Accounting Argentina Growth Failure. Adjusting Productivity by Utilization Effects and Natural Capital

Ariel Coremberg

doi:10.4067/S0718-88702026000100075

Authors

Ariel Coremberg IIEP-UBA-CONICET - Universidad del CEMA, Argentina

DOI:

https://doi.org/10.4067/S0718-88702026000100075

Keywords:

Total Factor Productivity (TFP), Economic growth, Gross Domestic Product (GDP), Inputs

Abstract

At the beginning of the 20th century, Argentina’s per capita income was comparable to Australia’s, a recent settlement with a natural-resource-rich economy. But today, expectations and promises are broken. Argentina’s current per capita income is less than one-third of Australia’s. Argentina’s long-run growth performance was clearly below potential. However, Argentina typically exhibits rapid short-run recoveries, comparable in magnitude to the high growth rates observed in China. Such sharp short-run recoveries could mask a failure in long-run growth. The paper introduces a methodology to analyze Argentina’s growth failure through growth accounting, including short-term utilization effects and natural capital, enabled by the recent update of the ARKLEMS+LAND database from the Center of Studies of Productivity. In 2023, GDP per capita and labor productivity were at 1974 levels, and Total Factor Productivity was lower than in the 1950s. Short-run productivity gains are transitory, primarily due to labor and capital utilization effects during recoveries. The contribution of natural capital increased during the commodity price boom. This was due to the impact of rent shares on GDP and on the volume of natural capital services. Generalized Total Factor Productivity (GTFP), when natural capital is included, was moderately higher than standard TFP, which measures only the contributions of produced capital and labor. The lack of productivity growth explains Argentina’s underwhelming growth and the frustration of Argentine society with its expectations for potential living standards.

Downloads

Download data is not yet available.

References

Barro, R., & Sala-i-Martin, X. (2004). Economic growth. McGraw-Hill.

Basu, S., Fernald, J. G., & Shapiro, M. D. (2001). Productivity growth in the 1990s: Technology, utilization, or adjustment? (Working Paper N.º 8359). National Bureau of Economic Research. https://doi.org/10.3386/w8359

Brandt, N., Schreyer, P., & Zipperer, V. (2013). Productivity measurement with natural capital (OECD Economics Department Working Paper N.º 1092). OECD Publishing. https://doi.org/10.1787/5k3xnhsz0vtg-en

Bresciani-Turroni, C. (1931). The economics of inflation: A study of currency depreciation in post-war Germany. Università Bocconi.

Burns, A. F., & Mitchell, W. C. (1946). Measuring business cycles. National Bureau of Economic Research.

Calvo, G. A. (2007). Interest rate rules, inflation stabilization, and imperfect credibility: The small open economy case (Working Paper N.º 13177). National Bureau of Economic Research. http://www.nber.org/papers/w13177

Calvo, G., & Végh, C. (1992). Currency substitution in developing countries: An introduction [Working paper]. International Monetary Fund. https://doi.org/10.5089/9781451845884.001

Calvo, G. A., & Végh, C. (1993). Exchange-rate-based stabilization under imperfect credibility. In H. Frisch & A. Wörgötter (Eds.), Open-economy macroeconomics (pp. 3–28). Macmillan Press. https://doi.org/10.1007/978-1-349-12884-6_1

Coremberg, A. (2004). El stock de capital en Argentina. Fuentes, métodos y resultados [The capital stock in Argentina: Sources, methods and results]. INDEC.

Coremberg, A. (2009). Midiendo las fuentes del crecimiento en una economía inestable: Argentina. Productividad y factores productivos por sector de actividad económica y por tipo de activo [Measuring the sources of growth in an unstable economy: Argentina. Productivity and productive factors by sector of economic activity and by type of asset]. CEPAL.

Coremberg, A. (2012b). Where is the wealth of Argentina? The national balance sheet of unstable natural resource-rich economies [Ponencia]. 32nd General Conference of the International Association for Research in Income and Wealth, Boston, Estados Unidos.

Coremberg, A. (2015a). Natural resource curse of oil and gas dependent countries from GDP and beyond [Ponencia]. IARIW-OECD Conference: W(h)ither the SNA?

Coremberg, A. (2017). Argentina was not the productivity and economic growth champion of Latin America. International Productivity Monitor, (33), 77–90. http://csls.ca/ipm/33/Coremberg.pdf

Coremberg, A. (2021). Cuánto necesita crecer y exportar Argentina para ser como Australia sin crisis de balanza de pagos [How much does Argentina need to grow and export to be like Australia without a balance of payments crisis]. Revista de Economía Política de Buenos Aires, 23(15), 107–161. https://doi.org/10.56503/repba.nro.23(15)pp107-161

Coremberg, A. (2023). Hiperinflación o hiperdesempleo: El dilema de hierro argentino [Hyperinflation or hyperunemployment: The Argentine iron dilemma]. La Nación.

Coremberg, A. (2024). 2023, el año que vivimos en (peligro de) hiperinflación [2023, the year we lived in (danger of) hyperinflation]. La Nación.

Coremberg, A., & Grandes, M. (2020). Corruption accounting and growth: Towards a new methodology. Journal of Financial Crime, 27(1), 43–57. https://doi.org/10.1108/jfc-04-2019-0039

Corrado, C., & Mattey, J. (1997). Capacity utilization. Journal of Economic Perspectives, 11(1), 151–167. https://doi.org/10.1257/jep.11.1.151

CSLS. (2001). Productivity trends in the construction sector in Canada: A case of lagging technical progress [Informe]. Centre for the Study of Living Standards.

Díaz Alejandro, C. F. (1970). Essays on the economic history of the Argentine Republic. Yale University Press.

Diewert, E. W. (1976). Exact and superlative index numbers. Journal of Econometrics, 2, 115–145. https://doi.org/10.1016/0304-4076(76)90009-9

Diewert, E. W. (1978). Superlative index numbers and consistency in aggregation. Econometrica, 46(4), 883. https://doi.org/10.2307/1909755

Diewert, E. W. (1995). Price and volume measures in the system of national accounts (NBER Working Paper N.º 5103). National Bureau of Economic Research. https://doi.org/10.1007/978-94-009-1798-9_8

Gerchunoff, P., & Fajgelbaum, P. (2016). ¿Por qué Argentina no fue Australia? Historia de una obsesión por lo que no fuimos, ni somos, pero... ¿seremos? [Why was Argentina not Australia? History of an obsession with what we were not, nor are, but... will we be?]. Siglo XXI Editores.

Graham, F. D. (1930). Exchange, prices, and production in hyper-inflation: Germany, 1920-1923 (Vol. 1). Ludwig von Mises Institute.

Hamilton, K., & Clemens, M. (1999). Genuine savings rates in developing countries. World Bank Economic Review, 13(2), 333–356. https://doi.org/10.1093/wber/13.2.333

Hamilton, K., & Hartwick, J. M. (2005). Investing exhaustible resource rents and the path of consumption. Canadian Journal of Economics, 38(2), 615–621.

Hayek, F. A. (1939). Profits, interest and investment: And other essays on the theory of industrial fluctuations. George Routledge and Sons.

Holtfrerich, C. L. (1986). The German inflation 1914-1923. De Gruyter.

Hulten, C. R. (1986). Productivity change, capacity utilization, and the sources of efficiency growth. Journal of Econometrics, 33(1–2), 31–50. https://doi.org/10.1016/0304-4076(86)90026-6

ILO, IMF, OECD, UN, Eurostat, & World Bank. (2004). Consumer price index manual: Theory and practice. International Labour Office.

ILO, IMF, OECD, UN, Eurostat, & World Bank. (2006). Producer price index manual: Theory and practice. International Labour Office.

INDEC. (2016a). Cuentas nacionales. Metodología de estimación base 2004 y serie a precios constantes y corrientes [National accounts. Estimation methodology base 2004 and series at constant and current prices] (Metodología INDEC N.º 21). INDEC.

INDEC. (2016b). Estadísticas de registros laborales. Aspectos conceptuales para la medición de la evolución de puestos de trabajo, remuneraciones y costo salarial [Labour records statistics: Conceptual aspects for measuring the evolution of jobs, wages and wage costs]. INDEC.

INDEC. (2017). Cuenta de generación del ingreso e insumo de mano de obra [Income generation account and labour input] (Metodología INDEC N.º 24). INDEC.

ISWGNA. (2008). System of national accounts. Inter-Secretariat Working Group on National Accounts, Commission of the European Communities, Eurostat, International Monetary Fund, OECD, World Bank y United Nations.

Jones, C. I., & Vollrath, D. (2013). Introduction to economic growth (3rd ed.). Wiley.

Jorgenson, D. W. (2017). World KLEMS: Productivity and economic growth in the world economy: An introduction. International Productivity Monitor, (33), 1–8.

Jorgenson, D., Gollop, F. M., & Fraumeni, B. (1987). Productivity and US economic growth. Harvard University Press.

Lucas, R. E. (1970). Capacity, overtime, and empirical production functions. The American Economic Review, 60(2), 23–27.

Mas-Colell, A., Whinston, M. D., & Green, J. (1995). Microeconomic theory. Oxford University Press.

Milgrom, P. R., & Roberts, J. (1996). The Le Chatelier principle. American Economic Review, 86(1), 173–179.

OECD. (2001). Measuring productivity [Manual de la OCDE]. OECD.

OECD. (2009). Measuring capital [Manual de la OCDE] (2nd ed.). OECD.

O'Mahony, M., & Timmer, M. P. (2009). Output, input and productivity measures at the industry level: The EU KLEMS database. The Economic Journal, 119(538), F374–F403.

Samuelson, P. (1947). Foundations of economic analysis. Harvard University Press.

Samuelson, P. A. (1949). The Le Chatelier principle in linear programming. Rand Corporation.

Schacht, H. (1927). The stabilization of the mark. Allen & Unwin.

Schreyer, P., & Pilat, D. (2001). Measuring productivity. OECD Economic Studies, 33(2), 127–170.

Shapiro, M. D., Gordon, R. J., & Summers, L. H. (1989). Assessing the Federal Reserve's measures of capacity and utilization. Brookings Papers on Economic Activity, 1989(1), 181–241.

Silberberg, E., & Suen, W. C. (2000). The structure of economics: A mathematical analysis (3rd ed.). McGraw-Hill.

Stiroh, K. J. (2002). Are ICT spillovers driving the new economy? Review of Income and Wealth, 48(1), 33–57.

Wierny, M. (2006). La economía no observada en la industria manufacturera argentina [The non-observed economy in Argentine manufacturing industry]. Desarrollo Económico,, 441–458.

World Bank. (2021). The changing wealth of nations: Measuring sustainable development in the new millennium. World Bank.