The wealth of the provinces

Argentina enjoyed a period of unprecedented economic growth between the federalization of Buenos Aires in 1880 and the Centennial of independence in 1910. This dissertation deals with one aspect of the Argentine political economy which, it is argued, was a decisive driving force of the country's economic policies across the whole period: regional interests. As a country characterized by extreme geographic inequalities, the policy preferences of the various regions were diverse and often clashed with each other. The Interior, and particularly the poor provinces outside the fertile Pampas, sought for expansionary fiscal and monetary policies to pay for their economic development, while the richer regions favored less unorthodox policies. The Interior was generally protectionist, and the Pampas mostly free trade. The political economy outcome depended on the relative power of these two broadly defined regions. In the decade of 1880, under the administrations of Julio Roca and Miguel Juárez Celman, the Interior reached the height of its power. Economic policies followed quite neatly the interests of the regions that supported the presidencies of Roca and Juárez. Protection was granted to the Interior's production. The abundance of external capital in the 1880s allowed for an impressive an ultimately unsustainable expansion of credit and railways in the Interior. Institutions and policies responded to economic interests: trade, monetary, banking and railway legislation were tailored to the Interior's hope of rapid economic development.

The 1890s left two lasting marks in Argentina's political economy. The severe economic and political crisis of 1890 that resulted from the policies of the 1880s forced a shift in the direction of fiscal orthodoxy. A more fundamental change began to take place as a consequence of the 1895 national census. The census, resisted for many years by the Interior politicians, implied that the Pampean region, which received most of the immigration, increased decisively its political representation and power. When Argentina began its recovery, and particularly as growth accelerated during the 1900s, the new regional balance of power was tilted towards the Pampas. The contrast with the 1880s was striking in every respect: the Interior industries were taxed and received no further protection while inflation of costs and an oversupplied internal market eroded their profitability; railways and credit concentrated more and more in the Pampas; and fiscal policy followed the more orthodox outlook of politicians of the Litoral. Except for the special case of Mendoza, the Interior receded while the action took place in the Pampas.