How to Do Business in Argentina Essay

Argentina was adopted national constitution in 1853 and was changed in 1949 by the government of President Juan Domingo Perón. Now, new constitution was again changed and approved in 1994. Argentina is a presidential democracy, with universal suffrage and compulsory voting. According to current constitution, the President is the head of state and

The reforms caused a period of success followed by worse conditions. These policies made the rich get richer and the poor get poorer. Towards the end of the 1990s the country experienced rising unemployment and decreasing wages. The privatization of industries in addition to the international debt and government corruption led to many citizens distrusting the government and failure to pay taxes thus keeping the problems still at large. Unfortunately, the fragile Argentine economic infrastructure, while seemingly strong, was not able to withstand the downturn in the world economy after the severe correction of the both the Dow Jones Industrial Average and NASDAQ stock markets in the United States in March 2000 and the terror attacks of September 11, 2001. The widespread economic failure caused the Argentine peso to become devalued and this caused extreme inflation in prices. In June of 2002 the peso was valued at just $0.26 of a U.S. dollar. The unemployment rates skyrocketed as well hitting over 25% in most parts of the country and the poverty rate increased from 30% in 1999 to over 50% in 2002. The benefits of globalization in Argentina were short-lived but still vital in the countries development.

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

Argentinian culture is a mixture of many other cultures and it has been largely influenced by Spanish colonialism and immigrants from all around the world and mostly from Europe. Buenos Aires is the capital city of Argentina. The city is also known as the cultural capital and it represents political, economic and cultural heart of the country. Argentinian culture is spreaded in lots of areas from dance to language and it has very unique sides which makes the culture extremely interesting.

Hola, te voy a contar un poco sobre Argentina. You probably wondering what and why I began my introduction in Spanish. First I began my translating what I said, Hi, I’m going to tell you a little bit about Argentina. Argentina’s national language is Spanish. The capital of Argentina’s is Buenos Aires, its flag is planned with horizontal line between two colored lights blue straight lines. The color in the flag mean undecided and the white colors represents silver according to some of Argentina’s residents.

very similar to that of the U.S. however the GDP per capita is significantly lower in Argentina than in the U.S.

The first de facto government after the swearing in of the Argentina Constitution of 1853 , was that of General Bartolome Mitre, who took office after winning the battle of Pavon in September 1861.

Despite the overall success of the International Monetary Fund and the United States to prevent additional contagion from the Mexican peso crisis throughout the broader global financial systems, the crisis nevertheless proved devastating to the Mexican economy and its population. The devaluation of the peso and capital flight plunged the Mexican economy into a deep recession, national GDP dropped by 6.2% throughout 1995, and multiple banks collapsed as poor quality assets and fraudulent lending practices came to light, forcing the financial sector to bare the brunt of the crisis (Pereznieto, 11). The average Mexican, however, would argue otherwise and angrily proclaim that it was them that suffered the most. Many Mexicans could no longer keep up with the rising interest rates and thousands of mortgages went into default, resulting in widespread repossession of homes. Prices rose by 35%, hyperinflation resulted in a real wage decrease of 25-35%, and unemployment rose to 7.4% in 1995 from its 3.9% pre-crisis the year prior (Pereznieto, 15). In the formal sector, over a million people lost their job, real wages decreased by 13.5%, and overall household incomes plummeted by 30% (Pereznieto, 15). Extreme poverty in Mexico grew to 37% in 1996 from 21% in 1994 (Pereznieto, 16). The growing poverty in Mexico also impacted urban areas more than rural areas (Pereznieto, 15). Urbanites relied on a healthy labor market, good access to credit, and

Argentina’s turbulent history of economic crisis are often attributable to government mismanagement and fluctuating commodities prices, which have resulted in the millions to live below the poverty line. Repeated recessions of the 1970s and 1980s, the hyperinflation of 1989-90, the economic crisis of 2001. Argentina is a long way from the turmoil of 2001, but today’s mix of rising prices, wage pressures and the mistrust of the peso have prompted Argentineans to become overrun by a sense of nostalgia.1

Argentina’s trouble with debt began with a military coup d’etat in 1976. The “Regime”, as the military government was called, ruled for seven years, during which it drastically increased the country’s public debt. When the Regime was overthrown, what was a reasonable $7.8 billion foreign debt had become a $46 billion debt. Much of this increase can be attributed to the nationalization of loan debts owed by private companies. Repayment of these debts became the responsibility of the Argentine people, who had neither approved nor benefited from the loans. The illegally inherited debt left the newly elected government with the dilemma of having to stimulate a troubled economy while devoting a significant portion of GDP to servicing the debt.

Following a steep currency devaluation and the largest sovereign debt default in history, Argentina entered a deep recession with high unemployment and social upheaval

In 1979, the United States started to record and monitor the levels of inflation and as such, the interest rates were increased by the Federal Reserve Board to contain it. The central banks in Europe also raised their interest rates. The increase in interest rates caused a rapid fall in commodity prices which perversely affected Mexico’s economy and other developing countries. Due to the combination of the above factors, there was a fall in the income from Mexican exports, a rise in the cost of financing debts that are in foreign currency and exchange rate market pressures. In august 1982 the government of Mexico under the leadership of Jose Lopez Portillo (1976 -1982) put a ban on foreign debt services and started a renegotiation process. The renegotiation was finalized by President Carlos Salinas de Gortari in 1989. The suspension of payments to foreign debts services led to a further increase in interests causing foreign investors to panic and forcing other developing countries in Latin America to also stop making payments on their debts. This led to a financial crisis in many countries and thus asked for financial aid from the world bank and International Monetary Fund. To receive financial

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).

D R Congo can be compared to the Indian state Madhya Pradesh, the population and literacy rate being similar. These two demographic parameters form the base for the development of an Economy. The major contributors to the GDP of Madhya Pradesh are similar to that of D R Congo. Madhya Pradesh however has got a better GDP. Comparing D R Congo to Madhya Pradesh will help understand the pros and cons in each

While the country economic progress has received international recognition, their development hasn’t been easy as it has faced major critical moments to their economic success. For example during the 1982 recession the gross domestic product dropped by 14.1 % which resulted to overvaluation of their currency which made the currency more vulnerable to harsh changes in international economy. This changes led to decrease in capital which decreased availability of finance meant to finance investments. According to Buchi this led to an increase in unemployment by 23% and decrease in salaries and wages by over 10% (Buchi 10). Years later Chile has been able to experience economic growth especially in the 1980s compared with other countries in South America who underwent similar crises.