THE ECONOMIC CONSEQUENCES OF ARGENTINE INDEPENDENCE
After de facto Independence from Spain in 1810 the economy of Buenos Aires enjoyed a dramatic improvement in its terms of trade, in the order of 400%. The removal of mercantilistic restrictions imposed by Spain as well as the reduction in transport costs produced a significant and gradual change in the prices of exportables and importables, as local prices converged towards international prices. The response of the Argentine economy was along the principles of the Theory of Comparative Advantage, that is, the production of exportables increased and the supply of goods competing with imported goods fell. Because exportables were capital and land intensive, and importables labor intensive, the rewards of capital and land increased sharply and wages fell.