Volume 44, Number 175,
October-December 2013
The Takeover of Soy and Dutch Disease in Argentina:
An Agricultural Curse?
Alicia Puyana and Agostina Constantino*
Date received: March 19, 2013. Date accepted: July 5, 2013
Abstract

The consolidation of Argentina as a global producer and exporter of soy took off in the mid-1990s. However, in recent years, the evidence suggests that Argentina is suffering from the symptoms of “Dutch disease,” which refers to the premature deterioration of agriculture and manufactures as a source of the gross domestic product and employment in the country. Some of these signs include appreciation of the real exchange rate (by maintaining a fixed exchange rate, the nation must deal with elevated inflation), and a falling commercial surplus. The objective of this work is therefore to clarify whether the economy of Argentina shows signs of “Dutch disease,” a phenomenon attributable to the soy boom of the 1990s.

Keywords: dutch disease, Argentina, soy, productive structure, deindustrialization.
INTRODUCTION

The consolidation of Argentina as a global producer and exporter of soy, a process known as “soyization,” took off in the mid-1990s, when this crop spread to the Pampas region. This marked a new phase in the process of the agriculturalization of the economy and the primary sector of Argentina, which emerged during the last military dictatorship (1976-1983), a regime that supported the neoliberal accumulation model through incentives that fostered the abandonment of livestock activities and their replacement with agricultural activities. Soy was the star of this model and even today leads growth for the sector.

However, in recent years, figures have emerged that would seem to indicate that the economy of Argentina is suffering from the infamous "Dutch disease." In other words, the premature deterioration of agriculture and manufactures as the main source of the gross domestic product and employment in the country. Some of these signs include the appreciation of the real exchange rate (by maintaining the fixed exchange rate, when the country suffered from high inflation) and the decrease in the commercial surplus. To this effect, the purpose of this work is to clarify if the symptoms of Dutch disease are present in the economy of Argentina as a phenomenon attributable to the soy boom that the country has experienced since the 1990s. This model, like any other, leaves out some variables and has its limits; however, reducing the complexity of the problem addressed in this work allows us to identify how certain variables and mechanisms function. The boom, due to the large growth in demand from China, is fully captured in the variable made up of soy prices, which implicitly reflect changes in technology whose effect is that prices do not rise to rates higher than the growth of demand. Another limitation results from problems in statistical information from Argentina, recently submitted to scrutiny. Even so, this exercise attempts to clearly illustrate that Argentina shows the symptoms of Dutch disease, with its pros and cons.

Following a brief theoretical review of Dutch disease, to answer this question, this work will analyze the possibility of Dutch disease in Argentina by examining some specific indicators.

* Researchers at the Latin American Faculty of Social Sciences, Mexico office. E-mails: apuyana@flacso.edu.mx,
      agostina.constantino@flacso.edu.mx, respectively.


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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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