Volume 44, Number 175,
October-December 2013
The Takeover of Soy and Dutch Disease in Argentina:
An Agricultural Curse?
Alicia Puyana and Agostina Constantino

An additional comment with respect to this boom, following Ocampo’s proposal that the growth rates of prices are ever smaller with respect to previous cycles, the current growth in prices has not managed to generate net surplus in values with respect to the phase prior to price declines. Figure 2 shows this surplus calculated in the following way:

Net Surplus = (Pcurrent year - P1971-1998 average) * Quantity of soy exported

Where P is the price of soy in constant dollars from 2005.

Figure 2. Surplus Value of Soy Exports with Respect to the Previous Phase of Prices (1971-1998)

Source: World Bank

As Ocampo writes (2011), booms in agricultural prices tend to be smaller each time, which explains why even though the increase in prices began 10 years before, the value of soy exports has not recovered its average values of the phase prior to 2008. This also explains why Argentina must export ever greater volumes of soy to maintain the income growth rate.

As the Dutch disease theory predicts, there are signs (Figure 3) that since the devaluation in December 2002, the exchange rate for the Argentinean peso (measured as the quantity of pesos needed to acquire a dollar), has appreciated, which would suggest that the inflow of dollars for soy exports and investments in this sector upon revaluating the currency has undermined the competitiveness of other sectors of the economy. This point is controversial. While Eduardo Levy Yeyati suggests that the appreciation of the peso may respond to the increase in prices and relative productivity of the grains sector, Martín Rapetti and José María Fanelli ascertain that currency appreciation is explained by local macroeconomic policy (Burgo, 2012).3

Figure 3. Real Exchange Rate from 2002 to 2011, Pesos per Dollar
Source: Central Bank of the Republic of Argentina and CENDA.

3 The National Statistics and Census Institute (INDEC) of Argentina has been involved since 2006. Starting in 2007, the government began to modify the methodology to measure the prices of the consumer price index, which has resulted in a very controversial measure, due to the fact that experts have criticized this measure. The main criticism is that the index measured by the government does not reflect the true cost of the food basket and, as such, inflation would be even greater than what the government publishes. This does not affect our work because if official inflation is under-estimated, then currency appreciation would be even higher than what is shown here.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 195 October-December 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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