Global Affairs Review

The Center for Global Affairs, New York University

economic crisis

Argentina: A historical analysis of the state’s fiscal Gordian Knot

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By Nahjae Nunes

Nobel prize-winning economist Simon Kuznets is rumored to have once remarked that there were four types of countries: “the developed, the underdeveloped, Japan, and Argentina.” This paper aims to justify why Argentina deserves a category unto itself.

Photo by Angelica Reyes on Unsplash

Introduction

If you google “economic crisis” there is a 67% chance that one of the first three suggestions will be “…in Argentina”. Approximately 188,000 web pages exist that have used that term verbatim. Indeed, what would constitute a “financial crisis” in other states is “stasis” for Argentina, as the nation is no stranger to pecuniary ruination. In total, the country has defaulted nine times on its sovereign debt amid economic crises. No other state has ever defaulted this much, and its inflation often resides in the altitudes of double digits, even as high as 5,000%, spurring several large currency devaluations (Bartenstein, Maki, & Gertz, 2019).

Yet, this hapless tale of economic defeatism was not always a part of its status quo. A little over a century ago, Argentina was one of the wealthiest countries in the world, with a GDP per capita on par with France and Germany (Glaeser, Di Tella, & Llach, 2017). By the denouement of the 19th century, all the economists concurred: Argentina had a blindingly bright future ahead. “Rich like an Argentine” was even a common phrase at the time (Neumann, 2008), and another, “Argentina potencia,” (“power” in English) is still acknowledged by Argentinians today. The name of the country is –or was– indicative of the lucrative prowess of the land.      Argentina’s etymology comes from the Latin term “Argentum”, which means silver. The provenance of this name can be traced back to the first voyages of the Spanish conquerors to the Río de la Plata. Native inhabitants greeted them with silver presents, resulting in the sobriquet the “Silver Hills” and eventually through the 1853 National Constitution, “the Land of Silver” or Argentina (Sawe, 2019).

After the promulgation of its 1853 Constitution, Argentina underwent strong economic growth and institutional modernization, which propelled the nation into the ranks of the world’s 10 wealthiest countries by 1913 (Glaeser, Di Tella, & Llach, 2017). Akin to Australia and Canada, Argentina was an exporter of primary goods, and until the mid-twentieth century, it followed a development path parallel to their economies. When compared with other areas in Latin America, Argentina had a small population density, and a promising stock of natural resources, which occasioned sizable export-driven advancement in defiance of the country’s geographic isolation from key international markets (Gallo, 1970; Duncan and Fogarty, 1985; Di Tella and Platt, 1985).

When considering Argentina’s promising economic prowess, the question remains: what caused a society that achieved astonishing wealth within five decades of succeeding its independence from Spain to plunge onto a trajectory of comparative decline? And how does the IMF fit into this puzzle?

A weak economic foundation

There is no monolithic explanation despite multiple theories that have been employed to explain Argentina’s degradation from a highly developed country to the developing, middle-income one it is now (The Economist, 2015). The general thrust of these theories emphasizes the role of poor leadership, conflict of political ideology, fiscal imprudence, ill-timed decision making, and institutional mismanagement. In order to understand how the past decade of global economic activity combined with economic decisions made by the Argentine government over the past decade has shaped their current position in the international system, we must evaluate a synthesis of accounts centered around domestic political forces and dynamics, leadership styles, incidental “Black Swans”,  as well as the conjunction of contextual interactions regarding structural forces, beginning in the mid 20th century.

In the early 1900s, fiscal abasement was unimaginable. Though wars raged on, first in Europe, and subsequently across the globe, life was still marvelous for the Argentine upper class which erected grand edifices and factories (Glaeser, Di Tella, & Llach, 2017). The country’s moneyed class indulged in equine escapades and summered in France, where they could splurge on the latest fashion trends. Life was not bad, either, for the proletariats, who had no issues finding decent employment, housing or education. In those days, Argentina’s economy was regularly growing by approximately 5% annually. In addition, beyond boasting the highest per capita income globally, Argentina also was home to prima facie a seemingly infinite supply of raw materials and natural resources such as water, gas, oil and –by no surprise– silver. Argentina also made a fortune exporting meat, grain and leather to war-torn Europe. The nation, the eighth-largest territory on Earth currently and encompassing all climate zones, was also once an international breadbasket, with ideal conditions for agriculture (Glaeser, Di Tella, & Llach, 2017).

Here we can identify a key phenomenon known as the ‘“resource curse,” variant of another economic malady known as the “Dutch disease”; it occurs when a state that has rich natural resources does not innovate or diversify their economy, consequently becoming “unentrepreneurial” as a great deal of money is already being made. As a result, there are no competitive forces against those vested interests. As Plato penned, “necessity is the mother of invention” and so if no need exists, then there is no need to invent, leading to a deficiency of innovation and giving way to corruption.

The major problem stemming from this notion is that Argentina never became an industrial power. Under President Perón’s administration, the government adopted a nationalist and protectionist policy of import substitution, began producing all manner of commodities locally to avoid buying them overseas, and implemented high tariff barriers, thus stymying foreign trade and investment. Argentine industry was cultivated and shielded –much to their expense– until the dictatorship of 1976 ended that policy (Yakovlev, 2016). This, in tandem with other factors explored throughout this paper, precipitated the economic conundrum that the state now grapples with.

At the end of World War II, the Argentine peso was thought of as one of the most stable currencies in the world, on par with the US dollar and British pound (Glaeser, Di Tella, & Llach, 2017). At that time, Argentina was the richest and most powerful country in the region, far ahead of their northern counterparts in São Paulo. An end to prosperity was nowhere in sight, and Argentina became the land of opportunity for work-hungry refugees, predominantly from Spain and Italy. There were more telephone lines in Argentina than in Japan, more automobiles per person than in France, and a grand Buenos Aires subway that bustled below the city’s surface (Barrionuevo, 2008).  Yet, beyond all the glittering facades, Argentina’s regression was already well underway. This can be almost single-handedly attributed to the man who won the presidential election of 1946 and later influenced many of his successors, whether conservative, moderate or liberal: Juan Domingo Perón.

The ex-army general guaranteed the Argentine populace another path between socialism and capitalism by laying the economic foundation for the adversity of the years ahead; the vestiges of which still endure today (Pahowka, 2005). The Peronist guiding principle was “profligacy,” a term      which describes the excessive, wasteful use of money and natural resources. And then, when nothing else worked, to go into debt, print money – thereby increasing demand within market limited supply – and let inflation ride sky high. By 1949, Peron had increased state expenditures threefold, and by 1955, when he was removed from power, the number of state employees had doubled. Even Eva, Peron’s wife, reviled as a rank populist by some but extolled as the “angel of the poor” by others, allegedly spent, frivolously, a great constituent of the revenue earned from the sale of grain and beer for personal gain, acts for which she was denounced (Reed, 2018).

 Inflation intensification

Nothing epitomized Peron’s economic psychosis more than the 150 million GBP (approximately 487 billion USD today) acquisition of Britain’s battered railway system, which really was just exorbitant ramshackle equipment, and 26,720 miles of derelict rails in severe disrepair. Yet, in true Argentine style, with fireworks, the dulcet sounds of church bells, and shrill locomotive whistles, this asinine purchase was commemorated as a national achievement. After a few years elapsed, the fiscal ramifications of its procurement had filtered through, and Argentina fell into its first deep economic crisis (Pahowka, 2005).

Although foreign debt only equaled $8 million in 1967, substantial borrowing began. The principal drivers of this were Argentina’s military dictatorship (from 1976 to 1983) and the 1982 Falklands War, in which not only were they vanquished, but also cost the military government its hold on power. Hyperinflation soon became the new buzzword in Argentina, eventually pushing Raul Alfonsin, the country’s first post-dictatorship president, out of office in 1989 (Reed College, n.d).

Thereafter, the economic situation only continued to exacerbate: The next president, Carlos Menem (1989 to 1999), a neoliberal Peronist, ushered in an era of “pizza and champagne” in the ’90s, a term coined to describe the wave of privatization in which profits were concealed and claimed by arcane entities (Vyas, 2021). One evil was replaced by another, as hyperinflation was swapped for a 1-to-1 peg of the peso to the USD. A “pegged currency” is simply one tethered to another currency. This is usually enacted to curtail inflation, though at the cost of the circumscription of sovereignty. This phenomenon is witnessed amongst the Danish krone & the Euro, as well as the Hong Kong dollar & the USD.

Menem slashed social spending and reprivatized the railway – unsurprisingly at an underrated price – and instead of progressively decreasing the peso’s pegged value, he held fast to the overvalued currency. This, combined with the Argentine pro-cyclical fiscal policies and extensive foreign borrowing, left the country unable to deal with a number of economic shocks (Vyas, 2021). Ultimately, this crisis gave rise to the recrudescence of an embattled currency, sovereign debt, and banking calamity.

Between 1992 and 1999, state expenditures soared a full 50 per cent. By 2001, Argentina’s snowball of credit (once $8 million) had amassed into a staggering, elephantine mountain of debt of $160 billion, and in December of the same year, Argentina declared bankruptcy (Governance and Social Development Resource Centre, 2009). Five presidents came and went within 14 days. The 2001-2002 Argentine financial crisis climaxed in the collapse of the Convertibility Plan of 1991, the freezing of bank accounts, and the largest foreign debt default in the history of global economics (Takagi, 2021).

By May 2002, 40% of the total workforce was either unemployed or underemployed (Governance and Social Development Resource Centre, 2009). Since then, Argentina never totally recovered from these path-dependent events which, in part, is what makes the country path-dependent.

In this tumultuous period, Eduardo Duhalde was appointed president in January of 2002. He appointed the man credited with stabilizing the process and the exchange rate at a moment of great rising in hyperinflation: Roberto Lavagna, Minister of the Economy (The Economist, 2005). After the default of 2001, the Argentine economy grew by 6% a year in six of the seven years from 2005 to 2011 (Mount, 2011). This was, in part, the result of a commodity price boom, and the government’s ability to keep the value of the currency low, encouraging industrial exports.

Néstor Kirchner became premier in May of 2003. During the mid-2000s, 20% of Argentina’s export revenue came from exporting unprocessed soybeans, soybean oil and soybean meal, thrice as much as the joint share of the conventional exports of wheat and beef (Richardson, 2008). Export taxes vacillated between 8% and 11% of the Kirchner government’s total tax receipts, approximately two-thirds of which emanated from soy revenue (Richardson, 2008). Taxes on imports and exports boosted government spending from 14% to 25% of GDP. Unsurprisingly, the import and export taxes dissuaded foreign investment, while high spending pushed inflation to the 20% margin (Mount, 2011).

An effort made by the Kirchner administration to levy price controls in 2005 proved futile as the goods most in demand were limited in supply. In several of those cases, much of the mandatory prices were ignored (Clarin, 2005). An assortment of economic sectors was also re-nationalized, including but not limited to the National Postal Service in 2003, the San Martín Railway line in 2004, the water utility providing for the Province of Buenos Aires in 2006 and Aerolíneas Argentinas in 2009. In the early months of 2007, Kirchner began meddling with inflation estimates by censoring and fining independent economists whose prognostications sullied the image his government endeavored to maintain on the global scene.

By December of the same year, Cristina Fernández de Kirchner, the widow of former President Néstor Kirchner, was elected president. The following year, the rural sector galvanized against a government resolution that, had it been implemented, would have augmented the export tax rate on soy from 35% to 44.1% (Richardson, 2008). Eventually, the new taxation regime was rejected, and official Argentine statistics are believed to have considerably underreported inflation since 2007, as Kircher carried forth Néstor’s policy on independent economic journalism. In 2008, Kirchner’s government purchased private pension funds for almost $30 billion, allegedly to shield the pensions from declining stock prices globally, though critics propound the true intention was to increase money in the budget (BBC, 2008).

These pension funds underwent large losses as a result of the Great Argentine recession, and by 2008, the state subsidized over three-quarters of the funds’ beneficiaries (Bermúdez, 2008). The late-2000s recession struck the country in 2009 with GDP growth decelerating to 0.8%. 2010 saw the return of high GDP growth and the economy grew by 8.5% (Cerruti, 2011). In April, Economy Minister Amado Boudou crafted a debt swap package for the owners of over USD 18 billion in bonds who did not partake in the ‘05 Argentine debt reformation process (Wray, 2010). In late 2010, the biggest new natural gas deposits in three and a half decades were discovered in the Neuquén province and by the third quarter of 2011, the unemployment rate decreased to 7.3%  (Reuters, 2011).

In November 2011, the government laid a plan to cut utility subsidies to higher-income households (Webber, 2011). By mid-2011, credit was outpacing GDP by a wide margin, raising concerns that the economy was overheating (The Economist, 2011). Argentina began a period of fiscal austerity in 2012 (La Voz, 2012). In April 2012, the government announced plans to expropriate Yacimientos Petrolíferos Fiscales (YPF), a state-owned energy company that produces an array of oil, gas, and petroleum products and services, despite the opposition of some energy experts who claimed that YPF’s Spanish partner and major holder, Repsol, had not done its duty to provide financial support for research and land exploitation, as well as allegedly only sending profits to Spain, forsaking YPF’s economic growth (Buenos Aires Herald, 2012). Escalating inflation and capital flight caused a swift depletion of the Argentine dollar reserves, stimulating the government to rigorously reduce access to dollars in June of 2012.

The establishment of capital controls, consequently, gave rise to the advent of a black market for dollars, called the “dólar blue,” at superior rates rather than the official exchange rate (Parks, 2014). By May 2014, independent predictions reflected annual inflation at 39.9%, one of the highest rates in the world (Romig, 2014). In July, a ruling from a New York court demanded that Argentina recompense the outstanding holders of the bonds that defaulted in 2001, which by then were primarily American vulture funds, before they compensated any of their exchange bondholders. The Argentine government rejected the court’s assertion, triggering another default on its debt.

Mauricio Macri was elected president on December 10, 2015. Exactly one week later, he released the exchange restrictions which saw the peso undergo a devaluation of nearly 40%, the largest recorded convertibility concluded in 2002 (Reuters, 2015). In January 2016, the peso  devalued again, and by April, monthly inflation increased to 6.7%. In December Macri later revealed the abolition of export retentions for maize, meat, and wheat while lessening taxes on soybean to 30%, costing 23.6 billion pesos (Gannio, 2016). This caused great increases in staple products, including oil, which increased by 51%, flour (110%) and poultry (90%), with a 50% increase in the price of meat within the next two weeks. The elimination of the retentions also precipitated the cost of soybean increase by 180% and corn by 150%.

In December 2019, Alberto Fernández assumed the country’s leadership, with former corruption-embattled President Cristina Fernández de Kirchner as his deputy. The country further faced another economic crisis. The concomitant worldwide economic destruction as a consequence of  COVID-19 has been expressly stark in Argentina (World Bank, 2021). The first confirmed case was reported on March 3, 2020. The authorities swiftly adopted far-reaching policies to counteract a quick spread of infections, including a full closure of borders and nationwide quarantine, beginning later that month. Though well-intentioned, the pandemic containment measures, late vaccination rollout, and a faulty economic reopening strategy had significant economic impacts (Costabel, 2021).

Argentina’s economy shrank nearly 10% in 2020, the largest diminution on the continent, apace with Peru, neglecting the Venezuelan tragedy. In 2002, when the economy collapsed, the fall was only slightly worse at 10.9%. Furthermore, this was also the economy’s third consecutive year of recession (Otaola & Bianchi, 2021). The pandemic has also accelerated an exodus of foreign investment, which in turn devalued the Argentine peso, amplifying the cost of imports, such as fertilizer and food, and sustaining inflation above 40%.

If history has taught the world nothing else of Argentine leadership, it is that the country is governed by presidents who, on matters related to financial policy, always do exactly the opposite of whatever their predecessor did. This trend remains to this day. What we are witnessing here is a partial reversal of the policy of the previous government and the one before this, and the one before it, and so on ad infinitum. Each successive administration builds its own policy, partly pulling down the fragments of the policy left by the previous administration. The result is that there is no general, cohesive structure leading to a collection of half-finished projects. With federal elections biannually, House of Representatives and Senate reelections in any given election year and presidential elections every fourth year, the country’s politics are subject to the whims of its leadership.

The International Monetary Fund

You must be asking yourself, “What about the world’s firefighter: the IMF?” “What role have they played in all this?” and “What is the Argentine-IMF dynamic like now?” Argentina is the main debtor of the Fund with a staggering $45 billion owed (Stott & Elliott, 2021). To put that figure in perspective, Joel Berg, CEO of Hunger Free America, estimated the cost of ending hunger in the United States of America at USD 25 billion; or a little over 50% of the Argentine debt (Just Harvest, 2016).

The IMF and Argentina share a long and complicated 66-year history since Argentina joined the organization in 1956. Since 1984, the country has received $56 billion in IMF loans, including the $45 billion loan in question under its last president, Mauricio Macri (Porzecanski, 2021). But the IMF’s constant attempts to rescue the struggling Argentine economy – through 21 separate lending programs– have not won many enthusiasts, in large part due to high interest rates. Argentina is possibly the country whose population abhors the IMF (Pérez, 2019). After all, Argentina remains the ideological home of Che Guevara and the next-door neighbor of Uruguayan author Eduardo Galeano, writer of the South American post-colonial treatise “The Open Veins of Latin America.”

From the renewal of large-scale international lending in the late 1970s, Argentina’s long-standing susceptibility to economic shocks has merged with the structural readjustment programs of the World Bank and chiefly the IMF to yield a particularly volatile mix of social dislocation, recessionary pressures, and political uncertainty. The result of this shift to neoliberal crisis management has been widespread. Unilateral payment deferrals that were characteristic of the crises of the nineteenth and early twentieth centuries suddenly yielded IMF bailouts and austerity programs that transferred the entire burden of adjustment for recurring crises onto the shoulders of the workforce, such as laborers and taxpayers in the debtor nations.

During the 1990s, the IMF dispensed money into the Argentine economy and supported the Menem policy of pegging the peso to the dollar, which ultimately triggered the recession. In exchange for their patronage, the IMF forced Argentina to administer demanding austerity policies, which they then abruptly cut off (Porzecanski, 2021).

Many Argentines have bitter memories of the painful budget cuts imposed by the IMF in the lead-up to the 2001 crisis, which failed to thwart the Argentine default on a record $135 billion of debt, the peso’s plummet, and the unemployment of millions of Argentine bourgeoisie. Argentina did eventually pay off its debts to the IMF after five years of economic discomfort, but leftist President Néstor Kirchner swore the state would never ever borrow from them again (Negron & Ortega, 2020). In Kirchner’s administration, the Fund was tool of populist gamesmanship. In 2005, after he repaid Argentina’s debt, he called the IMF the source of all Argentina’s “poverty” and “destitution,” trumpeting, “Goodbye and good riddance!” (Balch, 2005).

In this new world of international finance, any alternative to full reimbursement would simply be discouraged – something that became starkly clear after Argentina’s return to democracy after the collapse of the military regime in 1983 (Los Angeles Times, 1985). The president of the day, Raul Alfonsín, agreed to the binding nature of the preceding government’s debts, but briefly announced a six-month moratorium on interest disbursements to alleviate some pressure on the country’s besieged population, affirming that “we are not going to pay our debt by making our people hungry” (Roos, 2021). Right away, the creditors struck back, making any new negotiation of Argentine credit contingent on a new agreement with the IMF, which in turn declined to approve any arrangement without the sustenance of interest payments to the Wall Street banks.

In the words of a nameless US banker, the international financial community waited “until the economy went into such a tail-spin that the recalcitrant debtor must come crawling back to the table” (Roos, 2021). This international debt restriction left the nascent Argentine democratic government with no choice but to carry on with its interest payments and turn to the IMF for monetary support. “The only solution,” Alfonsín now professed, “is a policy of austerity that will be very hard and that will require great efforts by everyone” (Karachi School for Business & Leadership, n.d). The outcome of this turn to IMF-imposed austerity was an economic recession that in several respects was even graver than the crisis of the 1930s. In Argentina, and elsewhere on the continent, the 1980s consequently became labeled as “la década Perdida,” the lost decade.

To further add to the precarity of the situation today, a shadow of the state’s possibility of defaulting to the IMF looms. The current $44 billion owed to the organization was accrued under the previous president, Mauricio Macri. Now, under the recent nationalist Peronist left-wing government, many state –including the current administration– that the loan was illegitimate, and should have never been made. They allege the funding was used to fund Macri’s re-election campaign. Accordingly, the regime is requesting special terms for payment. The IMF holds that the loan was legitimate, and maintains that the loan met all its standard criteria and was granted under customary processes (Do Rosario & Martin, 2021).

One could conjecture that, naturally, the IMF is thinking about setting precedents as an international organization whose shareholders are 189 states. The IMF can’t cut an exceptional deal for one state, so it wants Argentina to follow the rules, though it has been accused of providing special treatment to certain countries – including Argentina – on multiple occasions (France 24, 2017). If there isn’t any settlement between the IMF and Argentina by March, the country will endure yet another default, but one more severe than any of its recent antecedents.

Argentina defaulted briefly on its debt to private creditors before reaching an agreement with them in 2020, which was the ninth default with private creditors. But a default to the IMF would be virtually unprecedented. This has only ever transpired very seldom with any nation and typically only for a few days because in defaulting to the IMF, a country severs ties not just from the IMF, but from all sources of international funding organizations such as the World Bank or the Inter-American Development Bank.

COVID-19 Response

As of July 2021, the government has adopted a litany of key policies pertinent to economic development in response to COVID-19, which my analysis placed into three categories: Fiscal (policies dealing with taxation, borrowing money and state expenditure), Monetary & Macro-Financial (policies of the central bank to regulate currencies through industries), and Exchange Rate and Balance of Payments (policies concerning Capital Flow Management Measures [CFMs] and Foreign Exchange) (KPMG International Limited, 2021).

Fiscal

The government measures (equivalent to around 6.5% of 2020 GDP, 4.5% in the budget and 2% off-budget, based on the authorities’ estimates) have focused on providing:

  1. Increased healthcare expenditure, including vaccine procurement, improvements in virus diagnostics, and general health infrastructure;
  2. Additional funding for workers and most exposed groups, such as social security and unemployment insurance benefits and subventions for minimum-wage workers;
  3. Amplified support for hard-hit industries, including subsidized loans for construction-related undertakings and the provision of grants to cover payroll costs;
  4. Forbearance, involving the uninterrupted delivery of utility services for households in arrears; and
  5. Credit guarantees for bank lending to micro, small and medium-size enterprises (MSMEs) to produce food and basic amenities.
    a. Furthermore, the government has also assumed anti-price gouging policies, including price controls for food and medical supplies.

Monetary and Macro-Financial

The government has also prioritized encouraging bank lending by means of:

  1. Decreasing reserve conditions on bank lending to households and MSMEs;
  2. Implementing guidelines that curtail banks’ holdings of central bank paper to safeguard space for MSME lending;
  3. Facilitating short-term easing of bank provisioning requirements and bank loan classification rules; and
  4. Effecting a stay on both bank account closures due to bounced checks and credit denial to businesses with payroll tax arrears.

Exchange Rate and Balance of Payments

Since August 2019, a multiplicity CFMs have been implemented, designed to limit some financial account transactions (parameters on transfers abroad, debt service in foreign currency and the purchase of dollars), and various current account transactions (surrender requirements on export proceeds, interest payments on foreign currency debt, dividend payments overseas, and limitations on the importation of services). After the emergence of the pandemic, CFMs helped moderate outflows and retain money in the Argentine economy. The exchange rate has devalued more than 50% vis-à-vis the USD from early March 2020 (Olivera Doll, 2021).

Conclusions

There is an argument to be made that Argentina has never truly emerged from its crisis. From its      birth as an independent state, the vicissitudes of state leadership in Argentina have always remained closely tethered to the umbilical cord of international finance –a reliance it has never really managed to sever. This vulnerability leaves the country acutely prone to debt and currency crises. When Argentine debt was exacerbated in the lost decades of the 1980s and 1990s, they tried to resolve the problem through privatization which –because of a lacking regulatory architecture, inter alia– yielded unintended consequences inclduing the Great Argentine Recession, which spawned exchange rate crises (Baer & Montes-Rojas, 2008). Since then, there have been periods of relative calm, but the structural and systemic issues were never resolved.

One such issue is that of the peso. Decades of currency devaluation and hyperinflation combined with the Great Recession made Argentina into the dollarized state it is today. The dollar is not simply another variable in the melting pot of finance, but rather a barometer that can measure how politics and economics are faring, in addition to serving as a savings instrument. The country never managed to produce the number of dollars it needed, which in turn makes the abysmal exchange rate an inevitability. For example, citizens are prohibited from purchasing more than $200 a month (Aljazeera, 2019). The fact that the local tourism sector is experiencing a reduction in tourists has only worsened the scarcity of dollar bills in Argentina. The problem is so acute that the government has even forbidden the importation of high-end liquor and vehicles (Raszewski, 2021).

Following that logic, Argentina failed to bridge the historically rich schism between the needs of its agriculture sector – its key source of income, which is quite competitive on the international market, and consequently supportive of free trade – and industry, which from the days of Perón has been governed by nationalist, protectionist and to some, absolutist policies. These grievances remain a deep-seated issue that the government and central bank have never quite fixed. Today, with a projected 2021 GDP of 455.172 billion (O’Neill, 2021), and PPP of 21700.00 USD (Trading Economics, 2022), Argentina’s economic freedom score is 52.7, far below the regional and national averages, making its economy the 148th freest in the 2021 Index of the World Economic Outlook Database and 26th among the 32 countries in the Americas (IMF, 2021).

Nobel prize-winning economist Simon Kuznets is rumored to have once remarked that there were four types of countries: “the developed, the underdeveloped, Japan, and Argentina.” This paper hopes to have justified why Argentina deserved a category unto itself.

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