Argentina, which had been insignificant during the first half of the 19th century, showed growth from the s up until that was so impressive that it was expected to eventually become the United States of South America. During the second half of the 19th century, there was an intense process of colonization of the territory in the form of latifundia. In , during Sarmiento 's presidency, total debt amounted to 48 million gold pesos. A year later, it had almost doubled. In , a currency reform introduced a bimetallic standard, which went into effect in July The profitability of the agricultural sector attracted foreign capital for railways and industries.
The first Argentine railway , a ten-kilometer 6. The scarcity of labour and abundance of land induced a high marginal product of labour. The government subsidized European immigration for a short time in the late s, but immigrants arrived in massive numbers even with no subsidy. Celman's successor, Carlos Pellegrini , laid the foundations for a return to stability and growth after the restoration of convertibility in All the same, between and the s, fiscal instability was a transitory phenomenon.
Argentina, like many other countries, entered into a recession following the beginning of World War I as international flows of goods, capital and labour declined. As a consequence, investable funds became increasingly concentrated in a single institution, the Banco de la Nacion Argentina BNA , creating a financial system vulnerable to rent-seeking. However, unlike its neighbors, Argentina became capable of still having relatively healthy growth rates during the s, not being as affected by the worldwide collapse on commodity prices such as Brazil and Chile.
Similarly, the gold standard was still in place at a time almost all European countries had abandoned it. Automobile ownership in the country in was the highest in the Southern hemisphere. For all its success, by the s Argentina was not an industrialized country by the standards of Britain, Germany or the United States. Exports of frozen beef, especially to Great Britain, proved highly profitable after the invention of refrigerated ships in the s.
Ranchers responded by switching from pastoral to arable production, but there was lasting damage to the Argentine economy. Argentina abandoned the gold standard in December , earlier than most countries. In response to the Great Depression, successive governments pursued a strategy designed to transform Argentina into a country self-sufficient in industry as well as agriculture. In , the armed forces forced the Radicals from power and improved economic conditions, but political turbulence intensified. Unemployment resulting from the Great Depression caused unrest.
Early Peronism was a period of macroeconomic shocks during which a strategy of import substitution industrialization was put into practice. The expansive macroeconomic policy, which aimed at the redistribution of wealth and the increase of spending to finance populist policies, led to inflation. During the first Five-Year Plan, various public works and programs were executed, with the aim to modernize the country's infrastructure.
Between and , a network of gas pipelines, which linked Comodoro Rivadavia with Buenos Aires , was built. During this period Argentina's economy continued to grow, on average, but more slowly than the world as a whole or than its neighbors, Brazil and Chile. In the s and part of the s, the country had a slow rate of growth in line with most Latin American countries, while most of the rest of the world enjoyed a golden era.
Wage growth beginning in pushed prices up.
Arturo Frondizi won the presidential election in a landslide. Krieger's tenure witnessed increased concentration and centralization of capital, coupled with privatisation of many important sectors of the economy. After , in a radical departure from past policies, the Ministry of Economy announced a programme to reduce rising inflation while promoting competition, efficiency, and foreign investment. A gradual reversal in trade policy culminated in the military announcing import substitution as a failed experiment, lifting protectionist barriers and opening the economy to the world market.
In the early s, per capita income in Argentina was twice as high as in Mexico and more than three times as high as in Chile and Brazil. By , the difference in income between Argentina and the other Latin American countries was much smaller. That exposed the fact that domestic firms could not compete with foreign imports because of the overvalued currency and long-term structural problems. After the relatively stable years of to , fiscal deficits started to climb again, and the external debt tripled in three years. However, in and , the real exchange rate appreciated because inflation consistently outpaced the rate of depreciation.
In August , after Mexico had announced its inability to service its debt , Argentina approached the International Monetary Fund IMF for financial assistance, as it too was in serious difficulties. That provided some breathing space as it was not before late September that an agreement was reached between the IMF and Argentina.
Perón in power
In , the Argentine austral replaced the discredited peso. The next move by the authorities was to launch the Primavera Plan in August , a package of economically heterodox measures that foresaw little fiscal adjustment. The IMF refused to resume lending to Argentina. The Peronist Carlos Menem was elected president in May After the collapse of public enterprises during the late s, privatisation became strongly popular.
For example, before the telephone privatisation, to get a new line it was not unusual to wait more than ten years, and apartments with telephone lines carried a big premium in the market. After privatisation the wait was reduced to less than a week. In , economy minister Domingo Cavallo set out to reverse Argentina's decline through free-market reforms such as open trade. A risky policy which meant at a later stage Argentina could not devalue. With risk of devaluation apparently removed, capital poured in from abroad.
Although the economy was already in a mild recession at this point, conditions worsened substantially after the devaluation of the Mexican peso during December Argentina fell into a deep recession in the second half of , triggered and then compounded by a series of adverse external shocks, which included low prices for agricultural commodities,  the appreciation of the US dollar, to which the peso was pegged at par,  the Russian financial crisis , the LTCM crisis and the devaluation of the Brazilian real in January In December , a series of deposit runs began to have a severe impact on the health of the banking system, leading the Argentine authorities to impose a partial deposit freeze.
The ensuing economic and political crisis was arguably the worst since the country's independence. Critics of the policy of economic liberalization pursued during the Menem Presidency argued that Argentina's economic woes were caused by neoliberalism , which had been actively promoted by the U. In January Eduardo Duhalde was appointed president, becoming Argentina's fifth president in two weeks.
An attempt by the Kirchner administration to impose price controls in failed as the items most in demand went out of stock and the mandatory prices were in most cases not observed. In early the administration began interfering with inflation estimates.
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The lates recession hit the country in with GDP growth slowing to 0. In November , the government laid a plan to cut utilities subsidies to higher income households. Rising inflation and capital flight caused a rapid depletion of the country's dollar reserves, prompting the government to severely curtail access to dollars in June By May , private forecasts estimated annual inflation at The Argentine government refused, causing the country to default on its debt again.
Layoffs in the private sector have increased five-fold. In April , monthly inflation in the country rose to 6. It is estimated that in the province of Buenos Aires alone 40 thousand pork producers would be in crisis. One of Macri's promises during the campaign was the elimination of Income tax for workers, saying "During my government workers will not pay tax on profits". The unique condition of Argentina, as a country which had achieved advanced development in the early 20th century but experienced a reversal, has inspired a wealth of literature and analyses on the causes of this progressive decline.
According to Di Tella and Zymelman , the main difference between Argentina and other settler societies such as Australia and Canada was its failure to seek adequate alternatives to compensate for the end of geographical expansion with the definitive closing of the frontier. Duncan and Fogarty argued that the key difference lies in the contrast between the stable, flexible government of Australia and the poor governance of Argentina. More recently, Taylor pointed that the relatively high dependency ratio and the slow demographic transition in Argentina led to a reliance on foreign capital to offset the resulting low savings rate.
The ultimate cause of Argentina's historical backwardness appears to be its institutional framework. From Wikipedia, the free encyclopedia.
The Political Economy of Argentina, 1880-1946 (St Antony's Series)
Widely studied economy with periods of growth and hyperinflation. Part of a series on the. Indigenous peoples in Argentina Inca Empire. Colonial Argentina. Civil Wars. Rise of Argentine Republic. Post-WW II to National Reorganization Process.
Table of contents
Return to democracy. See also: Patagonian sheep farming boom. Main article: — Argentine great depression. Main article: Presidency of Mauricio Macri. Main article: Argentine monetary crisis. Argentina portal. October Financial Times. Retrieved November 4, Agriculture and economic growth in Argentina, — International Food Policy Research Institute. April 19, Archived from the original on January 19, The Economist.
June 3, Archived from the original on December 14, Retrieved August 1, A History of the Global Economy.
The conservative restoration and the Concordancia, 1930–43
From to the Present. Cambridge University Press. The Hispanic American Historical Review. A brief history of Argentina. Infobase Publishing. The bureaucrats of Buenos Aires, — amor al real servicio. Duke University Press. University of Chicago Press.
History - Argentina - problem, growth, system, power, policy
Archived from the original PDF on January 16, Argentina and the United States, — SUNY Press. The Invention of Argentina. University of California Press. National Bureau Of Economic Research.