Yet Another Tale of Two Cities: Buenos Aires and Chicago
Filipe Campante and Edward L. Glaeser
NBER Working Paper No. 15104
June 2009
JEL No. D0,N0,R0
ABSTRACT
Buenos Aires and Chicago grew during the nineteenth century for remarkably similar reasons. Both
cities were conduits for moving meat and grain from fertile hinterlands to eastern markets. However,
despite their initial similarities, Chicago was vastly more prosperous for most of the 20th century.
Can the differences between the cities after 1930 be explained by differences in the cities before that
date? We highlight four major differences between Buenos Aires and Chicago in 1914. Chicago was
slightly richer, and significantly better educated. Chicago was more industrially developed, with about
2.25 times more capital per worker. Finally, Chicago’s political situation was far more stable and
it wasn’t a political capital. Human capital seems to explain the lion’s share of the divergent path
of the two cities and their countries, both because of its direct effect and because of the connection
between education and political instability.
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