Role of Import Substitution and Factor Endowments

This paper investigates structural change in Argentina between 1900 and 1973. It has been argued that trade policy under import-substituting indus-trialization disfavoured agriculture and led to a "technological lag " in the sector, and that this explains agricultures relative decline during a period of rapid industrialization. I \u85nd that there is no technological lag to be found in the data and, moreover, that relative prices had no discernible e¤ect on agricultural output. A three-by-three model based on these \u85ndings is de-veloped in which structural change is caused by exogenous changes in factor endowments. A simulation of the model replicates the observed structural changes from the 1920s onwards, suggesting that the decline of agriculture and rise of manufacturing can be explained by population growth once the land frontier had been reached