Argentina Crisis Of Argentina 's Emerging Economy

With a population of almost 42 million, massive stretches of land and terrains, Argentina is by no means a small country. Argentina makes up the whole southern half of South America, covering 2.8 million square kilometers (Geographia). Argentina contains some of the world 's tallest mountain ranges, vast deserts, and large scale waterfalls (Geographia). Being the eighth largest country in the world with a large amount of natural resources, Argentina has the potential to join the leaders on the global stage. Although having latent potential, Argentina lacks the ability and experience to meet the requirements of stabilizing itself as a country. Argentina’s potential is accurately presented through its distinct sense of nationalism through certain aspects of culture and its ability to make effective foreign policy, but Argentina’s strong points are quickly overshadowed by its inability to stabilize itself economically and construct effective domestic policies.

When Christopher Columbus discovered the coast of Venezuela, he thought he had encountered an earthly paradise, today that grace land is ravaged by famine, inflation, scarcity, violence, social and political conflicts; “social implosion [being] driven by economic collapse, caused by shockingly self-destructive policy making” (Toro, 1). Venezuela’s antidemocratic government and its lack of foresight has created a severe economic crisis crumbling health care system and a lack of basic necessities and is jailing innocent people who object.

The Argentine Process Of National Reorganization, more commonly known as the “Dirty War,” was a period from roughly 1974 to 1983 when the president was deposed and the entire government was taken control of by the military. This decade of civil destruction, turmoil, and human rights violations was part of the military’s plan to rid the country of the radical left and communist subversion. The junta spoke of a “New Argentina,” one full of prosperity for all its citizens, order and no longer chaos, they preached they would bring back Argentina’s glory days. For all this talk of an Argentina that would be once again a world power, no one knew of the atrocities the military would commit in the process. They did not think of the innocent lives

The Ministry of Economy dictated the pesificación, by which all bank accounts denominated in dollars would be converted to pesos at an official rate-at less than half their new value. This measure angered most savings holders and attempts were made to declare it unconstitutional. Here, depositors protest the freezing of their accounts. Several thousand newly homeless and jobless Argentines found work as cartoneros, or cardboard collectors. An estimate in 2003 put the number of people scavenging the streets for cardboard to sell to recycling plants at 30,000 to 40,000 people. Such desperate measures were common given the unemployment rate of 24%. The country defaulted on its $132 billion in debt. After Nestor Kirchner became president in 2003, Argentina was able to renegotiate its debt and pay it off by 2006.

On January, 2002 after more instability the government announced an economic plan devaluing the Argentine peso which had been pegged to the dollar for a decade. The devaluation plunged the banking industry into crisis, caused unemployment to reach 20% and wiped out much of the savings of the middle class, plunging millions of Argentineans into poverty.

While Argentina reported commendable economic growth and development in the early 20th century, it faces significant economic challenges due to increased disparities in income inequality. In fact, evidence shows that Argentina was one of the richest countries on the globe, with low poverty rates and high per capita income. Although the current economic status of Latin America is well-off compared to many regions of the world, the income inequality witnessed in many countries in the area has been instrumental in exacerbating the already heightened poverty levels. According to UNDP report, Argentina has managed to register unique human development

What gains their ground so sensational is Latin America's history of populist financial aspects. "Macroeconomic unsteadiness has long been a striking highlight of the Latin American economies," compose market analysts Dombusch and Edwards. "Inflationary upheavals, equalization of installments emergencies, and agonizing adjustment endeavors

In an economy which is globalized to such an extent it is difficult to know all the linkings, and the connections between events and institutions are often impossible to predict. Many countries in Eastern Europe, for instance, are still heavily reliant on Greek banks, and if those banks collapse the EU faces the risk of a chain reaction of financial turmoil that could easily spread to the rest of the global economy (TIME, June 29, 2015).

Venezuela currently has a population of 31 million people. Venezuela is still growing in numbers, and it’s getting harder for the government to provide health care for their people. Venezuela’s population is 1.9 times larger than South America. The country is mainly urban, and the wealth rate is declining. The resources per person needs to be the same, and as of now that’s not the case. Overall fertility rates are failing in Latin America. In 2015 the population was six times the size that it was in 1950, and the United Nations projects that it will be nine time larger by 2050, and still growing at that point, despite the long-term decline in fertility. (Latin America) Although there are many economic crisis in Venezuela, this isn’t preventing them from having children in higher numbers. This could be the shortage of health care.

Globalization in Argentina has affected the country in numerous ways. There are many positives and negatives. Until 1999 globalization seemed to be the reason the country was so prosperous. Pope John Paul II stated, “From the ethical point of view, can be positive or negative. In fact, there is an economic globalization which brings some positive consequences, as the phenomenon of efficiency and increased production and, with the development of relations between countries in economic, can strengthen the process of unity among peoples and make a better service to the human family. However, if globalization is ruled merely by the laws of the market applied to suit the powerful, leads to negative consequences. Such, for example, the

The financial crisis in Argentina during the late 1990s and early 2000s resulted in severe issues with foreign debt, inflation, unemployment, and political turmoil for the country. Argentina not only suffered a currency crisis, but also suffered a political crisis. Fallout from the economic collapse was so severe the Argentinean population resorted to civil unrest and protest, which in turn exacerbated Argentina’s problems at the turn of the century. While other issues related to this financial crisis such as the impact on the lives of the Argentinean population or the political turmoil and corruption are certainly worthy of discussion, this paper will focus on the currency crisis and the Argentinean government’s role in this economic

There is no definite answer as to why Argentina went into such an economic crisis, but looking at its tumultuous history gives clues and possible causes that could have contributed. When Argentina first gained independence from Spain, all of the provinces fought each other until a very tenuous democracy was formed in 1860. Along with a considerably shaky government, economic policies generally caused more harm than good. At the time budget deficits were handled by printing more money, so inflation was a constant issue that still continues to affect Argentina to this day. In the late 1800s and early 1900s, Argentina’s economy began to increase, due to rising exports of beef and wheat to Europe, made possible by the new technologies of railroads and refrigerator ships. During the 1930s, when Argentina was going through difficulties with its trading partners, it switched its economy to an “import substitution” economy—a “largely closed, self-sufficient economy, with high tariffs and extensive government direction.” This made the exchange rates become highly overvalued, which led to a lot of importation, but not enough exportation to balance out the debt. There was low economic growth and even more frequent inflation; percentage wise, inflation was in the triple digits from 1975 on. However, in 1989, Carlos Menem became president, and

Prior to becoming a democratic country, Argentina was exposed to a military dictatorship. Under this regime the Economy Minister was Jose Alfredo Martinez de Hoz whose neoliberal economic platform sided along to anti-labor, monetarist policies and financial liberalization. As a result of this regime, Argentina accumulated a $45 billion foreign debt. This lead interest rates to exceed trade surpluses, unemployment to increase and higher inflation rates. In 1985 a democracy was reestablished once President Raul Alfonsin was elected. Alfonsin’s government intended to stabilize the economy by establishing the austral, a new currency. However, this was unsuccessful because the government could not continue to fund its debts. The cost of utility increased significantly as real wages fell by almost half, increasing uncertainty across the country and causing inflation to increase from “200% a year in 1988 to 5,000% in 1989” (Brooke).

In addition, in the decade leading to 1994, the government saw an increasing expenditure for various projects in the country. The result was an increased reduction in the funds of the government. Another more important factor was that the country experienced hyperinflation from 1985 through 1993. This period was also characterized by significant increases in debt loads of the financial sector, as well as the low oil prices that also contributed to the weakening of the Mexican economy (Mathur, 18). One would argue that the Mexican

Budgetary policy is lacking of rigor due to the conflict among departments and the restricted import policy. Argentina’s policy remained a controversial conflict between executive department and congress. Because the Kirchner government enjoys a high popularity and controls the majority seats in congress, it passed some controversial legislation, and those actions bring criticism within the country. For instance, in 2012, Kirchner used her executive power to force congress to comply the federal budget bill that congress previously had more power to plan the budget bill than Kirchner’s Government (Fausto, 2010). The action weakened budget’s rationality because the government could budget without consulting the congress. As a result, government budget increased the deficits to 2.9% due to many exemptions and relying on customs duties in 2012 (Argentina: risk assessment, n.d.). Furthermore, more strictly import restrictions would deteriorate Argentina’s government budget’s deficits. More importantly, using administrative power (import restriction policy) to create an international trade surplus would become a time bomb in Argentina.