Argentina,Economic Barometer of the Alliance for Progress

Secretary of the Treasury Douglas Dillon at Punta del Este stated that the major purposes of the U. S. program are to foster an annual economic growth rate of 5 percent in each Latin American country, and to encourage tax reform, more equitable land distribution and improvements in public health, housing and education. Dillon pointed out that this program will require not only financial aid and technical assistance, but profound internal reforms.

Rostow W. W. , The Stages of Economic Growth: A Non-Communist Manifesto (Cambridge: The University Press, 1961). Rostow states that “take-off” is preceded by two other growth stages referred to as: (1) the traditional society, and (2) the pre-conditions to take-off. The “take-off” is the third stage, and it is followed by (4) the drive to maturity, and (5) the age of high mass consumption.

The “take-off,” according to Rostow (p. 8), occurs when an “economy exploits hitherto-unused natural resources and methods of production. Incomes increase in the hands of those who not only save at high rates but place their savings at the disposal of those engaged in modern sector activities. During the “take-off,” new industries expand rapidly, yielding profits which are in a large proportion reinvested in new plants, and these new industries in turn stimulate, through their rapidly expanding requirement for factory workers, the services to support them, and for other manufactured goods, a further expansion of urban areas and in other modern industrial plants.”

Rostow further states (p. 49): “Foreign capital has played a major role in the take-off stage of many economies … U. S., Russia, Sweden, Canada. Foreign capital was notably useful when the construction of railroads or other large overhead capital items with a long period of gestation played an important role in the take-off or the late precondition period. Whatever its strategic role, the proportion of investment required for growth which goes into industry is relatively small compared to that required for utilities, transport and the housing of enlarged urban populations.”

The Organization for Europeon Economic Cooperation reported the following percentage figures for selected countries: Netherlands, 23 percent; West Germany, 22; Austria, 22; Sweden, 21; Italy, 21; France, 18; the United States, 16; Belgium, 16; and United Kingdom, 15.

Gonzalez Norberto Tomasini R. , Introduccion ai estudio del Ingreso Nacional. (Editorial Universitaria de Buenos Aires, 1961).

Fillol Tomas Roberto . Social Factors in Economic Development: The Argentine Case. (Cambridge: The M. I. T. Press, 1961).

LAFTA members include Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Uruguay. Little implementation activity has occurred to date, even though this new economic bloc has received wide mention in the Latin American press and in statements from such groups as the Economic Commission for Latin America (CEPAL), O. A. S., and others. LAFTA, which encompasses a total population of about 160 million, came into existence in February 1960 when the treaty was signed in Montevideo.

YPF produces the bulk of the annual yield, but it has also formed agreements with private foreign companies for the exploration and development of oil reserves. Esso, Shell, Union Oil, Pan American Oil, and Tennessee Argentina are major private companies operating under agreements.

This development of the automobile industry in view of the thin market for units in terms of both population and family income levels has caused many observers to wonder why these leading American companies have invested so heavily, considering the potential return. For American companies other than Kaiser, one thought is that it is merely the prestige value which caused them to enter Argentina as producers. Less than 125,000 units have been sold annually by all companies combined.

The Argentine government has considered this particular industry as important in the development of the economy. The average man-on-the-street may wonder, however, when he reads price tags upward from $3500 to $5000 for cars which U. S. consumers pay $1800 to $2700 for equivalent models.

U. S. Department of Commerce, Survey of Current Business, August 1961, p. 22. The $472 million figure is about 18 percent of U. S. investment in Venezuela ($2,-569 million), and about half of the investment in Brazil ($953 million). Other 1960 U. S. investment estimates were $956 million in Cuba; $795 million, Mexico; $738 million, Chile; $446 million, Peru; $424 million, Colombia; and $405 million, Panama.

Breimyer Harold Goodall Jerry Gray Roger Rhodes V. James . The Future Export Market for Argentine Beef. (Buenos Aires: International Cooperation Administration, July 5, 1961).

The October 1961 announcement from the Ministry of Economy of the creation of the Federal Housing Administration and of the issuance of a 1.5 billion peso bond issue is the first step toward developing a national housing program.

Surrey Stanley S. Oldman Oliver . Preliminary Examination of the Tax System of Argentina. (Cambridge: Harvard University Law School, June 1960).

The recent G. A. T. T. report stated that “experts found a direct relationship between the rate of economic growth in the various industrial countries in the nine-teen-fifties and the competitiveness of their export prices. This, in turn, had a marked effect on the volume of their exports.” New York Times, November 9, 1961.