Volume 43, Number 171,
October-December 2012
The Third Peronist Government’s Economic Plan.
Gelbard’s Term (1973-1974)
Cecilia Vitto
THE CONSEQUENCES OF THE POLICIES IMPLEMENTED.
HOW KEY ECONOMIC INDICATORS EVOLVED

As indicated in the first section, the Triennial Plan foresaw considerable economic growth between 1973 and 1977, which had to be higher than the increase in consumption. According to these projections, this growth was associated with a substantial increase in the level of capital formation and, in particular, public investment. However, the majority of the most relevant economic indicators evolved very differently from what was projected.

One of the first questions to consider is the evolution of the gross domestic product. In this sense, it is extremely relevant that, continuing with what had been happening since 1964, the gdp grew uninterruptedly during Gelbard’s term, and in some quarters surpassed 6%, which was not far from established goals. Both the industrial and agricultural product in 1973 and 1974 increased in keeping with the behavior of the aggregate product. Still, both consumption and investment developed very differently to what was predicted. The former evolved positively and practically in the same way as the gdp during this entire period (in some quarters, even higher than gdp), which meant that it did not meet the goal of lower relative growth established in the Triennial Plan.

Investment had negative growth starting in the second quarter of 1973 until the same time period of 1974, when it only grew 0.3% (Figure 1). It is significant that all components of investment fell beginning when the new government assumed power, with notable contraction in investment in durable equipment, transport equipment and public construction7, as well as private construction, to a lesser extent. In this framework, this contraction in investment can be seen as the immediate response from a significant number of businessmen towards the income policy implemented, as it implied restrictions when transferring cost increases (including salaries) to prices. This contraction in capital accumulation affected the possibility of being able to consolidate the key goals of the government’s economic plan, as this contraction was made up of the base of the income redistribution policy and the strong economic expansion proposed by the government.

Figure 1. Inter-Annual Evaluation of the Gross Domestic Product,
Consumption and Fixed Investment 1973-1974 (in percentages)

Source: Prepared by the author base on fide data.

On the other hand, the evolution of various price and salary indicators in the framework of the policy implemented are relevant, as they sought to substantially reduce inflation and at the same time, increase the real salary and the participation of salaried workers in income.

During the first months of implementation, the Social Pact had a positive result in terms of stabilizing price levels (between June and November of 1973 the inter-monthly increase in retail price levels was an average of 0.1%), which was linked both to the new government’s power to arbitrate as well as the international scene at the time. During this same year, the terms of trade were extremely favorable, at record levels in historical terms, and were significantly correlated to a trade surplus for the country.

7 Regarding the importance of public investment for accumulation dynamics, see Vitelli (1990: 325).

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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