The apparent consumption of fossil energy as an indicator of modernisation in Latin America by 1925: a proposal using foreign trade statistics

"In the interpretation of the process of economic modernisation of the last two centuries, it is widely accepted that the productivity gains achieved through the development of new energy carriers (from wood to coal, and later to petroleum and electricity) play an important role. From this viewpoint, the Industrial Revolution has been interpreted as the “process that allowed the exploitation at great scale of new energy sources by means of inanimate converters” (Cipolla, 1994) and it has been argued that coal – and later oil – was “a strategic item in the rise and diffusion of the industrial civilisation” (Wrigley, 1962). It is within this context that it has also been claimed that “economic history makes it evident that the industrial standing of any country may be gauged, with a fair degree of accuracy, from its development of mechanical power” (U.S. Department of Commerce, 1931). Of the 32 countries that constitute Latin America and the Caribbean at present, we have historical national accounts for a handful of them. In the absence of comparable macroeconomic indicators for most of the Latin American economies beyond the 1930s, this paper presents an estimate of the apparent consumption per head of coal and petroleum for 25 countries of Latin America and the Caribbean for the year 1925. This allows us to rank the Latin American countries and observe the relative distance to each other. We use energy consumption as an indicator of economic modernisation. By 1925 most Latin American countries were importers of coal and petroleum products, mostly from the UK, the US and Germany; Mexico, Venezuela, Peru and Colombia also provided oil within the region. We use both the foreign trade statistics from the Latin American economies and that of their principal trade partners, plus data on home production of coal and petroleum for constructing our estimates. Ours is not the first attempt to construct the apparent consumption of energy in Latin America in historical terms. Three other studies present historical series of energy consumption in Latin America. These are the one by Raul Prebisch (CEPAL, 1951), a second attempt by CEPAL (1956) and finally Darmstadter et al (1971). Yet our endeavour goes far beyond the number of countries included in those studies for the early part of the twentieth century: Prebish gives data for 4 countries, CEPAL only includes data for 7 countries before 1930 and Darmstadter offers window estimates for 1925 and 1929 for 11 countries. In addition in our paper, the year 1925 is used as a test year in order to analyse the weakness and advantages of the alternative sources; we contrast their reliability, in order to build up a robust methodology to be applied (backward and forward in time) in future research for the estimation the apparent consumption of fossil fuels from 1870 to 1945. As a result, the paper contributes to several literatures. On the one hand, it offers a contrast of the foreign trade statistics of the Latin American countries with those of the advanced economies (UK, USA and Germany), showing that the former are far more reliable than previously thought by the literature. On the other hand, it contributes to environmental and energy history studies by doubling the number of countries for which energy consumption estimates was previously available in Latin America. Finally, it contributes to the wider economic history debate in Latin America providing the basis for a comparative analysis of modernisation performance beyond the few countries for which historical national accounts are available."