Agro-export Model: Causes, Consequences Features and Characteristics

We explain what the agro-export model is and what its causes and consequences are. In addition, its characteristics, advantages and more.

What is the agro-export model?

The agro-export model was an economic organization typical of certain Latin American countries, but in particular of Argentina, which took place at the end of the 19th century and consisted of the massive use of its territorial platforms to develop the cultivation and exploitation of raw materials from agriculture with export purposes, as the main source of income.

This model coincides in cases such as Argentina with the establishment of the national state, so it is deeply linked to the imaginary roots of the nation, that is, it forms an important part of its own economic history.

The agro-export model established an important economic flow between some industrial powers such as Great Britain, France or the United States and the young Latin American nations, shaping the society of the latter on the basis of an export economy. Next, a summary of the model, through its main characteristics.

Origin of the agro-export model

The agro-export model was born in countries with an extensive usable platform. It is often said that this agricultural export economy model was born in Argentina and other countries in a similar situation, which had an extensive territorial platform that could be used in agricultural and productive terms.

Furthermore, these were young nations, whose independence from Europe had been achieved at the beginning of the century, but which enjoyed sufficient foreign investment to undertake a large-scale agricultural project.

Historical context of the agro-export model

The agro-export model obeys the prevailing logic of the time that located central consuming countries and peripheral producing countries, so the export model assumed the role of providing the metropolis with the food it needs, in a role similar to that of America. Hispanic during the colony.

It is the time of the end of European colonialism and international capitals are pursuing their incorporation into insurgent markets such as the American one , which is happy to consume their manufactured products and feel in a condition of equal consumption.

Causes of the agro-export model

Foreign investment was abundant in countries like Argentina. The main causes of the emergence of the agro-export model lie in the amount of arable land available in the young Latin American nations, whose agricultural past during the colony will have prepared them.

On the other hand, foreign investment was abundant in countries like Argentina, allowing to build an extensive agricultural infrastructure, as Great Britain became the main buyer of its products.

Consequences of the agro-export model

Broadly speaking, the most important consequence of the agro-export model has to do with the massive growth of agriculture , but not its development and modernization.

Unlike the industrialized countries , whose economic histories pointed to the implantation of industrial capitalism and the emergence of a technified society, the peripheral countries concentrated on generating wealth by supplying the first world with the materials necessary for its development.

The consequences of this were immediate: the developed world was soon able to incorporate its own manufactured products to the market, sheltered by the technological powers of modern industry , lowering the prices of raw materials and constituting a very unevenly modernized world.

Advantages of the agro-export model

Many European migrants went to America to cultivate their land. The main advantages of the agro-export model are:

• Foreign capital flow: The massive inflow of foreign currency from abroad rapidly increased national budgets, allowing domestic investment, waste and corruption alike.
• Immigration: Many countries in America witnessed the wave of European migrants who came to cultivate on their lands, incorporating not only knowledge in the matter but also cultural and culinary traditions that enriched the local culture.
• It boosted growth: Through the expansion of agriculture, the arable platform grew and the volume of exported raw material was significant.

Disadvantages of the agro-export model

The main disadvantages of the agro-export model are:

• Dependence on the external market: Once the external markets are saturated, they are conquered by another supply or they begin to be self-sufficient, the agro-export economy will be in crisis due to the decrease of its only source of income.
• Regional imbalance: The regions were unevenly enriched, since the presence of arable land along the surface of the country was also rich.
• The large estates: The large landowners and latifundistas of broad but moderate, unsystematic production emerged, whose wealth was sustained by an impoverished peasant labor force.
• It did not drive development: The country as such grew in economic terms, but not in industrial terms.

Duration of the agro-export model

Venezuela was an ancient rural nation with extensive cocoa exploitation. The relative success of this model, prior to its entry into crisis in the first third of the 20th century , usually varies according to the particular history of the country: Some examples:

• In Venezuela: Former rural nation with extensive cocoa exploitation, its oil development began at the end of the 19th century, abandoning agriculture forever in pursuit of a more or less oil-dependent economy.
• In Argentina: The model lasted about 50 years (from 1880, with the presidency of Julio Argentino Roca, until the crisis of 1930).

Examples of agro-export model

The best example of the continent is represented by the Argentine model between 1880 and 1915 , a time during which the government promoted the massive cultivation of grains and cereals, which is why Argentina was often called "the breadbasket of the world." From an average export per year of 20 tons of grains, Argentina went to 400 tons in just over fifteen years.

During this period, the transport network grew, large estates were promoted in the Pampa and a good part of the local products , including meat, was exported to Europe . This also required much more peasant labor, thus creating incentives for European immigration (especially Anglo-Saxon and Eastern Europe ).

However, the beginning of the World Wars of the 20th century ( First and Second )  drastically decreased the volume of European imports , condemning the agro-export model to crisis and, eventually, to be replaced by one of domestic consumption.

End of the agro-export model

Domestic consumption promulgated the import substitution model. The great world crisis of 1930 whose epicenter is Wall Street in the United States put an end to the agricultural export model of Latin American countries, forcing them to fully replace external consumption, which fell by more than half of its figures.

Likewise, the population increase allowed a greater internal consumption , so that the import substitution model was enacted , to stop consuming foreign products and appreciate the local ones.

Indebtedness

The end of the agro-export model was accompanied by a policy of external indebtedness that was difficult to pay , which in its own way contributed to the delay in local development. Capital from agricultural exports was hardly completely replaced and the debt with nations of the so-called First World was imposed as a necessary evil to pilot the crisis of the peripheral countries.

Amputee Ibi

She has pursued her studies in The United States, where she has graduated in Business and Economics and is currently finishing her Master studies in International Economics and Finance. Miss. Amputee is fluent in three languages: English, Spanish and Russian and has elementary knowledge of French and Italian. She love exploring how Collaborative Research Group can become the best tool to achieve the (necessary) educational change. .