Agro-exporter Model – What it is, concept, causes and consequences

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

agro-export model
The agro-export model opted for agricultural production and export.

What is the agro-export model?

The agro-export model it is a liberal economic model, implemented at the end of the 19th century and the beginning of the XX in many Latin American countries, but with particular determination in Argentina. It proposed the maximum use of the national territory to maximize agricultural production, and their destination was mass export as the main economic activity of the country.

In other words, it was an economic model that, instead of pursuing industrialization, a complicated aspiration given the state in which most Latin American countries remained after their wars of independence, focused on agricultural production and agricultural raw materials to sell to the great industrialized nations, such as the United States, Great Britain and France.

The emergence of this large-scale agricultural model largely coincided with the formalization of the Latin American nation states, so that it was one of the first modes of organization of Latin American economic production after independence. He aspired to make the most of the region’s fertile land extensions, especially in territorially vast countries such as Argentina.

In any case, the role of exporters of raw materials was, in essence, the same that the Latin American colonies played with respect to the European metropolis during the colonial period, so that it was a continuation of the colonial economy of the region, despite the damage and the high cost of the independence struggle.

Characteristics of the agro-export model

agro-exporter transport technology model
This model brought technological improvements also in transportation.

Broadly speaking, the agro-export model was characterized by the following:

  • He focused productive energies on agriculture, which in many cases resulted in the modernization of production techniques and the transportation routes of raw materials.
  • It had huge foreign financial and technological investments, as well as with a foreign workforce (especially European) that came to America in spurts, looking for new opportunities.
  • This model confirmed the integration of the young Latin American republics to capitalism, albeit from a position of early economic dependence.
  • It was a liberal model which accompanied the founding and expansion of the states, hand in hand with the allocation of land to private producers and ranchers.

Causes of the agro-export model

Exporting raw materials to booming and expanding markets such as the United States it was, at that time, an insurance bet, given that the industrial powers had dedicated a good part of their peasant labor to industrial work during the 18th and 19th centuries. For this reason, the consumption of Latin American agricultural products allowed them to continue with the production of manufactured goods with high added value.

As we have said, this model was the logical continuation of the economic role that the Spanish-American colony had played in past centuries, for which reason it encountered very little resistance among political and economic actors, in general. What’s more, the large amount of arable land and abundant foreign investment promised a bonanza economic that would bring about the modernization of production techniques.

Consequences of the agro-export model

agro-exporter immigration model
The need for labor in the agro-export model favored immigration.

The agro-export model initially brought significant economic and productive growth. In addition, it produced a rapid modernization of transport routes and agricultural production mechanisms.

Literacy grew there was significant European immigration as peasant labor, and in cases such as the Argentine, beef jerky, sheep’s wool and other export products were replaced by cereals such as corn and wheat. This produced a boom in per capita income that exceeded those of more developed countries, such as Germany or Italy.

But the economic boom did not bring with it a model of industrialization that would allow these nations to keep up with the industrial powers, but rather relegated these countries to the role of raw material suppliers, dependent powers European and American who bought their products.

Thus, after the First World War and the Great Depression of 1929, the consequences were immediate: When raw materials became cheaper, agricultural-only countries headed for recession economic, unable to compete in industry with Europe and the United States. The latter forced many Latin American nations to reinvent their economic model, some with greater success than others.

Advantages of the agro-export model

The main advantages that the agro-export model demonstrated for the Latin American nations were:

  • A gigantic economic growth, which resulted in wealth generation and modernization of production and transport techniques.
  • Improvement of the local quality of life, combat against illiteracy and growth in the demand for work that, as there were few workers, translated into better salaries.
  • Enrichment of local culture, already diverse, thanks to massive immigration from Europe and other continents.
  • Continuous incentive to foreign investment, which brought with it new technologies, new knowledge and new development dynamics.

Disadvantages of the agro-export model

agro-export model disadvantages
The latifundio led to the enrichment of landowners and the impoverishment of peasants.

At the same time, the model assumed the acceptance of the following disadvantages:

  • Implementation of a foreign-dependent economy, centralized in agriculture and imported products made by industrial powers (sometimes with their own raw material).
  • Brought a regional economic imbalance, to the extent that the sectors linked to agriculture enriched much more than the others, especially the ranchers and landowners.
  • It promoted the latifundio and land tenure, which in the long run brought with it the enrichment of the landlords and the impoverishment of the working peasants.
  • It did not promote industrializationQuite the contrary, condemning the region to a technological and productive delay that would bring historical consequences.

Example of an agro-export model

There is no better example of the agro-export model than Argentina in the last thirty years of the 19th century. In fact, it was called “the granary of the world”, given the immensity of the volume of agricultural goods produced and exported by the South American nation.

Between 1880 and 1915 the Argentine governments openly promoted the planting of grains and cereals, going from an average export of around 20 tons per year to the imposing figure of 400 tons.