Location of agricultural output and economic geography. Uruguay in the long-run (1870-2008)

The aim of this article is to examine the influence of geographical conditions on the territorial distribution of agrarian output in Uruguay in the long-run. Our analysis covers seventeen time-benchmarks (1870, 1884, 1890, 1900, 1908, 1916, 1924, 1937, 1943, 1951, 1956, 1966, 1970, 1980, 1990, 2000 and 2008) by considering the possible explicative power of those factors closely related to “pure” geographical features (land endowments, climate, places where provinces are situated in the territory) in contrast to the second nature causes (those related to agglomeration economies, infrastructure and transport). For this purpose, we used a database that includes provincial value-added of agriculture and a set of variables possibly related with the location of production, and we tested our hypotheses with panel data and R² decomposition through a relative importance method, estimating the contribution of each variable to the fit of the model. Our results show that first-nature and second-nature factors compete in explaining the uneven territorial distribution of agriculture and that their effects changed over time. During the 20th century, second-nature factors gained influence as technological change favoured the rise of intensive agricultural activities (particularly the dairy industry and industrial crops). Furthermore, we found evidence of the increasing role of large markets (cities in the Uruguayan littoral, the south of the country, Montevideo, and key border region in neighbouring countries such as Buenos Aires, Entre Ríos, and Río Grande do Sul) in concentrating these agrarian productions. Second-nature causes emerged as key factors, with market potential becoming the predominant factor over time.