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Argentina’s Striking North/South Economic Divide

Submitted by on September 4, 2015 – 9:24 am 9 Comments |  
Argentina GDP by Province MapAs previously noted, Argentina is characterized by a north/south socio-economic divide, with the south being much more prosperous than the north. This regional disparity is visible on the HDI map included in the most recent post, but it is more clearly marked on other maps of economic development.

Consider, for example, GDP per capita by Argentine province (2008 data). As more than an order of magnitude separates Argentina’s least economically productive province (Chaco, at US$ 2,015) from its most productive province (Santa Cruz, at US$ 30,496), I have used a two-color scheme to call attention to the disparity, with the wealthier provinces mapped in blue and the poorer provinces mapped in red. The basic geographic pattern here is clear: the south has high per capita economic output, that of the center-east is slightly above the national average (with the exception of the city of Buenos Aires, which is very high), and that of the far north is low.

Argentina monthy salary by province mapBut as has been discussed in previous GeoCurrents posts, per capita GDP is not necessarily the best way of measuring actual economic conditions, especially at the sub-national level. The map of average monthly salary is more representative in this regard. As can be seen, income levels vary significantly over Argentina, but not as much as might be expected on the basis of provincial GDP variation. Here the lowest figure is US$ 945 in Santiago del Estero and the highest is US$ 2,646 in Santa Cruz. On this map, the north/south divide is clearly evident. One surprise here is the very low standing of Tucumán. Known as “El Jardín de la República” (“Garden of the Republic”), this agriculturally productive province is heavily dependent on sugar, a lagging industry. But according to the Wikipedia, Tucumán’s economy has been growing strongly in recent years.

Argentina vehicle ownership mapSimilar geographical patterns are apparent in regard to other economic indicators. The “vehicles per 1000 inhabitants” map shows a nice north/center/south differentiation; there are almost five times more vehicles per Argenina poverty mapcapita in Santa Cruz than in Santiago del Estero. The map of income poverty exhibits the same pattern, with strikingly high levels of poverty in the far north.

 

 

 

Argentina Population Density Map

 

 

 

 

 

 

 

 

Some aspects of Argentina’s north/south economic bifurcation are easily explained. Much of the south is very sparsely populated but rich in natural resources, particularly oil and natural gas, a situation that often generates high levels of economic production. As the map on the left shows, Santa Cruz and Chubut in particular have low population densities, and as the map below it shows, both provinces are heavily dependent Argentina GDP from Mining Mapon mining (especially oil and natural gas extraction), as is Neuquén, located a little further to the north. As noted in the Wikipedia, Santa Cruz, Neuquén, and Chubut have the least diversified economies in Argentina. Sheep ranching was formerly an economic mainstay in these generally arid provinces, but this industry has been battered by low global wool prices (Argentina is the world’s fifth largest wool producer, with roughly 3 per cent of the market, following Australia, China, the United States, and New Zealand.)

Although mining is vital for Tierra del Fuego in the extreme south, this province has a more diversified economy than the rest of the Argentine south. Tourism is increasingly significant, but manufacturing is more important. The strong position of manufacturing might seem improbably, given Tierra del Fuego’s peripheral location and harsh natural conditions. Argentina GDP from Manufacturing MapYet as it so happens, its very remoteness is one of the main reasons why it has such a large manufacturing sector. As explained in the Wikipedia:

Manufacturing, despite the province’s remoteness, contributes about 20% to output owing partly to generous certain tax incentives to local industry, a policy Buenos Aires has pursued to encourage immigration to less populated areas. A number of sizable factories have opened on Tierra del Fuego Island to take advantage of the tax benefits legislated in 1972, mainly home appliance and electronics manufacturers.

Recently, in the city of Río Grande, many international and Argentine companies, most notably the Korean company Samsung and the Argentine company Teltron, have set up factories that produce high-definition televisions (HDTV), CD-ROM-related articles, and low-cost GSM cell phones, built mainly from Argentine components.

In proportional terms, manufacturing is more important in Buenos Aires province and much more important in San Luis. The significance of Buenos Aires in this regard is not surprising, as the province and city of the same name unquestionably form the core area of the country, containing almost half of the total Argentine population (18.5 out of 40 million). The economic domination of manufacturing in San Luis, a province of mid-level economic standing, is less expected. But as explained by the Wikipedia, “Since 1983, … Governor (now Senator) Adolfo Rodríguez Saá has also overseen record investment by light manufacturers (mostly food-processors and bottling plants) and advances like the construction of Argentina’s most extensive expressway network.”

 

Argentina GDP from Agriculture MapIt is more difficult to explain the poverty of northern Argentina than the wealth of southern Argentina. This region, and especially the northeast, is heavily dependent on agriculture, although Argentina’s most agriculturally productive areas are located further to the south, in such provinces as Buenos Aires, Córdoba, and La Pampa. Whereas Buenos Aires province has a highly diversified economy, that of La Pampa is highly focused on farming. Considering its central location and rich farmlands, La Pampa has a surprisingly small population.

 

The relative poverty of Argentina’s most agriculture-dependent provinces is noteworthy, as the country has long been famed for its farming prowess and food exports. But recent Argentine governments have not been favorably disposed to agricultural interests, saddling farmers with export levies and other disincentives. As a result, Argentina no longer makes the list of the world’s top agricultural exporters, unlike neighboring Brazil. As is explained in a 2014 article in The Economist:

AGRICULTURE ought to be Argentina’s strength. Instead, incessant intervention has turned it into a source of weakness. The government has meddled in wheat production since 2006 by raising export taxes and setting export quotas. This interference, defended by the government as “protecting the tables” of Argentine consumers, has simply discouraged farmers from planting the crop.

The interventions show no sign of stopping. Last year’s unexpectedly poor wheat harvest caused the price of bread to double, prompting the government to suspend exports of the crop. Last month was the first December in 25 years that Argentina did not export any wheat.

Another surprise, to me at any rate, is the middling position of Córdoba Province in central Argentina in most of these economic indicators. Córdoba is agriculturally rich and has a reputation as a leading industrial center. As explained in the Wikipedia:

Since World War II, Córdoba has been developing a versatile industrial base. The biggest sectors are car manufacturing (Renault, Volkswagen, Fiat), railway construction (Materfer) and aircraft construction (Fábrica Militar de Aviones). Furthermore, there are textile, heavy and chemical industries and some agrobusinesses. Córdoba has been considered the technological centre of Argentina. The Argentinian spaceport (Centro Espacial Teófilo Tabanera), where satellites are being developed and operated for CONAE, is located in the suburb of Falda del Carmen. The software and electronic industries are advancing and becoming significant exporters; among the leading local employers in the sector are Motorola, Vates, Intel, Electronic Data Systems, and Santex América.

Heavy manufacturing and high-tech industries, however, have not fared particularly well in Argentina in recent decades, which may help explain Córdoba unimpressive economic figures.

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  • Very interesting post, Martin! It would be interesting to see a map of GDP from Tourism — I think Santa Cruz will be in a high category in this respect (but I don’t know for sure).

  • In http://whynationsfail.com/ by Daron Acemogly and James Robinson, this division is one of the examples given of how differences in political institutions and how extractive they are have flow-on effects through time. North Argentina was subject to the Spanish incorporation of local (Inca) extractive labour systems, (once all the gold was gone) like most of Peru through to Mexico upon Spanish conquest. The most vital areas of the Americas today were not subject to these extractive institutions (versus inclusive in their terminology):

    “Argentina and Chile have, however, fared better than most other countries
    in the region. They had few indigenous people or mineral riches and were “neglected” while the Spanish focused on the lands occupied by the Aztec, Maya, and Incan civilizations. Not coincidentally, the poorest part of Argentina is the northwest, the only section of the country integrated into the Spanish colonial economy. Its persistent poverty, the legacy of extractive institutions, is similar to that created by the Potosí mita in
    Bolivia and Peru.”

    https://en.wikipedia.org/wiki/Mit%27a#Mit.27a_during_Spanish_rule

    • Many thanks for the information. This makes a lot of sense in regard to the northwest, but some other factors must be in play in regard t0 the northeast.

      • More factors indeed, though here is more of their argument, about Paraquayan settlement:

        “The Spaniards, while trying to survive [at Buenos Aires], started sending out expeditions to find a new place that would offer greater riches and populations easier to coerce. In 1537 one of these expeditions, under the leadership of Juan de Ayolas, penetrated up the Paraná River, searching for a route to the Incas.

        On its way, it made contact with the Guaraní, a sedentary people with an agricultural economy based on maize and cassava. De Ayolas immediately realized that the Guaraní were a completely different proposition from the Charrúas and the Querandí. After a brief conflict, the Spanish overcame Guaraní resistance and founded a town, Nuestra Señora de Santa María de la Asunción, which remains the capital of Paraguay today. The conquistadors married the Guaraní princesses and quickly set themselves up as a new aristocracy. They adapted the existing systems of forced labor and tribute of the Guaraní, with themselves at the helm. This was the kind of colony they wanted to set up, and within four years Buenos Aires was abandoned as all the Spaniards who’d settled there moved to the new town.

        Buenos Aires, the “Paris of South America,” a city of wide European-style boulevards based on the great agricultural wealth of the Pampas, was not resettled until 1580. The abandonment of Buenos Aires and the conquest of the Guaraní reveals the logic of European colonization of the Americas. Early Spanish and, as we will see, English colonists were not interested in tilling the soil themselves; they wanted others to do it for them, and they wanted riches, gold and silver, to plunder.”

        • Very interesting — thanks for the information.

          • Another example of an initial Setllement which soon moves “upstream” takes place on Kangaroo Island during the settlement of South Australia (and later Adelaide), but showing more “exclusion” and the notions of ‘Society’ (rather than an extractive/inclusive meme above) can be read in Rebe Taylor’s “Unearthed: The Tasmanian Aboriginals of Kangaroo Island” (a classic in my opinion, if more social and micro history than geography, but then settlement is a curious geography.) http://www.wakefieldpress.com.au/product.php?productid=794