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 catastrophe, primarily discussing the relative fiscal policies and external shocks that led up to the crisis in 2001, followed by a brief examination of the governmental reaction and recovery efforts.
In order to identify the causal factors of this crisis, it may be best to start by looking at the 1980s in Argentina. While the economy of Argentina may have suffered deeply during 2001 and 2002, economic instability was nothing new to the country. During the 1980s Argentina was a victim to the Latin American Debt Crisis and high inflation. In 1989, inflation spiraled out of control, reaching nearly 200% in July alone (Hanke and Schuler, 2002). Not long after, the president at the time, Raúl Alfonsín, resigned due to subsequent protests and riots. As a result, the next elected president, Carlos Menem, took office several months early and appointed Domingo Cavallo as Minister of Economy. Together, starting in the early 1990s, Menem and Cavallo enacted certain major structural reforms—includin...
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...rts. The Argentine administration enacted pro-growth policies and avoided the drain of resources by controlling expenditures. Also, the government firmly negotiated the restructuring of the defaulted foreign debt. Argentina broke with the IMF in making important decisions regarding its economy recovery, despite the International Monetary Fund’s continued borrowing to Argentina during the late 1990s and early 2000s. In the next few years following 2003, Argentina managed to return to growth, as GDP increased foreign currency reserves increased. In the future, other less developed countries can learn from the Argentinean experience. In hindsight, the adherence to the fixed exchange rate system was maintained too long. Other countries should be wary before adopting such a currency board system, since this fixed rate could lead to an overvalued exchange rate.
Part I: “Consensus in Argentine Society and the Rise of Perón”. Chapter one, “ The Crisis of the Liberal Consensus” begins explaining the low participation of the Argentinean population in the government due to electoral fraudulence and intimidation. Then, he goes on to detailed how the democratic liberalism governmental system was threatened by the elites of Argentina because they fear the possible loss of their power from the new sectors that were rising. After, the author expressed that the
The depression in the 1930’s in the country of Argentina was one of the most devastating internationally. In 1929, Argentina had the fourth highest gross domestic product; however a few short months later, this would no longer be considered the case. Considering that the economy heavily depended on foreign trade for daily essential produces, the economy was deficient of vital goods and thus lacked important industry. Mainly dependent on the foreign capital from Great Britain at the time, domestic industry was severely affected by the market crash due to the halt of British domestic capital investment. Through the Domino Effect, mass and widespread unemployment was a major and constant theme in the Argentinian culture at the time. This further affected the government revenue dropped significantly as the export of the country faulted investment and imports were decreased exponentially due to the international depression. As a result of the decline in national revenue, grand deficits began to appear. To repair the shortage of the countries’ profits, the government began to borrow mo...
Social conflicts are a given throughout any country’s history, but in Argentina, these conflicts intensified as the gap between the upper and lower classes grew ever more extensive (Gall). During Revolution of 1943, in the era of the “Infamous Decade,” Juan Peron began his slow rise to power, first as the head of the military of the Labor Department. It was here, when he attended a charity gala for disaster relief from the devastating earthquake that struck Argentina, that he met then Eva Duarte (Page “Evita” 7). Evita began to sit in Colonel Peron’s meetings, where she made the occasional, but memorable contribution (Page “Peron” 85). In this time to 1945, Juan Peron built up his power within the government, and the Army forced Peron’s resignation and placed...
report of the national commission on the causes of the financial and economic crisis in
Argentina, which was soon to become the economic powerhouse, quickly descends into a ghost town of abandoned factories and mass unemployment. President Carlos Menem transformed Argentina by selling out every public asset he could find; he privatized factories, and created many corporate handouts. The nation approved of Menem’s changes, and Washington said “This is the best thing ever” (The Take) What the citizens didn’t realize is that by transforming the nation this way, Menem was creating a capitalist wild west. This caused more than half the people to live under the poverty line, and they were at the point where being offered food for pay was the citizen’s only option.
This paper argues that the Mexican peso crisis of December 20 should have been expected and foreseeable. In the year preceding the crisis, there were several indicators suggesting that the Mexican economy and peso were already under extreme pressure. The economy bubble was ballooning to burst so much so that it was simply a crisis waiting to happen.
After the revolution of 1943 Juan Perón shared control of the Argentinean government. Under Pedro Ramirez, Perón held three cabinet positions. With that he saw an opportunity. He did many reform programs and won a lot of the support of labor unio...
The global financial crisis affected the many advance economies, particularly the United States. Unemployment significantly increased, people were evicted from their homes, and the search for employment was a dead end. However, Canada was not affected with the same force as the United States: “Canada’s financial sector was less affected than most advanced economies and it had the highest bank soundness rating in the World Economic Forum surveys from 2007-2008 through 2012-2013.” Despite the relatively stable status of the Canadian economy, Canada was very much involved in the review and improvement of international financial regulations. Canada was in a position to make changes to financial regulations due to their perceived experience in the matter, as Canada escaped the crisis relatively unscathed. Canadian delegates were placed in charge of four core areas in the reformation of financial policy and, “in all these areas, Canada was able to successfully push for reforms that resonated with its experiences and interests in enhanced financial sector regulation and supervision.” This crisis, and the successful reformations that came out of it, further installed Canada as a leader in economics, firmly inaugurating them as the world’s best bankers.
Since the 1970s, Venezuela has gone from being South America’s richest nation into a nouveau-poor society in search of an identity. Once known as the Saudis of the West, Venezuelans have seen their economic fortunes decline in exact proportion to the general fall in world oil prices. Even so, Venezuela’s many problems were hidden from view until relatively recently, when severity measures heralded the sort of economic crises so painfully familiar to other Latin American countries. Runaway inflation, currency devaluations and even food riots have marked this new phase in Venezuelan history, to which the country is still trying to adjust.
Europeans arrived in Argentina in 1502. Spain established a permanent colony on Buenos Aires in 1580. Later on Argentina will become independent, but it will not come until July 9, 1816. From 1880 to 1930s Argentina was one of the top 10 wealthiest nations based on their agriculture. It wasn’t until 1986 that Argentina became a democracy, before that it was under military regime. During 1998 and 2002 Argentina had a major economic downfall. This is known as the Argentinean great depression. There were a couple of reasons: During the military regime the country went into debt for not finishing projects. Also, after democracy came back the new president try to stabilize the economy by creating a new currency, thus the country needed loans for this to happen. The debt eventually rose and the country had lost the confidence of the lenders.
Between the years of 1976 to 1983, the period known as the ‘Dirty War’ was in full force in Argentina. During this period, thousands of people mysteriously went missing, and are referred to now as the ‘Disappeared’. It is believed that many of the disappeared were taken by agents of the Argentine government, and perhaps tortured and killed before their bodies were disposed of in unmarked graves or rural areas. Whenever the female captives were pregnant, their children were stolen away right after giving birth, while they themselves remained detained. It is estimated that 500 young children and infants were given to families with close ties to the military to be raised. Within this essay I would like to touch on the brief history of the Dirty war and why the military felt it was necessary to take and kill thousands of Argentina’s, and also the devastating affects the disappeared, and stolen children are having on living relatives of those taken or killed. It is hard to imagine something like this happening in North America relatively recently. To wakeup and have members of your family missing, with no explanation, or to one day be told your parents are not biologically related is something Argentina’s had to deal with, and are continuing to face even today.
By the fall of 1981, the Argentinean government under the leadership of General Galtieri and the military junta was experiencing a significant decrease of power. Economical...
Ludwig von Mises once said, "There is no more dangerous menace to civilization than a government of incompetent, corrupt, or vile men." The Dirty War of Argentina is a very good example of how corrupt a government can become and how that corruption can pose a great threat to the foundation of a country. The Dirty War lasted from 1974 through 1983. Over the course of the War, anywhere from 10,000 to 30,000 of Argentina's citizens were murdered or declared missing. The War was between the powerful oppressors of the Argentinian government and the millions of citizens of Argentina.
The Web. 11 Mar. 2014. The 'Standard' of the 'Standard'. http://policydialogue.org/files/publications/The_Latin_American_Debt_Crisis_in_Historical_Perspective_Jos_Antonio_Ocampo.pdf>. Pastor, Manuel, Jr. "Latin America, the Debt Crisis, and the International Monetary Fund.
This paper provides an overview of the crisis, outlines the major causes of the crisis, examine alternative solutions to the problem