Lights and Shadows of the New Development Debate

A significant debate on development began to take shape in Argentina in the late 1960s, moving beyond earlier discussions centered on political representation and income distribution. This shift occurred as the nation's traditional strength as a food-exporting country faced premonitory challenges from World War I and the 1929 crash.

Despite initial warnings about industrial solutions, the frenetic pace of World War II and a post-war influx of foreign currency created an illusion of returning prosperity. This led to a prioritization of redistribution and a continuation of manufacturing inertia. However, by the 1960s, the structural problem of Argentina's 20th-century economy became apparent: a chronic shortage of foreign currency to finance an industry focused on a small domestic market, coupled with elephantine public spending driven by state intervention.

President Perón's administration in the 1950s attempted to address these issues through policies like promoting oil and foreign investment, and boosting overall economic productivity. The formal inauguration of the development debate, however, is often linked to President Frondizi's reforms in 1958, influenced by post-war modernization theories. Frondizi and his ideological partner Rogelio Frigerio developed their version, "desarrollismo," which acknowledged unique aspects of Argentina's economic and social landscape.

Unlike prevailing theoretical assumptions, Argentina was already urbanized, lacked a massive peasantry, and its agricultural production was recovering after decades of stagnation. Yet, the protected industrial economy's demand for foreign currency created an exasperating distributive conflict. Institutional barriers within this framework, which strained crucial variables like growth and distribution, also hindered new investment flows. To counter this, Frondizi liberalized exchange controls, leading to a devaluation of the peso. The goal was to reduce dependence on strategic goods like oil, petrochemicals, steel, and automobiles, thereby stabilizing the balance of trade. The challenge of aligning wages with productivity, complicated by the capital-intensive nature of new sectors and anticipated union resistance, remained.