerable. During the
second and third decades of the twentieth century, Colombia started to
have a significant industrial development. The first historical interpreta-

tions on the development of coffee linked these two processes by means
of an increase of income in the hands of small and medium peasants. This
would have generated demand for manufactures, making the beginning
of domestic industrial production both possible and profitable (Nieto
Arteta, 1973; Parsons, 1979). Further research (Arango, 1977; Palacios,
1983) challenged this thesis, considering that benefits from the coffee
boom concentrated in the merchants’ network.17 According to this
hypothesis, the big effect of the coffee boom expansion was promoting
the accumulation of capital.
Exporting the coffee produced in the colonization zone in Antioquia
generated linkages and externalities that would end up driving the coun-
try to a different development stage. Linkages were evident in the emer-
gence of a relevant demand for tools and machinery that were required
to process the coffee bean, such as washers, dryers, threshing machines,
coffee-grading machines, and, especially, pulping machines (despulpado-
ras). Demand for the latter surged at the same pace that new plantations
were created, as it was not possible to centralize the pulping of the bean.
By 1926 in Antioquia and Caldas there were 17,240 pulping machines
for a total of 20,260 farms (Brew, 1977, pp. 301–303). Even though in
the beginning this demand was satisfied with imports, since the end of
the nineteenth century, they started to be made by foundries in
Antioquia, which had been established decades before to produce some
tools employed in gold mining. In turn, the demand for tools like hoes
and machetes fostered the establishment of metalworking industries in
cities like Medellín and towns like Amagá and Manizales (Kalmanovitz,
2003).
The other important linkage of the coffee sector with the manufactur-
ing sector consisted in the creation of a market for packing bags. During
the nineteenth century they were imported from Scotland, but in the
beginning of the twentieth century, different regions started to manufac-
ture them out of the fique fiber. The demand for bags grew at the same
remarkable pace as that of coffee exports during the first decades of the
twentieth century, particularly during WWI, when the imports of sacks
collapsed. After the war, the government put a tariff on this product, and
the domestic bag industry continued growing (Brew, 1977, pp. 304–305).
The significant growth in the demand of consumption manufactured

goods, resulting from the increase in the monetary income of peasants,
workers, and merchants connected to the coffee economy, allowed the
growth of sectors such as construction materials, foods and beverages,
pottery and glass articles, metalworking industries, and textiles. The latter
deserves special mention, because of its importance in the industrializa-
tion of Antioquia and as a part of a vigorous import substitution process
that started since the beginning of the twentieth century. The connection
of textile development with coffee exports was direct, from the demand
side18 as well as from the supply side, based on the accumulation of capi-
tal by commercial houses and families who had in the threshing or export
of coffee one of their main economic activities.19 The group of business
families that established the textile factories in the west of the country
was formed from a sequence of economic activities, the main phases of
which were the production and export of gold, the creation of coffee
haciendas, the processing and commercialization of coffee, and, finally,
investment in secondary industries for the internal market. By the time
of the last phase of export development, the region not only relied on the
capital accumulated in this sequence of businesses but also on the techni-
cal and managerial knowledge necessary to make a leap to a more inten-
sive process of industrialization.20
As for the development of a transport infrastructure, in the same way
that steam river navigation was associated with the exportation of tobacco,
the development of railways was clearly correlated with coffee exports. In
the 1870s the Cúcuta railroad was built, connecting the coffee region of
North Santander with the Zulia River. In the next decade the construc-
tion of the Girardot railroad would start, providing transportation ser-
vices for the Cundinamarca haciendas to the Magdalena River. Even more
important was the construction of the Antioquia railroad, which started
in the mid-1870s in Puerto Berrío, reaching Medellín in 1914 and con-
tinuing its expansion in the following years to different places within the
coffee region. This railroad would play a crucial role not only in improv-
ing the competitiveness of the coffee bean but also in allowing the impor-
tation of the necessary machinery to support the industrial development
of this region. On the other hand, the Pacific railroad, which had started
to be built since the end of the nineteenth century, would arrive to Cali
in 1915 and afterward would extend itself to the central coffee zone.
Finally, by means of an aerial cable between Manizales and Mariquita,
Caldas coffee production could be taken to the Magdalena River.
All these processes of economic growth, generated by the coffee expan-
sion, would end up cracking the structures of production based on share-
cropping and tenancy that still subsisted in the old nineteenth century
haciendas. Peasants still attached to these units of production had now
economic alternatives. Therefore, they started to demand more freedom
to commercialize products that were cultivated in their plots, the aboli-
tion of rent payments in kind or mandatory labor, the recognition of
improvements made to land in the case of eviction, and even to question
in some cases the legality of hacienda ownership. It was in this context
that a surge of agrarian struggles took place in the 1920s, to which the
liberal republic of the 1930s would respond by means of the first agrarian
reform: Law 200 of 1936, which took important steps toward the mod-
ernization of social production relations in rural areas.
In sum, the development of the coffee economy in the west of the
country was the foundation on which a series of processes of internal
market expansion and capital accumulation rested, which would induce
modern industrial development. The increase in fiscal income that
resulted from this boom, and the access to foreign credit that it allowed
at the end of the period, also enhanced the capacity of the State to lead
the process of national development, especially through larger invest-
ments in infrastructure.
Overall Balance and Epilogue

During the century that goes from 1830 to 1929, Colombia made a tran-
sition from a country characterized by strong colonial-type rigidities in
its economic and social structures to one that finally linked up with the
international economy in a stable way. The transition was slow during the
nineteenth century, when export development was characterized by a
diversity of efforts confined to some regions with a variety of agrarian
structures. It was followed, however, by rapid export growth in
1910–1929, based on the rise of coffee production based on peasant
economies in the west of the country. The rapid economic growth gener-
ated by the coffee boom was also reflected in the rise of modern manufac-
turing, in significant improvements in infrastructure and, more broadly,
in the growing consolidation of capitalism as the basic socioeconomic
relation in both urban and rural areas.
There is, therefore, no case for dependency theory in Colombia’s export
development, since it is evident that coffee broke up the limitations inher-
ent to an economy of regional “archipelagos” and led to modern industrial
development. There is, in this regard, a consensus among the different
interpretations on Colombia’s economic history. What has been under dis-
cussion, however, is the mechanism by which the coffee economy gener-
ated this type of development: by increasing the demand for industrial
goods by rural producer or, rather, by allowing capital accumulation in the
agrarian sector that ended up irrigating into the industrial sectors. We think
that these two processes were, in fact, complementary and were also sup-
ported by improvements in the infrastructure facilitated by the greater
availability of fiscal resources and greater access to external financing.
However, the late success of the agro-export model in Colombia also
shows that the economic pressures on a nation that achieves industrial
development through commodity exports are of a different nature to
those of countries that achieve it through processes of expansion of
domestic market, driven by endogenous forces. For much of the twenti-
eth century, the external sector of Colombia’s economy would be very
dependent on the fate of a single product, which would bring macroeco-
nomic problems and political economy complexities.
As in the rest of Latin America, the Great Depression represented a
significant break with previous patterns.21 Given the dependence on cof-
fee exports, the drop in the bean’s prices was one of the main channels for
the transmission of the external shock: a 50% fall in the coffee terms of
trade 1925–1929 and 1935–1939 and an additional decrease with the
outbreak of WWII. The problem was not the falling demand in the
United States and Europe, but rather the excess of supply generated by
Brazilian overproduction. During the 1930s, this problem was managed
unilaterally by Brazil, as had been the case since the beginning of the cen-
tury. Brazil reached an agreement with Colombia to regulate the c offee
market, but it lasted only a few months in 1936. With the outbreak of the
war, the United States promoted the first successful agreement, the Inter-
American Coffee Agreement, signed at the end of 1940.
Even so, coffee production continued growing at an impressive pace
through the 1930s, reflecting the lagged effect of the high level of plant-
ings during the 1920s, which continued at a reduced pace in the 1930s.
The quantities exported increased by 62% between 1925–1929 and
1935–1939. This, along with the even faster growth of gold exports,
explains why real exports grew by 56% during the same years.22 This
avoided a sudden drop in the purchasing power of exports, which only
decreased by 8% in 1930–1934 relative to the previous 5-year period and
started recovering in the middle of the decade. As we have stated in this
essay, the capacity of the peasant economy to withstand low prices was
the key to explain the coffee dynamism during those years. However, as
the rhythm of planting slowed down and plantations started to get old,
coffee production started to be negatively affected toward the late 1940s.
The crisis was much deeper with regard to capital flows. The surge in
external financing, which had benefited Colombia widely in 1926–1928,
was abruptly interrupted with the collapse of Wall Street. The reversion of
capital flows, added to the implementation of orthodox macroeconomic
policies aimed at remaining within the gold standard, generated an early
recession. Starting in September 1931, however, the abandonment of the
gold standard and the introduction of foreign exchange controls facilitated
the adoption of expansionary monetary and credit policies. This shift,
together with an external debt default, a strong tariff increase, and a moder-
ate fiscal expansion, was the key for a strong economic recovery. Growth
remained, in any case, below the dynamism of the 1920s.
Linkages of coffee expansion in the decades before the economic crisis
were key to the recovery. The expansion of the domestic market generated
by the coffee boom created an environment that was conducive to the fast
growth of industrial production, particularly of textiles, based upon
import substitution. The integration of the internal market generated by
the late expansion of the transport infrastructure also contributed to this
process and was further intensified with the shift to the construction of a
larger road network during the 1930s. The industrial surge would be even
more accentuated with the recovery of coffee prices since the end of
WWII.
The decades of 1930 and 1940 represented for Colombia, therefore,

the consolidation of a process of industrialization that had firm roots in
the export boom of 1910–1929. It was not by chance that the four poles
of industrial development (Bogotá, Cali, Medellín, and Barranquilla)
were characterized by their strong connections with the coffee export
economy, either because of their geographic proximity with production
zones or because they were the way out toward the external markets.
Notes
1. According to Melo (2015), the most densely populated areas were: the
plateau of Cundinamarca and Boyacá and the Suárez River basin in the
eastern part of the country; the area composed of the populations of
Pasto, Túquerres, Popayán, and Cali, in the southwest; the central zone
of Antioquia; and the coastal region around the nuclei of Cartagena,
Mompox, and Santa Marta.
2. Botero and Vallecilla (2010) tried to refute the idea that in the mid-
nineteenth century the regions of Colombia were “economic archipela-
gos”, based on evidence of interregional trade that can be observed in the
reports of the Choreographic Commission directed by Agustín Codazzi.
Their results are interesting, but not conclusive, as they do not have
information on the volume or value of interregional trade flows.
3. Concertaje makes reference to a type of labor relation in which workers
of a hacienda were paid with money but were also attached to the haci-
enda by different means, such as the placement of dwellings for the
worker and his family inside the hacienda, the authorization for using
grazing lands of the hacienda in order to raise some cattle, the allowance
for harvesting food crops, among others. In exchange, concertados were
demanded to do paid work for the landowner a certain number of days
during the week.
4. In rural societies gamonal makes reference to a local political boss who
also owned large portions of land. A strong local master that concen-
trates political and economic power at the local level.
5. It is important to qualify this idea with the case of banana production in
the department of Magdalena, from the early years of the twentieth cen-
tury. However, this is a case that must be examined under different
parameters, for here the entire production and marketing process was
carried out by foreign capital, who directly owned the land on which the
plantations were established, in addition to entering into agreements
with the peasants of the area for the provision of fruit. According to
Bucheli (2005), banana production ended in this region as a result of the
high labor conflict in the plantations, which led the company to special-
ize in commercialization and to abandon production.
6. Ideally, we should calculate from 1850 instead of 1841/1845, but we
lack data for the years 1846–1854.
7. For an analysis of micro-export cycles during the second half of the nine-
teenth century, see Ocampo (1984, pp. 105–118). The tobacco and cof-
fee cases are discussed in the last section of this essay.
8. Note that due to the unfavorable behavior of the terms of trade in the
late nineteenth and early twentieth centuries, as well as the poor perfor-
mance of exports in those years, the general balance of the nineteenth
century changes according to whether we take 1898 or some early year
in the twentieth century as a cutoff date.
9. Two other regions of Colombia that exported tobacco during the second
half of the nineteenth century were Palmira and Santander. However,
their share of exports was relatively modest.
10. According to René de la Pedraja (1979, p. 48), in 1833 57% of the farm-
ers planted 6000 bushes or less.
11. In this region, the abundance of free lands and the effect of the agrarian
structure on the forms of production were evident to contemporaries.
See the report of the Governor of the Province of Corozal for the year
1874, Gaceta de Bolívar, 30 July 1874, pp. 158–160.
12. See the report presented by the Prefect of the Province of El Carmen to
the Governor of the Department, Registro de Bolívar, 23 October 1906,
pp. 461–462.
13. For an analysis of the credit system of merchants to the harvesting fami-
lies, see Colmenares (2017).
14. It is important to clarify that the export price (upper line) is not strictly
comparable to the prices for peasants and traders: while the latter corre-
sponded to tobacco leaves after having been harvested and dried on the
peasant farm, the export price included all the costs of classification of
the leaf into three types, fermentation and packaging, so that tobacco, in
this latter form, incorporated a higher value added.
15. In any case, it could not be said that the livestock industry was driven
directly by the export of tobacco, since its final destination was the con-
sumption of meat, independent of the production of leather.
16. It should not be unknown, however, that in the zone of Antioquia’s colo-
nization also existed other labor systems, similar to the sharecropping,
but adapted to the conditions of small- and medium-sized farms. These
were the systems of contracts for “company”, “profit company”, and
“purchase”, which in any case were minority against individual family
property. For an analysis of all these systems, see Machado (1988,
pp. 150–159).
17. Arango (1977, pp. 192–197) estimates that the peasants were exploited
by small traders (fonderos), only receiving for the grain 50% of the cur-
rent prices in the commercial plazas of the region.
18. Still in 1953 a high proportion of the demand for industrial goods in this
region came from the rural sector. See CEPAL (1957, Table 222).
19. For an account of the creation of textile enterprises by notable merchant
families of Antioquia such as Vásquez, Restrepo, Echavarría, Ospina,
Medina, and Mejía, see Brew (1977, pp. 378–385).
20. Since what is of interest here is the relationship between the export sector
and industrialization, we leave aside other factors that are no less impor-
tant in the explanation of textile development in the first decades of the
twentieth century in Antioquia. These are the resources available in the
region to obtain hydraulic power, availability of cheap labor (women and
children), natural protection given by transport costs, tariff protection-
ism, the Civil War of 1899–1902, WWI, and the devaluation of the
currency. In this regard see Brew (1977, pp. 373–375).
21. The following analysis is based on Ocampo (2015) and Ocampo and
Montenegro (1984).
22. Oil and bananas, on the other hand, experienced little growth, and the
second experienced the effects of the strike on plantations in 1928 and
black sigatoka thereafter.
References
Primary Sources—Press
Gaceta de Bolívar
Registro de Bolívar
Bibliography
Arango, M. (1977). Café e Industria 1850–1930. Bogotá: Carlos Valencia
Editores.
Bejarano, J. A. (1980). Los estudios sobre la historia del café en Colombia.
Cuadernos de Economía, 1(2), pp. 115–140.
Bejarano, J. A. (2015). El despegue cafetero (1900–1928). In J. A. Ocampo
(Ed.), Historia económica de Colombia (4th ed., pp. 165–197). Bogotá: Fondo
de Cultura Económica, Fedesarrollo.
Bejarano, J. A., & Pulido, O. (1986). El tabaco en una economía regional:
Ambalema siglos XVIII y XIX. Bogotá: CID, Universidad Nacional de
Colombia.
Botero, M. M., & Vallecilla, J. (2010). Intercambios comerciales en la
Confederación Granadina según la Comisión Corográfica, 1850–1856.
Historia y sociedad, 19, pp. 143–174.
Brew, R. (1977). El desarrollo económico de Antioquia desde la independencia
hasta 1920. Bogotá: Banco de la República.
Bucheli, M. (2005). Bananas and business: The United Fruit Company in
Colombia, 1899–2000. New York: New York University Press.
CEPAL. (1957). Análisis y proyecciones del desarrollo económico. Tomo III: El
desarrollo económico de Colombia. Mexico: Naciones Unidas.
Colmenares, S. (2017). Crédito, coerción y fidelidad laboral en una frontera
agrícola exportadora: Montes de María (Colombia), 1850–1914.
Investigaciones de Historia Económica—Economic History Research.
doi:10.1016/j.ihe.2016.10.001
de la Pedraja, R. (1979). Los cosecheros de Ambalema: un esbozo preliminar.
Anuario Colombiano de Historia Social y de la Cultura, 9, pp. 39–61.
Fals Borda, O. (2002). Historia doble de la Costa: El presidente Nieto. Bogotá: El
Ancora Editores.
Flórez, C. E. (2000). Las transformaciones socio-demográficas en Colombia durante
el siglo XX. Bogotá: Banco de la República, Tercer Mundo.
Flórez, C. E., & Romero, L. (2010). La demografía de Colombia en el siglo
XIX. In A. Meisel Roca & M. T. Ramírez (Eds.), Economía colombiana del
siglo XIX. Bogotá: Fondo de Cultura Económica, Banco de la República.
Gilmore, R. L., & Harrison, J. P. (1977). Juan Bernardo Elbers y el inicio de la
navegación a vapor en el río Magdalena. In J. A. Bejarano (Ed.), El siglo XIX
visto por historiadores norteamericanos. Bogotá: La Carreta.
GRECO. (2002). El crecimiento económico colombiano en el siglo XX. Bogotá:

Banco de la República, Fondo de Cultura Económica.
Harrison, J. P. (1951). The Colombian tobacco industry from government monopoly
to free trade 1778–1876. PhD dissertation, University of California at
Berkeley.
Kalmanovitz, S. (2003). Economía y nación: una breve historia de Colombia.
Bogotá: Norma.
Kalmanovitz, S., & López, E. (2009). Las cuentas nacionales de Colombia en el
siglo XIX. Bogotá: Fundación Universidad de Bogotá, Jorge Tadeo Lozano.
LeGrand, C. (1980). From public lands into private properties: Landholding and
rural conflict in Colombia, 1870–1936. PhD dissertation, Stanford University.
Machado, A. (1988). El café: de la aparcería al capitalismo. Bogotá: Tercer
Mundo.
McGreevey, W. P. (1982 [1971]). Historia económica de Colombia, 1845–1930.
Bogotá: Tercer Mundo.
Melo, J. O. (2015). Las vicisitudes del modelo liberal (1850–1899). In J. A.
Ocampo (Ed.), Historia económica de Colombia (4th ed., pp. 111–164).
Bogotá: Fondo de Cultura Económica, Fedesarrollo.
Ministerio de Hacienda. (1919). Comercio exterior de la República de Colombia,
Año de 1916. Bogotá: Imprenta Nacional.
Nieto Arteta, L. E. (1973). Economía y cultura en la historia de Colombia. Bogotá:
Viento del Pueblo.
Ocampo, J. A. (1984). Colombia y la economía mundial 1830–1910. Bogotá:
Siglo XXI.
Ocampo, J. A. (2010). El sector externo de la economía colombiana en el siglo
XIX. In A. Meisel Roca & M. T. Ramírez (Eds.), Economía colombiana del
siglo XIX. Bogotá: Fondo de Cultura Económica, Banco de la República.
Ocampo, J. A. (2015). La crisis mundial y el cambio estructural (1929–1945).
In J. A. Ocampo (Ed.), Historia económica de Colombia (4th ed., pp. 198–230).
Ocampo, J. A., & Montenegro, S. (1984). Crisis mundial, protección e industri-
alización: Ensayos de historia económica colombiana. Bogotá: CEREC,
FESCOL.
Ospina Vásquez, L. (1979). Industria y protección en Colombia, 1810–1930.
Medellin: Fondo Rotatorio de Publicaciones FAES.
Palacios, M. (1983). El café en Colombia, 1850–1970: una historia económica,
social y política. Mexico: El Ancora.
Parsons, J. (1979). La colonización antioqueña en el occidente de Colombia.
Bogotá: Carlos Valencia Editores.
Safford, F. R. (1965). Commerce and enterprise in Central Colombia: 1821–1870.

PhD dissertation, Columbia University.
Sierra, L. F. (1971). El tabaco en la economía colombiana del siglo XIX. Bogotá:
Universidad Nacional de Colombia.
Tovar, H. (2015). La lenta ruptura con el pasado colonial (1810–1850). In J. A.
Ocampo (Ed.), Historia económica de Colombia (4th ed., pp. 82–110).
José Antonio Ocampo holds PhD in Economics from Yale University. He is

member of the central bank of Colombia (Banco de la República) and professor
on leave from Columbia University. He is also Chair of the Committee for
Development Policy of the United Nations Economic and Social Council
(ECOSOC). He has occupied numerous positions at the United Nations and
Colombia, including UN Under-Secretary-General for Economic and Social
Affairs, Executive Secretary of the UN Economic Commission for Latin America
and the Caribbean (ECLAC), and Minister of Finance, Minister of Agriculture,
and Director of the National Planning Office of Colombia.
Santiago Colmenares Guerra is a member of the research group on Social

Protection in the Research Center for Development (CID) at the National
University of Colombia, and PhD candidate in Economic History at the
University of Barcelona. He has served as professor of World Economic History
at Pompeu Fabra University. His current research interests include the agrarian
history of Latin America and trade globalization during the nineteenth and early
twentieth centuries.
7
Mexico in the Export Era (1870s–1929):
Export Boom, Economic Modernization,
and Industrialization
Sandra Kuntz-Ficker
Introduction
After achieving Independence (in 1821), Mexico experienced five decades
of internal turmoil and external threats, including some armed interven-
tions and the loss of half of its territory. This situation affected its eco-
nomic performance, to the extent that by the 1870s, Mexico’s economy
was small, markets were frail and fragmented, and as much as 80% of the
population lived in the countryside, most of them dedicated to activities
that took place outside the market economy. Transportation facilities
were scant, with only one railroad line in operation and a few maritime
companies touching its ports. Connections with the international econ-
omy were fragile, as the country was in default of its external debt, for-
eign investment was meager, foreign trade rather modest, and immigration
Previous versions of this chapter were presented at several international meetings. A first partial
appraisal was published in Kuntz-Ficker (2014b). I appreciate the comments and suggestions that
I have received from colleagues and reviewers in all those occasions.
S. Kuntz-Ficker (*)

236 S. Kuntz-Ficker
practically null. Exports consisted mainly of silver specie (about 80% of

the total), complemented by small quantities of cattle, hides and skins,
dye stuffs, hardwoods, some fibers, and vanilla. Imports were composed
of articles for consumption, mainly textiles and groceries, with little place
for capital goods.
In the mid-1870s a liberal-minded elite consolidated in power, achiev-
ing political stability for the first time since Independence. Starting at
that point, the government fostered economic reforms, promoted foreign
investment in railroads and mining, and renegotiated Mexico’s external
debt entering into credible commitments with its creditors. An array of
economic legislation was enacted, in fields that included land, mining,
commercial activities, and later on railroads and banking. The expansion
of a railway network stimulated market integration and the enlargement
of the market economy, facilitated population mobility, and sparked the
incorporation of otherwise distant regions to economic activity. Even
though this impulse was temporarily interrupted by the Mexican revolu-
tion, in the 1920s the new regime continued fostering public works that
favored exports and the internal market alike. The more notable were
irrigation works and roads.
Another factor fostering export growth in the last decades of the
nineteenth century was the depreciation of the Mexican peso, because
of the “premium” it put on exports, as production costs were paid in
silver while they were sold in gold in the external market (Zabludovsky,
1992). At the same time, devaluation represented a nontariff barrier
with regard to imports that benefited those who produced for the inter-
nal market, including of course the nascent industry.1 Commercial
policy accompanied this phenomenon by designing a cascade tariff that
protected import-competing industries at the same time that lowered
the average height of the tariff. Also favorable to Mexico’s export boom
was the vicinity with the United States (USA), a country that provided
capitals for investment and a strong and expanding demand for Mexican
exports. The complementarity with the US economy generated grow-
ing interdependence between the two countries. An increasing share of
Mexico’s export trade was directed to this country, achieving 80% of
the total by 1913. The rest headed for Europe, mainly to the UK,
Germany, and France. Export concentration in the USA did not reduce
7 Mexico in the Export Era (1870s–1929): Export Boom... 237
Mexico’s options with regard to its imports, as European countries pro-

vided 50% of the total by 1913. Within a context of growing trade,
Mexico’s import basket also diversified and in fact moved from one in
which consumer goods prevailed to one consisting mainly of produc-
tion goods (Kuntz-Ficker, 2007).
The combination of these factors brought about the more successful
period of economic growth since Independence, sparked by an export-led
pattern of growth and with the contribution of foreign investment.
Starting in the 1870s, along with some traditional exports, as vanilla and
dyewoods, new branches of agricultural exports emerged, some under the
control of native entrepreneurs (like in hard fibers, as ixtle and hene-
quen), or native and foreign alike (cattle raising, coffee, rubber, and later
on chickpeas, banana, and tomato). Mining, largely under foreign con-
trol, expanded geographically as well as in the types of products (to the
traditional exploitation of silver, soon added lead, copper, gold, and zinc,
among others) and since the 1890s incorporated a secondary phase with
the emergence of a modern, technologically advanced metallurgical
industry. This provided the export sector with a broad regional scope,
benefitting areas that up until then had remained out of economic
progress.
Export expansion was temporarily affected by international economic
crisis, particularly in 1891, 1907, 1921, and, of course, 1929. Between
1912 and 1918 it was also affected by the Mexican revolution (which
started officially in November 1910), but not in an obvious way (Haber,
2003). On the one hand, the civil war had a negative impact upon min-
ing activities (because armies deterred transportation and frequently con-
fiscated or taxed mining production), which resulted in diminished
mining exports for at least three years. In contrast, activities that took
place in geographically peripheral areas (as the Yucatán peninsula or the
Gulf of Mexico) were less affected by the war and showed a remarkable
continuity. On the other, swelling international demand (and prices)
stimulated the sale of so-called strategic products abroad. The exporta-
tion of fibers (henequen and ixtle, cotton), cattle and its by-products
(hides and skins), and rubber and guayule held or even grew throughout
the decade, while the income yielded from it soared—because of infla-
tion in the international market.2 Furthermore, during those years
238 S. Kuntz-Ficker
Mexico started extracting and exporting oil, becoming one of the main
world suppliers by the end of the decade (Kuntz-Ficker, 2014c). Even
though this was to be a short-lived phenomenon, oil sales abroad gave a
great impetus to Mexican exports between 1915 and 1924, also help-
ing sustain public finances amid difficult circumstances. By the mid-
1920s the oil boom was over, contributing to an early decay of exports
and to an economic recession in Mexico even before the 1929 economic
depression put an end to the first export era.
The purpose of this chapter is to provide some indicators about the
performance and the contribution of exports to the Mexican economy
during the first export age, using a set of analytical parameters that allow
a more accurate assessment of their impact and facilitate comparison
with other countries. The interest of this case study is amplified by the
particularities of Mexico in the Latin American context. A notably diver-
sified export sector with a broad geographic spread but a relatively smaller
size, as well as higher value added in some of the components of the
export basket, distinguish the Mexican case from others in the region.
The existence of these features separated Mexico not only from the ste-
reotype of the mono-exporter country but also from those versions of
structuralism and dependency theory that considered the export-led
model an obstacle to industrialization and structural change. In Mexico,
export success contributed to overcome the stagnation that had charac-
terized economic performance in the five decades after Independence,
triggered economic modernization, and at some point gave way to the
beginnings of industrialization.3
exico and the First Export Era: Existent

M
Preconditions and Available Alternatives
Due to its frailty, by the beginning of this period the Mexican economy
was not in conditions to start a process of economic modernization and
industrialization, much less one that was sustainable with solely inter-
nal energies and resources (Kuntz-Ficker, 2007, pp. 17–27). The level
of economic activity was too low to support an autonomous process of
capital formation and foster a better use of available resources, not to

speak of triggering industrial growth. In fact, it was not even enough to
sustain a process of railroad or banking expansion without resorting to
foreign capital. On the other hand, the domestic market was slim and
fragmented. Conditions in the public sphere were neither promising.
Fiscal revenue was barely enough to sustain a modest governmental
apparatus, and public debt posed a permanent challenge on public
finances.
In sum, the most important prerequisites for industrialization were
utterly absent, and there is no reason to think that they would appear
without the intervention of exogenous forces. The progressive—albeit
unequal—implementation of a liberal institutional framework and the
achievement of a more stable polity starting in the 1870s (and particu-
larly during the long authoritarian rule of Porfirio Díaz (1876–1911),
or what is known as the Porfiriato) created a setting in which the idea of
taking advantage of the opportunities offered by the international
economy was conceivable. What followed was a phenomenon of expan-
sion of the export sector, driven by market forces with some aid by the
government at the local, regional, and national levels. The first efforts
aimed at revitalizing mining production, by opening the door to
American investment in the northern region with the first spillovers
taking place in the late 1870s. A second step consisted of pursuing an
ambitious project of railroad construction, led by foreign investors and
supported by the State by means of monetary subsidies (Kuntz-Ficker,
2015). In addition to that, the State promoted the incorporation of
new regions to economic activity by identifying and privatizing vacant
lands, many of them also in the north of the country. All this contrib-
uted to intensify the exploitation of natural resources and diversifying
the export basket. In 1870, only a few areas of the Mexican territory
had export-oriented activities, mostly in the Gulf of Mexico. By 1910,
at least 21 out of 28 states or territories had some export activities. In
1870, 78% of Mexico’s exports consisted of precious metals (silver and,
to a lesser extent, gold), while they represented less than 30% of their
total value after 1892.
240 S. Kuntz-Ficker
The export boom would not have taken place without the contribu-
tion of external funding in infrastructure (railroads, harbors) as well as
directly in the export sector—particularly in mining and oil and, to a
lesser extent, in agriculture. Most of the natural resources they exploited
had been idle because of lack of financing. The abundance of resources
still unemployed by the end of the period suggests that foreign capital did
not deprive domestic entrepreneurs of investment opportunities. In fact,
the participation of foreign capital in the export sector increased both the
level of economic activity and internal saving, fostering new investment
by native entrepreneurs, at times in the production of goods that now
found an increased domestic demand thanks to a higher level of employ-
ment and the integration of the internal market. By these means, export
expansion contributed to create the conditions (“prerequisites”,
Gerschenkron dixit) for industrialization. In fact, after a weak beginning
in the 1830s, industrial growth intensified since the 1890s, boosted by
economic prosperity and by a deliberately protectionist tariff policy.
For all these reasons, it is not daring to suggest that the integration into
the international economy by means of specializing in the production of
export goods with the aid of foreign investment was the only option
available to overcome the state of stagnation that had experienced the
Mexican economy after Independence. Only then could the internal sec-
tor of the economy become stronger and start a process of sustained eco-
nomic growth and structural change.

In this paper, we base our analysis in the reconstruction of foreign trade
values provided by Kuntz-Ficker, in which Mexican official records were
contrasted, corrected, and complemented by data taken from the official
sources of Mexico’s main trading partners, namely, the USA, Great
Britain, France, Germany, Belgium, and Spain (Kuntz-Ficker, 2010).
Let us start by providing some indicators that describe the performance
of Mexican exports throughout this period. Figure 7.1 illustrates the
long-term evolution of export values, differentiating commodity exports
from specie transfers.4
400
350
300
250
millions
200
150
100
50
0
1870
1871
1875
1876
1877
1881
1882
1883
1887
1888
1889
1893
1894
1895
1899
1900
1901
1905
1906
1907
1911
1912
1913
1917
1918
1919
1923
1924
1925
1929
1872
1873
1874
1878
1879
1880
1884
1885
1886
1890
1891
1892
1896
1897
1898
1902
1903
1904
1908
1909
1910
1914
1915
1916
1920
1921
1922
1926
1927
1928
Commodies (current) Commodies (constant) Specie (current) Specie (constant)
180
160
140
120
100
millions
80
60
40
20
0
1820
1823
1826
1832
1835
1838
1847
1850
1853
1859
1862
1865
1871
1874
1877
1886
1889
1892
1898
1901
1904
1913
1829
1841
1844
1856
1868
1880
1883
1895
1907
1910
Bulmer-Thomas Kuntz-Ficker Kuntz Ficker & Tena-Junguito
Fig. 7.1 Mexico’s export value. Above: 1870–1930 (fob values in dollars, current
and constant (1913) prices). Below: 1820–1913 (total values in dollars at current
prices). Sources: Above: see Kuntz-Ficker (2007, 2010) for primary sources and
method. Below: Kuntz-Ficker and Tena-Junguito (forthcoming), Kuntz-Ficker
(2010), Bulmer-Thomas (2014)
242 S. Kuntz-Ficker
We separate commodity exports from specie transfers for two reasons:

first, because gold and silver specie was used as currency in the world
market and could be sent abroad for a variety of purposes, not necessarily
related to trade, as making deposits in a foreign country or paying for
debts (uses that make them part of the capital account), and second,
because specie transfers did not necessarily speak of the development of
the export sector that took place during this period, as is clearly illus-
trated in Fig. 7.1 by the contrasting performance of expanding commod-
ity exports and stagnant or declining specie transfers. Consequently, in
this paper we deal with commodity export performance, leaving aside
specie remittances. That said, it is worth mentioning that a considerable
amount of silver is also included among commodity exports, because sil-
ver was also exported as ores or metal for industrial use.
With regard to commodity export values, it is useful to stress their
considerably low level at the point of departure (barely six million dol-
lars in 1870) and their steady grow, both at current and constant
prices, until the early 1910s. Although they experienced bumps associ-
ated with international economic crisis in 1893, 1900, and 1907, mer-
chandise sales multiplied by 28 (in value at 1913 constant prices)
between 1870 and 1910. Then they suffered a transitory fall because of
the revolution, but their value at current prices recovered rapidly
thanks to thriving demand in the international market resulting from
World War I (WWI). As for their real value (at constant prices), recov-
ery took longer but was also remarkable, particularly as a consequence
of the surge in oil exports, which had appeared in Mexico’s export
basket earlier in that decade.5 Performance was clearly less satisfactory
in the 1920s, even though Mexico’s sales abroad grew higher in scale
with respect to the prewar period. The reason, as mentioned earlier,
was twofold: the fall of oil exports and diminishing demand and prices
of other Mexican exports.
In his canonical book on Latin American economic history, Victor
Bulmer-Thomas states that “Mexico was one of the worst performing
countries in Latin America before the First World War” (Bulmer-
Thomas V., The Economic History of Latin America Since Independence,
2014, p. 511). Most of the indicators that he includes seem to validate
this assertion. However, I think that his depiction of Mexico is mis-
taken, mainly due to the use of faulty data. In order to prove this, the
second part of Fig. 7.1 compares two series of total export values for
the period 1820–1913, one provided by Bulmer-Thomas and the other
one composed by putting together Kuntz-Ficker and Tena-Junguito
(forthcoming) and Kuntz-Ficker (2010). Both series are contrasting at
first sight, particularly for the period between 1840 and 1870. In
Appendix 3 of his book, Bulmer-Thomas explains that he has taken all
data from INEGI (1985) and has estimated missing figures by interpo-
lation. The only figure provided by INEGI for this 30-year period
(1840–1870) is 1857; due to the lack of information from Mexican
sources, this figure is hardly reliable and obviously exaggerated. The
problem with this is that Bulmer-Thomas chose the year 1850 (for
which the figure for Mexico was made up by interpolating with a sin-
gle and most probably false piece of information) as the basis of his
calculations. The gross overestimation of Mexico’s export trade in that
year and the elongation of the export era by two decades (from 1850
to 1870) in which Mexico’s exports were stagnant led him to conclude
that growth was meager between 1850 and 1913—not to mention the
fact that his series underestimates exports from 1871 onward, as the
same figure shows.6
Table 7.1 provides some indicators on the performance of Mexico’s
commodity exports. Their rate of growth for the entire period averaged
6% per year and was positive for most of the period, with only one decade
(1920–1930) showing a negative average growth rate.
The overall outstanding performance of (commodity) exports resulted
in considerable growth, in absolute as well as per capita terms. Their
absolute value went from less than 6 million dollars in 1870 to 224 mil-
lion in 1920 (both at constant 1913 prices), while their per capita value
grew from 70 cents (of dollar) in 1870 to 16 dollars in 1920. Average
rates of growth were high for the entire period (6% per year between
1870 and 1929) but were remarkable between 1870 and 1911 (7.8% per
year in current prices and 8.5% in constant (1913) prices). As for the
quantum of exports, the higher average rates were reached in the two
decades between 1890 and 1911 (7% per year) but were significant since
1870 (5.6% between 1870 and 1911). In every respect, growth was less
impressive starting in 1913, and rather disappointing in the 1920s.
244 S. Kuntz-Ficker
Table 7.1 Value and rate of variation of Mexico’s commodity exports, 1870–1930
Value in the initial year
(constant 1913 prices,
US dollars) Average rate of variation (%)
Current Constant
Total (millions) Per capita prices (1913) prices Quantum
Maddison phases
1870–1930 6 6 3
1870–1913 7 8 5
1913–1930 2 1 0
Per decade
1870–1880 6 1 11 14 3
1880–1890 22 2 8 7 5
1890–1900 43 4 4 5 8
1900–1910 70 5 7 7 6
1910–1920 135 9 10 5 1
1920–1930 224 16 −6 −3 −3
Other periods
1870–1890 10 11 4
1870–1911 8 9 6
1870–1920 8 8 5
1870–1929 6 6 4
1890–1911 6 7 7
1911–1920 10 3 1
1913–1929 4 3 1
1920–1929 −3 −1 −3
Source: Own elaboration according to data in Kuntz-Ficker (2010).
On the other hand, one may wonder to what extent export expansion
could be counterproductive for the Mexican economy due to the so-
called Dutch disease. Its presence may be detected by estimating Mexico’s
real exchange rate with respect to the USA, its most important commer-
cial partner (see Figure 7.2).7
Figure 7.2 illustrates a succession of real exchange appreciation and
depreciation phases. The first stage of real appreciation of the Mexican peso
was short-lived (1886–1890) and originated in a variety of causes, while
the second phase was more durable (1899–1910) and may have reduced
the competitiveness of Mexican products abroad. Real depreciation of the
exchange rate also took place at two different points in time. The first one
was during the 1890s and was largely a result of the depreciation of silver.
The second and more consistent trend of real depreciation of the local cur-
180
160
140
120
100
Index
80
60
40
20
1885
1886
1887
1888
1889
1890
1891
1892
1893
1894
1895
1896
1897
1898
1899
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
7 Mexico in the Export Era (1870s–1929): Export Boom...
Fig. 7.2 Real bilateral exchange rate (with the USA), 1885–1929 (1913 = 100). Sources: For US price consumer index, Officer
(2010, pp. 142–145). For Mexico City price index, Gómez Galvarriato and Musacchio (2000, pp. 76–77). For Mexico’s nominal
exchange rate INEGI (1885, II, pp. 810–811)
245
246 S. Kuntz-Ficker
rency started in 1917 and continued (with a brief interruption) until the
end of the period. Oddly enough, the short boom of oil exports that started
in the late 1910s and ended in the mid-twenties did not provoke a phe-
nomenon of Dutch disease according to these figures.
One more indicator that deserves attention is the net barter terms of
trade, or simply terms of trade (TOT). For this purpose, Figure 7.3 pro-
vides two TOT series, one for commodities and one for specie, as it is
interesting to note the specific impact provoked by silver depreciation
upon Mexico’s TOT. In fact, terms of trade for commodity exports show
a much smaller variation than for specie, with the former moving within
the range of ±20%, except for the years 1920–1924.
Let us briefly analyze TOT deterioration due to silver depreciation.
Even though its existence is undeniable, its meaning is not straightfor-
ward. The conventional (structuralist) view suggests that a deterioration
in the TOT represented a loss of income for the economies that experi-
enced it, mostly exporters of primary products. This would be so because
falling relative prices for primary exports were more than proportional to
the productivity gains in primary production relative to those in indus-
trial production. The loss would be smaller, or even null, in the case of
those sectors experiencing fast technological progress, something that was
not generally expected in the average Latin American country (Prebisch,
1995, pp. 482–484). However, this was precisely what happened in
Mexico’s mining sector and particularly in the metallurgical industry that
developed since the 1890s. The latter was a capital-intensive industry that
incorporated cutting edge technology and whose productivity was com-
parable to that of the USA (Bernstein, 1964). A reduction in production
costs proportional to the fall in the price of silver would have offset the
loss of income by the exporting country. Even if the scant information
available does not allow a more precise account of this phenomenon,
Fig. 7.3 includes an index of labor productivity in the mining sector for
a few years within the period. As rough as it may be, it suggests that
productivity growth was substantial, particularly between 1872 and

1905, and likely to compensate falling TOT in silver. Furthermore, as
this productivity index refers to the entire mining sector, it could also
imply better terms of trade for mineral products that did not experience
a fall in price during this period.
160
140
120
100
80
Index
60
40
20
1870
1871
1872
1873
1874
1875
1876
1877
1878
1879
1880
1881
1882
1883
1884
1885
1886
1887
1888
1889
1890
1891
1892
1893
1894
1895
1896
1897
1898
1899
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
commodies specie labor producvity index (mining)
Fig. 7.3 Mexico’s net barter terms of trade (of commodity and specie exports) and productivity in the mining sector,
1870–1929 (1913 = 100). Sources: output per worker was calculated with information taken from Flores Clair et al. (1985,
pp. 17–18), González Reyna (1956), El Colegio de México (1961, pp. 131, 139, 140, 173), INEGI (1985, I, p. 404). Import price
index taken from Kuntz-Ficker (2007, pp. 495–496). As for the export price index, a Fisher index with 1913 = 100 was built
247
248 S. Kuntz-Ficker
Williamson’s assessment that improving terms of trade would hinder a

country’s industrialization does not seem to apply in this case either, as
there is not a consistent upward trend to be observed in Mexico’s long-
term series between 1870 and 1929.8 As it looks, terms of trade could
have played a role in shorter periods or specific junctures, but do not
seem to have had a consistent and lasting effect upon the Mexican econ-
omy during the export era.
he Economic Contribution of Exports:

T
Some Analytical Parameters
xport Boom and Economic Growth:
E
The Direct Contribution
Large part of the resources used in export production had been idle or
dedicated to a less productive use before the expansion of exports.
Inasmuch as the opportunity cost of these resources was rather low, their
incorporation to a (more) productive use represented a net benefit to the
economy, even if its magnitude cannot be calculated. As for the overall
benefit to Mexico’s economic growth, the direct contribution of exports
may be estimated by considering the pace of growth of the export sector
with respect to the pace of growth of the entire economy. To the extent
that export activities grew faster than the economy as a whole, they were
fostering the rate of growth of Gross Domestic Product (GDP).
It is not easy to make this estimate for Mexico, due to the scarcity
and weakness of GDP figures in existence (Riguzzi, 2009, p. 350). The
first computation available for our period refers to a single year (1877),
and a yearly estimate only starts in 1895, with a gap in information for
1911–1920. Based on these figures, which we use here with reservation,
we may conclude that exports grew in real terms at a much larger rate
than GDP between 1877 and 1929: 5% and 2% in average, respec-
tively. As a result of the intense growth of exports, their share in GDP
multiplied by five, from a meager 2.7% share of GDP in the 1870s to
14% in 1910 (5% and 17%, respectively, if we include specie).9 In the
early 1920s, this share grew further because of the oil boom, reaching a
maximum share of 23% in 1922 and declining afterward to a final 17%
in 1929.10
Trade openness—here calculated as the share of exports in GDP—is
also useful for another purpose: to estimate the direct contribution of
exports to GDP growth. Table 7.2 provides these figures for the period
after 1895.
Even though lack of data does not allow estimating this indicator for
the years before 1895, Table 7.2 confirms the notion that in almost every
stage within the export era, exports gave an important boost to the
Mexican economy. The last column shows the percentage of GDP growth
attributable to the growth of exports: an average of 32% between 1895
and 1929. This appears as an outstanding contribution, provided that
Mexico’s export sector was of a smaller size with regard to that of other
Latin American countries. Between 1910 and 1921, a contribution larger
than 100% may be explained by the fact that exports grew at a consider-
able pace while other sectors actually shrank, leaving GDP practically
stagnant. Finally, in the 1920s GDP grew faster than exports, at least in
the average, which means that the latter were already being displaced as
the engine of growth of the Mexican economy.
One could argue that the impulse that exports gave to GDP growth
had a negative counterpart inhibiting industrialization and other activi-
Table 7.2 The contribution of (commodity) exports to GDP growth, 1895–1929

(percentages)
Average Yearly average Yearly average
share of X rate of variation rate of variation Contribution of
Periods in GDP of GDP of X X to GDP growth
1895–1910 13 2.6 5.2 26
1895–1929 15 1.6 3.5 32
1910–1921 18 0.5 4.9 162
1921–1929 19 1.5 −1.5 −20
Sources: For GDP, INEGI (1985, I, pp. 311–320); for export values, Kuntz-Ficker
(2010).
Notes: X, exports (commodity); GDP, Gross Domestic Product. For 1910–1921,
the estimated share of exports in GDP is an average of 1910 and 1921, since
no GDP data exist for the rest of the 1910s.
250 S. Kuntz-Ficker
ties oriented to the domestic sector—as resources would have been

diverted from these purposes to investment in export activities. This does
not seem to have been the case in Mexico. Due to the combination of a
broad regional diffusion with a relatively modest size of export activities
in most regions, there was ample place for investment in a broad variety
of other activities oriented to the internal market. Also, as the more
capital-intensive export activities were largely under the control of for-
eign capital (mining-metallurgy and oil), native entrepreneurs could
often concentrate their resources in less capital demanding activities or in
those linked to the domestic market. Evidence that export dynamism did
not overshadow investment in the domestic sector is the contrasting per-
formance of exports and GDP in the period 1921–1929, with GDP
experiencing growth despite a negative impact from the export sector
(Table 7.2). GDP growth in the last decade of the export era is explained
largely by the stimulus of the industrial sector, which resumed its growth
trend immediately after the revolution.11 This realization challenges the
notion (derived from dependency theory) that an export-led model and
industrialization were mutually exclusive. We will address this in more
detail below.
On the other hand, we should take into account the differential role of
exports at a regional level. While some states had exports as their pre-
dominant (if not sole) activity, verging on occasion on mono-production
(Yucatán), there were others with a significant productive diversification
in exports (Veracruz, Sinaloa) or in exports and domestic endeavors as
well (Nuevo León, Coahuila), and even others that remained largely for-
eign to export activities (Puebla, Querétaro). On the other hand, the
contribution of exports to the economy of each state or region varied
according to an array of factors: the type of products, the degree of diver-
sification, the foreign/native ownership of assets, the origin and type of
labor force employed, and the connections of export activities with the
non-export sector, among others. In some states exports acted as a truly
modernizing force (particularly in northern Mexico), while in others they
maintained backward structures and hindered the formation of a labor
market (Chiapas, Oaxaca). In the north, export activities stimulated a
process of frontier expansion, with positive effects upon settlement and
the incorporation of formerly idle resources to economic activity.
Unfortunately, with the information available we cannot assess the

regional contribution of exports or their effect upon growth at a state level.
The only indication that we have of their positive impact is that fiscal rev-
enues grew faster in exporting states than in states with no export activities
(Kuntz-Ficker, 2014a). As those revenues did not necessarily originate in
activities related to the export sector, we shall assume that they are explained
by the broader prosperity associated with export success.
Related to the regionalization of Mexico’s export activities is the ques-
tion of diversification. In contrast to what happened in other Latin
American economies, Mexico’s export basket was considerably varied, to
the extent that by 1910 total export value was reached by the addition of
about 20 export products, none of which held more than 30% of the
total. Figure 7.4 presents the composition of Mexico’s (commodity)
export basket in that year. Please note that some of the products pre-
sented are actually generic entries, and thus contain more than one arti-
cle, each of which was usually produced in different regions (see Map 7).
Fibers include henequen from Yucatán and ixtle from Coahuila and
Nuevo León. Rubbers embrace products from a tree (castilla elastica) in
southern Mexico and from a shrub (guayule) in the north. On the other
hand, some articles were produced in several regions, which means that
product concentration did not necessarily reflect geographic concentra-
tion. To name an example, the strong presence in the export basket of
silver bars (28% of total commodity exports) and other mining products
(copper, lead, etc.) corresponds to a broadly spread mining sector which
had a varied importance across a dozen of states. Besides, the raw prod-
ucts extracted from hundreds of mining districts were processed at metal-
lurgical plants located at more than a dozen towns, particularly in the
central-north and north of the republic.
Product diversification and regionalization of exports had several impli-
cations at the regional level. To put it in Bulmer-Thomas’ terms, exports
can follow three different export-led models: additive, destructive, or trans-
formative (Bulmer-Thomas, 2014, p. 83). This means that the production
of an export commodity may have different effects upon the economy at
local and regional levels, depending on an array of factors: whether it is a
product of harvest or recollection; whether it is produced by peasant fami-
lies, native entrepreneurs, or foreign corporations; whether the labor force
employed is free, has some degree of q ualification, and earns monetary
252 S. Kuntz-Ficker
gum, 1
fine woods, 1 chickpeas, 1
sugar, 1
vanilla, 1
coffee, 3
other minerals, 4
lead, 4
silver bars, 28
animal products, 5
gold mineral, 5
fibers, 7
rubbers, 9
copper, 7
Fig. 7.4 Mexico’s export basket, 1910 (percentage share in commodity export
value). Note: rubbers: rubber and guayule; fibers: henequen and ixtle; animal
products: cattle, hides and skins; other minerals: antimony, zinc, and graphite;
fine woods: cedar and mahogany. Source: elaborated from information in Kuntz-
Ficker (2010)
wages; whether the product needs certain type of packaging or processing;

whether it requires financial, commercial, and distribution services and
whether these are provided by native or foreign entrepreneurs; and whether
it is processed and has further value added before heading for the external
market. All these varied conditions made a large difference as to the contri-
bution of exports: from a rather basic one of providing with some addi-
tional resources for consumption or a temporary spill of wealth upon a
particular region to raising the level of economic activity and boosting
structural change. For these reasons, the specific effects of export activities
at the regional level varied widely from one region to another and at differ-
ent stages of the export era.
xport Boom and Economic Modernization:

E
The Indirect Contribution
The Return Value
With the information available, it is not possible to build an annual

series of Mexico’s return value of exports. There is neither balance of
payments conveying remittances of capital or profits abroad nor a pre-
cise quantification of foreign direct investment or of payments to local
factors of production. Despite this lack of information, there is a piece
of evidence that is of use for our purpose: I refer to a report published
in the late 1920s by a financial expert from the USA who aimed at
assessing Mexico’s capacity to pay its foreign debt. Based upon qualita-
tive assessments and direct observation, he estimated a balance of pay-
ments for 1909–1910 and 1926 that allows discerning the share of
export value that was sent abroad from the one that remained within
the country (Sherwell, 1929). It is the latter, also called “retained value”
of exports what we wish to identify, as it contributed to fix capital for-
mation and to increase aggregate demand within the Mexican economy.
The resulting estimate is not accurate, as it does not account for remit-
tances abroad that may have returned to Mexico as reinvestments, or
for imported inputs destined for productive consumption in the export
sector. However, our purpose is less to provide an exact quantification
of these resources than to show, in orders of magnitude, the economic
significance of the wealth that, stemming from the export sector, poured
on the national economy on a yearly basis.
Let us comment briefly Sherwell’s estimates for the years 1909–1910
and 1926, as it provides an interesting picture of the national origin of
assets’ ownership in the export sector. According to his figures, return value
was relatively small in some activities characterized by foreign participation
in production and distribution. This happened in oil (a branch that did not
exist in 1909), with barely 39% of the value of oil exports retained by the
Mexican economy in 1926, and in some agricultural activities (rubber and
guayule, gum). On the other hand, return value was considerably high in
the mining sector (79% and 81% of the value of mining products exported
254 S. Kuntz-Ficker
in 1909–1910 and 1926, respectively) and in other relevant export activi-

ties, as henequen (97% and 87%, respectively, in each of those years) and
coffee (92% and 84%). In the case of mining, high shares of return value
were attributed to the large amount of domestic inputs and local labor
employed, whereas in coffee and henequen, to the prevalence of domestic
capital in the production process, despite foreign participation in financing
or distribution. Livestock exports also appeared with a high return value
(91% and 86% in both years, respectively). Overall, the author considered
that aggregated retained value was higher in 1909–1910 (77%) than in
1926 (65%), suggesting that a denationalization of assets took place in
between—which is somewhat paradoxical given the nationalistic rhetoric
of the revolutionary regime in the 1920s.
For our estimate (Figure 7.5), we have used Sherwell’s percentages of
return value by group of exports (mining, agricultural, etc.), considering
250
200
150
millions
100
50
0
1880 1890 1900 1910 1920 1929
RV: upper-bound esmate RV: lower-bound esmate Total export value
Fig. 7.5 The return value of exports, compared to their total value, 1880–1929
(dollars at constant 1913 prices). Note: elaborated from Sherwell’s estimates for
1910 and 1926 on the share of export value that stayed in Mexico (return value)
or was remitted abroad (leakage) by export group. For our estimate, we weigh
the yearly share of each group in the total value of exports and take the propor-
tions given by Sherwell for 1910 and 1926 as upper- and lower-bound estimates
for the return value in each year. Source: Sherwell (1929)
the share given for 1910 as an upper-bound estimate and that for 1926 as
a lower-bound estimate. Then, we use these shares to estimate the abso-
lute figures of return value from the total value exported by group in
selected years between 1880 and 1929. With this procedure, the return
value also depends on the composition of exports at each point within
the period.
Figure 7.5 illustrates that the proportion of export value retained by
the Mexican economy with respect to the total value of exports changed
widely as a result of the composition of exports. Thus return value was
much higher in the initial decades of the period than after 1910, and
found its lowest level during the oil boom, due to the overwhelming
control of this activity by foreign concerns. Return value went from
above 80% of total export value between 1880 and 1900 to 63% in
1920. Accordingly, when oil exports diminished, the return value of
exports recovered, reaching 73% of total export value in 1929.
However, ownership was not the only determinant of the destination
of export income. Mining was also an activity largely controlled by
foreign capital but used a lot of domestic inputs and an abundant local
labor force. By contrast, oil production was less labor intensive and
operated more as an enclave, providing a smaller contribution to the
Mexican economy.
In any event, the return value of exports represented a considerable and
increasing stream of resources, a welcome relief for an economy that had
traditionally suffered from capital scarcity and weak markets. Just to give an
idea of the relative significance of these figures, let us mention that the
return value of exports in 1880 (about 26 million dollars at constant 1913
prices) was higher than total federal income in that year (about 22 million).
By 1910, return value was equivalent to 68% of the amount of public debt
and 14% of GDP.12 Part of these resources was employed to pay for domes-
tic factors of production (land, labor, and capital), as well as to purchase
locally produced inputs. Another part was destined to the payment of taxes.
Direct taxes to export activities were relatively low and changed over time,
but some of them (particularly in mining) held throughout the period and
had the advantage of providing resources at the municipal, state, and fed-
eral levels.13 Furthermore, export success brought about prosperity in many
other areas, benefiting public finances with additional resources, which in
256 S. Kuntz-Ficker
turn were increasingly spent productively in infrastructure and public ser-

vices.14 As to the use of profits and rents, it is hard to assess to what extent
they were invested in productive activities or wasted in unproductive con-
sumption. The enlargement of productive endeavors surrounding mining
areas and export activities in general suggests that local entrepreneurs prof-
ited from growing investment opportunities. In any event, evidence sug-
gests that the use of those resources was far more productive in periods of
peace than during the Mexican civil war. In fact, it is likely that capital
flight and increased imports drastically shrank the retained value of exports
for most of the 1910s.
e Purchasing Power of Exports and the Changing

Th
Composition of Imports
Another way to look at the income generated by the export sector is the
capacity to import that it provided to the Mexican economy. The pur-
chasing power of exports grew at an average rate of 5% between 1870
and 1911, 4% per year between 1870 and 1926. Now, the extent to
which the foreign exchange obtained from sales abroad may act as a
stimulus to the economy depends on the use given to it. Up until the
1870s, Mexico’s imports consisted mostly of consumption goods, which
had no effect upon economic activity. This started to change as the
impulse toward economic modernization took hold among Mexican
elites and resources available were increasingly invested in the construc-
tion of infrastructure and the furnishing of the economy. The govern-
ment participated in this effort by means of a developmentalist
commercial policy that liberalized the importation of capital goods
while at the same time granted selective protection for import-compet-
ing activities (Beatty, 2002). The average height of the tariff fell (as a
result both of currency depreciation and tariff liberalization) from
around 50% until the 1880s to 23% starting in the 1890s.15 Within
this overall trend, productive inputs saw their import duties reduced to
a minimum (10% or less ad valorem), while textiles, iron and steel arti-
cles, and other products competing with the nascent industry kept high
tariffs (of 50% or more ad valorem).16
Structural change in the Mexican economy and tariff policy converged

to elicit a dramatic change in the structure of imports, from one com-
posed in 70% of consumer goods in 1880 to one consisting in that same
percentage of production goods in 1910 (Figure 7.6).
Change in the structure of imports took place because, amid fast
growth of total imports, the importation of production goods grew much
faster than that of consumption goods, with an average yearly rate of 5%
for the former against 2% for the latter. Within capital goods, imports of
all types of machinery grew at a yearly average rate of 11% between 1870
and 1911 and 8% for the entire period (1870–1929) (Kuntz-Ficker,
2007, p. 279). While at first this transition was sparked by the acquisition
of railroad equipment, starting in the 1890s it was strongly stimulated by
the importation of industrial machinery. Thus, the growing presence of
capital goods in Mexico’s import basket signals a process of economic
modernization that included the beginnings of industrialization and
that held with varying intensity throughout this period, safe for the
height of the civil war. In particular, the fact that the importation of tex-
tiles grew at a rate barely above that of the population (1.4% and 1.1%,
100%
90% PG machinery and

equipment
80%
fuels
70% PG
producve inputs
60%
50% foods and

beverages
40% CG
texles
30%
CG
20%
10%
0%
1870s 1890s 1910s 1928
Fig. 7.6 The structure of Mexican imports, 1870–1928 (percentage upon value).
Note: PG: production goods; CG: consumption goods. Sources: own elaboration
according to the reconstruction of value and composition of trade in Kuntz-Ficker
(2007, p. 277 and ff.)
258 S. Kuntz-Ficker
respectively) within a context of economic growth and market expansion

suggests that both import substitution and new demand acted as sources
of industrial growth (Beatty, 2000).
The shift in the composition of imports contradicts the conventional
idea that capacity to import generated by exports was mostly used to
satisfy the luxury consumption of the “buying oligarchy” and did not
have a visible effect upon the economy.17 Far from that, partial indicators
show that these resources were crucial to furnish the Mexican economy,
contributing to structural change and industrialization. As mentioned
before, the link between imports and economic modernization was tem-
porarily checked during the peak of the Mexican revolution in the 1910s.
Then, the importation of capital goods fell dramatically, while most of
the purchasing power of exports was used to finance warring factions,
buying weapons and ordnance abroad at inflated international prices. It
was also employed to remedy the shortage of foods and other commodi-
ties amid the civil war. By these and other means, the Mexican revolution
temporarily broke the link between exports and economic growth. As
soon as the war was over, capital goods’ imports recuperated fast, because
of inventories’ replacement and the resumption of investment by private
entrepreneurs (foreign and domestic) and by the State.
I nvestment Associated with the Export Boom

and Positive Externalities
In Mexico, the surge of export activities attracted investments with strong

positive external effects benefiting the entire economy. A clear example of
this was the mining sector. Machinery imported to extract water from the
mineshafts soon was used to introduce drainage in urban settlements.
Electric companies that started operations to provide mines with illumi-
nation broadened their services delivering electricity to the neighboring
towns. By the early 1900s, there were about 100 electric companies oper-
ating in the country. The climax of these endeavors was the Necaxa
hydroelectric system, which by the time of its inauguration in 1905 was
considered the largest in the world and, for decades, the more important
in Latin America (Peña Guzmán, 2012). The positive externalities of
these investments are visible but hardly quantifiable. By contrast, there is

one undertaking usually associated with the export boom that had a pow-
erful and assessable impact upon the Mexican economy: railroads, also
the most important achievement of economic modernization during the
export era.
Between 1880 and 1910, 20,000 kilometers of railways were built in
Mexico, under the auspices of the government (which granted cash
subsidies per kilometer) and the decisive impulse of foreign capital. The
conventional interpretation (produced under the influence of depen-
dency theory) acknowledged the importance of railroads in terms of
social savings, given that Mexico lacked efficient alternative means of
transportation. By 1910, railroads would have provided between 11%
and 25% of GDP in social savings, and contributed with at least 29%
of national income and 36% of productivity growth between 1895 and
1910. However, according to this view, most of the benefits would have
concentrated in the export sector and enhanced export-led growth,
which was considered fundamentally negative for long-run economic
development. The main piece of evidence for this assessment was the
shift that took place in the composition of railroad cargo between 1884
and 1907, from one mainly consisting of agricultural goods to one in
which mining products prevailed (Coatsworth, 1981). Under the
assumption that mining cargo all belonged to the export sector, it
seemed clear that railroad transportation benefited exports, not the
domestic market.
More recent research has challenged this interpretation (Kuntz-Ficker,
2015; Riguzzi, 1995). For the issue at hand, the problem lies in the assump-
tion that all mining products transported by railroads were for export. Our
research has found that 60% of the so-called mineral cargo was made of
coal and coke and construction materials, that is to say, articles for produc-
tive consumption within the modern sector of the Mexican economy that
in fact were partially imported. Another 36% was made of ores, the main
input of the metallurgical industry that, by processing those minerals, con-
verted raw materials into concentrates and intermediate goods, adding
value to exports before shipping them abroad. Although this industry was
largely foreign owned and used imported technology, it also consumed a
broad range of domestic inputs and hired native labor force, including
260 S. Kuntz-Ficker
skilled workers that earned the best wages available in the country. The
output of this industry provided 3% of mining cargo in 1907 and was the
only item of this group directly destined for export.
Considering that railroads’ original grouping by classes may be mislead-
ing, we propose a different way to classify freight in order to discern the
type of activities that benefited from railroad transportation. Figure 7.7
accounts for the cargo transported by 20 railroad companies in 1906–1907,
representing 85% of total railroad freight in that year.18 The sample does
not underestimate export cargo, as it includes all the lines that crossed min-
ing areas and those of Yucatán transporting henequen. In Figure 7.7 we
first grouped the entire load into three categories: ores, actual exports, and
cargo for the domestic market. As we explained before, ores were products
broadly belonging to the export sector but that underwent industrial pro-
cessing before being exported. Thus, “actual exports” include the cargo that
was sent abroad (metals in bars and ingots, coffee, cocoa, fibers, as well as
20% of forestry and 40% of cattle transported). Together, these two groups
(ores and “actual” exports) represent freight related to the export sector and
provided 24% of total railroad cargo.19 The larger share in this figure (76%
of total freight) corresponds to cargo that belonged to the domestic market,
and is then divided into a class of articles that contributed to economic
modernization (35% of total railroad cargo), and another containing all
EXPORTS, 5 ECONOMIC
MODERNIZATION, 35
coal and coke:
20%
construcon
domesc market materials: 10%
machinery and
76 equipment: 5%
agricultural (foods
and inputs):21%
ORES, 19 Forest: 9%
livestock: 2%
miscelaneous: 7%
REST, 41
Fig. 7.7 Composition of railroad cargo, 1906–1907 (percentage upon total ton-
nage). Note: For sources and railroad companies included, see text
the remaining freight, labeled “rest” (41% of the total). Along with agricul-
tural, forest, and livestock products for internal consumption, the “rest”
includes miscellaneous products, mainly groceries and manufactures, all for
the domestic market.
This grouping allows reassessing the role played by railroads in the
Mexican economy. On the one hand, cargo belonging to the export sec-
tor includes the main input of an industrial activity that produced exports
with value added and significant spillovers. Only 5% of total cargo was
composed of actual exports, that is to say, of articles headed for the exter-
nal markets. On the other hand, the more important components of
railroad cargo (76% of the total) belonged to the domestic sector of the
economy and contributed to economic modernization and the integra-
tion of the internal market. The implications of this are far-reaching. It
means, first, that a significant share of social savings favored the domestic
economy rather than exports and, second, that the number of beneficia-
ries was broader than previously acknowledged, including agricultural
producers, industrials, construction entrepreneurs, merchants, and con-
sumers. If one could still argue that railroads were built to promote
exports, it should be at least acknowledged that their positive externalities
were larger than the benefits they provided to the export sector.
Forward Linkages: Exports and Industrialization
In a first stage of the export era, the Mexican economy specialized on the
production of primary goods for the external market. Ores extracted
from the mines were exported in a raw state, mainly to the USA, along
with some foodstuffs (coffee) and raw materials with scant value added
(woods, natural dyestuffs, henequen). A qualitative leap took place start-
ing in 1890, when a protectionist tariff enacted in the USA imposing
high duties on lead ores fostered the relocation of metallurgical plants
from that country to Mexico. This event changed dramatically the nature
of Mexico’s mining sector, as it added an industrial phase to the extractive
activity. Progressively, Mexican mineral exports included metallurgical
intermediate products (Kuntz-Ficker, 2010, pp. 209–213). By 1929,
262 S. Kuntz-Ficker
most of the minerals exported were refined products (metals in bars and
ingots) with industrial value added. Something similar happened with
oil. In Mexico, petroleum extraction and exports started in the 1910s,
and oil became a leading component of the export basket by the second
half of that decade, while at the same time part of it started to be refined
within the country. Even though oil exports declined dramatically after
1925, refining activities continued. By 1929, the volume of oil exports
was considerably lower, but its composition denoted a higher degree of
processing, including derivative products and fuels.20 Figure 7.8 illus-
trates both processes.
At the same time, some agricultural activities incorporated innovations
in the use of resources and the organization of the productive process to
the extent that, without changing dramatically their production func-
tion, became more efficient. In some cases, the exportation of the raw
material required some processing or an elaborated packaging, leading to
the establishment of plants that employed machinery and a more skilled
labor force. For example, by the end of the period, cotton and henequen
were packed with high-pressure presses.
Some agricultural products that were destined for export developed
forward industrial linkages; although modest in the early stage, they laid
the groundwork for later development. In Yucatán, where the monocul-
ture of henequen for export expanded, early in the twentieth century an
industrial plant to produce fiber manufactures was established. After
many vicissitudes, it not only supplied part of the domestic demand for
sacks and robe but also began exporting sacks to Argentina. Cotton from
the northern region of La Laguna aimed at first at satisfying the demand
A. Mineral exports B. Oil exports

RAW
CONCENTRATES CRUDE
DERIVATIVES
REFINED
FUELS
Fig. 7.8 Mineral and oil exports according to their degree of processing, ca. 1929
(percentage upon volume). Source: Kuntz-Ficker (2010)
of the domestic textile industry. As cultivation expanded, the surpluses

were in part exported and in part used as inputs for a series of domestic
industrial endeavors. Cotton industrial linkages included the production
of cottonseed paste, soap, oils, and glycerin (an input used in the produc-
tion of dynamite, which also started in Mexico in the early 1900s). In the
1920s, in the northwestern state of Sinaloa, the cultivation of tomato
soared because of growing demand for winter vegetables in California.
An increasing surplus production sparked an industrial linkage at the
local level, leading to the establishment of a canned food industry with
brands that became famous over the century as Del Monte, Hérdez, and
Del Fuerte.
Other export products that connected with the domestic sector by
means of industrial linkages were animal skins, the main input for a shoes
and leather industry, and fruits, used to elaborate canned and bottled
juices. These products of manufacture had as their natural destination the
domestic market, though eventually enriched Mexico’s export basket.
By 1929, Mexican sales abroad included rope, cottonseed paste, shoes
and leather articles, and citrus fruit juices, contributing half a million
dollars in export income (Kuntz-Ficker, 2010, p. 563). Although discrete
at first, these branches of exports were swelling by the 1940s.
Besides industrial linkages, exports generated considerable links with
the services sector, sparking businesses in areas like packaging, storage,
distribution, and commercialization. Recent studies have shown the sig-
nificance of these activities at the regional scope and their capacity to
promote urbanization, as well as changes in the structure of the labor
force and other carry-over effects. Their impact was more visible in the
north and northwest, a huge area of recent settlement, where this process
gave place to thriving cities that became poles of attraction for people and
for capital (Carrillo Rojas & Cerutti, 2006).
Export Boom and Energy Transition
In the case of Mexico, as probably in the rest of Latin America, the use
of coal became indispensable with the introduction of railroad technol-
ogy. At first, and despite the existence of coal mines, coal had to be
264 S. Kuntz-Ficker
imported due to institutional constrains that hindered its exploitation

(Riguzzi, 1999). Starting in the 1890s those restrictions were lifted and
coal mining thrived, with the initial aim of providing fuel for railroad
companies. The operation of metallurgical plants starting in the 1890s
created further demand for fossil fuels. As Mexican coal was not always
appropriate for this use, local production was complemented with
imports. By 1920, domestic output of coal surpassed eight million tons,
half of which was converted into coke for its use in metallurgy (Sterret &
Davis, 1928, p. 194).
The idea of an energy transition merely “induced” by the export com-
plex (Travieso, 2015) does not seem to apply to Mexico. Even if rail-
roads and metallurgy were indeed the main consumers of modern
energies, energy transition also took place in the domestic sector and
went together with industrialization. In fact, the availability of modern
energies may be considered a positive externality of activities that origi-
nally developed in close bonding with the export sector, as was the case
of coal mining and oil extraction. According to the first industrial census
(Secretaría de la Economía Nacional, 1933), of all the energy consumed
by the Mexican industry, 86% consisted of modern energies (mineral
coal, oil and its derivatives, and electricity) and only 14% of traditional
energies (charcoal and firewood). Figure 7.9 provides a more detailed
view by activity.21
As the figure shows, industrial branches that appear as the main
energy consumers were those producing consumer goods (textiles,
foods and beverages, tobacco, etc.) and the electric sector. These were
also the more important consumers of traditional energies, but in a
proportion that was modest relative to the total. Other industries ori-
ented to the domestic market (construction materials, chemicals, pot-
tery, and glass) also used mainly modern energies. What is worth noting
is that even though the prevalence of modern energies in Mexico’s
industries was probably a consequence of energy transition induced by
the export boom, industrial activities mostly oriented to the export
market (oil and metallurgy) consumed a small amount of energy rela-
tive to the rest. Again, the positive externality was more effective than
the original purpose of investment.
Oil refining and disllaon
Metallurgy and metalic products
Construcon materials
Chemicals, poery, and glass
Light, electric power and heang
Manufactures for consumpon*
0 2 4 6 8 10 12 14 16 18
tradional modern
Fig. 7.9 Type of energy consumed in Mexican industries, 1929 (value in millions of pesos). Source: Secretaría de la Economía
Nacional (1933). *Includes textiles, leather articles, foods, tobacco, paper, jewerly, graphic arts, and art objects
265
266 S. Kuntz-Ficker
Balance
Conventional approaches, even in their more radical versions, often
considered Mexico as a singular case of relative success in the Latin
American context (Bambirra, 1978, p. 76). This country’s experience
stood out because of its contrast with a picture in which the export-led
model entailed “a large economic specialization” in a small number of
commodities and a “strong exit of surpluses”, hindering the creation of
an internal market because of the “concentration of income in the
enclave sector” (Cardoso & Faletto, 1971, pp. 49–50). In Mexico,
when internal polity and institutions finally converged with auspicious
international conditions, an abundant and varied resource endowment
made it possible to grow, from a rather closed economy with a discrete
presence in the world market to a successful exporting nation with a
robust and diversified export sector. Mexico’s exports included products
from agriculture, livestock, forestry, mining, and oil; over time, its
export basket embraced not only primary products but also intermedi-
ate industrial products. During the more expansive phase of export-led
growth between the 1870s and 1912, exports provided a significant
contribution to the growth of the Mexican economy. They triggered
economic recovery after decades of stagnation, fostered investment in
infrastructure (railroads, ports, electricity, drainage) with strong posi-
tive externalities for the rest of the economy, produced spillovers that
contributed to increase the level of internal saving and aggregate
demand, generated intersectoral linkages, and contributed to industri-
alization and energy transition. Ironically, more recent approaches have
rejected the positive exceptionality of the Mexican case and arrived at
the opposite assessment, namely, that Mexico was an experience of fail-
ure during the export era (Bulmer-Thomas, 2014, p. 511). As we have
tried to show, his judgment was misguided, largely because of the use of
faulty evidence. Therefore, the optimistic characterization of Mexico by
dependency theorists was more accurate. It remains to assess to what
extent this favorable picture is due to the specificities of Mexico with
respect to other Latin American countries or to the mischaracterization
of the pattern of growth in the conventional views.
In Mexico, resources were unequally distributed throughout the

republic, producing a clear regionalization of the export sector with dif-
ferent intensities and differential effects at the regional level. The contri-
bution of exports to the economy of particular regions depended on
many factors, as the type and duration of the activity, the national origin
of investment, its wage and fiscal spillovers, and its intersectoral linkages
at the local level. The outcome was a heterogeneous landscape in terms of
the presence of export activities and of the contribution of each activity
at the regional level, depending on its specific features and context.
Bulmer-Thomas has argued that Mexico’s export sector was not big
enough and that its export boom did not last long enough to be consid-
ered a successful case of export-led growth (Bulmer-Thomas, 2014,
p. 67). Judging by the outcomes of this experience, this does not seem a
reasonable conclusion. Available evidence indicates that exports provided
a rather significant contribution to GDP growth for over four decades,
between 1870 and 1912. Besides, the relatively modest size and the geo-
graphic dispersion of Mexico’s export sector did not necessarily diminish
its contribution to the Mexican economy. In fact, these features may have
had a positive effect, because the benefits and spillovers of exports spread
throughout the territory. Another advantage of a smaller but regionalized
export sector was that it did not absorb all the resources available and
neither put down the development of other endeavors, which, in turn,
benefited from the strengthening and integration of the domestic market
and of the infrastructure that came with export success. Even if Mexico’s
export performance was not as outstanding as that of the most successful
Latin American countries in terms of its size, it compares favorably with
them regarding its growth rates, its diversification, and its sectorial
composition; furthermore, it was remarkable relative to its own trajectory
and feasible alternatives.
The main downside of Mexico’s experience is associated with the
Mexican revolution. As we have seen, until 1912 exports grew fast and
sparked structural change and industrialization. The civil war had a
more profound impact than affecting transitorily the volume of exports.
It broke the virtuous dynamics that existed between export activities
and economic growth and their fruitful connections with the domestic
sector. The reinvestment of profits was severely checked as foreign
268 S. Kuntz-Ficker
investors fled from internal warfare and native entrepreneurs diverted

their resources from productive uses. Taxes extracted from export activ-
ities deviated from their usual goals as the centralized control of taxa-
tion was lost and military leaders seized those resources to finance the
different armies participating in the civil war. Had conditions of stabil-
ity prevailed in Mexico during the years of WWI, the country would
have profited from the international demand for strategic products to
give an additional impulse to an export platform that had just been
enlarged with the valuable addition of oil. The failure here did not
come from the pattern of development, but from the rupture of the
mechanism that turns wealth generation into economic growth. When
this mechanism was reinstated in the 1920s, there was a less favorable
international environment for export-led growth. With the premature
decline of oil sales and the progressive fall in demand and prices of
other commodities, Mexico’s export cycle started to fade even before
the 1929 economic crisis took it to a definitive end.
Epilogue
By the time the Great Depression (GD) hit the Mexican economy, the
latter was already going through a recession, aggravated by pro-cyclical
fiscal and spending policies. The impact of the crisis was felt in every sec-
tor of the Mexican economy and public finances. In 1929–1932, exports
fell by 65% and real GDP by 18%, while public income fell by 34%
(relative to 1925). Recovery started soon, though, thanks to the aban-
donment of orthodox fiscal, monetary, and exchange rate policies, and
even if in 1937 another recession in the USA affected Mexico, changing
conditions and the beginning of WWII limited the duration and depth
of its effects (Cárdenas, 2015). In the meantime, the Mexican govern-
ment implemented measures that strengthened the domestic market and
changed the economic balance between public, private, foreign, and
domestic investments, as the agrarian reform and the nationalization of
railroads (1937) and oil (1938).
WWII benefited the Mexican economy by increasing external demand,
improving terms of trade for Mexican exports, enhancing public finances,
and creating conditions for a favorable negotiation of external debt.

Industrial production thrived amid these favorable conditions but plum-
meted after the war, providing justification for the official adoption of
protectionism and an import substitution policy. A current of thought
inspired by structuralism has interpreted this juncture as the starting of
industrialization in Mexico (Moreno-Brid & Ross, 2010, p. 762).
For our purpose, it is important to stress that industrialization had
started and taken root in Mexico amid export-led growth, long before
import substitution policies were officially adopted. Industrial growth
intensified in the 1890s, precisely during the years of prosperity directly
associated with export expansion. By 1910, several industrial activities
had consolidated in the country, in branches of consumer goods (cotton
textiles, beer, tobacco, soap, pastries, and cookies) and also of some pro-
duction goods (cement, glass, iron and steel, dynamite). Under the shel-
ters of currency depreciation and tariff protection, manufacturing
industries supplied the growing demand provided by the domestic mar-
ket and started substituting imports of many items. Some export activi-
ties generated industrial linkages, producing manufactures for the internal
market or adding value to exports.
Although the Mexican revolution temporarily checked this process,
the 1917 Constitution did not pose a threat to the industrial sector, as the
latter was perceived as representing the progressive national bourgeoisie.
In fact, the new labor rights enshrined in the Constitution were only
partially enforced and rather negotiated at the state level until a federal
labor law was enacted in 1931. Volatility in the external sector, the con-
tinuation of protectionist policies, and changing relative prices favored
industrial growth in the 1920s. The industries that originated in the
Porfiriato added new branches as chemicals, beverages, canned foods, and
meatpackers. By 1929, as much as 80% of the total supply of manufac-
tured consumer goods in Mexico stemmed from the domestic industry.
Although to a lesser extent, import substitution had also reached inter-
mediate goods: in that year, 65% of their total supply came from abroad,
while the rest was fabricated in Mexico (Cárdenas, 1987). The export
sector was also industrializing, as by then 75% of all mining exports were
intermediate products of the metallurgy and 50% of oil exports were
refined or derived products. Industrial activities, including both the man-
270 S. Kuntz-Ficker
ufacturing sector oriented to the domestic market and the metallurgical

sector mostly headed for export, contributed with 20% of GDP in 1929
(Kuntz-Ficker, 2017, p. 15).22
All the factors that favored the continuity of industrialization during
the 1920s were reinforced during the period of recovery from the GD,
particularly when the government embraced heterodox monetary and fis-
cal policies in order to spark economic activity. Currency devaluation
favored import substitution, while uncertainty generated by the agrarian
reform created incentives for industrial investment. Between 1932 and
1934, industrial output grew at 21% per year in average, fostering eco-
nomic recovery and consolidating a course of events that had been taking
place at least since the 1890s. The process continued in the rest of the
decade and received a further stimulus during WWII. However, most of
industrial growth that took place in this period was to a large extent pos-
sible thanks to installed capacity created amid export-led growth.
Notes
1. Both effects ceased when Mexico adopted a gold exchange standard
starting in 1905.
2. Henequen and ixtle were hard fibers, the former produced in the Yucatán
peninsula and the latter in the north. Guayule was a bush that grew also
in the north that produced a type of rubber, while rubber was extracted
from a tree cultivated in the Gulf area and in the southern states of
Chiapas and Oaxaca (Kuntz-Ficker, 2010).
3. The analysis of Mexico’s exports is based upon the reconstruction of for-
eign trade series according to both Mexico’s official sources and those of
its main trading partners ( the USA, the UK, Germany, France, Belgium,
and Spain) (Kuntz-Ficker, 2007, 2010).
4. Under specie we include gold (bullion and coin) and silver (coin), while
silver bullion is included in the commodity trade. Mexican silver coin
was the main means to pay for imports and was used as a means of
exchange in many Asian countries. Mexico’s monetary system was bime-
tallic until a gold exchange standard was adopted in 1905. However, the
monetary chaos provoked by the Mexican revolution led to reassume
silver coinage starting in 1918, which continued until 1927. Sterret and
Davis (1928, pp. 121–122), Cárdenas and Manns (1992).
5. As we will see later, the effect of the Mexican revolution upon external
sales was not as serious as the impact that it had upon linkages and spills
of exports upon the rest of the economy.
6. The wrong value for 1857 represents an overestimate of three times the
actual value of exports in that year. In Table 1.2, he calculates a 2.2%
growth rate between 1850 and 1912 instead of the 4.1% that would
result from the correct figures. Another difference with Bulmer-
Thomas’ analysis in this respect is that he considers silver currency
transfers as part of Mexico’s exports, which leads to overestimate the
development of the export sector in the early years of the period.
Bulmer-Thomas (2014).
7. For lack of a consumer price index for Mexico, we use a Mexico City
price index, which is available only for part of this period. Because of this
reason, the estimate is somewhat fragile and subject to revision.
8. For Williamson’s deindustrialization argument, see Williamson (2006);
for an assessment on Mexico before the export era, see Dobado González,
Gómez Galvarriato, and Williamson (2008).
9. Our figures contrast again with those provided by Bulmer-Thomas for
this indicator: according to Table A.2.1, the ratio of exports to GDP
would be 0.097 (that is to say, a percentage share of 9.7%) for 1908–1910,
including specie, well below our estimates. Bulmer-Thomas (2014,
p. 467).
10. GDP data from Coatsworth (1990, p. 117) for 1877 and INEGI (1985,
I, pp. 313–331) for 1895–1929, both in values at constant prices with
different base years (which were changed to make them comparable).
GDP data, originally in pesos, were converted into US dollars at the
exchange rate provided by INEGI (1985, II, pp. 810–811).
11. On Mexico’s early industrialization see Cárdenas (1987), Haber (1989,
2006), and Cerutti (1992).
12. Public federal income according to Pérez Siller (1982, p. II); public debt
according to Carmagnani (1994). GDP according to INEGI (1985, I,
pp. 313–331), converted to dollars.
13. For a couple of examples, in 1883, a processing plant in Guanajuato paid
10.4% of output in taxes, from which 0.9% were municipal duties,
3.2% state taxes, and 6.2% were federal taxes. In the 1920s the company
Real del Monte paid between 9 and 11% of total output in taxes. Some
agricultural products, like henequen and coffee, paid taxes that were rel-
evant for the states’ finances, while at the federal level were of lesser
importance. Kuntz-Ficker, 2010.
272 S. Kuntz-Ficker
14. Carmagnani (1994). About the differential performance of state finances

for states with or without export activities, see Kuntz-Ficker (2014a).
15. Cotton thread went from a 70% to a 2% ad valorem duty between
1890 and 1929, while tanned skins went from 82% to 18% within the
same time span. Other production goods, as machinery, got the lowest
tariffs, of less than 5% ad valorem, or were exempted during most of
the period.
16. All this took place, as just said, within a context of diminishing overall
tariffs. For a few examples, coarse cotton cloth went from a 134%
ad valorem duty in 1889 to a still high of 46% in 1929, and leather
articles from 64% to 50% within the same period (Kuntz-Ficker,
2007).
17. Cárdenas (1987, p. 23) acknowledged that consumer goods represented
around one third of Mexico’s imports, but failed to give this feature its
significance in terms of the use of imports as an instrument to promote
the structural change of the economy.
18. The railroad companies included in the sample are: Mexican Central,
Mexican National, Mexican, International, Interoceanic, South Pacific,
Monterrey to Gulf, Chihuahua to Pacific, Coahuila and Zacatecas, Rio
Grande, Sierra Madre and Pacific, Torres to Minas Prietas, Saltillo to
Torreon, Nacozari, Carbonífero from Coahuila, Kansas City, Cananea
and Rio Yaqui, Mexicano del Sur, Tehuantepec, Unidos de Yucatán.
Cargo data were gathered from AGN, SCOP.
19. There is some overestimation of exports in this account, as ores were
mostly exported as metals.
20. In this sense, Cárdenas mischaracterized Mexico’s export sector by assum-
ing that “practically all of the products exported were raw materials and
almost always non-processed ones” (Cárdenas, 1987, p. 28).
21. The use of values instead of a measure of volume or power may bias the
results. However, the information available is not uniform as to the
power provided by different types of energy. The clear predominance of
modern energies, though, lowers the significance of the possible
distortions.
22. Bulmer-Thomas also underestimates this phenomenon due to the exclu-
sion of metallurgy from his account of industrial GDP. As a consequence,
he undermines Mexico’s position in the Latin American context. Bulmer-
Thomas (2014, pp. 145, 206).
References
Archival Sources
Archivo General de la Nación (México). Secretaría de Comunicaciones y
Transportes (AGN, SCOP).
Bibliography
Bambirra, V. (1978). El capitalismo dependiente latinoamericano (7th ed.).
México: Siglo XXI.
Beatty, E. (2000). The impact of foreign trade on the mexican economy. Terms
of trade and the rise of industry, 1880–1923. Journal of Latin American
Studies, 32(2), pp. 399–433.
Beatty, E. (2002). Trade policy in Porfirian Mexico: The structure of protection.
In S. H. Haber & J. Bortz (Eds.), The Mexican economy, 1870–1930: Essays
on the economic history of institutions, revolution, and growth (pp. 205–254).
Stanford, CA: Stanford University Press.
Bernstein, M. (1964). The Mexican mining industry, 1890–1950. A study of the
interaction of politics, economics and technology. New York: State University of
New York.
Cárdenas, E. (1987). La industrialización mexicana durante la Gran Depresión.
Cárdenas, E. (2015). El largo curso de la economía mexicana. México: Fondo de
Cultura Económica.
Cárdenas, E., & Manns, C. (1992). Inflación y estabilización monetaria en
México durante la Revolución. In E. Cárdenas (Ed.), Historia económica de
México (Vol. III, pp. 447–470). México: Fondo de Cultura Económica.
Cardoso, F., & Faletto, E. (1971). Dependencia y desarrollo en América Latina.
Ensayo de interpretación sociológica (3a ed.). México: Siglo XXI.
Carmagnani, M. (1994). Estado y mercado. La economía pública del liberalismo
mexicano, 1850–1911. México: Fondo de Cultura Económica.
Carrillo Rojas, A., & Cerutti, M. (2006). Agricultura comercial, empresa y desar-
rollo regional en el noroeste de México. Culiacán: Universidad Autónoma de
Sinaloa/Universidad Autónoma de Nuevo León.
274 S. Kuntz-Ficker
Cerutti, M. (1992). Burguesía, capitales e industria en el norte de México.

Monterrey y su ámbito regional (1850–1910). México: Alianza Editorial/
Universidad Autónoma de Nuevo León.
Coatsworth, J. (1981). Growth against development: The economic impact of rail-
roads in Porfirian Mexico. DeKalb: Northern Illinois University Press.
Dobado González, R., Gómez Galvarriato, A., & Williamson, J. G. (2008).
Mexican exceptionalism: Globalization and de-industrialization, 1750–1877.
The Journal of Economic History, 68(3), 758–811.
El Colegio de México. (1961). Estadísticas económicas de México. Comercio
Exterior. México: El Colegio de México.
Flores Clair, E., et al. (1985). Estadísticas mineras de México en el siglo XIX.
México: Instituto Nacional de Antropología e Historia.
Gómez Galvarriato, A., & Musacchio, A. (2000). Un nuevo índice de precios
para México, 1886–1929. El Trimestre Económico, 67-1 (265), pp. 47–91.
González Reyna, J. (1956). Riqueza minera y yacimientos minerales de México
(3rd ed.). México: Banco de México.
Haber, S. (1989). Industry and underdevelopment. The industrialization of Mexico,
1890–1940. Stanford: Standord University Press.
Haber, S. (2006). The political economy of industrialization. In V. Bulmer-
Thomas, J. Coatsworth, & R. Cortés Conde (Eds.), The Cambridge economic
history of Latin America (Vol. II: The Long Twentieth Century, pp. 537–584).
Cambridge, MA: Cambridge University Press.
Haber, S. H. (2003). The politics of property rights: Political instability, credible
commitments, and economic growth in Mexico, 1876–1929. Cambridge, MA:
INEGI (Instituto Nacional de Estadística, Geografía e Informática) (1985).
Estadísticas históricas de México. 2 volumes. México: INEGI.
liberal, 1870–1929. México: El Colegio de México.
Kuntz-Ficker, S. (2010). Las exportaciones mexicanas durante la primera global-
ización, 1870–1929. México: El Colegio de México.
Kuntz-Ficker, S. (2014a). La contribución económica de las exportaciones en
México: un acercamiento a las finanzas estatales, 1880–1926. América Latina
en la Historia Económica, 21(2), pp. 7–39.
Kuntz-Ficker, S. (2014b). The contribution of exports to the Mexican economy
during the first globalisation (1870–1929). Australian Economic History
Review, 54(2), pp. 95–119.
Kuntz-Ficker, S. (2014c). El impacto de la Primera Guerra Mundial sobre el
comercio exterior de México. Iberoamericana, 14(53), pp. 117–137.
Kuntz-Ficker, S. (2015). México. In S. Kuntz-Ficker (Ed.), Historia mínima de

la expansión ferroviaria en América Latina (pp. 63–101). México: El Colegio
de México.
Kuntz-Ficker, S. (2017, January). How industrialized was Mexico by 1929? A
small but necessary correction to Mexico’s national accounts. Revista de
Historia Económica. Journal of Iberian and Latin American Economic History,
pp. 1–17. doi:10.1017/S0212610916000197
Kuntz-Ficker, S., & Tena-Junguito, A. (forthcoming). Mexico’s foreign trade in
a turbulent era (1821–1870): A reconstruction. Revista de Historia Económica.
Journal of Iberian and Latin American Studies.
Moreno-Brid, J., & Ross, J. (2010). La dimensión internacional de la economía
mexicana. In S. Kuntz-Ficker (Ed.), Historia económica general de México. De
la colonia a nuestros días (pp. 757–788). México: El Colegio de México—
Secretaría de Economía.
Officer, L. H. (2010). An improved long-run consumer price index for the
United States. Historical Methods: A Journal of Quantitative and Interdisciplinary
History, 40(3), pp. 135–148. doi:10.3200/HMTS.40.3.135-148
Peña Guzmán, C. (2012). Frederick Stark Pearson y la construcción de la hidro-
eléctrica de Necaxa. Simposio Internacional Globalización, innovación y con-
strucción de redes técnicas urbanas en América y Europa, 1890–1930. Barcelona,
España. Retrieved on April, 2017, from http://www.ub.edu/geocrit/
Simposio/cPe%C3%B1a_Frederick.pdf
Pérez Siller, J. (1982). Los ingresos federales en México, 1867–1913. Unpublished
thesis, México, Facultad de Ciencias Políticas y Sociales, UNAM.
Prebisch, R. (1995). El desarrollo económico de la América Latina y algunos de
sus principales problemas. Desarrollo Económico, 26(103) (Oct–Dec),
pp. 479–502.
Riguzzi, P. (1995). Inversión extranjera e interés nacional en los ferrocarriles
mexicanos, 1880–1914. In C. Marichal (Ed.), Las inversiones extranjeras en
América Latina, 1850–1930: Nuevos debates y problemas en historia económica
comparada (pp. 159–177). México: Fondo de Cultura Económica.
Riguzzi, P. (1999). Un modelo histórico de cambio institucional: la organización
de la economía mexicana, 1857–1911. Investigación Económica, 59(229),
pp. 205–235.
Riguzzi, P. (2009). From globalization to revolution? The Porfirian political
economy: An essay on issues and interpretations. Journal of Latin American
Studies, 41, pp. 347–368.
276 S. Kuntz-Ficker
Secretaría de la Economía Nacional. (1933). Primer censo industrial de 1930.

Resúmenes Generales (Vol. I). México.
Sherwell, G.B. (1929). Mexico’s capacity to pay. A general analysis of the present
international economic position of Mexico. Washington, DC.
Sterret, J. E., & Davis, J. S. (1928). The fiscal and economic condition of Mexico.
Report submitted to the International Committee of Bankers on Mexico,
Mexico.
Travieso, E. (2015). Transición energética bajo una era de exportaciones: el caso de
Uruguay, 1900–1950. Paper presented at the International Seminar La Era de
las Exportaciones, México, El Colegio de México.
Williamson, J. G. (2006). Globalization, de-industrialization and underdevel-
opment in the third world before the modern era. Revista de Historia
Económica/Journal of Iberian and Latin American Economic History, 24(01),
pp. 9–36.
Zabludovsky, J. (1992). La depreciación de la plata y las exportaciones. In
E. Cárdenas (Ed.), Historia económica de México. Lecturas de El Trimestre
Económico (Vol. III, pp. 290–326). Fondo de Cultura Económica.
Sandra Kuntz-Ficker is an economic history professor and a researcher at El

America from the early nineteenth to the mid-twentieth century. She has published
eighteen books as author or editor and more than 60 articles and book chapters.
Kuntz-Ficker was President of the Mexican Economic History Association and is
currently member of the Executive Committee of the International Economic
History Association (since 2015). Since 2013, she is coeditor of the Revista de
Historia Económica—Journal of Iberian and Latin American Economic History.
Personal website: http://www.colmex.mx/academicos/ceh/kuntz/
8
Exports and Their Impact
on the Economy. The Case
of Peru, 1830–1930
Luis Felipe Zegarra
Introduction
Economists and historians have devoted time to analyzing the export sec-
tor of Peru in the nineteenth and early twentieth centuries. One limita-
tion for the study of exports in Peru has been the lack of official statistics.
However, there have been some attempts to estimate exports to overcome
the lack of official information.1 In spite of the limited information, some
have analyzed the evolution of the export sector and the impact in the
economy. Yepes (1981), for example, analyzed the export sector of Peru
in 1820–1920, whereas Thorp and Bertram (1985) analyzed the export
sector of Peru from the late nineteenth century. More recently, Zegarra
(2014a) and Zegarra (2014b) examined the export sector in World War I
(WWI) and in the 1920s.
Some of the historical studies of the Peruvian export sector have serious
limitations. The studies by Yepes and by Thorp and Bertram, for example,
L.F. Zegarra (*)

CENTRUM Católica Graduate Business School, Pontificia Universidad
Católica del Perú, Lima, Peru

280 L.F. Zegarra
lack general-equilibrium considerations: much of their analysis is actually

consistent with partial-equilibrium models. As followers of the depen-
dency theory, those authors also seem to make the assumption that inter-
national trade relationships between countries may be defined as a
zero-sum game and that emerging economies are subjugated to the desires
of developed economies. Also, those studies do not pay much attention to
social efficiency considerations. As a result, those authors seem to consider
that exportation of raw materials and the presence of much foreign invest-
ment were negative for the Peruvian economy and that it was desirable to
count with distortive government policies that fostered investment in the
domestic economy—especially in value-added sectors—regardless of the
magnitude of market failures, not considering that those policies would
have produced socially inefficient outcomes.
This chapter analyzes the evolution of the export sector between 1830
and 1930 and examines the impact of the export sector in the economy.
In particular, it describes the boom of guano, the drastic drop of exports
after the War of the Pacific and the posterior recovery, especially during
WWI and the bonanza of the 1920s. The chapter also discusses the posi-
tive and negative effects of the export sector on the economy. It shows
that exports accounted for an important share of the growth of GDP and
that the booms of exports during the guano era and between 1913 and
1929 led to a significant expansion in the capacity of the country to
import. The chapter also shows that the export sector generated positive
and negative externalities in the rest of the economy through the avail-
ability of funds and the real exchange rate. Importantly, this chapter dis-
cusses the limitations of partial-equilibrium analysis and pays attention
to social efficiency considerations.
Indicators of the Export Sector

In this section, I briefly discuss the methods to calculate the following
indicators of the export sector: value of exports, the index of export quan-
tum, the degree of openness, the terms of trade and the exchange rate.
Official information on the value of exports is scarce for most of the
nineteenth century, especially prior to 1890. For the late nineteenth
8 Exports and Their Impact on the Economy. The Case of Peru... 281
century and for the twentieth century, there is official information.

Even official information, however, presents important problems. For
1830–1930, I estimated the value of the main export products over the
basis of information on volumes and prices. The figures are reported in
Zegarra (2017). Table 8.1 shows the main export products for several
periods that were taken for the estimation of the value of exports. Map 8
shows the location of products. In Zegarra (2017), I provide a descrip-
tion of the sources of information. With the same information of vol-
umes and prices of the main export products, I estimated the index of
export prices and the index of export quantum. Figures 8.1 and 8.2
show the evolution of the value of exports and the index of export
quantum, respectively. Table 8.2 reports information about the value of
exports and the index of export quantum.
Table 8.1 Goods included in the calculation of the value of exports and the index
of export prices
Calculation
of the value Calculation of the Goods included in the basket of export
of exports index of prices products
Base
Period Period year Fertilizers Mining Agriculture
1830–1841 1830–1841 1830 Nitrates Gold, Sugar, cotton,
silver, wool, coffee,
copper bark, cacao
1842–1885 1841–1885 1860 Guano, Gold, Sugar, cotton,
nitrates silver, wool, coffee,
copper bark, cacao
1886–1900 1885–1900 1885 Gold, Sugar, cotton,
copper bark, cacao,
rubber
1901–1930 1900–1930 1900 Oil, gold, Sugar, cotton,
copper cacao, rubber,
leather
Notes: The table reports the main export products for each period. I only took
into account the information of those products for the estimation of the value
of exports and the index of export prices
282 L.F. Zegarra
140
120
100
80
Millions
60
40
20
0
1830
1833
1836
1839
1842
1845
1848
1851
1854
1857
1860
1866
1869
1872
1875
1878
1881
1884
1887
1890
1896
1899
1902
1905
1908
1911
1914
1917
1920
1926
1929
1863
1893
1923
Fig. 8.1 Value of exports (millions of current dollars). Note: Zegarra (2017) pro-
vides an explanation of the sources
120
100
80
Millions
60
40
20
0
1830
1833
1839
1842
1845
1848
1851
1854
1857
1860
1863
1866
1869
1872
1875
1878
1881
1884
1890
1893
1896
1899
1902
1905
1908
1911
1914
1917
1920
1923
1926
1929
1836
1887
Fig. 8.2 Export quantum (millions constant dollars of 1913). Notes: The figure
depicts the index of export quantum (1913 = 100). For a discussion of the sources
of information, see Zegarra (2017)
Table 8.2 Indicators of the export sector, 1830–1930

Annual growth Current value Constant value of
rates (%) of exports exports Per
Total Per Total capita
(million capita (million Index valuea
Current Constant dollars) (dollars) dollars)a (1913 = 100) (dollars)
1830–1840 11.6 10.3 2.5 1.8 2.5 6.5 1.8
1840–1850 7.7 8.1 5.1 2.9 5.2 13.3 2.9
1850–1860 13.1 7.7 18.3 8.2 12.7 32.7 5.7
1860–1870 6.2 4.8 33.5 13.2 18.4 47.4 7.3
1870–1880 −16.8 −14.0 32.9 12.3 21.9 56.3 8.2
1880–1890 2.8 3.0 7.9 2.8 7.1 18.2 2.5
1890–1900 5.0 6.9 10.9 3.7 11.3 29.1 3.8
1900–1910 6.1 6.0 21.7 6.1 22.7 58.4 6.4
1910–1920 15.5 5.5 66.3 14.6 43.3 111.4 9.7
1920–1930 −3.0 8.6 93.8 17.9 81.9 210.6 15.5
Notes: The table reports growth annual rates and annual average levels per
decade of the current value of exports and the index of export quantum.
See Zegarra (2017) for the discussion of sources
a
Annual average levels. Constant values at 1913 prices
300
Exports Imports Terms of trade
250
200
Index
150
100
50
0
1830
1833
1839
1842
1848
1851
1854
1857
1860
1863
1866
1869
1872
1875
1878
1881
1884
1887
1890
1893
1896
1899
1902
1905
1908
1911
1914
1917
1920
1923
1926
1929
1836
1845
Fig. 8.3 Export and import prices and terms of trade (1913 = 100). Notes: The indexes
of export and import prices were expressed in gold dollars. The index of terms of trade
was calculated as the ratio between the index of export prices and the index of import
prices. The index of export prices comes from Zegarra (2017). The index of import
prices was calculated using information from Seminario (2015), pp. 865–868, 1026
284 L.F. Zegarra
Figure 8.3 shows the indexes of export and import prices as well as the
index of terms of trade. Export and import prices are expressed in current
dollars. Export prices were collected by Zegarra (2017). The index of
export prices reflects the evolution of prices for a basket of export prod-
ucts.2 Import prices come from Seminario (2015). The index of import
prices reflects the evolution of prices in the main trading partners of Peru.
For 1830–1896, Seminario relied on information of the Global
Commodity Prices Database of Allen and Unger for 1830, FOB prices of
exports of textiles of the United Kingdom for 1831–1873 and the index
of wholesale prices in the United Kingdom for 1874–1896. For
1897–1930, Seminario employs the index of consumer prices in the
United States as a proxy of Peruvian imports. Terms of trade were calcu-
lated as the ratio between the index of export prices and the index of
import prices.
Figure 8.4 shows the evolution of the nominal and real exchange
rates. The nominal exchange rate is defined as the amount of soles per
dollar. For 1830–1882, I estimated the nominal exchange rate using
information on the silver content of the peso and the sol, the gold con-
tent of the sterling pound, the relative price between gold and silver
and the exchange rate between the dollar and the sterling pound. The
exchange rate between the dollar and the sterling pound comes from
Officer (2016a), whereas the relative price between gold and silver
comes from Officer (2016b). On the other hand, I employed official
information on the exchange rate between the sol and the sterling
pound for 1883–1902 and on the exchange rate between the sol and the
dollar for 1903–1930 from Ministerio de Hacienda y Comercio (1935,
pp. 33, 35).
The real exchange rate (RER) measures the price of foreign goods
expressed in terms of domestic goods. An increase in the real exchange
rate implies that domestic products are relatively less expensive, with
respect to foreign products, so the greater the real exchange rate, the more
competitive the domestic economy. The real exchange rate was calculated
as RER = NER IPf/IPd, where NER = nominal exchange rate, IPf = index
of foreign prices and IPd = index of domestic prices. To calculate the
index of real exchange rate, I employed the nominal exchange rate
between the sol and the dollar (expressed in terms of amount of soles per
3 180
Nominal (soles per dollar)

160
2.5 Real (1913=100)
Nominal exchange rate (soles per dollar)
140
Real exchange rate (1913=100)

2 120
100
1.5
80
1 60
40
0.5
20
0 0
1830
1833
1836
1839
1842
1845
1848
1851
1854
1857
1860
1863
1866
1869
1872
1875
1878
1881
1884
1887
1890
1893
1896
1899
1902
1905
1908
1911
1917
1920
1923
1929
1914
1926
Fig. 8.4 Nominal and real exchange rates. Notes: The nominal exchange rate is
expressed in soles per dollar. The real exchange rate (RER) is an index and was
calculated as RER = NER × IPf/IPd, where NER = nominal exchange rate, IPf = index
of foreign prices and IPd = index of domestic prices
dollar), the GDP deflator of the United States and the consumer price
index of Lima.3
Evolution of the Export Sector

The Peruvian export sector, as most economic sectors of Peru, faced severe
difficulties in the first years after Independence in 1821. Political instabil-
ity led to economic stagnation. From the decade of 1830s, however,
exports recovered. According to our estimations, the value of exports
maintained an increasing trend in the 1830s, increasing from 2.1 million
dollars in 1830 to 5 million in 1840. In 1845, the value of exports was
5.8 million dollars. The index of export quantum experienced significant
growth in the 1830s and 1840s. According to our estimations, the index
286 L.F. Zegarra
of export quantum (1913 = 100) increased from 3.4 in 1830 to 10.5 in

1845, thus increasing by more than 200% in these 15 years. Copper
exports, for example, increased from 141 tons in 1830 to 501 tons in
1845. Cotton exports increased from 61 tons in 1830 to more than 1400
tons in 1845, whereas wool exports increased from only 3 tons in 1830
to more than 1200 tons in 1845.
The export sector experienced a significant transformation from the
mid-1840s. The boom of guano led to a significant expansion of exports.
In particular, according to our estimations, the value of exports increased
from 3.9 million current dollars in 1845 to 7.6 million in 1850 and 25.9
million in 1860. In the following years, exports declined but remained
above the levels from the 1830s. On average, the value of exports was 18
million dollars in 1860–1870 and 34.5 million in 1875. The index of
export quantum increased during the boom of guano, especially in
1845–1870. In particular, the index of export quantum (1913 = 100)
increased from 10.5 in 1845 to 19.7 in 1850 and 41.2 in 1860: the index
of export quantum increased by almost 300% in 1845–1860. Then, the
index of export quantum grew from 41.2 in 1860 a 65 in 1870, declining
to 64 in 1875.
The exploitation of guano, with large international demand, especially
from Europe, had an important impact on the export sector. Guano
exports increased from around 10,000 tons in 1845 to almost half a mil-
lion tons in 1860 and remained above 300 thousand tons per year in
most of 1861–1878. Among Peruvian exports to Great Britain, exports
of guano accounted 67% of the total value of exports in 1870. Meanwhile,
Peru increased the exports of nitrates from less than 20,000 tons in 1845
to 62,000 tons in 1860 and more than 300 thousand tons in 1875.
Agricultural exports also increased. Sugar exports, for example, increased
from 570 tons in 1860 to 41 thousand tons in 1875, whereas cotton
exports increased from less than 1000 tons in 1860 to more than 4000
tons in 1875.
In the late 1870s and in early 1880s, exports experienced a significant
drop. In particular, according to our estimations, the value of exports fell
from 36 million dollars in 1878 to only 7.4 million in 1883. This large
drop of exports was caused by the decline in guano reserves and the War
of the Pacific (1879–1883) between Peru, Bolivia and Chile. As a result

of the war, Peru lost territory rich in nitrates and suffered destruction of
physical capital. Then the index of export quantum (1913 = 100) fell
from 74 in 1878 to only 18 in 1883, so the index of export quantum fell
by more than 70% in only five years. Guano exports declined from
around half a million tons in 1878 to less than 100 thousand in 1883.
Meanwhile, as Peru lost the nitrate province of Tarapaca, it did not export
nitrates, which had been more than 300 thousand tons in 1878. Other
exports also suffered a significant decline due to the destruction of infra-
structure and productive disorganization during the years of the war.
Sugar exports, for example, fell from around 50 thousand tons in 1878 to
31 thousand tons in 1883.
In the following years, the export sector recovered. The value of exports
increased from 7.2 million dollars in 1887 to 16 million in 1900. The
index of export quantum (1913 = 100) increased from 17.6 in 1883 to
25 in 1895 and 38 in 1900. The recovery in the late nineteenth century,
however, was only partial: The value of exports and the index of export
quantum in 1900 were still below the levels reached in 1878, prior to the
War of the Pacific. In the early 1900s, the value of exports experienced
recovery. In particular, the value of exports increased from 16 million dol-
lars in 1900 to 23 million in 1905 and 29 million in 1910. So the value of
exports increased by 81% between 1900 and 1910. Also, the index of
export quantum increased by almost 80% between 1900 and 1910.
WWI had an important impact on Peruvian exports. The value of
exports increased from 39 million dollars in 1913 to 119 million in 1919,
so the value of exports increased by more than 200% between 1913 and
1919. This increase in the value of exports obeyed to the increase in the
volume of the exports as to the increase in prices. The index of export
quantum increased by 41% between 1913 and 1919, whereas the index
of export prices increased by 117%.4
At the beginning of WWI, the cotton sector suffered the consequences
of the changes in the international supply and demand of commodities.
However, prices soon recovered. According to Thorp and Bertram (1985),
WWI led to an initial decline in prices in 1914–1915, which, together
with the difficulties in maritime transportation, contributed to slowdown
288 L.F. Zegarra
the growth of production. Then prices were exceptionally high, and the
interruption of cotton from Egypt during the war yielded Peruvian agri-
culturists an opportunity to penetrate the US market.5 Facing the increase
in prices, the domestic agricultural supply increased. The number of haci-
endas of cotton, for example, increased from 236 in 1915–1916 to 674 in
1917–1918. The surface dedicated to cotton increased from 56 thousand
hectares in 1915–1916 to almost 89 thousand in 1918–1919, whereas
that the number of laborers increased from 20.5 thousand in 1915–1916
to more than 32 thousand in 1918–1919. Cotton exports increased from
24 thousand tons in 1913 to 24 thousand in 1916 and 37 thousand in
1919, whereas the value of exports of cotton increased from 6.7 million
dollars in 1913 to 7.9 million in 1916 and 32 million in 1919.6 The
increase in the cultivated surface was facilitated by the new irrigation
projects as well as to the reallocation of cultivated land.7
Sugar also experienced an increase in the volume of production and
exportation. In the United States, the sugar price increased from 4.3 cents
in 1913 to 6.9 cents in 1919 and 8.9 cents in 1919. Apparently, the sugar
sector was prepared to take advantage of the improvement in export con-
ditions. As Thorp and Bertram (1985) argue, many large plantations
established plans for the installation of new machinery. Among those
plans, Casa Grande, from Gildemeister, obtained in 1910 funding from
German partners to the purchase of a new gigantic ingenio (industrial
facility for the transformation of sugar cane into sugar). Other important
plantations that installed new ingenios in the following years were Santa
Bárbara in Cañete, Laredo in La Libertad and Tumán, Pátapo, Pucalá and
Cayaltí in Lambayeque. The Peruvian industry was, thus, in good condi-
tions to respond to the increase in world prices.8 The number of sugar
cane haciendas increased during WWI from 90 in 1913 to 94 in 1916
and 117 in 1919, and the cultivated surface increased from less than
40,000 hectares in 1913 to 48,754 hectares in 1919. Also, the labor
force in those haciendas and ingenios increased from 20,942 in 1913 to
26,496 in 1919.9
Mining exports also benefited from the increasing international demand.
As a consequence of the industrial applications to copper and their employ-
ment in the production of military artifacts,10 the wholesale price of 1
pound of copper in the United States increased from 15.7 cents in 1913 to
almost 28 cents in 1916, although later declined to 19.1 cents in 1919.

Copper exports increased from 41 thousand tons in 1913 to more than 52
thousand in 1916, although later declined to 44 thousand tons in 1919;
and the value of copper exports increased from 9.6 million dollars in 1913
to 22 million in 1919. In this scenario of increasing prices, there was great
interest in investing in mining. The number of mining concessions increased
from 5029 in 1913 to more than 6000 in 1919.11
After the end of WWI, the value of exports increased from 119 million
dollars in 1919 to 123 million in 1920 but then fell to 58 million in
1921. The 1921 level, however, was still above the pre-WWI levels.
Moreover, in the following years, exports recovered partially, reaching the
value of 102 million dollars in 1929. Export prices fell between 1919 and
1921 and then recovered only partly. In the United States, for example,
the price of a pound of sugar fell from 12.7 cents in 1920 to 6.2 cents in
1921 and 5.5 cents in 1925, whereas the price of cotton fell from 33.9
cents per pound in 1920 to 15.1 cents in 1921. Meanwhile, the price of
1 pound of copper fell from 18 cents in 1920 to 12.6 cents in 1921,
although later recovered to 14.1 cents in 1925; and the price of 1 pound
of silver fell from 1.34 dollars in 1920 to 70 cents in 1925. In 1929
export prices were 57% below the 1919 level. Terms of trade drastically
dropped in the early 1920s and then remained relatively constant until
1929.
The decline in the prices of commodities obeyed to the decline in the
international demand, especially from industrialized economies. Bulmer-
Thomas (2003) argues that there were changes in the long-term demand
and supply of raw material that led to a declining trend in prices. The
world supply increased due to technological changes, new investments in
infrastructure and the protection of agriculture in part of Europe.
Even though export prices over the 1920s were not as high as during
WWI, they were not as low as to disincentive investment and production
in the export sector. In the case of sugar, for example, the cultivated sur-
face increased from 48 thousand hectares in 1919 to 77 thousand in
1929, whereas exports increased from 272 thousand tons in 1919 to 363
thousand tons in 1929. Sugar producers accumulated large sums of
money during WWI, which were later used to invest in the sector, in
particular in the purchase of land and the installation of new ingenios.
290 L.F. Zegarra
Basadre (1963), for example, indicates that some haciendas installed large
and modern machineries. As Thorp and Bertram (1985) argue, in the
early 1920s the productive capacity in sugar haciendas rose to around 320
thousand tons, twice the level prior to WWI.
Cotton also experienced an expansion of the cultivated surface and
exports. The cultivated surface of cotton increased from 88 thousand
hectares in 1919 to almost 130 thousand hectares in 1927. The volume
of cotton exports increased from 37 thousand tons in 1919 to 57 thou-
sand tons in 1927, although later declined to 45 thousand tons in 1929.
Even though cotton prices in the 1920s were lower than in 1919, they
were still very attractive. In 1924, for example, an observer argued that
the price and profitability of cotton had displaced pisco, the drink, in
recent years to a less important place in Pisco, the port.12 In other words,
the high prices of cotton generated an increase in investment and produc-
tion at the expense of other products.
Meanwhile, mining exports also experienced expansion of volume, in
spite of the decline in international prices. Silver exports, for example,
grew from 276 tons in 1920 to almost 652 tons in 1929. Copper exports
increased from around 33 thousand tons in 1920 to more than 57 thou-
sand tons in 1929. Also, oil exports increased from 178 thousand tons in
1920 to more than 1.5 million tons in 1929.
As discussed in this section, Peru’s export sector largely depended on
products such as guano, nitrates, sugar and cotton, among other com-
modities. Peru was then an exporter of raw materials. However, Peru did
not lack industrialization. Although limited, Peru’s export sector experi-
enced a process of industrialization, especially in the case of the agricul-
tural products. In the twentieth century, for example, Peru processed
sugar cane prior to its exportation. According to the official information,
Peru did not export sugar cane, but white sugar, chancaca, brown sugar
and muscovado sugar.13
Industrialization in Peru, however, was certainly far more limited than
in other economies. I cannot explain why Peru did not embark into a
process of industrialization as in the United States or Western Europe. It
is possible that Peru was competitive in the production of raw materials,
not in the production of manufactured goods. It is also possible that gov-
ernment policies did not promote industrialization through tariffs or
another means of protection to domestic manufacture. In fact, Thorp

and Bertram (1985) argue that Peru did not conduct policies that fos-
tered industrialization. From a social point of view, if the reason for the
lack of a major industrialization of Peru was the lack of policies such as
tariffs and protection of domestic manufacture, then the lack of industri-
alization was socially efficient. It would have been socially inefficient to
embark into a process of industrialization as a result of artificial
competitiveness.
Economic Impact of Exports

The evolution and, in particular, the growth of the export sector has
implications beyond the export sector. Exports, for example, may have a
linkage with other economic sectors, so that the growth of exports will be
associated with changes in other sectors. In this section, I will present the
indicators that are usually associated with the economic impact of the
export sector.14 I will report the estimations of the contribution of exports
to economic growth and the purchasing power of exports. I will also ana-
lyze other consequences of the growth of exports, such as the presence of
positive and negative externalities.
Contribution to Economic Growth
The contribution to economic growth is one of the most common indica-

tors in the evaluation of the impact of exports in an economy, especially
in an analysis of partial equilibrium. This indicator measures the direct
contribution of exports to GDP and is calculated over the basis of the
growth rate of the export quantum, the growth rate of GDP and the
participation of exports on GDP.
I relied on the participation of exports in 1913, which was calculated
with our estimation of the value of exports (in current dollars) and the
estimation of nominal GDP by Seminario and Beltrán (1998) also in
current dollars. For 1913, the participation of exports on GDP was
12.8%. Table 8.3 reports the contribution of exports to economic growth.
292 L.F. Zegarra
Column 1 shows the annual growth rate of the export quantum. Column
2 shows the annual growth rate of GDP. Column 3 represents the per-
centage of the growth of GDP explained by the growth of exports. It was
calculated as I = U/y, where U = contribution of exports to the growth
GDP and y = growth rate of GDP. The contribution of exports to the
growth of GDP (denoted as U) was calculated as U = ab, where a = annual
growth rate of the export quantum (column 1) and b = participation of
the export sector in GDP in 1913. The contribution of exports to eco-
nomic growth (I = U/y) reflects the percentage of the growth rate of GDP
that is explained directly by the growth of the export quantum.
The index of export quantum grew by 7.9% per year in 1830–1845,
and GDP grew by 3.7 per year. Exports contributed with one percentage
point to the annual growth of GDP. Using the participation of exports on
GDP in 1913, the contribution of exports was equivalent to 27% of the
growth of GDP.
From 1845 to 1855—period that can be named as the early guano
era—GDP grew by 3.5% per year. Exports grew rapidly due to the
Table 8.3 Calculation of the contribution of exports to GDP growth

Annual growth rate (%) Contribution of Exports to
Export quantum GDP GDP growth (%)
(1) (2) (3)
1830–1845 7.86 3.68 27.33
1845–1855 14.41 3.51 52.41
1855–1878 2.65 2.05 16.52
1878–1883 −24.96 −13.83 23.06
1883–1900 4.64 3.94 15.03
1900–1913 7.73 4.35 22.70
1913–1919 5.87 4.24 17.68
1919–1929 7.19 5.52 16.65
Notes: Columns 1 and 2 report the annual growth rates of the index of export
quantum and real GDP, respectively. Column 3 reports the contribution of
exports to the growth of GDP as a percentage of the growth rate of GDP. The
contribution of exports to the growth of GDP (denoted as U) was calculated as
U = ab, where a = annual rate of growth of the export quantum (column 1)
and b = participation of exports in GDP in 1913. Column 3 is equal to I = U/y in
percentage points, where y = annual rate of growth of GDP. The index of
export quantum was estimated by Zegarra (2017). GDP comes from Seminario
(2015), pp. 888–895, 1061–1062
exploitation of guano. In particular, the index of export quantum

increased by 14.4% per year. The contribution of exports to the annual
growth of GDP was 1.8 percentage points, which was equivalent to 52%
of the growth rate of GDP. Later between 1855 and 1878—period that
can be described as the late guano era—the index of export quantum
grew by 2.7% per year, and GDP grew by only 2% per year. The contri-
bution of exports to the growth of GDP was around 0.3 percentage
points per year, that is the contribution of exports to the growth of GDP
was around 16.5% of the growth rate of GDP. Taking the period associ-
ated with the boom of guano, from 1845 to 1878, the growth of the
index of export quantum was 6% per year, and the annual growth rate of
GDP was 2.5%. Therefore, the contribution of exports to GDP was
equivalent to around 31% of the growth rate of GDP.
During the War of the Pacific, the export quantum experienced a large
drop due to the destruction of infrastructure and the loss of territory rich
in nitrates. In particular, the export quantum dropped by 25% per year
between 1879 and 1883. The economic contraction was not limited to
the export sector. GDP fell by 13.8% per year in the same period. Exports
contributed with 3.2 percentage points per year to the drop of
GDP. Therefore, the fall of exports contributed with 23% of the (nega-
tive) growth rate of GDP.
In the 1880s and 1890s, the export quantum and GDP recovered.
Between 1883 and 1900 the export quantum grew by 4.6% per year,
whereas GDP grew by almost 4% per year. The contribution of exports
was 0.6 percentage points per year, that is the contribution of exports was
15% of the growth rate of GDP. Between 1900 and 1913 GDP grew by
4.4% per year; the export quantum grew by 7.7% per year, contributing
with around one percentage point to the growth of GDP, equivalent to
23% of the growth rate of GDP.
During WWI, the export sector benefited from high prices of exports,
which attracted investment in the agricultural and mining sectors.
Between 1913 and 1919, the productive expansion led to the increase in
the export quantum by 5.9% per year. The rest of the economy also expe-
rienced important growth. In particular, GDP grew by 4.2% per year.
The contribution of exports to the growth of GDP was 0.8 percentage
points. So the contribution of exports was equivalent to 18% of the
294 L.F. Zegarra
growth rate of GDP. In the postwar period, Peru was affected by the
decline in prices of commodities. However, the productive expansion
during the years of the war allowed Peru to expand the volume of exports.
Between 1919 and 1929, the export quantum increased by 7.2% per
year, at a greater rhythm than in WWI. The contribution of the export
sector to the growth GDP was around 0.9 percentage points per year,
that is 17% of the growth rate of GDP.
Therefore, the expansion of the export sector had important direct
effects on the growth of GDP. For the subperiods reported in Table 8.3,
the contribution was never below 15% of the growth rate of GDP, exceed-
ing 50% during the early guano era.
Even though the indicator is illustrative, one must be careful about the
interpretation of the indicator. First of all, it is important to take into
account that the differences in the contribution of exports may be
explained by a greater or lower growth of the non-export sectors. For
example, if non-export sectors grew rapidly in a certain period due to
exogenous factors, then the contribution of exports would be low. More
importantly, from this indicator, one cannot draw conclusions about
what could have happened to the economy if the export sector had grown
faster. For example, if the growth rate of GDP is 1%, and the contribu-
tion of exports to growth of GDP is 20%, then one cannot argue that if
the export sector would have grown twice as much, then the economy
would have grown in 0.2 percentage points more. After all, the resources
of the economy could have been employed for other means. In the case
of Peru, for example, if more workers would have grown sugar in the
nineteenth and twentieth centuries working in the coastal plantations,
they would have had to stop working in other productive sectors.
When analyzing the contribution of exports to the growth of GDP, it
is interesting to evaluate the composition of exports. If the exportable
basket is highly diversified, then the growth of exports will benefit a large
number of sectors, which in turn may have an impact on other sectors.
The composition of exports changed over time (Fig. 8.5). In the
nineteenth century, especially before the War of the Pacific, the export
basket was concentrated in a few products, especially guano and nitrates.
In 1855, for example, the index of Herfindahl—which measures the
degree of concentration—was 0.49. On average, in 1850–1875 the index
0.6
0.5
0.4
Index
0.3
0.2
0.1
0
1830
1833
1836
1839
1842
1845
1848
1851
1857
1860
1863
1866
1869
1872
1875
1878
1881
1884
1887
1890
1893
1899
1902
1905
1908
1911
1914
1917
1920
1923
1926
1929
1854
1896
Fig. 8.5 Index of Herfindahl. Notes: The figure depicts the index of Herfindahl of
the export sector. I took into account the value of the main Peruvian exports listed
in Table 8.1. The index of Herfindahl measures the sum of the square of the par-
ticipations of all export products. This index can take values between 0 and 1. A
greater value of the index indicates that the export sector is more concentrated.
For a further discussion on the sources of information for the calculation of the
value of exports, see Zegarra (2017)
was 0.34. After the drastic decline in guano and nitrate exports, the index
of Herfindahl fell to 0.23 in 1885–1900. The boom of exports during
WWI occurred through a less concentrated basket than in the 1850s or
1860s. In fact, the index of Herfindahl remained around 0.2 in those
years.
Then there exist notable differences in the type of growth of the export
sector between the boom guano and the export boom in 1913–1929. The
boom of exports in the 1850s and 1860s was far more concentrated
around a few exports. To a large extent, two products (guano and nitrates)
dominated the exporting supply. The boom of exports in the early twen-
tieth century was far less concentrated, benefiting directly a larger num-
ber of productive sectors.
296 L.F. Zegarra
The differences between both periods of export boom are certainly not
limited to the degree of concentration of the value of exports. There were
also important differences in the regional location of the export sectors.
The exploitation of guano occurred in the guano islands, especially in Ica,
whereas the production of nitrates occurred in the southern province of
Tarapaca. On the contrary, the expansion of sugar and cotton production
in the early twentieth century occurred along the Peruvian coast. In addi-
tion, the expansion of copper production largely occurred in the high-
lands, especially in the central highlands. In that sense, the expansion of
exports in the twentieth century was related not only to a greater variety
of productive sectors but also to a greater number of regions.
Purchasing Power of Exports
Other indicator usually employed to determine the impact of exports in

an economy is the purchasing power of exports. The purchasing power of
exports is calculated as the ratio between the value of exports and the
index of import prices. In theory, under the assumption that the country
has no access to other sources to fund imports, the purchasing power of
exports measures the capacity of the country to acquire imports with the
revenues from exports. If the purchasing power of exports is greater, the
country has more revenues to acquire imports of consumption and capi-
tal goods. Notice, however, that this interpretation of the indicator is
only valid under the assumption that the country cannot fund imports
with any means other than exports. If an economy has access to financial
resources from other countries, it can fund imports with foreign debt or
foreign investment.15
I calculated the purchasing power of exports between the ratio of the
value of exports and the index of import prices (1913 = 100). I employed
our estimations of the value of exports from Zegarra (2017). Table 8.4
reports the purchasing power of exports.
Between 1830 and 1845 the value of exports grew by 8.2% per year.
Import prices fell on average; so the purchasing power of exports increased
by 12.7% per year. This was a period of recovery of the Peruvian export
sector after the stagnation on the 1820s.
Table 8.4 Annual growth rates (%)

Current value of Index of import Purchasing power of
exports prices exports
1830–1845 8.21 −4.02 12.74
1845–1855 19.18 −1.09 20.49
1855–1878 2.04 1.49 0.50
1878–1883 −27.10 −1.97 −25.52
1883–1890 4.21 −2.95 7.38
1890–1900 5.00 −0.60 5.64
1900–1913 7.02 3.40 3.50
1913–1919 20.52 7.25 12.37
1919–1929 −1.50 1.93 −3.36
Notes: The table shows growth rates of the value of exports, the index of import
prices and the purchasing power of exports. I relied on our estimates of the
value of exports. The purchasing power of exports is calculated as the ratio of
the value of exports and the index of import prices
In 1845–1855 (early guano period), the value of exports experienced a

large expansion due to the boom of guano. In particular, the value of
exports grew by almost 20% per year. In the same period, Peru benefited
from a decline in import prices: those prices fell by around 1% per year,
so that the purchasing power of exports grew by more than 20% per year.
Some figures suggest an increase in the value of imports, probably facili-
tated by the positive future expectations of the Peruvian economy.
Between 1855 and 1878—period that can be referred as late guano
period—the value of exports grew at a lower rhythm. In particular, it
grew by 2% per year. Import prices grew by less than 2%, so the purchas-
ing power of exports grew by 0.5% per year. During these years, imports
expanded. I do not count with information on the composition of
imports for these years; but it is possible that the boom of railroad invest-
ment during these years was partly fostered by the boom of exports.
During the War of the Pacific, the value of exports dropped drastically.
As I mentioned previously, guano exports fell, and Peru stopped export-
ing nitrates, the second export product of Peru, after guano. As a result,
the value of exports fell by more than 27% per year between 1878 and
1883. Import prices also contracted, but at a lower rhythm: import prices
fell by 2.1%. Due to the significant decline in the value of exports, the
298 L.F. Zegarra
purchasing power of exports of Peru fell by 25% per year. Due to the
negative expectations of economic growth, imports also largely declined.
In 1883–1890, the value of exports increased by 4.2% per year,
showing a clear recovery after the economic collapse originated by the
War of the Pacific. Import prices declined, so the purchasing power of
exports fell by almost 3% per year. In the last 10 years of the nineteenth
century, the value of exports continued growing. In particular, the value
of exports grew by 5% per year. The purchasing power of exports grew
by 5.6% per year. In 1900–1913, the value of exports grew by 7% per
year. This rhythm of growth was lower than during WWI. However,
from the early 1880s Peru experienced sustained economic growth.
Import prices, however, also grew, so the purchasing power of exports
only grew by 3.5% per year.
During WWI, the value of exports grew by more than 20% per year,
partly due to the increase in export prices. This period, however, was an
inflationary period: import prices increased by 7.3% per year. Due to
the increase in import prices, the growth in the value of exports was not
entirely reflected in a greater capacity to import. The purchasing power
of exports, however, did grow: it grew by 12% per year. In the 1920s,
however, in spite of the expansion of the productive capacity of export-
ing companies, especially in the agricultural sector, the value of exports
declined. In particular, in 1919–1929, export prices fell, and the value
of exports fell by 1.5% per year. Import prices grew by 1.9% per year,
so the purchasing power of exports declined by 3.4% per year. In spite
of the decline in the value of exports and the purchasing power of
exports, the purchasing power in 1929 was still 43% greater than the
level in 1913.
Therefore, based on the evidence, the purchasing power of exports
largely expanded over the century between 1830 and 1930. The purchas-
ing power of exports in 1929 was 63 times the level in 1830. The largest
expansion of the purchasing power of exports occurred in 1845–1855
and 1913–1919, that is during the early guano era and WWI.
I do not count with information on the composition of imports for
most of the nineteenth century. So, it is not possible to reach a definite
conclusion on the use of the greater purchasing power of exports during
the periods of export boom, in particular during the guano boom. In
particular, I cannot determine whether the greater purchasing power of

exports led to an increase in the demand for consumption or capital
goods. The expansion during the guano era allowed Peruvians to invest
on infrastructure, in particular railroads. The private sector and the State
invested large sums of money in the construction of railroads in the coast
and the highlands.
In the twentieth century, information is more abundant, which allows
us to determine how Peru employed the greater purchasing power of
exports. As it was mentioned, the increase in export prices in 1913–1919
and in the index of export quantum in the 1920s led to a greater purchas-
ing power of exports between 1913 and 1929. According to official infor-
mation, imports increased from 29 million dollars in 1913 to 70 million
in 1928. For 1917, imports were 68 million dollars, but only 54 million
if one excludes specie. Information for this year shows that most imports
were in the form of manufactured goods. In particular, Peru imported
textiles for an amount of 16 million dollars, accounting for 29% of total
imports (excluding specie). Imports of food and beverages were 8.5 mil-
lion dollars, accounting for 16% of the value of imports. Other impor-
tant imports were carriages and cars, musical instruments, medicines,
soaps and perfumes and papers, which were worth 6.7 million dollars,
accounting for around 12% of all imports. Machinery represented a far
smaller portion of imports. In particular, Peru imported 3.2 million dol-
lars’ worth of machinery and its replacements, which accounted for 6%
of total imports.
A comparison of 1913 and 1917 indicates that imports (excluding
specie) increased by 91%. Imports of textiles increased by 162%. Imports
of foods and beverages increased by 101%. Imports of carriages and cars,
musical instruments, medicines, soaps and perfumes and papers increased
by 192%. In contrast, imports of machinery only increased by 15%.
Therefore, much of the growth of imports was associated with imports of
consumption goods, not capital goods.
In the 1920s, imports of consumption goods continued being very
important. From 1919 to 1928, imports of consumption goods increased
from 21 million dollars to 37 million. On the contrary, imports of inputs
declined from 17 million dollars in 1919 to 11 million in 1928, and
imports of capital goods barely increased from 21.1 million in 1919 to
300 L.F. Zegarra
only 21.8 million in 1928. It is possible that the expansion of imports of

consumption goods was caused by the optimism generated in the 1920s
during the government of Augusto B. Leguía.
That much of the expansion in imports was in the form of exports of
consumption goods, and not capital goods, deserves attention. I cannot
establish a conclusive reason for the higher importance of consumption
goods in the expansion of imports. It is possible that investors did not
expect that favorable conditions for exports would remain in the future,
or that even if prices were not low, conditions for investment were even
better in other economies. Some might argue that government policies
were lacking. For example, subsidies for investing in the domestic econ-
omy or taxation for exportation of profits could have fostered investment
in Peru. Subsidies and taxation of exportation of profits, however, are
distortive policies, and so would have not led to socially efficient
outcomes.
Return Value
One indicator that has been commonly used to evaluate the impact of the
export sector in an economy is the value of return. The return value mea-
sures the amount of revenues generated by the export sector that remained
in the domestic economy. In other words, the value of return represents
the contribution of exports to the national income. If a company obtains
substantial revenues from its exporting operations, but only employs for-
eign inputs and does not pay significant taxes, then its direct contribu-
tion to the national income is very limited. One must be careful about
this indicator, however, especially when expressed as a percentage of total
export revenues. That one company leaves a lower portion of its export
sales to the economy for the payment of domestic resources than other
company does not necessarily mean that the former leaves a lower amount
of dollars than the latter.16
Thorp and Bertram (1985) estimated the value of return for mining
industries in the early twentieth century. As a percentage of total reve-
nues, the value of return of the Cerro de Pasco Copper Corporation—the
largest producer of copper in Peru—ranged between 44% and 73% in
1916–1930.17 For 1925, for example, the value of return was 53%. Total
revenues were 18.4 million dollars. The company paid 3.9 million, 1 mil-
lion and 4.8 million dollars as salaries, taxes and purchases to providers.
Meanwhile, as a percentage of total sales, the value of return of the
International Petroleum Company—the main oil producer in Peru—
ranged between 11% and 26% in 1916–1930.18 Let us examine, for
example, 1925. Total sales of this company were 23 million dollars. Of
these total sales, 5 million dollars corresponded to sales to the domestic
economy and 18 million were exports. The value of return, that is pay-
ments to the domestic economy in the form of wages, taxes and pay-
ments to domestic providers, was 3.6 million dollars, equivalent to 15%
of total sales of this company.
I do not count with information as to estimate the value of return for
agricultural sectors. However, it is noteworthy that exporting companies
with foreign ownership—such as the Cerro de Pasco Copper Corporation
and the International Petroleum Company—had a significant return value.
Export sectors directly contributed with national income through the pay-
ment of salaries, taxes and purchases to domestic providers.
Positive Externalities: Liquidity and Public Works
The evidence suggests that the expansion of the export sector produced
positive externalities in the rest of the economy. The positive externalities
occurred through two channels: (a) greater liquidity that facilitated the
creation of banks and the expansion of credit and (b) more public funds
for public investment.
As mentioned previously, one must be careful with the concept of
externalities. That there were externalities does not necessarily mean that
in the absence of export growth, those effects would have not occurred.
Liquidity, for example, could have been attracted even if the export sector
remained stagnant, as long as there was potential for growth in other sec-
tors, whereas fiscal resources could have been generated if other sectors
experienced economic growth.
Let us analyze the possible effect of exports on liquidity and the appear-
ance of banks. In theory, in a partial-equilibrium framework, the growth
302 L.F. Zegarra
of exports can lead to a surplus in commercial balance and the increase in

the supply of loanable funds. These funds can make it possible the financ-
ing of investment projects, including projects in sectors not directly
related to the export sector. It is important to point out that what is
important here is not the growth of the value of exports in a specific year
but the changes in the expectations about the future growth of the econ-
omy. In fact, that an economy experiences an increase in exports without
a major change in expectations will not necessarily bring more funds.
After an increase in exports, the profits obtained by exporting companies
could flow toward other economies in the form of loans or investments if
the expectations about the domestic economy do not change. On the
contrary, after an export boom and the improvement in the expectations
of the economy, domestic and foreign investors could opt for loaning
their funds to the domestic economy, benefiting other sectors in need of
liquidity.
This seems to have been the case of the boom of banking credit in the
1860s and early 1870s. Due to greater liquidity, several banks of issue and
discount opened offices from the late 1862. In the 1870s, Peruvian banks
operated not only in Lima but also in other cities of Peru, especially along
the coast. Banks as the Bank of London, Mexico and South America, the
Banco del Perú, the Banco Nacional, the Banco de Lima, the Banco de
Arequipa and the Banco de Trujillo, among others, served the needs of
funding, especially short-term credit. From 1866, mortgage banks also
operated in Peru, offering long-term credit. An analysis of the main
shareholders of these banks shows that large merchants, many of them
linked to the business of guano, were directly involved with the creation
of banks.
Peruvian banks were useful not only to satisfy the needs of credit of
exporting companies. In fact, commercial banks funded short-term oper-
ations of merchants in Lima and in other cities, whereas mortgage banks
funded not only investment in exporting agriculture but also the recovery
of urban fincas. On the other hand, banks of issue made it possible that
Peruvians have banknotes, something unusual in mid-nineteenth-century
Peru. In the face of the lack of a means of payment, the creation of banks
contributed with the development of the Peruvian economy.
The liquidity from the export sector facilitated the creation of banks
and the channeling of funds to the rest of the economy not only during
the boom of guano. In the second half of the 1910s, and in the decade of
the 1920s, after the expansion of the export sector, the savings from
exporters facilitated the growth of the credit supply. The number of banks
increased from 7 in 1913 to 10 in 1920 and 13 in 1929. The paid-in
capital in the banking system increased from 6 million dollars in 1913 to
7.5 million in 1919 and 21 million in 1929, whereas bank deposits
increased from 39 million dollars in 1913 to 70 million in 1919, main-
taining those levels in 1929. Meanwhile, bank credit increased from 31
million dollars in 1913 to 37 million in 1919 and 72 million in 1929.
I have not conducted an econometric study as to determine if in fact
the growth of the export sector generated an expansion in liquidity. But
the information suggests that the growth of the export sector was related
with the growth of liquidity in the Peruvian economy.
On the other hand, the export sector also generated externalities
through the expansion of fiscal revenues. This was particularly important
during the guano era. Between 1850 and 1870, the boom of guano led to
an expansion in fiscal revenues. Since guano was property of the State,
the increasing revenues from guano had an impact on fiscal revenues. As
Contreras (2012) argues, the fiscal revenues increased from 3.1 million
dollars in 1830–1839 to 5.3 million in 1840–1849, 13.4 million in
1850–1859 and 36 million in 1860–1869.19 These fiscal revenues allowed
the State to meet its commitments. As stated by historian Jorge Basadre
in the encyclopedic Historia de la República del Perú, the payment of the
foreign debt, of the domestic debt, manumission and the expenses of the
conflict between Spain and Peru and other international problems origi-
nated were in fact revenues from guano, as well as the investment in large
public works, especially railroads.20
In the late 1910s and during the 1920s, the State also benefited from
the expansion of the export sector. Fiscal revenues increased from 17 mil-
lion dollars in 1913 to 30 million in 1919 and 56 million in 1929. The
expansion of fiscal revenues allowed the State the construction of large
public works. The greater expansion of public works occurred during the
government of Augusto B. Leguía (1919–1930). Among those works,
one can mention large irrigation projects such as El Imperial, La Chira,
304 L.F. Zegarra
Sechura, Esperanza and Olmos. Also, the government funded centers of

agricultural experimentation in the northern coast, the cultivation of rice
in the highlands, farms of sheep and bovine livestock in the southern
highlands and the National School of Agriculture in La Molina. Also, the
government invested large sums of money in roads such as Lima-Canta-
Chanchamayo, Cerro de Pasco-Huánuco, Puquio-Chalhuanca and Ica-
Nasca- Molinos, among others. Meanwhile, the railroad network
expanded from 3275 kilometers in 1913 to 4522 kilometers in 1929.
The State also constructed the pier of Supe, the pier of Cerro Azul and
Maritime Terminal of Callao. Lima was benefited from the expansion in
fiscal spending. Besides potable water, streets were paved, and avenues
were built.21
Therefore, in a partial-equilibrium analysis, the evidence suggests that
the growth of the value of exports generated positive externalities, related
with the growth of liquidity and the increase in fiscal revenues, used for
the construction of public works.
Negative Externalities: Dutch Disease?
The expansion of exports may generate not only positive externalities but
also negative externalities. In theory, in a partial-equilibrium analysis, a
boom of exports of some products may generate strong disincentives to
investment and production in other sectors. A strong inflow of revenues
to the country due to the boom of exports of one product may generate
a decline in the nominal exchange rate. If such decline in the exchange
rate is not accompanied by a decline in domestic prices (and in the costs
for the companies), then other exporting companies may experience a
decline in their profit margins. On the other hand, even if the nominal
exchange rate is not affected, a boom in exports of one product may affect
other sectors through the impact in domestic prices. For example, if the
growth of production in one exporting sector causes an increase in the
demand for non-tradable goods and services, then the prices of those
non-tradable goods and services may increase. If the nominal exchange
rate does not increase in the same proportion, then the profit margins of
other exporting companies will be affected. The negative effect of the
boom of exports in one sector in other exporting sectors is known as

Dutch disease.
Let us evaluate the possible impact of booms in exports over the real
exchange rate to determine whether products such as guano in the 1850s
and 1860s or agricultural products in the 1910s and 1920s had a negative
impact on the possibilities of growth in other sectors. During the guano
boom, the nominal exchange rate remained around 1 sol = 1 dollar,
except during the US Civil War, when the dollar experienced deprecia-
tion with respect to the sol. However, due to the increase in domestic
prices in Peru (measured by the evolution of the index of consumer prices
in Lima), the real exchange rate experienced a clear decline from the mid-
1850s. In particular, the index of real exchange rate (1913 = 100) fell
from 116 in 1854 to only 57 in 1873. In other words, in 20 years, the real
exchange rate fell around 50%. Some export products that could have
been profitable in the 1850s could have lost competitiveness due to the
significant decline in the real exchange rate.22
The decline in the real exchange rate is consistent with the increase in
nominal wages, an important factor in the cost structure of the Peruvian
companies. During the guano period, the demand for labor may have
increased due to the requirements of labor for agriculture, railroads and
trade. In fact, in the 1850s and 1860s nominal wages increased. A study
of the Junta Municipal de Lima (1870) provides information on nominal
wages in 1855 and 1869.23 Ramón Montero indicated that the daily wage
of a free laborer ranged between three and four reales in 1855; in 1869,
the daily wage ranged between six and eight reales.24 According to
B. Elguera, daily wages in 1855 were four reales for the skilled workers
and three reales for other workers; 14 years later, wages for free laborers
were around one peso. Other sources also indicated an increase in salaries
in the 1860s. According to Macera (1977), laborers in Lima, Chorrillos
and Callao received an average daily wage of 0.8 soles.
Engelsen (1978) argues that one of the greatest problems of landlords
was the lack of laborers. In particular, according to Engelsen hacendados
argued that crops were lost due to the lack of laborers. As long as sugar
and cotton exporters were able to pay more for labor and land, fundos
that produced other crops experienced an increase in their operating
costs.25 Similarly, the hacendado J. F. Lembcke indicated in 1870 that
306 L.F. Zegarra
salaries had increased due to the lack of laborers. The lack of laborers
started from the manumission of slaves and has increased from then,
whereas slaves had disappeared. Before 1854 the daily salary of a free
laborer in the fundos around Lima was five or six reales. In 1870 it was
eight reales. And yet there was difficulty to find workers, because laborers
working in the railroads earned 12 reales and even 2 pesos.26 The observa-
tions of Manuel Vilcapampa, another hacendado, also suggest that there
was lack of workers in the 1860s. The daily salary that a free laborer gen-
erally earned in 1855 was five reales, including food. The salary of a slave
was around four reales, including food and clothing. In 1870, however,
no free laborer worked for less than one feeble peso, and most regularly
earned one peso fuerte.27
The nominal exchange rate then increased after the War of the Pacific.
In particular, the exchange rate increased from 1.1 soles per dollar in
1877 to 1.3 soles in 1890 and more than 2 soles from 1894. The real
exchange rate then experienced recovery. In particular, the index of real
exchange rate (1913 = 100) increased from 64 in 1877 to 84 in 1894.
And it continued increasing in the following years. It is possible that part
of the recovery of the export sector in the late nineteenth century obeyed
to the increase in the real exchange rate.
The new boom of exports during WWI had an impact on the exchange
rate. In particular, the nominal exchange rate fell from 2.2 soles in 1914
to 1.87 in 1918, although then recovered to 2.1 soles in 1919. In the fol-
lowing years, the exchange rate continued increasing to more than 2.4
soles per dollar in all years in the 1920s. Meanwhile, the exchange rate
(1913 = 100) fell by 18% between 1913 and 1918. But it then recovered
in the following years. The index of real exchange rate (1913 = 100) went
up to 130 in 1929. In comparison with 1900, the real exchange rate in
the 1920s was superior. One cannot then argue that the boom of exports
during WWI and especially during the 1920s had a negative effect on the
real exchange rate. On the contrary, the real exchange rate was superior to
the level reached in the late nineteenth century.
Balance
The export sector went through diverse changes over 1830–1930. Prior
to the War of the Pacific, Peru exported guano and nitrates, as well as
wool, sugar and cotton. In the 1850s, however, guano was the predomi-
nant product in the basket of export products. In the late nineteenth and
early twentieth centuries, Peru largely exported sugar, cotton, rubber and
copper. Peru experienced significant boom in quantum and value of
exports in the 1850s and 1860s. Decades later, Peru experienced a sub-
stantial increase in prices and value of exports in the late 1910s and an
increase in quantum in the 1920s.
In this chapter, I have reported some useful indicators to determine the
economic impact of exports. The contribution of exports remained between
15% and 30% of the growth rate of GDP, with the exception of the early
guano era when the contribution of exports exceeded 50%. Meanwhile,
the purchasing power of exports maintained an increasing trend, with the
exception of the War of the Pacific and the 1920s. On the other hand, the
export sector generated positive and negative externalities. The expansion
of the export sector generated greater liquidity fostering financial develop-
ment and public investment. However, the growth of exports during the
guano era generated a real appreciation of the domestic current which
could have reduced the competitiveness of other sectors.
Most exports of Peru were raw materials. Some have pointed out that
the lack of industrialization of Peru was negative for the economy and
that the government should have adopted policies oriented at fostering
industrialization, as if industrialization was desirable at any cost. I chal-
lenge this view. If the lack of industrialization obeyed to market imper-
fections such as lack of information or market concentration, then indeed
there was a theoretical argument in favor of government intervention to
eliminate specific market failures. However, if the lack of industrializa-
tion is explained by the fact that Peru did not have comparative advan-
tage in the production of highly added value goods, then the socially
efficient outcome for Peru was to export raw materials. Tariffs and other
distortive policies could have promoted socially inefficient industrializa-
tion. In fact, the experience of Peru with the policies of import substitu-
308 L.F. Zegarra
tion in the 1940s, 1960s and 1970s is a strong reminder of the negative
consequences of the governments’ attempt to protect domestic manufac-
ture and foster industrialization via tariffs or other distortive policies.
Epilogue28
The Great Depression had important effects on the Peruvian economy
and, in particular, on the Peruvian export sector. One of the effects of the
Great Depression on the Peruvian economy was the decline in the inter-
national demand for commodities. As exporter of raw materials, Peru
suffered a decline in export prices. According to Zegarra (2014a), export
prices declined by 21% per year between 1929 and 1932. For example,
the price of 1 pound of sugar declined from 5.1 cents in 1929 to 4 cents
in 1932; and the price of 1 pound of cotton declined from 19 cents in
1929 to 6.4 cents in 1932. Also, the Peruvian export sector was seriously
affected by protective policies in the United States and Western Europe.
The value of exports declined by more than 30% per year in this period.
The Great Depression affected Peru not only through the export sector.
Overall, according to Thorp and Bertram (1985), GDP in Peru fell by
11% in 1930, 8% in 1931 and 4% in 1932.
The economic situation changed from 1933. The growth rate of GDP
grew from −4% in 1932 to 13.5% in 1934 and 9% in 1935. As industri-
alized economies recovered, the international demand for commodities
increased. Export prices increased by 4.9% per year between 1932 and
1937. The official value of exports increased from 42 million dollars in
1932 to 81 million in 1935 and 92 million in 1937. The export sector
recovered; however, Peru was not the same as in the 1920s. In fact, the
1930s was a period with demand for greater government intervention, in
particular policies favoring unions and subsidizing manufacture. The
government passed labor legislation in favor of unions and created the
Ministry of Public Health, Labor and Social Prevention as well as the
Industrial Bank.
WWII constituted an important event for the Peruvian economy.
Initially, the war meant the closeness of important markets for Peruvian
export products, especially in Germany. Western Europe was an impor-
tant trading partner for Peru; so the war initially implied a negative fac-
tor. Peruvian exports to Germany declined from 8.1 million dollars in
1938 to 4 million in 1939, and less than a million in 1940. Exports to
England and France declined by more than 50% between 1938 and
1940. The United States then became an important trading partner for
Peru. Export prices fell in 1939 but then partly recovered in 1940 and
1941, and the official value of exports declined from 77 million dollars in
1938 to 66 million in 1940. From 1940, however, the external condi-
tions improved. The value of exports increased to 71 million dollars in
1943 and 84 million in 1945. The recovery of exports occurred as a result
of the search of new markets and the greater demand for agricultural
products.
During these years, the Peruvian government implemented policies in
favor of unions, urban low and middle classes and domestic manufactur-
ers. In particular, the government enacted price controls and rent con-
trols, favored the expansion of the state bureaucracy and imposed
rigidities in the labor market. From 1945, the government intervention
was even greater in terms of price controls, inflation and increasing pub-
lic spending. The government also implemented policies to protect
domestic manufacture via tariffs, special exchange rates and subsidies.
Soon, however, Peru would learn the negative consequences of rigidities
in the labor market, expansionary macroeconomic policies and the pro-
tection of the domestic manufacture.
Notes
1. See for example Hunt (1973), Seminario (2015), Zegarra (2017).
2. The basket of export products is reported in Table 8.1.
3. Information comes from Johnston and Williamson (2016) and Seminario
(2015).
4. As Basadre (1963), p. 104, argues, the European war determined from
1915 a prodigious increase in the value of Peruvian exports.
5. Thorp and Bertram (1985), p. 79.
6. Zegarra (2014b), p. 106.
310 L.F. Zegarra

9. Zegarra (2014b), pp. 107–08.
10. Basadre (1963), p. 105.
11. Zegarra (2014b), p. 108.
13. Ministerio de Hacienda y Comercio (1919).
14. These indicators are useful in a partial-equilibrium analysis. Some of
these indicators lack relevance when making a general-equilibrium
analysis.
15. It is necessary to take into account that in macroeconomic terms the
inhabitants of a country choose their consumption of imported goods
not only as a consequence of how much the country exported in one
single year. A country determines the level of imports not from the
current value of exports, but from the future expectations of economic
growth and, in particular, from the present value of exports. It is pos-
sible that in several years the trade balance is in deficit due to a slow
growth of imports. In fact, in periods of strong investment and opti-
mism about the future, the inhabitants of a country can demand large
volumes of capital and consumption goods, independently of the value
of exports. On the other hand, in some years an economy can experi-
ence significant growth of exports and trade surplus, paying previous
debts with that surplus.
16. Let us compare two companies A and B. Company A generates a
direct contribution to the national income equal to x times its export
revenues NA, and company B generates a direct contribution to the
national income equal to y times its export revenues NB. Assume that
x < y and NA > NB. Let us also assume that company A is more pro-
ductive than company B, that both companies demand the same level
of domestic and foreign resources and that taxes are zero. As both
companies used the same level of domestic resources, x NA = x NB. So
even though company A left a lower portion of its sales to the domes-
tic economy, the contribution in dollars of both companies is the
same.
19. Contreras (2012), p. 375.
20. Basadre (1983), Vol. III, p. 90.
21. Zegarra (2014b), pp. 27–28.
22. Seminario (2015) shows that Peru exported some manufactured goods
to Bolivia prior to 1870. Over time, however, those manufactures
declined in importance. It is possible that real appreciation partially
explains the decline of exporting manufacture.
23. Junta Municipal de Lima (1870).
24. One silver peso was equal to eight reales. One silver peso was equivalent
to one silver sol. One feeble peso was equivalent to 0.8 silver soles.
25. Engelsen (1978), p. 107, 273.
26. Junta Municipal de Lima (1870), p. 10–11.
27. Junta Municipal de Lima (1870), p. 19–20.
28. This section is largely based on Zegarra (2014a).
Bibliography
Basadre, J. (1963). Historia de la Cámara de Comercio de Lima. Lima: Valverde.
Basadre, J. (1983). Historia de la República del Perú. Lima: Libreria Universitaria.
Independence. Cambridge: Cambridge University Press.
Contreras, C. (2012). La economía pública en el Perú después del guano y del sali-
tre. Lima: BCRP, INEI.
Engelsen, J. (1978). Social aspects of agricultural expansion in coastal Peru,
1825–1878, dissertation for obtaining the PhD in History, UCLA. Los Angeles:
UCLA.
Hunt, S. (1973). Price and quantum estimates of Peruvian exports, 1830–1962,
discussion paper No. 33. Princeton: Princeton University.
Johnston, L., & Williamson, S. (2016). What was the U.S. GDP then?.
MeasuringWorth. Retrieved from https://www.measuringworth.com/usgdp/
Junta Municipal de Lima. (1870). Datos e informes sobre las causas que han pro-
ducido el alza de precios de los artículos de primera necesidad que se consumen en
la capital. Lima: Imprenta del Estado.
Macera, P. (1977). Trabajos de historia. Lima: Instituto Nacional de Cultura.
Ministerio de Hacienda y Comercio. (1919). Extracto estadístico del Perú 1918.
Lima: Imprenta Americana.
Ministerio de Hacienda y Comercio. (1935). Extracto estadístico del Perú
1931–1932–1933. Lima: Imprenta Americana.
Officer, L. (2016a). Dollar-pound exchange rate from 1791. MeasuringWorth.
http://www.measuringworth.org/exchangepound/
312 L.F. Zegarra
Officer, L. (2016b). The price of gold, 1257–2009. MeasuringWorth. http://

www.measuringworth.org/gold
Seminario, B. (2015). El desarrollo de la economía peruana en la era moderna.
Precios, población, demanda y producción desde 1700. Lima: Universidad del
Pacífico.
Seminario, B., & Beltrán, A. (1998). Crecimiento económico en el Perú:
1896–1995. Nuevas evidencias estadísticas. Lima: Universidad del Pacífico.
Thorp, R., & Bertram, G. (1985). Perú: 1890. 1977. Crecimiento y políticas en
una economía abierta. Lima: Mosca Azul Editores; Fundación Friedrich
Ebert; Universidad del Pacífico.
Yepes, E. (1981). Peru 1820–1920. ¿Un siglo de desarrollo capitalista? Lima:
Signo Universitario.
Zegarra, L. F. (2014a). Perú, 1920–1980. Contexto internacional, políticas
públicas y crecimiento económico. In C. Contreras (Ed.), Compendio de his-
toria económica del Perú 1930–1980, Vol. 5 (pp. 19–104). Lima: BCRP.
Zegarra, L. F. (2014b). La economía peruana durante y después de la Primera
Guerra Mundial. In F. Novak & J. Ortiz (Eds.), El Perú y la Primera Guerra
Mundial (pp. 101–130). Lima: PUCP.
Zegarra, L. F. (2017). Exports, 1830–1930. Working Paper. Lima: CENTRUM
Católica.
Luis Felipe Zegarra is Associate Professor of CENTRUM Católica GBS, the

Graduate Business School of Pontificia Universidad Católica del Perú. He holds
a PhD in Economics from UCLA and specializes on economic history, indus-
trial organization and financial economics. A number of his papers have been
published in international peer-reviewed journals, such as Explorations in
Economic History, European Review of Economic History, Journal of Iberian and
Latin American Economic History, “Investigaciones de Historia Económica and
Historia Agraria. His latest articles analyze the credit market of Lima, Peru, in
the nineteenth century, focusing on the impact of financial intermediation,
political instability, usury laws and gender discrimination in the allocation of
loans.
9
Latin America’s First Export Era:
A Preliminary Balance
(Toward a New Synthesis)
Sandra Kuntz-Ficker
A Preliminary Assessment
Our set of case study shows that, contrary to the conventional view,
export-led growth during the first globalization was not an overall nega-
tive experience. In all the countries under analysis, export expansion
brought about a more productive use of resources, the construction of
infrastructure, booming public finances, stronger internal markets, eco-
nomic recovery, and growth. There is no evidence that the previous tra-
jectory would have given better results in the midterm, and there is no
case in which the path followed led to a worse situation. When the inter-
national economy opened the door of globalization, export-led growth
was probably the only feasible way for the Latin American economies to
overcome structural stagnation inherited from the colonial period and to
create internal conditions for sustained economic growth.
Having said that, it is clear that outward development was not
equally positive for all Latin American countries. The famous notion of
S. Kuntz-Ficker (*)

314 S. Kuntz-Ficker
a lottery of products, which considered differential conditions for each

country from the supply as well as the demand side, is still useful in
understanding why some countries profited to a larger extent than oth-
ers from their insertion into the international economy (Díaz-Alejandro,
1988). The in-depth analysis of seven country case studies allows us to
shed light on some of these differences from a comparative perspective.
Although scant or uneven information yielded varied results as to the
quantitative indicators that we were able to build for each country, we
have grouped them, together with some more qualitative assessments,
in Table 9.1.
The first rows provide the start and ending years for the indicators
included for each country, which depend on the information available.
Before going into that, a word must be said about the timing and dura-
tion of export-led growth. In both aspects, there is a great diversity
between countries. Only a few of them adjust strictly to the conventional
timeline of this model and share a common pattern of export-led growth
that begins somewhere in the 1870s and ends in 1929: Argentina, Chile,
and Mexico. To some extent, Bolivia shared this chronology, although it
experienced a rather modest export expansion in the first decades and
somehow reverted back to a process of export-led growth after recovering
from the 1929 economic depression and kept it until the late 1940s.
Another set of countries experienced at least two phases of outward-
looking growth in the nineteenth century, namely, Brazil, Peru, and
Colombia. These countries went through a relatively early integration
into the world economy that receded before recommencing more vigor-
ously in the last decades of the nineteenth century or even in the early
twentieth century. More than a challenge to the conventional timeline,
what we see here are two different phenomena: in the first stage(s), these
nations lived a period of export expansion with little consequences for
domestic development; in the second one, they engaged in export-
oriented growth, that is to say, in a process of economic growth with
structural changes fostered by exports. In Brazil, the first and second
waves were dominated by one product, coffee, although the second one
brought about some export diversification. In Colombia the transit from
one to another corresponded to different product cycles: the first expan-
sion also represented phases of a relatively more diversified export sector
9 Latin America’s First Export Era: A Preliminary Balance... 315
Table 9.1 Export indicators for seven Latin American countries

Argentina Bolivia Brazil Chile Colombia Mexico Peru
Start year (for 1875 1900 1821 1880 1905–1909 1870 1880
indicators)
End year 1929 1950 1913 1929 1929 1929 1929
Commodity exports value
Current (millions of dollars)
Start year 67 13 19 32 14 7 7
Max. 1019 113 362 284 111 337 123
Year max. 1928 1948 1913 1920 1925–1929 1920 1920
Constant (millions of dollars)
Start year 91 17 12 7 18 6 6
Max. 865 75 373 394 66 227 282
Year max. 1927 1943 1901 1929 1925–1929 1921 1929
Max./start 10 4 31 56 4 38 47
year (times)
Per capita, constant (dollars)
Start 27 9 2.6 1.7 4 0.7 3
Max. 56 28 67 9 16 16
Growth rates (of constant values) %
1870–1913a 4.6 3 9 2.1 8 1
1913–1929b 2.7 2 0.1 6.2 3 6.7
1870–1929c 4 7 3 6 2.5
1900–1950 2
Other export indicators
Return value (% upon total export value)d
Min. 52 32 63
Max. 93 57 82
Average 82 42 ca. 80 38–60 “High” 76
X:GDP (proxy for openness)
Min. 7 8 10 13
Max. 20 28 33 19 10 19
Average 20 16 25 17 10 15
Contribution to GDP growth
Min. 5 −10 17 2 −20 15
Max. 39 29 40 44 162 23
Average 18 21 24 22 11 32 18
Notes: Constant values in 1913 prices, deflected with a Fisher price index
a
Argentina: 1875–1919; Colombia: 1871/75–1910/14
b
Chile: 1913–1930; Colombia: 1910/14–1925/29
c
Argentina: 1875–1929; Colombia: 1871/75–1925/29
d
Bolivia: 1935–1950; Brazil: coffee, 1880s; Chile: tax + cost
316 S. Kuntz-Ficker
that operated at a rather small scale, while the second expansion meant
the consolidation of coffee as the leading export commodity. Finally, in
Peru the guano cycle left some short-term prosperity and a delayed start
of export-led growth, which was characterized by some degree of diversi-
fication, as Zegarra shows in his contribution.
Duration is an important factor when we aim at dealing with the
effects and contribution of export-led growth. Argentina, Brazil, Chile,
Mexico, and to some extent Peru experienced longer export-led growth
periods—although in the case of Mexico, there was a ten-year disruption
provoked by the civil war. On the other hand, Colombia and Bolivia
experienced shorter processes of export oriented growth. As Colmenares
and Ocampo emphasize in their chapter, the surge of coffee exports in
Colombia had significant positive consequences in terms of economic
modernization and industrialization, but it lasted too little to dramati-
cally change the economic structure of the country. In Bolivia, more than
a long wave of export-led growth, there seem to be short export cycles.
Within the period analyzed by Carreras-Marín and Peres-Cajías (the first
half of the twentieth century), there was one of moderate expansion from
1900 to 1920 and another more intense one during World War II
(WWII). Neither their duration nor their intensity lead to expect much
in terms of a visible contribution to the economy, though.
As for the indicators presented in Table 9.1, a first interesting feature is
the widely different level observed in the value of exports at the point of
departure. Let us speak first of values at current prices. While most coun-
tries started with moderate figures, Chile and particularly Argentina had
relatively high export values in the initial year: Chilean exports were four
times larger than Peruvian and Mexican (commodity) exports, while
Argentine exports were almost ten times larger. Export values were less
discrepant at the point of departure in constant (1913) prices with
Argentina being the only exception, which reveals a strong beginning of
this country in every sense. The result of this was that rates of export growth
that were not entirely far away from each other took each country to a
rather different place. With a 4% average growth rate for exports in the
entire export era, Argentina reached a maximum level of 865 million dol-
lars, while Mexico, with a remarkable average export growth rate of 6% per
year, reached a top export value of 227 million dollars (both at constant
1913 prices). That is to say, taking both at their highest point, Mexico’s
export sector represented one fourth of the size of Argentina’s export sector.
Considering only the magnitude of the process, Argentina was an outlier,
while Brazil, Chile, Mexico, and Peru remained within a range between
200 and 400 million dollars in their best year. Only two countries stood
below 100 million dollars: Bolivia, with 74 million, and Colombia with
66 in their best years. In sum, the scale of the phenomenon was completely
different for Argentina than for any other Latin American country. On the
other hand, per capita export values tell a somewhat different story. In this
regard, Chile appears as the best performer, with a top value of 67 dollars
per capita, with Argentina ranking second (56 dollars per capita) and
Bolivia at an unexpected third place (with 28 dollars per capita). In a sec-
ond group Mexico and Peru share a top figure of 16 dollars of exports per
capita, and Colombia lies behind with barely 9 dollars at its best point.
However, this comparative perspective should not let us forget that in
a certain sense what mattered most was the progress that each country
made with respect to its own trajectory. Considering the size of the econ-
omy and the progress that had been achieved before the export era, a
growth of exports that multiplied the initial (constant) value by 56
(Chile), 38 (Mexico), 31 (Brazil), or 20 (Peru) (relative to the highest
level achieved), most have been rather significant and cannot be consid-
ered a failure. Argentine’s exports multiplied “only” by a factor of ten, but
having started from such a high value, the outcome was outstanding. By
contrast, there were two cases (Bolivia and Colombia) in which, starting
from a modest level, the (real) value of exports only multiplied by four.
In Colombia this may be attributed to the short duration of the coffee
cycle, while in Bolivia it was probably the consequence of a rather weak
export performance.
According to the information provided in each chapter and gathered
in Table 9.1, the contribution of exports to economic growth went from
a minimum of 18% (for Argentina and Peru) to a maximum of 32% (for
Mexico) in average throughout the export era. However, as was to be
expected, it varied a lot within this period, as there were phases in which
it contributed with 40% or more (in Argentina, Brazil, Chile, and
Mexico) of GDP growth and others in which the contribution was mini-
mal or even negative. On the other hand, although with the information
available we are not able to provide a measure of openness, we do have a
proxy for it, which is the ratio of exports to GDP.1 In this regard, it is
318 S. Kuntz-Ficker
interesting to note that the size of the contribution of exports to eco-

nomic growth did not necessarily match the degree of openness. In cases
where exports were rather small at the beginning, even after growing
much faster than GDP they remained relatively modest. Fast growth
yielded a large direct contribution of exports to GDP growth (as hap-
pened in Chile and Mexico) despite a lower degree of openness. In other
cases, a small openness ratio simply reflected the discreet significance of
exports’ direct contribution to economic growth (as in Colombia). Even
though these estimates are somewhat fragile, they seem to confirm a rel-
evant but not overwhelming role of exports in economic growth for most
countries in our sample.
Other aspects should be considered to assess the relative success and
economic contribution of export-led growth, even though they cannot be
quantified. The most important is perhaps diversification, as it entailed a
broader regional distribution of exports and a larger variety of connec-
tions with the non-export sector. In this realm, Mexico led by far the
region’s landscape, being the only Latin American country that developed
to a significant degree export activities in both mining and agriculture—
here including livestock and forestry. Furthermore, in Mexico several
product cycles overlapped, generating simultaneous export booms in dif-
ferent regions, while in other countries, like Bolivia or Chile, product
cycles occurred one at the time—which also happened in Colombia
regarding the tobacco and coffee cycles. Only Peru had meaningful
exports of mining and agricultural products at the same time, although
there was a more limited variety in this case. Second in terms of the num-
ber of products that participated in export expansion was Argentina,
which enjoyed a significant diversification within the agricultural sector.
In Brazil, as Absell and Tena-Junguito explain in their chapter, a relative
diversification in the later stages was overshadowed by the preeminence
of coffee throughout the export era.
The question of export diversification by countries is somewhat
more complex and was not conceded so much attention in this vol-
ume. This may be in part explained by the well-known fact that the
first globalization was led by a few commercial powers that monopo-
lized international capital movements and ocean transportation means,
and were also the main source of demand for the products with which
Latin America participated in that process. Thus, contributions in this

book addressed the destination of each country’s exports but generally
took its analysis for granted. For all the countries under study, the
United Kingdom (UK) and the major powers in continental Europe
(Germany and France), plus the United States (USA), were the most
important destinations of exports. The typical case was perhaps
Colombia, which sent 95% of its exports to UK, USA, Germany, and
France (Ocampo, 1984). This said, there were indeed differences
between countries that deserve mention. Some countries showed
higher concentration than others in one or two large commercial pow-
ers. This was the case of Mexico, whose geographic vicinity with the
United States provoked a relatively high concentration in export trade
–that was not matched by a similar concentration in imports, though,
as Kuntz-Ficker has shown (2007). At the other end, Argentina kept a
considerable geographic diversification of its export trade throughout
the period, in which not only the United Kingdom and a broader set
of countries in continental Europe participated, but also neighboring
countries in South America, as Brazil, Chile, Uruguay, and Bolivia.
Bolivia, for its part, was forced by its landlockness to use neighboring
countries (mainly Peru and Chile) as intermediaries to carry out its
export trade, which was mostly directed to the USA, UK, and Germany.
Notwithstanding this, intraregional trade between the Latin American
countries was kept to a minimum during the export era. According to
a recent research (Carreras-Marín, Badia-Miró, & Peres Cajías, 2013),
it averaged 10% of total trade for a representative sample of South
American countries, namely Argentina, Bolivia, Brazil, Chile, and
Peru. Besides, it was “strongly dependent on natural resources” and
most likely a function of economic complementarity between nations.
Nations that were farther away, like Mexico, or that were separated by
natural barriers from potential markets in the region (as was Colombia
from Brazil and Peru), held even less intraregional transactions. The
only instances in which intraregional trade went beyond that minimal
level or provided an opportunity for industrial linkages were textile
exports from Brazil to its neighboring countries and oil exports from
Mexico to Argentina, the latter starting in WWI. Even though intrare-
gional trade did not play a significant role in fostering value-added
320 S. Kuntz-Ficker
exports during the first export era, the ground was set for a more fruit-
ful intercourse in the following period. Particularly since the juncture
created by WWII and its aftermath, less industrialized countries in the
region became important markets for the more advanced economies
within Latin America.
A much greater impact had positive external economies and associated
investments. In practically all of the Latin American countries, export
expansion attracted foreign resources and brought about significant
investment in ports, railways, electrification, and public services, which
had positive externalities upon the rest of the economy. The equipment
of the export sector required the importation of machinery and tools that
implied knowledge and technology transfer. In this sense, export-led
growth brought about economic modernization to a degree that was pre-
viously unknown and that would probably have been unachievable had
the previous trajectory continued. In this sense, the first wave of eco-
nomic modernization was intrinsically associated with the first era of
export-led growth. Unfortunately, in these regards information concern-
ing each of the countries under study is much more uneven, which ren-
ders an overall assessment difficult. Surely, there were significant
differences between countries. In Colombia, Peru, and Bolivia, railroad
expansion was not as important as in other countries, but still played a
role in providing cheap internal transportation. In Chile, as Badia-Miró
and Díaz-Bahamonde assess, the benefits of railroads concentrated in the
export sector, with scant positive external economies due to their isola-
tion from the rest of the country. In Argentina and Brazil, positive exter-
nalities of railroads were larger, and in Mexico they were quite remarkable.
Even more difficult is to assess positive externalities of other investments
associated to the export boom, as those in banking and finance, e lectricity,
ports, and other infrastructures. In any event, it is clear from our survey
that this aspect of export-led growth deserves further investigation.
One more dimension that merits a comparative assessment is the rela-
tion of export expansion with industrialization. This issue needs to be
approached from a twofold perspective. One aspect is the use given to the
growing purchasing power of exports derived from export expansion. In
only one country (Mexico) is there sound evidence of the implementa-
tion of a protectionist tariff policy aimed at providing protection to
import-competing industries and shifting the composition of imports
toward production goods (including machinery, inputs, and fuels). With

weaker evidence as to the role of the State, the structure of imports
showed a similar change in Argentina, Brazil, and Chile. In all these
countries, a process of import substitution in textiles and other consumer
products—and at times also in production items—accompanied the
changing composition of imports since the last years of the nineteenth
century. Later on, the Antioquia region in Colombia experienced a com-
parable process in close connection with the larger capacity to import
provided by surging coffee exports.
Another aspect of the relationship between export-led growth and
industrialization is that of forward linkages of export activities. The
most notable of these took place in Mexico, in at least two fields. The
first one was the emergence of a modern, technologically advanced
metallurgical sector (responsible for the processing of at least 75% of
mineral exports by the late 1920s) and a refining branch of the oil sec-
tor. The second one related to the fact that, starting at some point, the
surplus production of agricultural exports created industrial linkages
whose output was oriented to the internal market. By these means,
export activities provided the ground for inward-looking industries
that were to flourish in the following years. In Argentina, the livestock
sector created significant forward linkages with the establishment of
cold-storage houses and the emergence of a dairy products industry, as
Kuntz-Ficker and Rayes describe in their chapter. The products of the
former were originally headed for export, although with a growing
internal demand, while the latter, originally inward oriented, found
external markets starting in WWII. Also wheat production created a
forward linkage in the elaboration of flour, for export and for internal
consumption as well. In Peru the main forward linkage took place in
the processing of sugar for export, through the establishment of large
industrial plants (ingenios). In Brazil and Colombia, forward linkages
of export activities were limited because the main commodity did not
need further processing. However, coffee exports in Colombia sparked
the emergence of a packing bag industry that flourished during the
coffee boom. In two countries that exported minerals (Bolivia, tin, and
Chile nitrates), internal conditions or disinterest in the part of inves-
tors hindered the creation of an industrial branch for the extractive
activity.
322 S. Kuntz-Ficker
Table 9.2 uses the information included in Table 9.1 and the pre-
ceding comments to propose a provisional typology of export-led
growth performance for the countries studied in this volume. The cri-
teria used to place each country in one of the three groups is rather
loose and perhaps somewhat arbitrary and only aims at differentiating
countries in those regards according to broadly defined ranges. Since
we do not have quantitative estimates for diversification and industri-
alization, I have placed the seven countries in the group that, in my
opinion, better reflects the assessment provided by the authors of each
chapter. As I have said before, criteria are loose but also explicit, so
that the reader may decide that a particular country does not belong to
a certain group in a specific category. Table 9.3 summarizes this infor-
mation by adding the number of times that each country appears in
each group or category. Finally, the last column presents the group
with the higher frequency for each country, which would roughly
define its overall performance in export-led growth, according to these
criteria. The exercise does not intend to be accurate or definitive, of
course, not only because ranges are loose but also because there may be
other criteria that we are not considering here. Besides, a more rigor-
ous procedure would not grant the same weight and significance to all
the criteria. For instance, diversification or industrialization has mul-
tiple and probably more profound meanings than the initial value of
exports. For our purposes, though, this exercise offers a hint of what
we think may be achieved with our approach, namely, a typology of
countries that allows to discern varying degrees of success and differ-
ential positive effects of export-led growth.
According to Table 9.3, export-led growth would have been more suc-
cessful for three countries, Argentina, Chile, and Mexico. A closer look
shows that Chile appears more like a borderline case and lacks some of
the qualitative advantages that the other two countries enjoyed, namely,
diversification and industrialization, particularly by means of forward
linkages of the export sector. In a second group appear Brazil and Peru,
because of different reasons. Brazil experienced a long export cycle with
scarce diversification and rather modest export growth. Peru had an early
phase of export expansion (the guano era) in which the contribution of
exports to economic growth was scant. Then, it underwent an era of
Table 9.2 A provisional typology of export-led growth in seven Latin American countries
Top Growth
value/ rate (of Top per
Initial Initial Top initial constant capita Return Contribution
value value value Top value value value) value value to GDP
Duration (current) (constant) (current) (constant) (constant) (avg) (constant) (avg) growth (avg) Diversification Industrialization
Group 1 Ar, Br, Ar, Ch Ar Ar Ar Br, Ch, Mx Ch, Mx Ar, Ch Ar, Br, Mx Mx Ar, Br, Mx
Ch, Mx Co,
Mx
Group 2 Pe Br, Bo Bo, Br, Co, Br, Ch, Br, Ch, Mx Ar, Pe Ar, Co Bo, Br, Bo, Ch Ar, Bo, Br, Ar, Br, Pe Co, Pe
Pe Mx Mx, Pe Ch, Pe
Group 3 Bo, Co Co, Mx, Ch, Mx Bo, Co, Bo, Co, Pe Bo, Co Bo, Br, Co – Co Bo, Ch, Co Bo, Ch
Pe Pe Pe
Abbreviations: Ar, Argentina; Bo, Bolivia; Br, Brazil; Ch, Chile; Co, Colombia; Mx, Mexico; Pe, Peru
Note: Indicators correspond to the information provided in Table 9.1. Groups are ranked starting from the best
performance in each indicator, as defined below
Grouping ranges and criteria:
Duration (of export-led growth): G1: 60 years or more; G2: 40–60 years; G3: shorter or discontinuous cycles
Initial value (current and constant): G1: x > 30; G2: 10 < x < 30; G3: 0 < x < 10
Top value (current and constant): G1: x > 400; G2: 200 < x < 400; G3: 0 < x < 200
Top value/initial value (constant): G1: x > 30; G2: 10 ≤ x ≤ 20; G3: 0 < x < 10
Growth rate of exports (constant value) (avg): G1: x ≥ 6; G2: 3 ≤ x ≤ 6; G3: 0 < x < 3
Top per capita value (constant): G1: x > 30; G2: 10 ≤ x ≤ 30; G3: 0 < x < 10
Return value (avg): G1: x > 70 or “high”; G2: 30 < x < 60; G3: 0 < x < 30
9 Latin America’s First Export Era: A Preliminary Balance...
Contribution to GDP growth (avg): G1: x > 30; G2: 15 < x < 30; G3: 0 < x < 15
Diversification and industrialization: qualitative assessment according to chapters.
323
324 S. Kuntz-Ficker
Table 9.3 Frequency of rankings by country

Total indicators Group of higher
Group 1 Group 2 Group 3 available frequency
Argentina 8 4 0 12 1
Bolivia 0 5 7 12 3
Brazil 4 7 0 11 2
Chile 5 4 3 12 1
Colombia 1 3 8 12 3
Mexico 7 3 2 12 1
Peru 0 7 4 11 2
Note: Frequency refers to the groups provided in Table 9.2.
export-led growth with two distinguishable phases: the first one, in the
last decades of the nineteenth century, that held very similar characteris-
tics to those mentioned for Brazil (slow export growth and limited diver-
sification), and the second one, shorter, of a more intense growth in all
indicators and a broader diversification. Finally, two countries in our
sample belong to the third group: Bolivia and Colombia. In both cases,
early phases of export expansion fell short in every indicator, while later
phases provided greater impulse and contributions but were short-lived.
Particularly in those cases, it would be very useful to assess the extent to
which export-led growth was a better option relative to the actual alterna-
tive facing those countries at the time. Only then we could reach a more
definitive judgment about the convenience of the path followed for the
development of those countries during the export era.
Victor Bulmer-Thomas, in his canonical book on the economic his-
tory of Latin America, conducts an exercise that is similar to ours at least
in its motivation. He employs some common indicators that apply to all
Latin American countries using the information that was available to
him. With this, he estimated the target rate of export growth that was
necessary to hold during a certain time in order for export-led growth to
succeed, provided a given rate of growth of the non-export economy.2
His exercise results in a dichotomy that defines the cases in which coun-
tries experienced successful export-led growth (Bulmer-Thomas, 2014,
p. 67). According to his assessment, only 3 countries achieved that target:
Argentina, Chile, and Uruguay, while the 18 remaining countries of
Latin America would have failed in that respect. While Bulmer-Thomas’
study is more complex and rich in some regards, we think that the assess-
ment becomes too simplistic in this aspect. On the one hand, the infor-
mation that he employs to build the indicators is anything but complete
or reliable; on the other, a yes or no answer obviously lacks the nuances
and shades that become apparent when one undertakes an in-depth study
of each country. Our appraisal is still provisional and incomplete, but, in
our view, goes in the right direction.
hat Do We Do with Some

W
Good Old Concepts?
According to our findings, there are at least two crucial premises of the
conventional interpretations that need to be discarded as characteristic or
general features of Latin America’s first export era. The first one belongs
to structuralism and is the idea that there was a long-term deterioration
in the terms of trade. The second one is the fundamental notion of depen-
dency theory and states that enclaves were the predominant form that
export activities took during this period.
The thesis that terms of trade deteriorated during the first export era
was first proposed by Raúl Prebisch and Hans Singer and not long ago
reformulated by Luis Bértola and Jeffrey Williamson. According to
Prebisch’s estimate, the decline occurred at least from 1885 to
1931–1935 (Prebisch, 1986, p. 483). In a recent work, Bértola and
Williamson (2006) incorporate in the “venerable terms of trade debate”
the role played by the transport revolution, which increased terms of
trade “for both center and periphery,” and the turn of events that took
place in the 1890s. They provide an estimate of terms of trade for Latin
America as an unweighted eight-country average that includes
Argentina, Brazil, Chile, Colombia, Cuba, Mexico, Peru, and Uruguay.
According to this, terms of trade increased from the 1820s until the
early 1890s, declining afterward from an index of around 130 to about
70 in 1930 (Bértola & Williamson, 2006, pp. 32–33). They acknowl-
edge the different outcomes for countries producing temperate-climate
primary products relative to those specializing in mining or tropical
326 S. Kuntz-Ficker
primary products. With information provided in this volume, we have

calculated a weighted average for six (all countries in our case studies
except for Bolivia) of the eight countries included in Bértola and
Williamson’s estimate (which also includes Cuba and Uruguay). Our
average is weighted by each country’s share in the sum of exports stem-
ming from the six countries together and yields somewhat different
results (see Figure 9.1).
We coincide with Bértola and Williamson in observing an upward
trend that goes from 1883 to 1895, followed by a sudden fall in the latter
year and unfavorable terms of trade lasting until 1902. But then our
series shows an upward swing and a decade of relatively more stable terms
of trade until 1915, when the more pronounced drop of the period
occurs, continuing until 1921. In that year the index starts to move up
again, reaching its peak in 1927 and falling one more time in the last
years of the 1920s. Our perception, therefore, is not one of a pronounced
and steady fall from the 1890s to the Great Depression, but rather one of
shorter cycles (of around ten years each) that make the long-term curve
look more or less stable or, if anything, moving slightly upward. In any
event, we do not find a “secular deterioration” of the terms of trade as the
one described by Prebisch and Singer, nor a 40-year deterioration as the
one portrayed by Bértola and Williamson (between 1890 and 1930). In
fact, there was a 30-year period (1885–1915) within the export era in
which terms of trade for the six Latin American economies did not show
a steady up or down trend, remaining instead within an average index of
91 and a standard deviation of 11.
What is true is that there was a broad variation between countries in
this regard. After 15 years of declining terms of trade (1880–1895),
Argentina experienced a slightly upward trend from the late 1890s to
1914, while Brazil and Colombia had the opposite experience: an
upswing until the 1890s and then a prolonged decline. For Chile, terms
of trade were pretty much steady until a sudden upsurge took place start-
ing in the late 1890s. Only in Mexico and Peru was there a falling trend
that lasted for more than 15 years. In the case of Mexico, however, we
have argued that to the extent that it reflected falling silver prices, it did
not represent a loss of income for the economy, as it was probably com-
pensated by growing productivity in the mining sector.
Index
20
40
60
80
0
120
100
1880
1881
1882
1883
1884
1885
1886
1887
1888
1889
of Chaps. 2–8 of this volume
1890
1891
1892
1893
1894
1895
1896
1897
1898
1899
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
Fig. 9.1 Terms of trade for six Latin American countries (weighted average), 1913 = 100. Sources: data provided by authors
1929
327 9 Latin America’s First Export Era: A Preliminary Balance...
328 S. Kuntz-Ficker
This point leads us to a related issue. If the idea of a long-term deterio-

ration of Latin America’s terms of trade that lasted for most of the export
era seems hard to uphold, the meaning of this indicator is even more
arguable. The recent thesis that rising terms of trade were negative for
Latin America because falling relative prices for industrial products in the
international market discouraged industrialization (Williamson, 2010)
leaves us with a lose-lose situation for the region. Declining terms of
trade would have had a short-term negative impact in the form of a loss
of income, while increasing terms of trade would have had a long-term
negative effect in hindering industrialization or even provoking de-
industrialization. As no definite trend is observable in most of our coun-
try case studies, it is likely that none of these negative impacts affected
their long-term economic performance during the export era. In any
event, it is something that defies any attempt at generalization and should
be evaluated on a case-by-case basis.
Let us now deal with the second issue. The claim that export activities
operated as enclaves was present throughout the dependency theory lit-
erature. More recently, it has been recycled by some sort of neo-
dependency current of thought and by contemporary literature dealing
with present-day globalization and the role of now industrial enclaves in
economic growth.3 Not long ago, Conning and Robinson (2009) under-
took the analysis of the dependency theory notion of enclave. They tried
to find out, first, how generalized was its presence in the Latin American
countries during the first export era and, second, whether it had negative
effects in terms of long-term development, inequality, or the size of gov-
ernment. Even though the motivation of our study is similar (to build
operational indicators that allow us to address conventional interpreta-
tions with empirical evidence), we find the criterion that they adopt to
define an economic activity as an enclave rather narrow. They use a
dichotomy and define as enclaves not only sectors but countries in which
the main export was owned by foreigners. In this volume we have tried to
adopt a more thorough approach to this important issue.
Firstly, we consider that, generally speaking, what may be defined as an
enclave is an activity or even a sector, but not a country. The same coun-
try may have activities that are enclaves and others that are not, and even
within the same sector, there may be activities that differ from others in
terms of their connection to the local economy. A dichotomous classifica-

tion of the entire export sector (or country) as enclave or not enclave
ignores the differential and cumulative benefits of each export activity on
the non-export economy.
Secondly, we accept that ownership may be a relevant criterion to
define whether an economic activity is an enclave or not, but it is not the
only one. Dependency theory used this as the crucial criterion because
foreign ownership could define the way in which the enclave sector
evolved, taking it over from domestic control and imposing an external
rationale to economic activity. Furthermore, foreign ownership of assets
would lead to a consistent loss of export gains by means of profit remit-
tances abroad, limiting the possibilities of capital accumulation and eco-
nomic growth. However, this criterion may be misleading. On the one
hand, as the chapter on Bolivia shows, there were cases in which owner-
ship was in the hands of national entrepreneurs that behaved like foreign-
ers, as they did not reinvest their profits inside the Bolivian economy,
sending them abroad instead. Beyond this odd situation, it is not owner-
ship itself, but rather the patterns of reproduction that may define a par-
ticular activity as an enclave. In other words, the decisive criterion is the
extent to which the activity in question is connected or not to the rest of
the economy, and the number and types of these connections. This, in
turn, means that we should rely on a number of indicators in order to
assess the degree to which a specific activity may correspond to the defini-
tion of enclave. As Bulmer-Thomas correctly states:
The meat-export industry, for example, involved so many separate pro-

cesses (e.g., pasture, fencing, fattening, slaughtering, packing) that it could
not be mounted successfully without transforming many branches of the
non-export economy. By contrast, banana exports were possible from
enclaves both physically and economically separate from the rest of the
economy. (Bulmer-Thomas, 2014, p. 89)
To this observation we can just add that there were sectors of larger
complexity than the Argentine meat industry, such as the mining-
metallurgical sector in Mexico and thus with more and deeper connec-
tions with the non-export sector.
330 S. Kuntz-Ficker
Thirdly, this means that, rather than a dichotomous classification of

activities as enclaves or not enclaves, what we may find is a continuum
that goes from activities that are entirely disconnected from the national
economy to those that have multiple and complex links with it, with a
broad range of variations within. We should add, in this sense, that it is
hard to think of an activity that has no relation whatsoever with the
domestic economy and may be defined as an enclave stricto sensu. Even in
what is probably the more extreme case documented in this volume
(nitrates in Chile), there existed some kind of connections with and ben-
efits to the economy as a whole. In this regard, an assessment of each case
should consider the opportunity cost of resources and the feasible alter-
natives to the path actually adopted. To follow up with the example, is it
conceivable that, in the absence of foreign investment, Chile had, at that
time, the technological, financial, and organizational capacity to profit
from those natural resources? Would any other activity have rendered the
benefits (in terms of backward linkages, railroad infrastructure, wages,
and taxes) that nitrate exploitation provided?
Some of the parameters employed in this volume confirm how inap-
propriate the concept of enclave is to depict most of Latin America’s
export sectors. One measurable indicator to address this issue is the return
value of exports. It accounts for payment to local factors of production
and thus introduces nuances to the basic dichotomy represented by the
foreign/native equation. Assets may be in the hands of natives and the
endeavor could still transfer much of its gains to foreign distribution net-
works (as often happened in the coffee sector). Inversely, an activity may
be foreign owned and pay rents to local owners of land and wages and
salaries to native workers (as was the case in the Mexican oil sector).
According to estimates presented in Table 9.1 (taken from the chapters
that compose this volume), return value turned out to be high in
Argentina, Brazil (with respect to coffee in the 1880s), Colombia, and
Mexico and moderate in Chile and Bolivia. The reasons underlying these
differences are rather diverse. In Argentina and Colombia the main factor
explaining a high return value was the domestic ownership of export
assets; in Mexico, the significant connections with the non-export econ-
omy. In Chile, despite high taxes in the nitrate sector, there was a leakage
of export earnings because most assets were foreign owned and fuel had
to be imported. In Bolivia, owners were native but transferred their earn-

ings abroad. Additionally, we have identified an array of means by which
export activities may benefit the domestic economy. Positive externalities
of investments in infrastructure, spillover investments from the export
into the domestic sector, backward linkages with activities providing
inputs and wage goods consumed in export activities, and forward link-
ages with activities in the manufacturing or services sectors, among
others.4
Even if benefits from export activities were larger than the feasible
alternative, it is clear that the positive effects and virtuous connections of
export activities were more abundant in some sectors and countries than
in others. Some of the chapters in this book also refer to the cost of these
endeavors, such as those stemming from excessive specialization, envi-
ronmental destruction, the concentration of land, and an unequal distri-
bution of gains. We do not explore the possible long-term consequences
of the activities that conventional wisdom has characterized as enclaves,
but Conning and Robinson conduct this exercise for what they consider
enclave and non-enclave countries. They do not find negative long-term
differences in income per capita, inequality, or the size of the government
between them (Conning & Robinson, 2009, pp. 374–375). In any event,
our survey confirms that we cannot speak of enclaves as a homogeneous
reality, that all generalization in this respect is abusive, and that this issue
should be addressed on a case-by-case basis.
Some Final Remarks

The abrupt end of the export era as a result of the 1929 Great Depression
nurtured an economic culture that saw rather negatively that phase of
Latin American development. The shift toward inward-looking growth,
largely imposed by external conditions, was reinforced by a growing State
presence and the rise of social movements within the region. Within this
context, the idea that industrialization was the only possible way to reach
sustainable development took hold, and it was accompanied by the
notion that this route had been closed by outward-looking growth.
Structuralism articulated those notions into a paradigm that was very
332 S. Kuntz-Ficker
much in accordance with the nationalist and anti-imperialist stances of

Latin American regimes at the time, and thus it was adopted by them as
part of their own programs for economic modernization and industrial-
ization, with important achievements throughout the region. Successive
generations provided new elements to the original interpretation, radical-
izing some of its postulates and adding a political-ideological dimension
that deepened the criticism against the way in which Latin America par-
ticipated in the first globalization of the modern world. This current is
known as dependency theory and came out of university classrooms to
take over the social imaginary and economic culture, flowing eventually
into anti-globalization movements of all sorts (Packenham, 1992, p. 5
and passim).
However, inward-looking development also came to an end, if not as
abrupt and catastrophic, equally inevitable for all the economies within
the region. The economic crisis that signaled its final moments in many
countries fed criticisms against statism and protectionism, in what
appeared as a recognition of the limits of inward-looking growth.
Eventually, the economic culture nurtured by the new wave of globaliza-
tion also reached an uncritical extreme view that considered the half cen-
tury of nationalism and introspection that had just passed as an utter
mistake. In this interpretation, export-led growth appeared as the pana-
cea for every country, at every moment in history.
Most likely, neither of these claims is entirely right. Structuralism and
dependency theory pointed out some weaknesses of export-led growth
that remain valid, while current neoliberalism has emphasized some dis-
advantages of inward-oriented growth that hold true. Both currents of
thought have incurred in excessive generalizations and have underesti-
mated the importance of inductive reasoning and empirical research in
the search for a balanced assessment of their pros and cons.
Regarding the nature of patterns of growth, there are certain features
that are widely known yet often forgotten. The first one being that they
are historical phenomena, which follow one another in long cycles and
whose course may be influenced by the great economic powers of the
time but is exogenous for most individual countries. More than good and
bad patterns of development, they represent sets of opportunities, which
open new paths and the possibility to achieve a period of sustained eco-
nomic growth for the countries that profit from them. The second one is
that growth models do not function as unconnected compartments that
absolutely exclude one another, so that, for instance, industrialization
was unconceivable during export-led growth and had to wait for inward
development to bloom from scratch. In nineteenth-century Latin
America, successful export-oriented growth created the conditions for
industrialization. Furthermore, once conditions in the international
economy deteriorated, the newly born industrial activities started to act
as engines of growth, anticipating the transit to the new pattern of
growth. A similar assertion applies for inward-looking growth: as Prebisch
himself proclaimed, the more it embraced export activities as part of the
model, the more possibilities had to succeed.
This volume provides an analysis of the first export era that intends to
avoid both prejudice and generalization, departing instead from the in-
depth analysis of country case studies in order to start inductively assem-
bling a new interpretive synthesis. It does not glorify export-led growth,
but it does not dismiss it as utterly inadequate either. We approach this
aim by putting together new evidence based on original sources and
empirical research and by presenting this evidence in a way that is rela-
tively uniform and susceptible to comparison. By using a set of compa-
rable parameters, we reassess specific aspects of the economic contribution
of exports to the Latin American economies during the first export era.
Our necessarily provisional conclusion is that some generalizations need
to be discarded once and for all, and that the outcomes of export-led
growth were different for every country, in some regards positive for all
and probably better than the at the time available alternative. However,
this is only the beginning of our endeavor. In the midterm, we aspire to
encourage a systematic comparison between cases (countries, regions,
sectors, products) that will lead us to elaborate a typology that recognizes
shades and particularities, varying degrees of failure and success, and the
factors that caused them.
Naturally, this first endeavor opens an agenda for future research. In
our view, it should embrace at least three interrelated realms. First, we
need to build more evidence with regard to the parameters that we
chose for our analysis. In many areas, the uniformity for which we
strived in the different chapters was undermined by lack of information
334 S. Kuntz-Ficker
or by the low quality or dubious reliability of the information that we

have. In the same token, we need to find the way to convert some of the
qualitative assessments that we presented here in quantitative indica-
tors, so that comparisons may be more accurate and fruitful. Second,
we need to be able to construct more analytical parameters that embrace
different areas and allow us to provide a more comprehensive assess-
ment of the first export era. In this volume we focused on the contribu-
tion of exports to the economy, but it would also be worth it to address
this issue from a broader perspective. Particularly important would be
to assess the role of export-led growth in State building, wealth and
income distribution, or institutional development. Finally, the comple-
tion of this project would entail incorporating new country case stud-
ies to the analysis. This objective is not as easy to achieve as it seems.
Our purpose being to undertake empirical research that allows us to
construct a set of indicators and parameters that provide a common
base for comparison, it poses some material and human capital condi-
tions that unfortunately are not always present in every country.
However, this would be the only way to achieve our main purpose,
namely, to build, progressively and inductively, a new interpretative
synthesis that embraces the entire region and puts the first export era in
Latin America into the right historical perspective.
Notes
1. Openness is usually measured as the ratio of total trade (imports plus
exports) to GDP. As in this volume we focus on exports, the indicator we
can provide is a partial measure of it. However, under the assumption of
balanced trade, we may estimate openness as approximately double the
size of the ratio of exports to GDP.
2. In his assessment, a successful export-led growth was such that allowed to
achieve a target rate of growth of 1.5% in real GDP per head for a rela-
tively long period. Bulmer-Thomas (2014, pp. 55–73).
3. About a new wave of dependency theory, there are works from the Latin
American scholarship that we may cite, but it is interesting to note that its
influence extends to more global endeavors. See, for instance, Szlajfer and
Henryk (2012, p. 245 and ff.), Weaver (2000, p. 75 and ff.). For the cur-
rent use of the term, see Dietz (1985), Warr (1987), among others.
4. A recent work dealing with current export-led growth proposes ways of
overcoming the enclave character of export activities in Africa. They con-
sist precisely of the kinds of connections with the non-export economy
that we have identified in the Latin American first export era. See Isik,
Opalo, and Toledano (2015).
References
Bértola, L., & Williamson, J. (2006). Globalization in Latin America before
1940. In V. Bulmer-Thomas, J. Coatsworth, & R. Cortés Conde (Eds.), The
Cambridge economic history of Latin America (Vol. II, pp. 11–56). New York:
Bulmer-Thomas, V. (2014). The Economic History of Latin America since
Carreras-Marín, A., Badia-Miró, M., & Peres Cajías, J. (2013). Intraregional
trade in South America, 1912–1950: The cases of Argentina, Bolivia, Brazil,
Chile and Peru. Economic History of Developing Regions, 28(2), pp. 1–26.
doi:10.1080/20780389.2013.866379
Conning, J., & Robinson, J. (2009). Enclaves and development: An empirical
assessment. Studies in Comparative International Development, 44, pp. 359–385.
Díaz-Alejandro, C. (1988). Trade, development and the world economy. Selected
essays of Carlos F. Díaz-Alejandro. Oxford: Basil Blackwell.
Dietz, J. (1985). Export-enclave economies, international corporations, and
development. Journal of Economic Issues, XIX(2), pp. 513–522.
Isik, G., Opalo, K., & Toledano, P. (2015). Breaking out of enclaves. Leveraging
opportunities from regional integration in Africa to promote resource-driven
diversification. Washington, DC: World Bank.
Kuntz Ficker, S. (2007). El comercio exterior en la era del capitalismo liberal.
Ocampo, J. (1984). Colombia y la economía mundial 1830-1910. Bogotá: Siglo
XXI.
Packenham, R. A. (1992). The dependency movement. Scholarship and politics in
development studies. Cambridge: Harvard University Press.
Prebisch, R. (1986, octubre-diciembre). El desarrollo económico de la América
Latina y algunos de sus principales problemas. Desarrollo Económico, 26(103),
pp. 479–502.
336 S. Kuntz-Ficker
Szlajfer, & Henryk. (2012). Economic nationalism and globalization. Leiden and
Boston: Brill.
Warr, P. (1987). Export promotion via industrial enclaves: The Philippines’
Bataan export processing zone. Journal of Development Studies, 23(2),
pp. 220–241.
Weaver, F. S. (2000). Latin America in the world economy. Mercantile colonialism
to global capitalism. Boulder: Westview.
Williamson, J. (2010, September). When, where, and why? Early industrializa-
tion in the poor periphery, 1870–1940. NBER Working Paper 16344.
Sandra Kuntz-Ficker is an economic history professor and researcher at El

lished eighteen books as author or editor and more than 60 articles and book
chapters. Professor Kuntz-Ficker was President of the Mexican Economic History
Association and is a member of the Executive Committee of the International
Economic History Association (since 2015). Since 2013, she is coeditor of the
Revista de Historia Económica—Journal of Iberian and Latin American Economic
History. Personal website: http://www.colmex.mx/academicos/ceh/kuntz/
Index1
A B
Agrarian, 55, 66n5, 78, 79, 96, 98, Balance, 28, 31n25, 43, 48, 49, 62,
103, 193, 195, 196, 207, 64, 65, 103, 122, 139, 161,
214, 218, 223, 224, 178, 193, 204, 223, 227n8,
227n11, 268, 270 253, 266, 268, 302, 307,
reform, 195, 223, 268, 270 310n15, 313
sector, 15, 79, 98, 104, 224 balance of trade, 193
structure, 193, 195, 196, 207, of payments, 18, 161, 253
218, 224, 227n11 Belgium, 41, 142n2, 240, 270n3
Argentina, v, 3, 25, 28, 31n24, Bolivia, v, 2, 3, 28, 31n25, 41,
39–41, 43–47, 49, 51, 54, 75–82, 86, 90, 94, 96, 100,
55, 58, 61, 62, 64, 65, 102–104, 104n1, 104n2,
66n6, 84, 86, 90, 94, 95, 106n13, 106n14, 106n17,
98, 129, 172, 262, 314, 155, 174, 287, 311n22,
316–318, 320–322, 314, 316–318, 320, 321,
324–326, 330 324, 326, 329, 330
Cuyo, 56 Antofagasta, 82, 102, 158, 174
North-East, 124, 126, 129, 141 Cochabamba, 101
Pampas, 55, 56, 58 Guaqui, 101
Patagonia, 48 Huanchaca, 82, 102
1
Note: Page number followed by ‘n’ refers to notes.

Economic History, https://doi.org/10.1007/978-3-319-62340-5
338 Index
Bolivia (cont.) Chile, v, 3, 28, 41, 48, 75, 82, 84,

La Paz, 101 86, 88, 94, 102, 104n1,
Oruro, 82, 101 106n15, 142n2, 153–155,
Potosí, 80, 81, 104n5 160, 161, 166, 170, 172,
Uyuni, 82, 101 174, 180, 191, 287, 314,
Viacha, 101 316–318, 320–322,
Brazil, v, 1, 3, 28, 41, 90, 104n1, 324–326, 330
113–115, 117, 119–122, Northern regions
128, 133, 135, 137–142, Antofagasta, 82, 102, 158,
142n2, 217, 224, 314, 174
316–318, 320–322, 325, Atacama, 158
326, 330 Tarapacá, 158
Alagoas, 124 Colombia, v, vii, 3, 25, 28, 31n18,
Amazonas, 131 31n24, 84, 191–195, 197,
Ceará, 124, 126, 129 198, 201, 204–207, 220,
Espírito Santo, 126 221, 223–226, 226n2,
Pará, 124, 125, 131 227n9, 314, 316–318, 320,
Paraíba, 129 321, 324–326, 330
Paraná, 126 Ambalema, 194, 196, 207–209,
Pernambuco, 124, 129 212–214
Rio de Janeiro, 124–127, 129, Antioquia, 193, 195, 208,
131, 133, 136, 142n2 215–223, 226n1, 228n16,
Rio Grande do Norte, 129 228n19, 228n20, 321
Río Grande do Sul, 124, 125 Barranquilla, 211, 212, 226
Santa Catarina, 124, 126 Bogota, 208
Sao Paulo, 1, 124, 126, 129, 131, Caldas, 220, 221, 223
133, 137, 141, 153, 181 Cali, 222, 226, 226n1
Sergipe, 124, 126 Caribbean region, 194, 196, 207,
Bulmer Thomas, Victor, 6, 18, 19, 25, 214
29n2, 31n19, 86, 242, 251, Cauca, 193
267, 271n6, 271n9, 272n22, Cundinamarca, 195, 196,
289, 324, 329, 334, 334n2 218–220, 222, 226n1
El Carmen, 209, 212, 227n11
Girardot, 222
C Magdalena river, 194
CEPAL (Comisión Económica para Manizales, 221, 223
América Latina), 102, Montes de María, 196, 207, 209,
106n18, 228n18. See also 210, 212–214, 219
Economic Comission for Nariño, 195
Latin America (ECLA) North Santander, 215, 222
Index
339
Santander, 195, 215, 220, 222, Economic growth, vii, viii, 8, 9,

227n9 11–13, 15–17, 20, 21, 26,
Tolima, 193, 215 46–48, 58, 60, 63, 64, 76,
Commercial policy, 20, 22, 54, 214, 90, 92, 94, 96, 103, 114,
256. See also Tariff policy 122, 123, 157, 167–169,
Crisis, economic, vi, 6, 43, 44, 49, 63, 176–178, 192, 223, 224,
64, 77, 78, 80, 84, 86, 88, 237, 240, 248–252, 258,
90, 92, 95, 139–141, 155, 267, 268, 291–296, 298,
160, 163, 164, 166, 169, 301, 310n15, 313, 314,
172, 173, 176, 180, 192, 317, 318, 322, 328, 329
193, 198, 199, 201, 202, Energies, 26, 137
210, 217, 225, 226, 237, consumption, vi, viii, 4, 5, 18, 20,
242, 268, 308, 314, 332 21, 25, 41, 48, 52, 55, 57,
Great Depression, v, 28, 43, 44, 63, 59–62, 65, 107n20, 121, 137,
64, 78, 88, 90, 95, 140, 141, 138, 140, 142n1, 143n2, 172,
155, 160, 163, 164, 166, 174, 209, 214, 222, 228n15,
169, 172, 176, 180, 193, 236, 252, 253, 256–260, 296,
201, 224, 268, 308, 326, 331 299, 300, 310n15
(see also Depression) electricity, vi, 23, 52, 61, 62, 100,
142n1, 258, 264, 266, 320
oil, vi, 31n18, 41, 61, 62, 65, 96,
D 98, 107n21, 174, 200, 206,
Dependency theory, vi, 2–8, 11, 12, 229n22, 238, 240, 242,
18, 19, 21, 22, 24, 29n8, 246, 249, 250, 253, 255,
62, 77, 191, 224, 238, 250, 262, 264, 266, 268, 269,
259, 280, 325, 328, 329, 290, 301, 321, 330
332, 334, 334n3 derivatives, 264 (see also
Depression, 28, 199, 238, 314 Byproducts)
Domestic market, 58, 64, 78, 221, exports, 199, 242, 246, 253,
223, 225, 236, 240, 250, 255, 262, 269, 290
261, 266, 269, 313, 321 extraction, 41, 65, 264
Dutch disease, viii, 5, 15, 30n11, petroleum, 138, 262, 301 (see
30n15, 92, 122, 166, also Oil)
181n18, 244, 246, 304, 305 refining, 65, 81, 102, 158,
262, 321
traditional, 264
E transition to modern, 26, 30n11,
Economic Comission for Latin 61, 98, 137, 138, 263, 264,
America and the Caribbean 266
(ECLAC), 162 Yareta, 102
340 Index
Europe, vi, 41, 56, 121, 224, 236, 139–141, 143n2, 196, 237,
286, 289, 290, 308. See also 262, 269, 272n16, 286,
by countries 287, 289, 290, 296, 305,
Export-led growth, 2, 5–13, 16, 22, 307, 308
24, 26–28, 31n25, 47, henequen, 237, 251, 254,
76–79, 81, 82, 86, 90, 103, 260–262, 271n13
104, 141, 206, 207, 223, ixtle, 237, 251, 252, 270n2
237, 259, 266–270, 313, wool, vi, 40, 55, 60, 286, 307
314, 316, 318, 320–322, guano, vi, 81, 280, 286, 290, 292,
324, 332–334, 334n2, 294–298, 302, 303, 305,
335n4. See also Export model; 307, 316, 322
Export pattern of growth gum, 253
Export model, 6, 11, 13, 26 linseed, 40, 58
Export pattern of growth, 6, 8, 9, 28, minerals, vi, 84, 89, 98, 259, 262,
237, 266, 333 321
Export products antimony, 84, 89
animals, 51 bismuth, 84, 85
banana, 31n18, 206, 218, 227n5, copper, vi, 80, 84, 89, 154,
237, 329 168, 172, 176, 178–180,
cacao, 116, 124, 131 182n41, 237, 251, 288,
cattle–livestock, 40, 41, 48, 55, 289, 296, 300, 307
56, 64, 66n5, 210, 214, gold, 2, 41, 60, 65, 161, 193,
227n3, 228n15, 236, 237, 197–199, 202, 205, 206,
260, 266, 304, 318, 321 212, 216–218, 221, 222,
chickpeas, 237 225, 236, 237, 239, 242,
cinchona bark, 196, 200 270n1, 270n4, 283, 284
coffee, vi, 31n18, 84, 114, 116, lead, vi, 4, 7, 19, 179, 220,
117, 119, 122–130, 132, 223, 237, 251, 261, 302,
133, 135, 137–141, 143n2, 316, 329, 333
192–199, 201, 202, 205, nitrates, vi, 84, 155, 174, 286,
206, 215–218, 220–226, 287, 290, 293–297, 307,
227n7, 236, 237, 254, 260, 321, 330 (see also
261, 271n13, 314, Saltpeter)
316–318, 321, 330 silver, 77, 80–82, 84, 86, 90,
corn–also mais, 40, 58, 65, 133, 94, 100–102, 105n10–12,
218 154, 197, 205, 209, 210,
fibers, 237, 260, 270n2 236, 237, 239, 242, 244,
cotton, 65, 116, 117, 119, 246, 251, 270n4, 271n6,
122, 124, 129, 133, 135, 284, 289, 290, 305, 326
Index
341
tin, vi, 76, 78, 79, 82, 84, 86, composition, 124, 161
89, 90, 92, 94, 100, 102, basket, 24, 25, 40, 56, 64, 84,
103, 105n7, 105n9, 89, 238, 239, 242, 251,
105n12, 106n17, 321 262, 263, 266, 294
wolfram, 84, 89 diversification, 174, 314
zinc, 84, 237 External economies, 24, 57, 157,
quebracho, 40, 48, 56 167, 173–175, 179, 320.
quinine, 80, 82 See also Externalities
rubber, 82, 84–86, 90, 92, 94, Externalities, 57
104n1, 114, 116–119, 122, negative, 304
124, 139, 140, 196, 237, Dutch disease, 92, 181n18, 304
253, 270n2, 274, 307 positive, 301, 331
guayule, 237, 251, 253 External market, 59, 60, 63, 212,
sugar, vi, 56, 59, 60, 114, 116, 226, 236, 252, 261, 321
117, 119, 122, 124, 129,
137, 139, 143n2, 288–290,
294, 296, 305, 307, 308, F
321 Factors of production
tobacco, vi, 56, 59, 124, 193, capital, vii, viii, ix, 2, 4, 5, 9, 11,
194, 196, 200, 206–210, 13, 16–23, 26, 40, 41, 44,
212, 214–218, 222, 227n7, 48, 49, 52, 55, 60, 63, 78,
227n9, 228n14, 228n15, 79, 81, 82, 89, 96, 101,
264, 269, 318 123–126, 128, 129, 131,
tomato, 237, 263 132, 139, 141, 158, 176,
vanilla, 236, 237 178, 196–198, 204–208,
wheat, 25, 40, 55, 58–60, 119, 216, 217, 221–225, 227n5,
154, 168, 321 235–237, 239, 240, 246,
Exports, 12, 15, 17, 20, 39, 40, 46, 250, 253–259, 263, 280,
62, 80, 89, 114, 120, 123, 287, 296, 299, 300, 303,
136, 140, 142, 167, 172, 310n15, 329, 330, 334 (see
191, 235, 236, 248, 249, also Foreign investment)
253, 263, 279, 284, 289, labor, 308
291–293, 301, 308, 309, slave labor, 115, 125, 137, 193
316 land, 17, 19, 20, 40, 100, 123,
boom, 9, 26, 51, 66n3, 123, 124, 127, 137, 192, 194–196,
199, 207, 208, 210, 218, 207, 209, 214, 216, 218,
225, 226, 236, 240, 258, 220, 223, 227n4, 227n5,
259, 264, 267, 295, 296, 236, 255, 288, 289, 305,
298, 302, 318, 320 330, 331
342 Index
First Export Era, The, 40, 62 Hamburg, 207

First Globalization, The, 39, 164 Hanseatic, 142n2, 210, 212
Fiscal incomes Great Britain, 41, 64, 89, 90,
from exports, 20, 21, 48, 96, 131, 106n15, 136–138, 142n2,
132, 205, 296 143n2, 166, 236, 240, 286.
Foreign debt See also United Kingdom
and economic modernization, 13,
17, 253, 258, 268
and railroads, 58, 268 H
Foreign investment, 41 Hacienda, 159, 162, 201. See
direct, ix, 8, 15–18, 23, 24, Treasury
46–48, 51, 59, 63, 76, 79,
94, 95, 98, 103, 113, 114,
122, 123, 132, 155, 157, I
167, 170, 178, 193, 204, Import(s), 96, 138, 236, 299
205, 209, 220, 222, 248, capacity to, 9, 20–22, 40, 52, 54,
249, 253, 291, 294, 300 63, 64, 96, 103, 135, 137,
310n16 174, 178, 201, 206, 215,
in export activities, 16, 25, 48, 220, 225, 253, 256, 258,
49, 250, 331 263, 291, 296–299, 307, 321
profit remittances, 18, 19, 48, 49, composition of, 18, 20–23, 52,
242, 253, 329 76, 84, 117, 119, 133, 137,
in railroads, vi, 236 139, 163, 202, 251,
utilities, 23 255–259, 294, 297, 298
France, 41, 90, 136, 137, 142n2, capital goods, 21, 44, 63, 96,
236, 240, 270n3, 274, 309 236, 256–258, 296, 299, 300
consumption goods, 48, 256,
257, 299, 300, 310n15
G Import substitution industrialization
GDP growth, ix, 16, 40, 46, 47, 63, (ISI), 180
95, 167, 205, 249, 267, 317. Industrialization, 42, 235, 290
See also Exports and Industry
economic growth metallurgy, 25, 56, 136, 250, 264,
Germany, 41, 90, 136, 137, 142n2, 269, 272n22
214, 236, 240, 270n3, 274, metallurgical plants, 251, 261,
308 264
Bremen, 207, 209, 211, 212 metallurgical products, 26
Index
343
nascent, viii, 22, 54, 63, 64, 135, L

228n20, 236, 256, 269, 332 Latin America, v, vi, vii, viii, 1–10,
(see also Protectionism) 12, 13, 19, 21, 24–28,
textile, vii, 56, 65, 133, 135, 222, 29n3, 29n11, 30n12,
228n19, 228n20, 263 31n24, 61, 64, 75, 78, 84,
Infrastructure 86, 95, 96, 98, 102, 120,
drainage, 23, 220, 258, 266 125, 153, 154, 172, 179,
and exports, vi, vii, 22, 26, 181n17, 191, 224, 238,
63, 65 242, 246, 249, 251, 258,
harbors-ports, 23, 41, 51, 52, 263, 266, 267, 272n22,
58–60, 63, 82, 101, 125, 313, 317, 318, 320,
127, 138, 158, 174, 175, 324–326, 328, 330, 331,
179, 194, 235, 240, 266, 333, 334, 334n3, 335n4
290, 320 Liberalism
navigation, 129, 194, 214, 222 liberal reforms, 192, 195, 197
costs of, 7, 30n14, 43, 114, Linkages, 221, 225
127, 216, 228n14 backward, 19, 23, 55, 167, 175,
railroads, vi, ix, 23, 24, 26, 177–179, 250, 330, 331
30n14, 41, 49, 52, 58–63, forward, ix, 24, 175, 261
79, 82, 84, 101, 102, industrial, 25, 31n23, 40, 63,
106n12, 128, 129, 132, 262, 263, 269, 321
133, 137, 138, 143n3, 158,
159, 174, 179, 214, 222,
235, 236, 239, 240, 257, M
259–261, 263, 264, 266, Machinery, 258, 299
268, 272n18, 297, 299, and economic modernization,
303–306, 320, 330 (see also 10, 13, 17, 21, 22, 24, 26,
Railways) 28, 51, 52, 54, 61, 238,
railways, 23, 41, 52, 58, 63, 79, 253, 256–261, 316, 320,
82, 84, 101, 102, 332
105–106n12, 129, 143n3, imports of, 52, 62, 96, 98,
158, 159, 174, 179, 222, 107n20, 136, 137, 177,
236, 259, 320 222, 257, 269, 296, 299
roads, 194, 214, 236, 304 and industrialization, 11, 22, 24,
Internal market, 5, 11, 23. See also 26, 54, 228n20, 238, 250,
Domestic market 258, 261, 267, 316, 321,
Italy, 41, 142n2 322, 332
344 Index
Market(s), v, vii, ix, 4, 7–9, 11, 14, weak/fragmented, vii, 7, 9, 81,

15, 19, 20, 23–25, 39, 41, 95, 103, 105n11, 175, 216,
44, 48, 52, 54–56, 58–60, 235, 239, 240, 255, 317
62–65, 75–80, 82, 90, 94, Mexico, v, 1, 3, 28, 30n14, 31n24, 84,
101–103, 114, 122, 124, 88, 94, 172, 235–240,
125, 128, 130, 133, 139, 242–246, 248–251, 253,
142n2, 154, 160, 163, 254, 256–259, 261, 263,
173–175, 179, 180, 192, 264, 266–269, 270n1,
193, 196, 197, 206, 207, 270n3, 270n4,
210, 212–217, 221–226, 271n6–271n8, 271n11,
235–237, 239, 240, 242, 272n17, 272n20, 272n22,
250, 252, 255, 258–261, 302, 314, 316–318,
263, 264, 266–270, 280, 320–322, 325, 326, 329, 330
288, 307–309 Chiapas, 250, 270n2
domestic, vii, ix, 5, 8, 9, 11, 19, Chihuahua, 272n18
23, 25, 48, 55, 56, 58, 64, Coahuila, 250, 251, 272n18
78, 133, 142n2, 175, Mexico City, 1, 245, 271n7
221–225, 236, 239, 240, Nuevo León, 250, 251
250, 259–261, 263, 264, Oaxaca, 250, 270n2, 274
266–270, 313, 321 (see also Sinaloa, 250, 263
Internal market) Veracruz, 250
integration, vii, 1, 8, 23, 43, 58, Yucatán, 237, 250, 251, 260, 262,
61, 75, 77, 79, 102, 114, 272n18
142n1, 154, 163, 225, 236, Mining, 41, 167, 193, 237, 255, 288
240, 261, 267, 314 copper, vi, 80, 84, 89, 154, 168,
international, 4, 20, 24, 43, 172, 176, 178–180,
48, 55, 56, 59, 60, 63, 77, 182n41, 237, 251, 288,
80, 82, 102, 154, 160, 289, 296, 300, 307
163, 174, 179, 196, 207, gold, 2, 41, 60, 65, 161, 193,
212, 214, 215, 225, 236, 197–199, 202, 205, 210,
237, 242, 252, 261, 321, 216, 218, 221, 222, 225,
328 (see also External 236, 237, 239, 242, 270n1,
market) 270n4, 283, 284
regional, ix, 17, 47, 48, 52, 58, lead, vi, 7, 19, 84, 179, 220, 223,
77, 80, 101, 103, 124, 129, 237, 251, 261, 302, 316,
131, 139, 191, 193–195, 329, 333
197, 206, 212, 215, 224, nitrates, vi, 84, 155, 174, 286,
237, 239, 250, 251, 263, 287, 290, 293–297, 307,
267, 296, 318 321, 330
Index
345
saltpeter, 81, 155, 157–160, 163, P

164, 167–172, 174, 175, Pampean region, 55, 56, 58
178–180, 181n11 (see Panama, 198, 204
Nitrates) Peasant(s), 218, 220, 223
silver, 77, 80–82, 84, 86, 90, 94, economy, 210, 225
100–102, 105n10–12, 154, mode of production, 197, 214
197, 205, 209, 210, 236, Peru, v, 3, 28, 75, 84, 94, 129, 279,
237, 239, 242, 244, 246, 284–287, 290, 294,
251, 270n4, 271n6, 284, 297–300, 302, 303, 305,
289, 305, 326 307–309, 311n22, 314,
tin, vi, 76, 78, 79, 82, 84, 86, 89, 316–318, 320–322, 325,
90, 92, 94, 100, 102, 103, 326
105n7, 105n9, 105n11, Cañete, 288
105n12, 106n17, 321 Ica, 296, 304
zinc, 84, 237 La Libertad, 288
Modernization, 235 Lambayeque, 288
economic, 10, 13, 17, 21, 22, 24, Northern coast, 304
26, 28, 51, 52, 54, 61, 238, Petroleum, 138, 262, 301. See also
253, 256–261, 316, 320, Oil
332 Prébisch, Raúl, 13, 30n17, 78, 325,
and structural change, 8, 238, 240 326, 333
Price index, 90, 93, 96, 245
of exports, viii, ix, 2, 3, 6–10, 12,
N 13, 15–20, 22, 23, 26, 27,
Net barter terms of trade, 13, 246, 31n18, 40, 41, 43, 46–49,
247. See also Terms of trade 51–54, 56, 58, 63, 64, 76,
Netherlands, The, 41 77, 84, 86, 88, 92, 94–96,
Nitrates, vi, 81, 84, 153–182, 286, 98, 100–103, 104n5,
287, 290, 293–297, 307, 105n10, 106n13, 114–116,
321, 330 121, 122, 124, 125, 133,
135–137, 139, 141, 157,
164, 167, 168, 172, 178,
O 179, 199, 202–207, 225,
Oil, vi, 41, 61, 62, 65, 96, 98, 174, 227n8, 227n9, 238, 243,
200, 206, 229n22, 238, 248–251, 253–256, 258,
240, 242, 246, 249, 250, 263, 267, 271n5, 271n9,
253, 255, 262, 264, 266, 272n19, 279–282,
268, 269, 290, 301, 321, 284–289, 291–301, 304,
330. See also Petroleum 306–309, 310n15
346 Index
Price index (cont.) appreciation of, 9, 14, 15, 31n18,

Fisher Price Index, 90 45, 92, 94, 244, 307
of imports, 13, 18, 20–22, bilateral, 14, 161
52–54, 63, 76, 90, 92, 96, and competitiveness, 212
100, 101, 107n20, 133, depreciation of, 14, 121, 236,
162, 164, 177, 202, 244
256–258, 272n17, Regions, 158
297–300, 310n15 Retained value. See Return value
Paasche Price Index, 90 Return value, 18, 49, 170, 255
Protectionism, viii, 22, 54, 64, and aggregate demand, 266
228n20, 269, 332 Revolution, 2, 78, 84
and industrialization, 11, 22, 24, Bolivian Revolution, 78, 84
26, 54, 228n20, 238, 250, industrial revolution, 2, 26
258, 261, 267, 316, 321, Mexican revolution, 236, 237,
322, 332 250, 258, 267, 269, 271n5
Public works, vi, vii, viii, ix, 10, 11, River Plate, 40, 47
20, 22, 23, 26, 41, 49, 51,
52, 63, 65, 82, 119, 131,
174, 178, 193, 194, S
222–224, 226, 236, 240, Saltpeter, 81, 155, 157–160, 163,
256, 266, 267, 287, 289, 164, 167–172, 174, 175,
293, 299, 301, 303, 304, 178–180, 181n11
313, 320, 330, 331. See also Saving
Infrastructure internal, 5, 7–12, 17, 18, 20, 23,
and exports, ix, 27, 28, 76, 115, 25, 41, 47, 51, 55, 58,
155, 161, 198, 262, 290 63–65, 78, 79, 132, 133,
externalities, ix, 10, 22–24, 40, 137, 138, 217, 222, 223,
63, 128, 129, 132, 142, 225, 235, 236, 238, 240,
206, 221, 258, 261, 266, 250, 260, 261, 266, 268,
280, 291, 301, 303, 304, 269
307, 320, 331 Scotland, 221
subsidies for, 300 Second World War, 54, 86, 140, 141.
See also WWII
Silver, 76, 77, 80–82, 84, 86, 90, 94,
R 100–102, 105n10–12,
Railways, 23, 41, 52, 58, 63, 79, 82, 106n12, 154, 197, 205,
84, 101, 102, 105–106n12, 209, 210, 236, 237, 239,
129, 143n3, 158, 159, 174, 242, 244, 246, 251, 270n4,
179, 222, 236, 259, 320 271n6, 284, 289, 290,
Real exchange rate 311n24, 326
Index
347
South America, 77, 80, 103, 302. See 63–65, 66n3, 76, 78, 79,
also by countries 81, 82, 84–86, 88, 90, 91,
Spain, 41, 75, 142n2, 240, 270n3, 303 96, 98, 100, 104n3,
State, viii, 6, 17, 22, 41, 51, 58, 61, 106n13, 107n20, 114, 119,
65, 79, 100, 105n11, 160, 123, 128, 129, 131, 135,
170, 197, 198, 208, 214, 139, 140, 153–155, 158,
223, 239, 258, 299, 303, 160–162, 164, 166, 179,
321, 331, 334 180, 192, 193, 201, 202,
Structuralism, vi, 2–8, 11, 13, 18, 204, 206, 214, 224, 226n2,
20–22, 29n8, 44, 62, 191, 227n8, 235, 237, 240, 242,
238, 269, 325 243, 246, 248, 257, 268,
270n3, 280, 283, 284, 289,
305, 310n15, 325, 326, 328
T export, 205, 206, 236, 243 (see
Tariff policy, ix, 21, 54, 240, 257, Exports)
320. See also Commercial import (see Import(s))
policy volume, 43, 52, 141, 201–203,
Terms of trade, viii, 5, 8, 12–14, 44, 243, 280–282, 285–287,
63, 66, 90, 114, 119, 135, 291–294, 299, 307
162, 164, 201, 202, 204, Transportation, 235. See also
224, 227n8, 246, 248, 268, Infrastructure
280, 283, 284, 289, 325, Treasury, 49
326, 328. See also Net barter
terms of trade
appreciation, viii, 1, 9, 14, 15, 19, U
31n18, 45, 92, 94, 122, United States, The (USA), 236,
166, 244, 307, 311n22 244–246, 253, 268
deterioration, 44, 63, 92, 120, Uruguay, 41, 86, 324, 325
202, 246, 325, 326, 328
secular, 13, 44, 63, 92, 120, 326
(see also Prébisch, Raúl) W
and industrialization, 11, 22, 24, War, v, viii, 4, 28, 41, 54, 76, 81, 84,
26, 54, 228n20, 238, 250, 86, 98, 100, 104n1, 113,
258, 261, 267 (see also 117, 119, 121, 138, 140,
Prébish, Raúl) 141, 155, 158, 163, 164,
loss of income, 5, 13, 246, 326, 328 169, 170, 172, 173, 176,
net barter terms of trade, 13, 246, 179, 180, 198, 205, 217,
247 228n20, 242, 279, 280,
Trade, vii, viii, 2, 5, 8, 12–14, 27, 286, 287, 293, 294, 297,
30n11, 44, 45, 51, 54, 60, 298, 305–308, 316
348 Index
War (cont.) WWI, 41, 42, 44, 47, 54, 55, 62,
Chaco, 48, 84, 98, 100 63, 66n3, 76, 86, 88–90,
Civil (Mexican), 256 94, 103, 201, 210, 221,
First World War, 18, 19, 41, 42, 228n20, 242, 268, 279,
44, 47, 54, 55, 62, 63, 66, 280, 287–290, 293–295,
76, 86, 88–90, 94, 103, 298, 306, 319
201, 210, 221, 228n20, WWII, 54, 65, 86, 88, 89, 90, 94,
242, 268, 287–289, 294, 95, 96, 224, 225, 268, 270,
298, 306 (see also WWI) 308, 316, 320, 321

(Palgrave Studies in Economic History) Sandra Kuntz-Ficker (Eds.) - The First Export Era Revisited - Reassessing Its Contribution To Latin American Economies (2017, Palgrave Macmillan)

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

(Palgrave Studies in Economic History) Sandra Kuntz-Ficker (Eds.) - The First Export Era Revisited - Reassessing Its Contribution To Latin American Economies (2017, Palgrave Macmillan)

Uploaded by

Copyright:

Available Formats

PALGRAVE STUDIES IN ECONOMIC HISTORY

THE FIRST EXPORT

More information about this series at

The First Export Era

Palgrave Studies in Economic History

Library of Congress Control Number: 2017953911

© The Editor(s) (if applicable) and The Author(s) 2017

Cover illustration: Walker Art Library / Alamy Stock Photo

Printed on acid-free paper

This Palgrave Macmillan imprint is published by Springer Nature

developments during the Great Depression and the early post–World

of Latin America’s insertion into the world economy—as producers of

activities) but of ‘de-agrarization’ and thus of a slowdown of the diversifi-

1 Latin America’s First Export Era: Reassessing Its

2 The Contribution of Argentine Exports to the

3 The Bolivian Export Sector (1870–1950) 75

4 The Brazilian Export Economy, 1822–1913 113

5 The Impact of Nitrates on the Chilean Economy,

6 Exports and Economic Development in Colombia:

7 Mexico in the Export Era (1870s–1929): Export Boom,

8 Exports and Their Impact on the Economy.

9 Latin America’s First Export Era: A Preliminary

Fig. 2.1 Argentine exports, 1875–1929 (FOB values in dollars, at current

Fig. 2.6 Progress in import substitution: apparent consumption

Notes: The current value of exports is deflated by a Fisher

Fig. 5.4 Exports, 1880–1930 (percentage as a share of GDP).

based on the composition of imports during the period

Fig. 7.9 Type of energy consumed in Mexican industries,

Table 2.1 Rates of variation of Argentine exports, 1875–1929 43

Table 4.7 Composition of imports by categories, percentage

© The Author(s) 2017 1

others correspond to specific subsets, and even some more revealing

 iews on Latin American Development

The purpose of this work is to provide a set of analytical parameters

those countries kept the same trajectory, an endogenously generated force

 re-existing Conditions and Available

endowment, able to produce exports that were in high demand during

 he Analytical Framework: Making

Even though the parallelisms between dependency theory and growth

Some Indicators of Export Performance

the period, which provides an objective measure of the intensity, scope,

changes in the terms of trade should be considered alongside changes in

where ERo represents the nominal exchange rate of the country in

The purpose of calculating RER is to detect the existence of the so-­

 he Economic Contribution of Exports:

Export Boom and Economic Growth: The Direct Impact

In macroeconomic terms, the direct contribution of exports to the economy

from the degree of openness, this parameter allows us to assess, first, if

where a represents the rate of growth of exports, b the share of exports

diversification, and geographic specialization, among others. On the

 xport Boom and Economic Modernization:

The Return Value (RV)

The fact is that authors belonging to different scholarly traditions have

Any evidence about these components of return value would allow us

 e Purchasing Power of Exports (PPX), Commercial Policy,

One of the novelties of structuralism was the attention given to currency

Strictly speaking, what is useful for our purpose is to calculate the

indicators of the structure of the tariff, which allow us to identify areas of

Spillover Investments and Positive Externalities

Generally speaking, conventional interpretations of the first export era

Forward Linkages: Exports and Industrialization

It is well known that export-led growth, as it evolved in the last third of

Transition to the use of modern energies has been acknowledged as an

1 Latin America’s First Export Era: Reassessing Its

2 The Contribution of Argentine Exports to the

3 The Bolivian Export Sector (1870–1950) 75

4 The Brazilian Export Economy, 1822–1913 113

5 The Impact of Nitrates on the Chilean Economy,

6 Exports and Economic Development in Colombia:

7 Mexico in the Export Era (1870s–1929): Export Boom,

8 Exports and Their Impact on the Economy.

9 Latin America’s First Export Era: A Preliminary

Table 2.1 Rates of variation of Argentine exports, 1875–1929 43

iews on Latin American Development

re-existing Conditions and Available

he Analytical Framework: Making

Some Indicators of Export Performance

The purpose of calculating RER is to detect the existence of the so-

he Economic Contribution of Exports:

Export Boom and Economic Growth: The Direct Impact

xport Boom and Economic Modernization:

The Return Value (RV)

e Purchasing Power of Exports (PPX), Commercial Policy,

Spillover Investments and Positive Externalities

Forward Linkages: Exports and Industrialization

The Contents of this Book

Argentina and the First Export Era

Some Descriptive Indicators

he Economic Contribution of Exports: Some

The Indirect Contribution

The Fiscal Linkage

he Purchasing Power of Exports and the Change

Industrial Linkages and Industrialization

Consumption of Modern Energies

a ccording to Prado (1988, pp. 63–72), official documents in the 1910s

The Evolution of the Bolivian Export Sector

Some Descriptive Indicators

Own Esmaon Arroyo&Maurer Gómez

The Direct Contribution of Exports