difference the 1971 winner of the Nobel Prize in Economics Simon Kuznets stated
this based on their economic performance there were four kinds of countries
developed countries developing countries Argentina and Japan
folks both Argentina and Japan are currently facing many economic problems
but the steps taken to reach their present situations they couldn't have
been more different their paths have been so different that we want to take a
closer look so what steps of Argentina and Japan followed to get to where they
are today how are they similar how are they different
how did Japan a rocky islands without natural resources managed to progress
while Argentina with its vast territory and the huge amounts of resources
struggles to keep its state out of chronic crisis well we're going to tell
you all about it in today's video pads
awesome country's doomed to success and others to failure our natural resources
a blessing or a punishments well let's get back to the first half of the 20th
century how is Argentina's economy compared to Japan's 100 years ago
folks in the early 1900's the differences between Argentina and Japan
were extreme their situations were the opposite of what they are today
Argentina was a much more developed country than Japan it said natural
resources and educated population and open trade with the rest of the world
was a world power it was a country that was wealthier than the United States
meanwhile Japan was a much less developed country that had very
traditional institutions
if we had been asked for a forecast at that time we've probably all picked
Argentina to go on and become the richest country on the planet while
Japan would struggle for subsistence
bradford differentiated these two countries the most was their natural
resources while the argentine territory is full of natural resources mother
nature was not so generous with the japanese japan is a small chain of rocky
islands with very little habitable territory it's exposed to all kinds of
natural disasters and it has very few natural resources
as if that weren't enough in 1945 World War two ended with the detonation of two
nuclear bombs over Japan the only ones that have ever been used in war
from that moment on the country it was devastated city's infrastructure and
industry worked to a large extent destroyed over three million Japanese
especially young Japanese lost their lives and more than ten million soldiers
returned home from the front with no jobs
in 1945 nobody absolutely nobody would have bet on Japan's future
but practically all of us would have bet on Argentina's future you see at the
beginning of the 20th century Argentina was also something of a beacon in Latin
America his economy was among the top ten in the world had the highest social
development levels it's rail network was growing rapidly education system was
highly advanced and the country held a large share in the global capital market
on some examples well in those years Argentina is one of the main recipients
of direct European investments it was one of the largest primary goods
exporters in the world and the second most popular destination for immigrants
from the old continent yes at this time German spaniards and italians migrated
on masse to argentina in other words we're talking about a country that saw
the united states as its equal that explains why at the time when US aires
was on the list with the london new york or any other major city in the world and
on top of that it managed to stay after the second world war saving many lives
and many dollars so don't tell me you would have a better large antenna about
my last scent you would hold on just a second because things soon began to
change take a look at this chart at the beginning of the 20th century
Argentina's GDP per capita was three times higher than that of Japan this gap
remained until the end of the Second World War however from the 50s onwards
there was a significant change suddenly Japan began catching up at full speed so
much so that by the end of the 1960's the Land of the Rising Sun had already
surpassed Argentina since then the gap has only increased
so the question is what happens what did Japan do that Argentina didn't well
listen up
Japan versus Argentina Argentina's territory is seven times
larger than that of Japan while Argentina's population is only about one
third of Japan's
the density isn't the only difference between the two countries as we've
already mentioned the Argentine territory went compared to Japan is much
more fertile and also boasts a lot of natural resources of all kinds oil
natural gas gold silver copper coal iron lithium Argentina still has practically
everything
Argentina is ranked sixth on the list of countries with the largest amount of
mining resources in the world
of course being blessed with natural conditions doesn't make production any
simpler during the 19th century argentinian investors poured a lot of
money into machinery and infrastructure so that the country could become one of
the largest food producers in the world by the beginning of the 20th century in
the 1800's Argentina's political system and institutions such as property rights
or freedom of trade encouraged investors to invest their money in the country
meanwhile during the second half of the 19th century Japan made similar changes
we've already talked about this on visual politic and I'm gonna leave a
link to that video in the description below this was known as the Meiji
Restoration however as changes were slower in the
natural conditions harder the results by the beginning of the 20th century was
not so impressive and then well along came the Second World War
the ends of this conflicts left Japan a ruined broken and devastated country
while Argentina which although it had suffered during the crisis of 1929 was
still a prosperous country there was even a creditor for England and many
other nations that had participated in the war so with a solid financial
position many natural resources are well educated population no threat of war or
conflicts at growing middle class and a huge global demand for food the
prospects for the country of tango couldn't have really been better but
let's go back to the main question at what point did Argentina and Japan begin
to take such a difference in divergent paths you see after the Second World War
Japan in one way or another began to slowly assimilate and copy many of the
elements that had made the United States prosper
this had a lot to do with the u.s. occupation under the command of General
Douglas MacArthur leader of the supreme command of the Allied forces these
occupation forces aims to demilitarize and democratize Japanese society to do
so the Constitution was rewritten and many of the us's institutions were
copied such as the elimination of the power and of the government size the
protection of private property and the freedom of business commerce in short
Japan opened itself up to the world
meanwhile Argentina did the opposite in February 1946 juan domingo perón became
the country's president with him came a real model change for the South American
country suddenly the state began to increase its size and its influence on
the economy and small aspects of Argentinian society a lot of countries
were nationalized especially those dedicated transport energy in
communications tons of the government's controlled and a lot of restrictions on
foreign trade were approved in addition there were a lot of regulations of all
kinds in practice parent transformed Argentina into a kind of army rules by
the orders of its presidents
to carry out his plans the liberal constitution of 1853 was replaced by a
paradise one in 1949 in the first 10 years of perón's leadership that
government distortions of the state's economic activity was so great that
Argentinians eventually had to eat black bread and ration their meat consumption
this is not because of a vegan VAD or anything like that but because of
scarcity Argentinian producers opted to stop producing rather than comply with
the price controls or the exchange rates that were established by the government
and on top of all of that prawns exit from power didn't really cause any
change yes some economic freedoms were reintroduced and some controls were
suppressed but the states wait its size and its interference in the country's
economic activity did not received public spending high taxes and inflation
had come to stay
folks the changes prompt set in motion in Argentina became definitive and to
this we understand the political instability caused by eight secession of
military coos these are a crisis that happens in Argentina over and over again
every five to ten years the results as you all know is that today Argentina is
no longer one of the ten richest countries in the world it's not even in
the top 25 it's not even in the top 50
according to data from the International Monetary Fund's and taking price
differences into accounts in purchasing power parity terms Argentina ranks 62nd
and the countries with the highest GDP per capita that is it's at the same
level as countries like Iran Belarus or Gabon
and everything indicates that after the last crisis it's gonna fall even further
down the list today 32% of Argentinians that's one in three live in poverty
Argentina is one of the few countries in the world where poverty is increasing
instead of decreasing anyway folks that's how Japan and Argentina revolved
in several videos on this channel we've seen in detail how Argentina and Japan
became what they are today but now the question is can we extract some key
points from comparing these two well I believe we can check this out
the key points let's see by comparing Argentina and Japan we can extract three
main ideas that I think we should always take into account the first and let's
make this really clear is it a country isn't rich or poor because of its
natural resources or its size it's useless to have huge amounts of
resources if they aren't properly exploited in fact Japan proves that a
country can be very rich without having natural resources or a lot of territory
what matters folks what really makes a difference in wealth generation is a
country's level of capital investment and work innovation and productivity are
much much more important than Natural Resources the second idea is that a
country that reaches a high level of development and prosperity is not
guaranteed to sustain that level indefinitely
well that doesn't exist per se it has to be created continually and its creation
needs to adapt to the changes that occur in the world otherwise you could have a
similar experience to Argentina which went from being the richest country on
earth to 60 second place and falling of course such a decline in fortune is bad
for everyone especially for the most disadvantaged members of the population
punishing a productive economy is always a bad idea the third idea is that wealth
isn't achieved by government spending like crazy public spending can only be
financed through three methods more taxes more public debt or running the
bill printing machine that is increasing inflation all three methods cause
nothing but crisis and poverty you have to be very clear about where public
spending will end if you want a country to prosper and if you don't believe me
you can see another good example of this in Venezuela anyway folks this was a
comparison comparing how Argentina and Japan evolved into what we can learn
from them I really hope you enjoyed this video please do hit that like button if
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always I'll see you in the next video