Argentina were an extreme free market country in the late 1800s with little taxation or duties. They had essentially open borders and were one of the main immigration countries of the world in that period. All of this grew the economy for it to end up at the turn of the century as I believe the 6th richest country in the world.
What also happened though was a huge influx of workers from Europe. This was during the a large wave of unionizing and radicalization in Europe, this movement was brought with the immigrants across to Argentina. This spawned a period with many strikes, bombings etc throughout the 20s. Strangely enough that in itself did not lower the economy. What it did do was create enough of a backlash (remember 9/11) that a coup was made possible and the whole downward spiral started.
Read more on Wikipedia http://en.wikipedia.org/wiki/History_of_argentina#Yrigoyen.2...
Since then Argentina has had essentially a mix of either military rule by juntas who carried on strong protectionist policies or democratically elected governments carrying on strong protectionist policies (the Peronistas). The current state of the economy is mainly due to the common factor here "strong protectionist policies".
The current government is carrying on the exact same idiotic policies. Argentina has many great programmers. Many of them are now working for US startups bringing in valuable foreign currency. What is their main tool? Well naturally a MacBook Pro.
In the US the cheapest 13" model costs $1199. In Argentina that costs 8,249.00 Pesos (US $2,162.25). If you're lucky enough to have US dollars it's only $1889. Now the current protectionist peronista government have just approved a further %35 electronic gadget tax that will go on top of this. See more http://econotrix.com/archives/000648.html
You have heard of import duties, well this current government tried to impose export duties on the agricultural industry the number one foreign exchange earner. I could go on.
As always while it is really cool to be able to plot to sets of data on a graph it is not terribly useful with some individual explanation.
I think this that the reason why this study is so attractive to certain people is that it plays into a variation of a classic flaw intelligent people have. Hayek called it the Fatal Conceit. Basically I am more intelligent than the masses, thus I know better. This translates into "I am intelligent, if you disagree with me you must be dumb". In the case of the study author and just about all intellectuals further mutates into "My ideas are obviously right. The masses ideas are obviously wrong. I'm educated. Lets educate the masses to the level where they are at my level so they agree with me."
I am all for education, but I'm much more in agreement with PG's approach to education than the traditional form that tends to be pushed.
Developing countries with poor education often have large classes of people working in informal businesses. These people are often not educated. But in almost all of these countries (where the culture allows it) the parents are pushing their children to be educated. (eg http://econotrix.com/archives/000640.html). Economic development will increase education unless there are certain cultural issues (such as not educating girls etc) that halt it.