I always read that before WWI Argentina was one of the ten wealthiest nations in the world.
Is this actually so? If so, why? And what happened to the country.
Here’s some reading.
The current fiscal crisis is a bit more complex than what I care to gnaw on this morning. Simply though, the Argentine economy was at a high point in the early 20th century when it was largely based on agricultural output. Argentina endured 40 years of political mayhem (from the 1943 ascension of Juan Perón through the 1983 exit of the military junta) during which time it failed to make the transition to an efficient modern industrial economy, while much of the rest of the world was doing juust that.
In 1900, Argentina and the USA were roughly equal in per capita GNP. However, from that point onward, the USA grew and Argentina shrank. In fact, ARGENTINA may become the first case of a first-world country actually entering the third world! The reasons for this are complex-certainly Peron and his gang of thieves played a part. I suspect that Argentina was simply too small to support much of an industrial base-and its beef and wheat farming are just not enough to sustain a modern standard of living. Last report was that most of the foreign banks are pulling out-Canada’s Scotia Bank is leaving Argentina after losing billions! Nothing seems to work-and another ominous sign-most of the university-educated class are leaving to go to the US, Brazil, and Europe. A case study in how to drive a prosperous, potentially wealthy nation into bankruptcy!
GDP per capita in Geary-Khamis dollars
Country … 1913 … 1930… 1950 … 1970 … 1990
US … 5307…6220… 9573 … 14854 … 21866
UK … 5032 … 5195 … 6847 … 10694 … 16302
Canada … 4213 … 4558 … 7047 …11758 … 19599
Japan … 1334 … 1780 … 1873 … 9448 … 18548
Argentina … 3797 … 4080 … 4987 … 7302 … 6581
Source: Angus Maddison, Monitoring the World Economy 1820-1992, OECD,
Paris, 1995,pp.193 ff.
Expressing GDP per Capita in Geary-Khamis dollars is an attempt to equalise what economists call purchasing power parity across countries. That is, it tries to take out the effects on GDP per capita of things like different exchange rates.
Unfortunately I haven’t got the figures from 1900 but Argentina was definitely higher up the ranking and was on a sharp downward decline by 1913. From what I have heard previously, in 1900 Argentina was definitely in the top 5.
Some reasons for Argentina’s decline are given by other posters but probably the main reason that it declined was simply that the rest of the world changed and Argentina didn’t change with it. Per capita consumption and real (inflation adjusted) prices of agricultural and basic commodities (which formed the backbone of the Argentinian economy) declined significantly over the 20th century and Argentina never adjusted to meet those changes.
There are hundreds of studies out there comparing changes in Argentina to Australia over the 20th Century. The two countries were in almost identical positions at the beginning of the century - high GDP per capita but heavy reliance on agricultural industries - but in entirely different positions at the end - Argentina is close to being a third world country while Australia has clung to its position by adjusting.
I think that Argentina’s fail was both an excessive economic protectionism and governments more concerned in fighting the communist threat than anything else.
In 1900 Argentina was a rising country, 13º in global scale life style, beign in first place the USA and Australia. After WWII, Argentina, though plenty industrialized, keep on a protectionist policy that truncated economic development by insulating national products from global competence, and thus not fomenting quality manufactured goods.
Although that same protectionism implemented by Perón flourished national industry in a couple of years, keeping it prevented Argentina from converting into a mainly exporting nation - or, at least, a fairly one.
Subsequent military governments, responding many times to the same foreign interests that help them to make their way to power, didn’t pay too much attention to these matters and passed their days killing subversives or anyone at hand.
And now, because of these gross mistakes, we have an unemployment and underemployment rate totalizing nearly 40% of national population. All because of a lack of industry, increased thanks to the 1-to-1 rate of exchange sustained by law since '90s.
And you know what is the worst part? Government still don’t mention the word ‘industry’ in their speechs…
:mad:
As said before, Argentina’s economy is based mostly on agriculture; the nation’s main ressource are its vast cattle herds. In the beginning of the 20th century, there was a lot of money to be made in the business, but with more and more industrialization and decreasing food prices, cattle just hasn’t the importnace it used to have. Argentina missed modernization of its economy and relied too much upon agriculture.
And add to what Zapper mentions, that during the 1960s-1980s period the usual tactic of those governments to keep up the appearance of “prosperity” and keep the people from taking to the streets (besides busting the heads of or “disappearing” anyone who complained about the latest policies) was to print money, creating episodes of hyperinflation.
By the late 80s Argentina had gone down to the lower-middle-class of countries, but at least barely held on to some dignity. Then in the late 80s and thru the 90s the governments tried to borrow their way out of the hole. The bankers demanded stability, and the governments offered it by artificially tying the currency to the dollar at 1:1 and dumping nationalized industry. When the world economy went flat, dollars stoped flowing in, but not out. When they ran out of dollars in the bank, money stopped circulating – resulting in the political-economic crash-and-burn of last December.
It looks like Argentina will soon be bankrupt again…after nationalizing a Spanish oil company, the Argentine government finds it has little or no credit-surprise! What’s next for this comic opera country?
This is more a topic for Great Debates, and certainly isn’t worth raising a 10-year-old zombie for. If you want to discuss this, open a new thread in GD. This is closed.
Colibri
General Questions Moderator