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Uruguay: The Rise of a Monocentric Economy

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Roots of Underdevelopment

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Abstract

We explore the impacts of urban primacy on Uruguayan economic development, with a focus on the late nineteenth and early twentieth century. We argue that Montevideo’s primacy produced a dualistic economic geography (city-port/countryside) without intermediate towns of an even remotely comparable scale. The lack of a network of cities translated into physical infrastructure, notably through a dendritic railway design where would-be secondary towns were not connected to each other. Primacy became an obstacle to the development of a more diversified territorial division of labor and limited the emergence of new clusters, especially in sectors associated with industrialization. Such a monocentric economy was ill-suited for structural change, contributing to Uruguay’s mediocre twentieth-century growth record and its continued divergence from the world’s leading economies.

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Notes

  1. 1.

    Browning (1989) offers a geographer’s overview of the concept. For an introduction to the empirical research on ‘urban primacy’ in developing economies, see Overman and Venables (2005). The extensive economic literature on urbanization, urban concentration, and long-term development is reviewed in Davis and Henderson (2003).

  2. 2.

    The ‘rank-size rule’ suggests that city sizes within national economy are distributed in a lognormal fashion (the second city in a country should be half as large as the first and so on). For a discussion of the rank-size rule and urban hierarchy in economic history, largely in reference to Europe, see Wrigley (2004: 253–257) and de Vries (1984: 85–120).

  3. 3.

    The best single study of the genealogy of Montevideo’s primacy is Rial and Klaczko (1981). Readers not familiar with the major themes and trends of Uruguay’s economic history will find a concise and clear overview in Bértola (2008).

  4. 4.

    A recent history of Colonia do Sacramento under Portuguese rule (the Spanish gained definitive sovereignty over the town in the Treaty of San Ildefonso in 1777) can be found in Prado (2015: 13–33).

  5. 5.

    In the decades before the start of the independence revolution in the northern shore of the Plata (1811), Montevideo’s population rose to about 14,000; the other sizable settlements, also in the coastal south, were Colonia (5000) and Maldonado (3000) (Pollero 2016: 225; Gelman 1998: 246–247; Biangardi 2013: 25).

  6. 6.

    See, for a study that does find subnational fortunes persisting even since pre-colonial times in other Latin American cases, Maloney and Valencia Caicedo (2016).

  7. 7.

    For an authoritative review of this revisionist literature (known often as the ‘renaissance of rural history’ in Argentina and Uruguay), see Garavaglia and Gelman (1995). A recent overview focusing on Uruguay can be found in Moraes (2020).

  8. 8.

    An ‘agglomeration shadow’ appears when a major city ‘prevents’ new cities from emerging in its vicinity or existing ones from growing beyond a low threshold because it can effectively act as a cost-effective supplier of goods and services; see Fujita et al. (1999: 147).

  9. 9.

    Own calculations on the basis of the latest household survey microdata available (June 2020) (INE 2021).

  10. 10.

    For the structure of the Uruguayan railway network in 1913 and the evolution of the construction process, see the Uruguayan Statistical Yearbook for 1913–1914.

  11. 11.

    These stations were Bella Vista, Yatay, Sayago, Peñarol, and Colón.

  12. 12.

    In fact, a very high share of the passenger traffic in the Uruguayan railway system would probably consist of commuting trips between stations within Montevideo or its surrounding areas. Unfortunately, the absence of information about destination stations prevents from knowing the importance of those trips with any precision.

  13. 13.

    Within Latin America, the largest economies (Brazil and Mexico) as well as the other two southern cone countries (Argentina and Chile) also experienced early industrial growth during the First Globalization; see, for an overview, Bulmer-Thomas (2014: 117–151).

  14. 14.

    Detailed classifications of occupational data taken from the statistical appendix to Travieso (2020a). Previous estimates of occupational structure based on the 1908 census broadly coincide on this point; see Rama (1969), Klaczko (1979), and Rial (1981).

  15. 15.

    For two excellent empirical tests of ‘home market’ effects in explaining the within-country location of manufacturing, see Rosés (2003) and Davis and Weinstein (1999). These effects are of course related to the classic concept of ‘external economies of scale’: the cost savings achieved by firms producing in a large local economy (Vernon 1962).

  16. 16.

    The economic history literature on the New Zealand-Uruguay comparison is vast; for recent overviews, see Álvarez (2018) and Travieso (2020b: 272–277).

  17. 17.

    For a recent historical analysis of the key ideas and policies of batllismo (named after José Batlle y Ordóñez, president 1903–1907 and 1911–1915) see Caetano (2013); for a classic English-language study, see the trilogy by Vanger (especially Vanger 1980).

  18. 18.

    See Zubillaga (1977) for a historical overview of Uruguay’s administrative divisions and Rodríguez Miranda and Magri (2017) for a study of recent changes in the institutional framework for regional and local governments.

  19. 19.

    The birth of Flores (the last departamento to be founded) is emblematic: its territory was taken from the departamento of San José in 1885 by order of president Máximo Santos before leaving office; this resulted in the creation of a new Senate seat, which he then stood for and won (Pivel Devoto and Ranieri 1956: 356).

  20. 20.

    On the theoretical mechanisms linking rent-seeking and tariff protection with urban primacy, see Ades and Glaeser (1995) and Krugman and Elizondo (1996).

  21. 21.

    Population taken from 2011 census. For incomes: own calculations from household survey data from June 2020 (INE 2021); results are almost identical for household income and personal income. The coronavirus pandemic does not seem to have affected the mean income gap between the capital and the rest of the country.

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Authors and Affiliations

  1. Carlos III University of Madrid, Getafe, Spain

    Emiliano Travieso

  2. University of Barcelona, Barcelona, Spain

    Alfonso Herranz-Loncán & Alfonso Herranz-Loncán

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  1. Emiliano Travieso
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Correspondence to Alfonso Herranz-Loncán .

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  1. Vancouver School of Economics, University of British Columbia, Vancouver, BC, Canada

    Felipe Valencia Caicedo

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Travieso, E., Herranz-Loncán, A. (2023). Uruguay: The Rise of a Monocentric Economy. In: Valencia Caicedo, F. (eds) Roots of Underdevelopment. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-38723-4_15

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