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Published by EH.NET (May 2010)

Yovanna Pineda, Industrial Development in a Frontier Economy: The Industrialization of Argentina, 1890-1930. Stanford, CA: Stanford University Press, 2009. xiii + 209 pp. $55 (cloth), ISBN: 978-0-8047-5983-0.

Reviewed for EH.NET by Fernando Rocchi, Department of History, Universidad Torcuato Di Tella.

The discussion about Argentina?s economic failure in the twentieth century has been a fruitful source of debate for economic historians. One of the Argentine economy?s major shortcomings has been the lack of sustainable industrialization, despite success in the agrarian sector. As a result, early performance of the manufacturing sector has attracted a wide variety of scholars. The book under review by Yovanna Pineda (Department of History, Saint Michael?s College) enters this debate by studying the extent and weaknesses of early industry in Argentina from 1890 to 1930.

Pineda focuses on industrial productivity, investment, entrepreneurship, profits, and policies towards industry. Her work is well researched and written. Its detailed analysis focuses on firms that participated in the Stock Market of Buenos Aires, which includes fifty-nine manufacturing companies across ten consumer goods sectors. The author dismisses structuralism and dependency theory by arguing that the ?failure of Argentina to successfully develop a self-sustaining industrial sector with forward and backward linkages cannot be attributed to a wrong course of action or even to a set of actions by the government or manufacturers. Instead this book discusses both what happened and what failed to happen during the course of industrialization? (p.7)

Industrial Development in a Frontier Economy successfully quantifies the sources of Argentine industrial underdevelopment. Pineda?s book works with four data sets that generate fresh insights and serve as useful primary sources. One of the key issues is the study of productivity increases between 1895 and 1935. By studying labor productivity, total-factor productivity, economies of scale, and concentration ratios, the author shows that Argentine industry was inefficient from the beginning and relied on government intervention to remain profitable. Another important topic is the technological shortcomings of the Argentine manufacturing sector. Argentine manufacturers failed to develop the technological capabilities needed to sustain industrialization, to a large extent, due to the political and legislative environment. As a result, local industry relied too much on imported machinery while tariff protection impeded competition and fostered concentration of capital.

Financing factories, according to Pineda, was in the hands of the members of the business networks, represented by five leading merchant groups. The study of entrepreneurial behavior is another field covered by this book, and the author successfully shows that these members most likely preferred to establish networks of finance rather than networks of technological knowledge. In parallel, entrepreneurial aversion to risk fostered concentration. The analysis of industrial legislation demonstrates that its failure to promote successful industrialization was the consequence of the absence of a well-defined plan. As a result, legislation discouraged sustainable industrialization

The chapter on the merchant finance group is one of the best contributions of the book. Quantitative and qualitative analysis unite to demonstrate that entrepreneurial behavior favored commercial aspects of the economic process rather than investing in the industrial sector.

This well crafted book is another nail in the coffin of the once standard perspective on the shortcomings of Argentine industry, which blamed the state for being hostile toward industrialization and favoring the traditional agricultural exporting sector. Pineda prefers to analyze the market and, when she studies industrial policies, highlights the state?s shortcomings in attempting to help the process of manufacturing growth. This process becomes apparent when studying the 1920?s. This decade of economic and industrial wealth for Argentina brought additional barriers set up by the state. Under the guise of trying to help industry, it brought about the unwanted result of a more concentrated and less competitive manufacturing sector.

The fresh insights of the cliometric perspective of Pineda?s book, the array of topics covered in the research, and the impressive data sets make Industrial Development in a Frontier Economy mandatory reading for those interested in Latin American industrialization and, in general, for those who enjoy the study of the region?s economic history. Although one of the shortcomings of Argentine economic history has been a lack of quantification, Pineda?s book offers an impressive amount of information about the industrial companies? performance in an original and stimulating way.

The only major criticism that might be leveled against the book is that it limits itself by studying only firms listed on the Stock Exchange, without analyzing family companies. In spite of this limitation, Pineda has given us an excellent book that has rearranged our understanding industry, economics and the entire topic of Argentina?s relative decline in the twentieth century.

Fernando Rocchi, Professor of History at the Universidad Torcuato Di Tella in Buenos Aires, is currently finishing a book on the history of commercial advertising in Argentina.