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Institutions and endowments: state credibility, fiscal institutions and divergence, Argentina and Australia, c.1880-1980

Mitchell, Andrew Hunter (2006) Institutions and endowments: state credibility, fiscal institutions and divergence, Argentina and Australia, c.1880-1980. PhD thesis, The London School of Economics and Political Science (LSE).

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Abstract

The thesis compares Argentine and Australian fiscal systems from the late nineteenth to the late twentieth centuries. It uses institutionalist and endowments approaches to evaluate the importance of state credibility and taxation on long run economic development. After rapid convergence in the early twentieth century, Argentina and Australia clearly diverged in the latter twentieth century. Divergence emanated from different institutional experiences, which ultimately originated from dissimilar experiences of state credibility. State credibility is the extent to which society trusts the state to act in its interests. Fiscal institutions are a clear and comparable measure of state credibility over time as they frankly express underlying political economy. As Argentina and Australia were once similarly successful settler economies with comparable geographic prospects for development, the comparison promises to transcend geographically deterministic explanations for development. Geography primarily consists of factor endowments and location. In fact Argentina was better placed to succeed in geographic terms than Australia. Yet Australia, not Argentina, secured the status of a developed country. Australia and Argentina exemplify the relative insignificance of geography in shaping development. Divergence resulted from a failure of Argentine institutions to generate sufficient space for negotiation and compromise, and a ‘latent civil war’ was entered from the 1930s until the early 1980s. A key finding of the thesis is that divergence in fiscal institutions, especially differing capacities to embed progressive systems of direct taxation was crucial to divergence in development. This finding is based upon the discovery of new evidence and the harmonisation of fragmented time series which enable comparison over a long period of time. Argentina and Australia took different paths in the latter half of the twentieth century due to distinct institutional environments and their legacies for social consensus and development.

Item Type: Thesis (PhD)
Additional Information: © 2006 Andrew Hunter Mitchell
Library of Congress subject classification: D History General and Old World > DU Oceania (South Seas)
F History United States, Canada, Latin America > F1201 Latin America (General)
H Social Sciences > HC Economic History and Conditions
J Political Science > JF Political institutions (General)
Sets: Departments > Economic History
Supervisor: Lewis, Colin M.
URI: http://etheses.lse.ac.uk/id/eprint/835

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