British investment in Argentina

Early investment (1820s-1950s)

Argentina had a unique relationship with Great Britain during the time period after Argentinian independence all the way up to World War 2. British Investment would begin in the 1820s, with investments into industries such as mining, immigration, and agriculture. How ever this investment would be worthless by the 1930s and would not prove to be profitable until the 1950s and on.[1] It would not be until the 1960s that there would be any amount of investment that would be continuous enough to be impactful on either the Argentinian or the British economy.[1] Early investment failed in Argentina because of multiple factors, such as war with Brazil, an overestimated labour force that did not exist after the revolution, and the lack of resources being able to flow out of the Rio de la Plate because of a wartime blockade.[1] These economic inhibitors were followed by the "cattle baron", Juan Manuel de Rosas's caudillo-ship which also deterred foreign investment, and then the defaulting of payment towards loans from the time of revolution.[1] All of these factors made Argentina appear unstable and therefore diminished foreign investors willingness to invest in the new state. Therefore, industrialization of Argentina and its vast pampas (plains) would have to wait until the industrializing capital of Great Britain would be imported decades later.[2]

Bernardino Rivadavia's policies on foreign investment

Bernardino Rivadavia was the First President of Argentina, from 1926-27. Rivadavia wanted to open Argentina to liberal policies that he thought would increase wealth and industrialization inside of Argentina. Some examples of how he wanted to accomplish this was by allowing free trade and lowering tariffs by replacing them with taxes on the selling and renting of the plentiful reserves of land which Argentina had.[1] Rivadavia wanted to make Argentinian products desirable on foreign markets by lowering tariffs, whilst also selling off Argentinian land to foreign investors who would increase the productivity[1] of the land as liberal policies at the time claimed to do. Another way Rivadavia tried to secure foreign capital was by encouraging the development of businesses that focused on agriculture and immigration.[1] Rivadavia created policies that could have been beneficial to the development of Argentina, but since the Cisplatine War between Argentina and Brazil took place during these reforms, the benefits were diminished and never experienced their full effects.[1] During the Cisplatine War, the Brazilian Navy had blockaded the Rio de la Plata, which meant that trade could now flow freely between Argentina or Great Britain, thus harming the new economic ties.

Late investment (1855-WW2)

With the end of Juan Manuel de Rosas dictatorship in 1952, and followed by liberal government, investment to Argentina was increasing.[3] A result of this investment was the building of infrastructure was built to enable international trade.[4] As development of industry grew, and the economy of Argentina strengthened, the quality of life for Argentineans ended up being among the highest in the world. Argentineans towards the end of the 20th century were well-fed, well-educated, and industrious compared to most of the world.[4]

The question of informal empire and British hegemony in Argentina through investment

Towards the 1870s, it was clear that the British were extremely influential in the economics of Argentina. Therefore, this made a very unique power dynamic between the two sovereign states of Great Britain and Argentina. Some scholars have even argued that Argentina was a product of British imperialism. A. G. Hopkins explains that for imperialism to occur, the sovereignty of one state is being diminished by the state with more structural power.[5] Susan Strange, an English Political Scientist, identified four main traits of structural power in her study: States and Markets. One of these four equal parts of structural control is "control over credit."[5] For a developing nation it is clear that a free line of credit is essential to nation-building. Capital is needed to build industries, and the Argentinians lost their line of credit when they declared independence from Bourbon Spain. Argentina as well as most of Latin America lacked the domestic capital to rebuild after the revolutions seeing as revolutions are generally violent and consequently destroyed infrastructure.[6] Therefore, the City of London stepped in and funded the capital where Argentina could not.[5] In return for this foreign capital, the Argentinians would make sure that the policies and regime was to stay stable and keep the interests of the investors in mind.[5]

British investment in the Argentinian railway system

A map showing the extent of the Argentinian Railway system as of 1910. At this time it was the tenth largest system in the entire world. It was financed by British investors and this is shown by the use of wider tracks that were common to the British and not the Americans.[7]

An essential component of the investment and development of the Argentine economy was the importation of a modern railway system. The British were responsible for the creation of the Argentine railway system. From 1860 there were 39 kilometers of railways in Argentina, and by 1910 there were 23,994 kilometers.[8] At the beginning of the twentieth century the Argentinian railway system was the 10th largest in the world, most of it being a product of English capital financing the new projects.[9] By 1937 there were around 40,000 kilometers of railways, of which 66% was British owned which was unheard of in an independent country at this time.[8] Since Argentina at this time did not have a well developed steel industry, the Argentinean railway projects needed to be funded by English capital since capital was limited domestically in Argentina.[8] As well, the technology of the railway system needed to be imported into Argentina from Europe or the USA.[2]

The purpose of the Argentine railway system was not built to transport people, but in fact to ship the agrarian products of the pampas (plains).[7] Since Argentina was developing as an agrarian export economy, railroads were built to connect the rural farmland to the main ports of Argentina, as seen in the map of Argentinean Railways in 1910-1911.[7] Most of the lines centre around the cities like Buenos Aires or Bahia Blanca and then branch out to the pampas in order to retrieve goods to bring back and ship out to European markets, mainly the British. The British would send in industrial goods to make Argentinean agriculture more modern and productive, while the Argentines would export those primary products back to Great Britain.

Modern British investment in Argentina

When a military coup occurred in 1943 in Argentina, and then with the populist president Juan Perón succeeding to power, investment in Argentina was looking less profitable for investment. Especially when Perón nationalized the Argentinian railway system in 1948 which still was mainly owned by the British at the time. The military dictators of Latin America in the 20th century were keen to practicing Import Substitution Industry, which meant isolating the Latin American economies from the economies of western European and North America. The method attempted to discourage the buying of finished goods from other countries and instead produce said goods domestically.[10] Therefore, in the latter half of the twentieth century, dictators like Perón nationalized industries which would lead to less foreign investment, in hopes to domestically improve industrialization without foreign capital.

References

  1. 1 2 3 4 5 6 7 8 Ferns, H. S. (1952). "Beginnings of British Investment in Argentina". The Economic History Review. 4 (3): 341–352. doi:10.2307/2599426. JSTOR 2599426.
  2. 1 2 Street, James H. (1982). "British Influence on Argentine Growth: The Dependency Controversy". Journal of Economic Issues. 16 (2): 545–553. doi:10.2307/4225195. JSTOR 4225195.
  3. ↑ Stone, Irving (1972). "British Investment in Argentina". The Journal of Economic History. 32 (2): 546–547. doi:10.2307/2116829. JSTOR 2116829.
  4. 1 2 Bart., Weeks, Gregory. Understanding Latin American politics. Boston. ISBN 0205648258. OCLC 872562050.
  5. 1 2 3 4 Hopkins, A. G. (1994). "Informal Empire in Argentina: An Alternative View". Journal of Latin American Studies. 26 (2): 469–484. doi:10.2307/157952. JSTOR 157952.
  6. ↑ 1955-, Chasteen, John Charles,. Born in blood & fire : a concise history of Latin America (Fourth ed.). New York. ISBN 0393283054. OCLC 945693843.
  7. 1 2 3 "Map of the Argentine Railways". 1911. Retrieved 2017-10-26.
  8. 1 2 3 Duncan, Julian S. (1937). "British Railways in Argentina". Political Science Quarterly. 52 (4): 559–582. doi:10.2307/2143973. JSTOR 2143973.
  9. ↑ Lewis, Colin M. (2015-11-19). British Railways in Argentina 1857-1914: A Case Study of Foreign Investment. Bloomsbury Publishing. ISBN 9781474241670.
  10. ↑ "THE ROLE OF IMPORT SUBSTITUTION INDUSTRIALIZATION POLICY IN THE ECONOMY OF NIGERIA (PDF Download Available)". ResearchGate. Retrieved 2017-10-26.
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