Argentina was the richest country in the world

Disponible en español

The recent update of the Maddison Project data states that Argentina ranked No. 1 in the GDP per capita ranking in the years 1895 and 1896.

In the textbook “Economics”, written by the Nobel Prize in Economics Paul Krugman together with his wife Robin Wells, in the chapter on introduction to macroeconomics, they make a small comparison between the evolution of Canada and Argentina. With the title “A story of two countries”.  “One of the most informative contrasts is between Canada and Argentina, two countries that, at the beginning of the 20th century, seemed to be in a good economic position. From today’s point of view, it is surprising to realize that Canada and Argentina looked pretty much alike before the First World War. (…) Economic historians believe that the average level of per capita income was almost the same in the two countries until the 1930s.”[1]

Nobody disputes that Canada today is in a better economic position than Argentina. The GDP per capita is almost triple that of our country. Probably the most used series for per capita GDP is that of the World Bank, which covers from 1960 onwards.

Building a series of years before 1960 is a major challenge due to the lack of data. Someone who undertook this challenge was the economic historian Angus Maddison (1926-2010). After his death, his work was continued by the University of Groningen (The Netherlands) under the name of Project Maddison.

Anyone who saw interviews with economists such as José Luis Espert or Agustín Etchebarne is likely to have heard that “Argentina was the 5th country in the GDP per capita ranking”. Indeed, these economists used the Maddison series, where if for each year of the series we order the countries with the highest to lowest GDP per capita (as if setting a ranking), we see that in 1896 Argentina reached the 5th place. In that year we surpassed the United States, Belgium, the Netherlands and Germany, but we were below Australia, New Zealand, Switzerland and the United Kingdom. Although we were not far from these either. Argentina surpassed Australia in 1820, and New Zealand in 1850, but we never surpassed the United Kingdom and Switzerland. In 1896 Argentina had 84% of the GDP per capita of the United Kingdom, and 69% of that of Switzerland.

Anyone who said that Argentina was once the most prosperous country in the world did not have the data to support that claim, until now. Recently updated the data of the Maddison Project, the latest version, makes a revision for the values of 13 countries in the period 1872-1910. With the new changes, in general, the United States rises and Belgium, the Netherlands, Switzerland and the United Kingdom lowered their ranking.

As shown by the data of the last version, from this moment on, everyone can say that Argentina was once the most prosperous country in the world. Years 1895 and 1896 was ranked No. 1 in the ranking. Yes, in those two years, we were better than Australia, New Zealand, United Kingdom, Switzerland, United States, etc.

What happened between 1896 and today does not fit into this article. When, exactly, was the beginning of the decline Argentina is a topic of eternal debate. But since I borrowed the beginning of a Krugman text, I also borrow it for closing. “However, after the Second World War, the Argentine economy performed poorly, mainly due to political instability and poor macroeconomic policies.” [1]

[1] Economics 4th edition. Krugman, Wells.
More info about the Maddison Project 
Written by Javier Anderson.

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