Patterns of Agricultural Production and Long-run Development in Argentina’s Fertile Plains

We investigate the effect of ranching specialization in 1914 on income per capita in 1994 across Argentinian departamentos in the provinces of Buenos Aires, C ́ordoba, Entre Rıos, and Santa Fe. Using exogenous variation in agricultural production patterns generated by climatic features, we find negative effects of ranching specialization on long-run income per capita that are both significant and sizable. The results are robust to controlling for province fixed effects and an array of geo-climatic conditions. We also show how the effects of early ranching specialization emerged over the course of import-substituting industrialization between the 1930s and the 1970s. We assess the plausibility of four potential channels: the comparative performance of ranching and other agricultural activities; the role of backward and forward linkages characterizing different agricultural activities; the effects of land concentration (which was higher in ranching localities); and the differential patterns of population density and immigration associated with each specialization pattern.