What developmentalism means today as a proposal for economic policy is what every person wants; But what it meant between 1958 and 1962, during the presidency of Arturo Frondizi, was something very concrete. This had much less to do with general principles than with the powerful personality of Rogelio Julio Frigerio, especially at the operational level. His personal energy was comparable to that of Domingo Felipe Cavallo and Justiniano Allende Posse (the latter, head of the National Road Directorate, traveled tens of thousands of kilometers in the 1930s with a low tax on fuel and the technology of the time).
I spoke to the American about this Everett Einar Hagen (1906 – 1993)who studied at the University of Wisconsin and taught at the University of Illinois and MIT. His strong stance in favor of Keynesian principles explains his move from Illinois to MIT, as the teaching staff there were more traditionalists. He had his character, to say the least. In his words: “I went to Burma to work as a consultant for the United Nations. My constant tensions with the rest of the mission prevented me from doing good work. After returning to the United States, I received psychotherapeutic treatment. In addition to Burma, I consulted in Singapore, Malaysia, Japan, El Salvador, Colombia, Brazil, Argentina, and Saudi Arabia. Every discipline must have its iconoclasts, and I attacked some sacred cows of development theory.” Be The economics of developmentPublished in 1968, the fourth edition was completely revised.
-How and when did Frondizi and Frigerio meet?
– Through a mutual friend, Narciso Machinandiarena. The meeting took place on January 6, 1956 and began – how should you put it? – the equivalent of love at first sight. Due to military pressure, he not only did not become Minister of Economic Affairs, but was also forced to resign from his position as Minister of Economic and Social Relations before the end of 1958. But that doesn’t mean they didn’t continue to work closely together.
– What was developmentalism during Frondizi’s presidency?
– Let’s distinguish between the diagnosis and the way practical measures were implemented. Back then, countries were divided into developed and underdeveloped countries. Frigerio included Argentina among the latter, so for him economic policy was not simply “more of the same after correcting the legacy left by Juan Domingo Perón.” Obviously not all Argentines agreed with his proposal, but the most important thing from a decision-making perspective is that President Frondizi adopted it.
– And then?
– In the development strategies of the time, steel was synonymous with development. So much so that more than one proposed to stop focusing on GDP and instead focus on the production and consumption of steel. Some African countries that were gaining political independence at that time were thinking about setting up steel mills!
– But in the Argentine case there was a problem.
– This forced us to combine Frigerio’s “structural vision” with an important economic constraint. Let me explain. Frondizi left the fight against inflation in his first year in office to his Economy Minister Emilio Donato del Carril; Alvaro Carlos Alsogaray, between mid-1959 and April 1961, and later Roberto Teodoro Alemann and Carlos Arturo Coll Benegas. However, this did not mean that the remaining economic policies could be implemented autonomously.
– What are you talking about?
– From the balance of trade in a context that did not rely on the export of primary products for reasons of both local supply and international demand; the central bank lacked reserves; and there were no international capital movements. Therefore, in order to finance the increase in imports necessitated by internal development, it was necessary to “make room” for imported goods. For example, oil!, whose purchases abroad accounted for around 30% of total imports. Hence the priority of the “Battle for Oil”.
– For you, the way the policies were approached was also crucial.
– In fact, for illustration it is necessary to compare the case of oil with that of the automobile industry. The first involved the signing of 13 contracts that achieved near self-sufficiency within three years (previously about half of the oil consumed was imported) and where YPF purchased oil at a price lower than the international price. Brilliant wherever you look at it. Frondizi never sent them to Congress because, as he put it, “they would not have been approved” and he found himself in a race against time. The contracts were canceled for formal reasons during the presidency of Arturo Umberto Illia, at the initiative of Adolfo Silenzi de Stagni! Real nonsense.
-How was automobile production approached?
– During Frondizi’s presidency, Argentina moved from assembling cars to manufacturing them. This meant, in effect, unlimited protection for the finished products and much more moderate protection for the imported component, which was limited to a portion of the inputs. But instead of signing contracts that took advantage of the industry’s obvious economies of scale, “anyone” was allowed to open a store. In view of the very high profit expectations resulting from the good income per inhabitant and the aging of the vehicle fleet, 29 companies have registered. Yes, you don’t read wrong: 29 companies. There were 13 of them left in 1964 and only nine in 1969.
– How is this asymmetry explained?
– I don’t know, but apart from the differences that exist in different sectors, I emphasize the personal aspect in the design and implementation of different policies. I leave it to lovers of counterfactual approaches to imagine what would have happened in Argentina if Frondizi and Frigerio had not met, and to imagine how our country would have developed if Ricardo Balbín had become president of the nation in 1958. Sorry if I hurt anything, but thank God Frondizi beat Balbín; in the same way that, thank God, Raúl Ricardo Alfonsín defeated Ítalo Argentino Luder in 1983.
– The debate between person and circumstance in explaining past events is endless.
– Because this is an empirical question and therefore there are examples for one side and the other. It is important that what happened is clarified in each case.
– Don Everett, thank you very much.