Henry Willebald

Between the colonial heritage and the first globalization boom: on income inequality in the Southern Cone

This paper presents a first estimate of income inequality in the Southern Cone of South America (Brazil 1872 and 1920, Chile 1870 and 1920, Uruguay 1920) and some assumptions with regard to Argentina (1870 and 1920) and Uruguay (1870). We find that income distribution was relatively high on the eve of the first globalization boom. Thus, inequality is not only the result of globalization, but also a structural feature. Inequality increased between 1870 and 1920, both within individual countries and between countries. Globalization forces do not result in obvious outcomes. Rather, the effect of globalization on inequality depends on the expansion of the frontier and institutional persistence and change in old and new areas. Inequality was clearly high in the wake of the globalization process. This was a particular kind of inequality, which was part of a set of institutions closely linked to the exports of primary goods, sluggish technological change and limited human capital formation.

Income Distribution in the Latin American Southern Cone during the First Globalization Boom and Beyond

Latin America is the most unequal region in the world and there is intense debate concerning the explanations and timing of such high levels of income inequality. Latin America was also the region, not including European Offshoots, which experienced the most rapid growth during the first globalization boom. It can, therefore, be taken as an interesting case of study regarding how globalization forces impinged on growth and income distribution in peripheral regions. This article presents a first estimate of income inequality in the Southern Cone of South America (Brazil 1872 and 1920, Chile 1870 and 1920, Uruguay 1920) and some assumptions concerning Argentina (1870 and 1920), and Uruguay (1870). We find an increasing trend towards inequality between 1870 and 1920, which can be explained as a process of inequality both within individual countries and among countries. This trend is discussed along three lines: the relationship between inequality and per capita income levels; the dynamics of the expansion to new areas; and movements of relative factor prices and of the terms of trade. During the current globalization process inequality remained apparently stable, as a result of contradictory movements: within-country inequality increased, especially in the three countries with the highest per capita income; on the other hand, between-country inequality was reduced due to the process of club-convergence among the Southern Cone countries. Divergence with core countries was deepened. Some implicit results seem to show that state-led industrialization was featured by decreasing inequality, both within and among countries.

Uneven Development Paths among Settler Societies, 1870–2000

The development trajectories of different settler economies varied significantly in the long run. This chapter aims to identify some crucial determinants in these divergent trends. It discusses three basic sets of ideas. First, there existed a group of countries - modern ‘settler societies’. Second, settler societies showed quite different economic performances through time, giving place to quite different economies. Third, economic performance is strongly related to patterns of specialization and structural change, and by the distribution of income and wealth. The chapter explores the idea that distribution could have an impact on the pattern of productive and trade specialization. In turn, productive and trade specialization were considered important factors to explain technological change, productivity growth and economic performance. The evidence presented shows that there is a positive relationship between inequality and the specialization in low value-added activities. Keywords:development paths; settler economies; settler societies; value-added activities

Contract Enforcement, Investment and Growth in Uruguay since 1870

Institutions and their quality are central concepts in the recent development and institutional economics literatures. Our hypothesis is that inadequate contract enforcement has hindered investment and, in consequence, indirectly has had a negative effect on Uruguay’s long-term growth performance. We first review the main concepts and the approaches to define and measure the quality of contract enforcement. We then introduce one measure that has the advantages of being measurable into the past and not depending on subjective judgments; namely, the “contract intensive money�? (CIM) indicator proposed by Clague et al. (1999). Using our long series for the CIM indicator, and extending key macroeconomic variables backwards to 1870, we are able to estimate a structural model to explore the plausibility of our hypothesis. In the estimation, based on the seemingly unrelated regressions (SUR) method, we find support for the thesis that the quality of contract enforcement influences growth through its impact on investment. Put differently, our results suggest that poor contract enforcement played a significant role at the root of Uruguay’s underperformance, and in its experience of (relative) long-run decline.