the Republic of Argentina is undoubtedly one of the most iconic countries in the
world it is widely recognized for the great
quality of their meats as well as their exotic landscapes it is the third
leading economy in Latin America just behind Raziel and Mexico in South
America has always had a historical economic and social rivalry with one of
its most important competitors and partners Brazil about 115 years ago
Argentina was one of the richest countries on the planet in reference to
their GDP per capita a century of military cooze populist government's
Wars ineptitudes and other circumstances marked the economic degredation of
Argentina from being one of the richest countries in the world to one of the
most stagnant economies in the world and one of the worst on the continent just
after Venezuela in a way our Giunta has always been accompanied by the constant
economic swings in the last decades the Argentine economic history is much too
complicated to summarize in a 10 minute video however a recap the most important
events in recent times in order to explain what is going on with Mauricio
Macri the current President of Argentina who is soon seeking re-election the
outcome of the next election is not at all certain due to recent economic and
historical events today at the hands of Mauricio Macri poverty in Argentina has
increased the country is still in a deep recession that has reduced the GDP by
more than 2 percent and the country has the highest inflation in the Americas
just after Venezuela the decline of Argentina has politicians lawyers
economists and academics scratching their heads many are still trying to
understand the country's decline in order to seek out possible solutions for
its recovery today we will go over one of the most controversial issues in
Latin America the rise and decline of Argentina without further introduction
let's begin
let's go back into the past it is the Year 1910 just four years before the
beginning of the First World War but what was the context in the region more
than 100 years ago is it similar now with Mexico and Brazil as the leading
countries in Latin America in fact it wasn't the main power at the time was
Argentina also one of the world's most advanced countries their GDP was nearly
half the entire Latin America combined it was among the top ten economies in
the world just behind Australia the UK and the United States but still ahead of
France Germany and Italy the GDP per capita of Argentina was almost triple
the Japanese GDP however today it's the exact opposite
at this point Argentina was the largest economy in Latin America and in terms of
wealth was six times richer than Brazil these levels of economic wealth were
maintained even after the first world war until the mid 1930s where we hit a
major turning point after this year Argentina's economy degraded in
comparison to the most developed countries in the world although
Argentina had periods of strong growth in the last century especially during
the boom of the commodities between 2004 and 2014 and their populations still
being richer than most of Latin America its position as one of the most vibrant
economies of the world was just a distant memory
today the GDP per capita of Argentina is only 43% of economies such as France
Germany and the UK even in the region Chilean earth-wide fared way better the
political symptoms of the decline are also clear if Argentina seemed to enjoy
stability in the pre-war era its history since then has been marked by a
succession of military coups the first came in 1930 others followed
in 1943 55 60 to 66 and 76 the 1989 election marked the first time in more
than 60 years that a residing President had handed over power to an elected
successor at the polls even if more than 30 years have passed since the end of
the military dictatorship democracy in Argentina has not led to a stabilization
of the country many citizens of Argentina use the example of a pendulum
to describe the radical changes of social economic policies of the last
three decades from loose economic policies conducted in the 1980s the
economic liberation pushed by Uncle Sam and the 90s and back in the new
millennium under the presidency of nestor kirchner and then of his wife
Cristina Fernandez de Kirchner but pendulum is more stable than Argentina
they experienced recessions in 70s and 80s with the hyperinflation of 1989 and
1990 and another economic crisis in 2001 explaining the case of Argentina is a
true aid nigma for economists before decades have tried to understand the
origin of the problem and sense economics is considered as a social
science it depends on man and society unlike the exact sciences which means
that economic effects will differ from country to country Simon Kuznets a Nobel
Prize winning economist stated that there were four types of countries in
the world the developed countries the non developed countries Japan and
Argentina this is because the case of Japan and Argentina are unique in the
world on one hand we have Japan which experienced a process of accelerated
industrialization and less than 60 years and became the second global economy at
the beginning of the year 2000 in the 60s however Japan and Argentina had
exactly the same GDP per capita but by 2013 the Japanese GDP per capita was
five times better than Argentina's GDP per capita there are many countries that
have managed to copy or imitate Japanese industrialization and there are many
theories of what went wrong in Argentina Argentina is comparable to someone who
has been shot poisoned stabbed and suffocated all at the same time it's
hard to determine what really killed the poor victim and it is absolutely
necessary that we determine what caused the situation that has dragged the
country's economy for the last few decades the Economist Raphael de tella
explains that in general that could be three main reasons for Argentina's
decline the first one explains that Argentina was rich a hundred years ago
very rich but it was not modern this could have caused difficult adjustments
when there were external shocks to the economy when Argentina was rich in the
1910s it was due to their natural resources but their industrial base was
not yet well-developed the site an example in 1914 Renaud's aires in
chicago were the perfect examples of vibrant cities in america both were key
cities for the transport of ships and goods and while Chicago had a literacy
rate of 95% Buenos Aires only had a low rate of just under 75% the elites were
not very interested in the education of the population in fact until the 1940s
Argentina had one of the highest primary school enrolment rates in the world
but secondary school enrolment rates were far below other first world nations
without a population that is educated in the secondary and tertiary
level Argentina could not create competitive industries however the
technology of that golden age allowed it to export meat like never before
in fact from the Year 1910 and five following years Argentina went from
exporting twenty five thousand to four hundred and eleven thousand tons of
meats Argentina had used foreign technology to grow but never produce
their own at the same level as other world powers half of the country's
capital was in foreign hands in 1913 which added to the country's wealth
however much of this money was not invested back into the country in the
long term this was not going to guarantee the country to remain within
the top world powers and in the 60s the country began to fall behind when France
and Japan finally exceeded Argentina's GDP per capita the second theory
explains that Argentina effectively became rich by placing bets on
agriculture free markets and England which at the time was one of the great
world powers and in fact its largest trading partner if any of these sectors
collapsed Argentina would have many problems to adjust their accounts and in
fact this is exactly what happened when the first world war hit the debt levels
increased with it thirdly England was also at a decline at
the time and it began to prefer to trade with the Commonwealth nations instead of
its South American partner in a way twentieth-century Argentina was
desynchronized with the rest of the world it had a growth model based on
free trade exports but the world wars were strong external shocks for
Argentina after world war ii when the developed countries began to open free
trade again argentina had already become a closed economy and it remained under
the command of juan domingo perón so in the year 1946 an institution's a
controlled national trade was created along with more regulations and more
autocratic policies that increase the price of food which was a great benefit
for exporters but a detriment for ordinary citizens the income of the
richest 1% of Argentines was strongly correlated with exports of
crops and livestock as the urban and working-class population grew so did the
electoral districts susceptible to parents promises to support the industry
and strengthen workers rights many analysts believe that some sectors of
the Argentine economy were capable of competing internationally such as
agriculture but other sectors were too degraded due to the intrusion of the
states there were even some markets where Argentina was a leader which
started to break down during the Kirchner era they tried
lower the price of food products president nestor did this by limiting
the export of wheat meat and other foods as well as an implementation of strong
export taxes the state was able to obtain foreign currency but food
production sectors decline because they could not export to their full potential
which caused many farmers to stop planting food or having livestock the
perverse effects of the intervention have been amply demonstrated in the
kirshner era according to the US Department of Agriculture Argentina was
a fourth largest exporter of wheats in 2006 and by 2013 had fallen to 10th
place the country had lost 10 million heads of cattle and neighboring
countries such as Brazil and Uruguay quickly surpassed Argentina in the
international trade market meanwhile Brazil had become the world's largest
exporter of beef and poultry in the last two years today
Argentina is a sixth leading exporter of beef with 2.7 million heads of cattle
Paraguay which is 17th on the same list has 600 thousand heads of cattle or the
equivalent to 1 head of cattle for every 11 citizens nowadays beef is one of the
few sectors of economic activity with the current administration which had its
position since December 2015 and show favourable figures the president at the
beginning of his mandate reduced taxes on exports and according to official
data in the first five months of 2018 Argentina exported 60% more beef than in
the same period in 2017 so that translates to one hundred and twenty one
thousand two hundred and seventy seven tons against 75 thousand nine hundred
and thirty-four however in late 2018 the president re imposed heavy taxes on
soybean exports according to balance accounts with strong austerity mandates
even so Argentina's problems are much deeper
than a simple issue of exports the third explanation may be the distress of the
financial markets in Argentina explaining each of the crises and
recessions of the country would take many videos one of the most important
crises was in 2001 when the country went into a default a transfer of payments
and a large part of it was owed to the International Monetary Fund because of
this default Argentina was always marked as a black sheep and thanks to the boom
of commodities it managed to pay back the debt to the IMF
in 2007 under President Kirchner's command after 2007 his wife assumed
power and public spending was increased and lar
subsidized many elements of daily life from public services and even football
broadcasts one of the most controlled situations was the exchange rate which
created all sorts of practical problems such as the rise of the black market
dollars which heavily distorted prices thus a parallel market of the dollar and
the Argentine peso was created but as it happened in Venezuela was a fixed
exchange rate imposed by the government it was only logical that a parallel
market of US dollars would appear this changed when McCree decided that the
peso should fluctuate freely against the dollar thus being the exchange rate when
he decided to do this the Argentine peso devalued by more than 30 percent and
when he released the currency inflation was at around 25 percent and this
involved risks such as the reduction of the citizens purchasing power and an
increase in inflation and this is exactly what happened now Argentina has
an inflation that exceeds more than 50 percent having the highest inflation in
the continent just after Venezuela Argentina's government insists that its
problems lie in liquidity and not in the solvency to meet its financial
obligations with the lack of liquidity due to a continuous string of deficits
president Macri promised to reach a zero deficit but it
was forced to go to the IMF in May the IMF issued a loan for more than 50
billion dollars to Argentina in exchange for even stronger austerity measures the
president announced that this would help investors to have more confidence in
Argentina but only 7 months after the IMF approved the loan the Argentine peso
remained at its weakest point in the last four years and today while
Argentina is in recession opponents of the current administration argue that
its policies of austerity and social cuts have sunk the country into a
recession new taxes the release of the peso and inflation of 50 percent have
led the country into another crisis this is a very complicated issue which drags
decades of history dictatorships Wars fake intervention bank bailouts defaults
and the IMF the third largest economy in Latin America is the most important
country to be in a crisis within the continent Argentina is part of the g20
20 most industrialized countries in the world but many are questioning
Argentina's membership in the organization arguing that its economy is
far too weak compared to the other 19 countries obviously we can't cover
everything in this one video and another follow-up video
will be made to explore possible solutions for the crisis from several
different points of view so what do you think about the current crisis in
Argentina do you think that the president is making the necessary
adjustments or do you think he is further worsening the situation and were
you surprised to learn that Argentina was once one of the five richest nations
on the planet I hope you enjoyed this video don't forget to Like and subscribe
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