Argentina's long term economic performance between 1880 and 2000 (convergence with the rich followed by divergence) can be understood in terms of the economic and political consequences of its peculiar factor endowments. Skewed endowments meant huge gains from trade during the First Globalization boom; but, conversely, disintegration of world commerce in the Depression was a heavier blow for such a naturally specialized economy. The extreme protectionism, characteristic of the post-war period, was related to the country's peculiar economic structure: comparative advantages in food production and disadvantages in (labor-intensive) manufacturing implied that closing the economy was a political winner, though it eventually hampered growth. The road to openness followed in the last quarter of the 20th century would have meant, correspondingly, an increase in inequality. Attempts to moderate it through debt accumulation and exchange rate appreciation destabilized the economy and contributed further to Argentina's comparative decline.
