Agro-export model: what it is and its characteristics

We explain what the agro-export model is and what its causes and consequences were. Also, its general characteristics, advantages and disadvantages.

The agro-export model inserted countries like Argentina into international trade.

What is the agro-export model?

The agro-export model is a form of economic organization characteristic of some Latin American countries, particularly Argentina from the end of the 19th century until the 1930s. It consisted of the use of fertile lands to develop agricultural and livestock production with the aim of exporting food and other raw materials.

This model established an important economic flow between some industrial powers, such as Great Britain, France and the United States, and the Latin American nations that until then occupied a marginal position in the world economy. Countries like Argentina thus entered world trade as exporters of raw materials. and export became its main source of income.

The agro-export model went through a brief period of crisis during the First World War (1914-1918) and ended when the Great Depression broke out in the 1930s. In Argentina, the years of the agro-export model were the period of greatest economic growth in its history.

Origin of the agro-export model

The agro-export model was born in countries with extensive fertile lands.

The agro-export model It emerged in the 19th century in countries that had extensive fertile lands that could be used for agricultural and livestock production. The most characteristic example is the Pampas plain in Argentina.

These were young nations, whose independence from the European empires had been achieved at the beginning of the 19th century. Their processes of national organization began to consolidate in the mid-19th century, but They needed foreign investment and imported machinery. to be able to modernize and undertake a large-scale agricultural or livestock project like the one planned by their ruling classes.

The agro-export model obeyed the logic of the international division of labor. In the context of the Second Industrial Revolution, The central countries (such as Great Britain) demanded raw materials for their industry and food.and peripheral countries (such as Argentina) satisfied this demand through large-scale production of raw materials, encouraged by foreign investment in infrastructure for production and transportation. At once, The agro-exporting countries became a market that consumed the manufactures and machinery of the industrialized countries..

Causes of the agro-export model

Foreign investment was abundant in countries like Argentina.

The main causes of the agro-export model were:

• The Industrial Revolution in Europe and the United States, which fueled international demand for raw materialssuch as the agricultural products of the Argentine countryside demanded by Great Britain and France. The industrialized countries in turn exported manufactured products and machines to the agro-exporting nations, according to a model called the international division of labor.
• The amount of fertile land available in exporting countries. In Argentina, the Argentine army’s campaign against the indigenous people of the Pampas and Patagonia, traditionally called the “conquest of the desert,” involved the appropriation of large tracts of land that were ceded or sold to landowners, ranchers, and soldiers. This favored wheat production and cattle breeding.
• Foreign investment in exporting countries, like the British private capital that allowed the installation of railway lines and refrigerators in Argentina. Improvements in transportation shortened distances (for example, between productive areas and the port of Buenos Aires) and lowered costs. The importation of agricultural machinery by landowners depended on a credit policy promoted by the State.
• Technological innovations coming from industrialized countries, which in Argentina increased productive capacity, such as steam sowing and harvesting machines or the windmill to obtain water from underground water tables. A particularly important technological novelty for the Argentine economy was artificial refrigeration, which allowed animal meat to be preserved in refrigerators and transported in refrigerated ships to Europe. In this way, the cattle that until then offered leather and tallow for the external market began to be subjected to cross-breeding that made it possible to obtain refined and tasty meats for export. The planting of alfalfa was also important to improve pastures.
• The consolidation of the national and legal orderas happened in Argentina starting in 1880 with the federalization of Buenos Aires, the organization of the national territories, the creation of organizations such as the National Mortgage Bank or the Ministry of Public Works and a profound legislative task.
• The increasing use of fences to delimit landswhich made it possible to ensure private ownership of fields and to separate land dedicated to agriculture from land dedicated to livestock, which prevented animals from damaging crops.
• European immigrationwhich in Argentina grew significantly after the immigration law of 1876 and offered an abundant workforce to work in the countryside and in the cities.

Consequences of the agro-export model

The most important consequences of the agro-export model were:

• Growth and modernization of the agricultural sectorwhich in Argentina depended largely on the import of agricultural machinery.
• The expansion of railway lines in agro-exporting countries with the investment of foreign capital (mainly British) and the improvement of other infrastructure works, such as the construction of the new port of Buenos Aires in Argentina.
• The increase in exports agricultural resources (such as wheat, corn, wool, leather and meat) and imports of machinery and manufactures from industrialized countries.
• economic growth which, in Argentina, went hand in hand with the founding or modernization of cities, the state promotion of immigration and education, the establishment of a unified currency, the prosperity of ranchers who traveled the world and the progressive formation of a middle class.
• The difficult living conditions of less favored sectors (among which socialist and anarchist ideas were spread).
• External debt due to the credits requested for investment in infrastructure, which in Argentina motivated various forms of speculation and caused a financial crisis in 1890.
• The economic backwardness of the areas that were left out of the agro-export model, such as the artisanal and mining industries of the northern Argentine provinces, whose population experienced a process of impoverishment.
• The dependence of agro-exporting countries on demand and prices in the external marketwhich meant that the outbreak of the First World War (1914-1918) momentarily halted economic dynamism by reducing the exports of some products (such as cereals), and that the Great Depression of the 1930s marked the final crisis of the agro-export model.

Advantages of the agro-export model

Many European immigrants came to America to work in the fields.

The main advantages of the agro-export model were:

• Foreign capital flow. The influx of private capital from industrialized countries (such as Great Britain) favored investment in infrastructure and modernization works.
• Immigration. Many countries in the Americas witnessed waves of European immigrants who generally settled in the countryside to work as sharecroppers or rural laborers. In addition to offering their labor force, they enriched the local culture by incorporating their cultural and culinary traditions.
• Economic growthThe expansion of agricultural production with the import of machinery, foreign investment in infrastructure and immigration allowed for an increase in the volume of raw materials exported, which favoured economic growth and modernisation.
• Social improvements. The economic transformation favoured the demand for labour, access to goods and services in the domestic market and, through the compulsory primary education law, an increase in the level of literacy in the population.

Disadvantages of the agro-export model

The main disadvantages of the agro-export model were:

• Dependence on the external market. Changes in the economic and political conditions of raw material purchasing countries directly affected agro-export economies, as happened during the First World War and the Great Depression. The agro-export economy entered into crisis when international trade was interrupted, purchasing countries promoted protectionist policies or the external market for a given product became saturated or was conquered by the production of another country.
• Regional imbalance. The regions dedicated to agricultural production became richer with the agro-export model while other regions, such as the provinces with traditional artisanal industries, were marginalized and became impoverished or grew at an uneven rate.
• Latifundism. With the agro-export model, large landowners and large landowners emerged, such as the Argentine ranchers, who concentrated the land and turned their ranches into large companies dedicated to export. This landowning oligarchy became richer and became socioeconomically different from the rest of the population.
• Agricultural but not industrial development. Due to the emphasis placed on the export of raw materials, the growth of the agricultural sector was not accompanied by an equivalent development in the industrial sector. Technical and technological investments and innovations were mainly concentrated in agricultural machinery and infrastructure for the production and transportation of agricultural and livestock products.

Examples of the agro-export model

In Central America, an export model for tropical fruits was established.

The agro-export model was successful in some countries for a time but entered into crisis in the first third of the 20th century, especially…