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Since the end of the Second World War, Argentina has stopped giving priority to exports as an engine of growth and has begun to suffer from the lack of dollars, which becomes more evident as the country grows and imports increase; The story, at least until now, always ends with the devaluation
Argentina is stagnant. Over the last 50 years, growth in per capita gross domestic product (GDP) has slowed. In the rest of the world, not only has progressed, but most countries in the region have learned to overcome their structural problems and greater stability.
By the end of 2019, for example, Argentina will have the same GDP per capita as in 2009, according to data from the consulting firm EcoGo. That is to say, he even benefited from the soaring price of
basic productsIn the past decade, the country has not been able to increase its per capita wealth.
By contrast, over the same decade, the GDP per capita of the advanced economies increased by 1.5% per annum and that of the emerging economies by 3.7%, the Asian region at the top with a growth of 6% . Latin America grew by 1.1%.
"Over the past 50 years, the country has lost a relative position to the rest of the world," said Martin Vauthier, director of EcoGo. "There are very deteriorated social indicators, such as increasing poverty, loss of job quality and the expansion of the informal market, which is expected of a very low growth economy. . "
When we compare the situation with the countries of the region, it is obvious that there was a different dynamic. "Chile, Uruguay and Colombia have grown faster than Argentina, Brazil is a special case because it went into recession and fell sharply, and despite all its problems Vauthier added that Argentina concludes: "Except for Venezuela, the country's performances have been the poorest in recent years".
A more concrete example of the contrast between Argentina's stagnation and the progress of the rest of the countries is what happened with investments in infrastructure. Buenos Aires built the first subway line of Latin America in 1913 and the network now has an extension of 55 kilometers. Santiago de Chile, whose first metro line was inaugurated in 1975, has a network of 140 kilometers long, almost triple.
Argentina's problem comes back as
already seen.
As economist Jeffrey Sachs said last year: "For Argentina, the financial crises resemble the movie Groundhog Day: every year that I visit, there is another crisis, 5 or 10 years later. " The question is how to escape. of this ".
The beginning of the problem
To respond when the country began to lose relative wealth, economists said the end of the Second World War was a turning point.
"Until 1930, Argentine exports were a real engine of growth.It was a period of job creation and rapid growth.In fact, Argentina was among the ten economies with the highest GDP in the world, "says Ramiro Castiñeira, Econometric Econometric Council.
"Then came the intra-guerrilla period and, because of the wars, international trade was closed, but when the bullets stopped and the world resumed its trade, Argentina decided not to join and the period" of life with what was ours "was beginning the import substitution," he adds.
Since then, policies that over the years have led to the application of export quotas, withholding taxes, sworn import declarations and the "vice" of leaving the exchange rate behind have begun. . By putting obstacles in the way of trade, Argentina has struggled to generate the dollars needed for growth.
"When a country develops, industrial production increases and the demand for imports of inputs and consumer goods increases, for which it takes more money and the source to obtain them." is exports, "admits Vauthier.
"Argentina does not obtain sustained growth in its exports because they are highly concentrated in primary products, which depend on climatic factors, so that the country can not finance the increase in imports it needs to increase, the current account deficit starts, it is financed by credit, but it is cut at some point, the capital goes out of the country and the devaluation comes in. Then imports become more expensive, Activity slows down and activity decreases ", describes the economist C is what is called in jargon the
stop and go.
Di Tella University professor Eduardo Levy Yeyati identified the 1980s as the decade in which the country stopped growing at the same rate as Australia and the United States. However, he says that it was in the 70s that Argentina began to have a growth problem. "The productive development model based on the transfer of primary income to promote the basic industry and the production of durable goods failed: we did not achieve the competitiveness needed to export and we were confronted with an external constraint, that is, we did not export enough to import what we had to grow, resulting in periods of external indebtedness and crisis. " he explains.
To encourage exports, Levy Yeyati says businessmen need signals to sell abroad, for example "to have an exchange rate that does not lag behind – to reduce inflation – during the years election ". Similarly, he says, "many Latin American countries face the same problem, they are aggravated by the inertial inflation that forces the Central Bank to maintain positive real rates, which has tendency to depress the exchange rate ".
Mario Blejer, former president of the Central Bank, expresses as follows: "Argentina has spent 70 years without being able to maintain its competitiveness without devaluing the issue, which is why we can not have a situation. more similar to that of other countries for which the exchange rate is not the only instrument for maintaining competitiveness ".
Countries of the Pacific Alliance, which, unlike Argentina, have been able to consolidate their growth, have made their exports more efficient through investments to reduce logistics costs and trade agreements aimed at reduce tariffs. In other words, thanks to the investments, they improved their productivity and managed to increase their GDP.
"In Argentina, by contrast, per capita productivity has fallen dramatically, with many citizens working in low-productivity areas, such as the state, which also has a weight in the economy, which in 2015 accounted for 47 percent of the population. PBI Today represents about 42%, "says Fausto Spotorno of Orlando Ferreres.
The economist points out that investment over the past decade has not declined but increased a little. The problem was that it was poorly distributed. "In the last time, rules of the game were put in place that led investment to nonproductive sectors, such as the manufacture of mobile phones in Tierra del Fuego, for which the agro was taxed, "he concluded. the money that Argentines have abroad – which is between $ 300,000 and $ 400,000 – would have been invested in the country, we would have the GDP of Australia and Canada. The money was sent because the state started to damage the country. private sector through inflation, taxes, expropriations and failures, all of which affected private capital, which started to escape and economic growth deteriorated. "
The crises of the last 45 years
1975: Rodrigazo
It was the first major financial crisis in the country. This is what happened when the then Minister of the Economy, Celestino Rodrigo, ordered a series of devaluations resulting in inflation of 873%.
1981: The devaluation of Sigaut
"Whoever bets that the dollar loses," said the famous Minister of the Economy of the time, Lorenzo Sigaut, who then applied the successive devaluations that resulted in a rise in the exchange rate of 225, 8%.
1989: hyperinflation
During Raúl Alfonsín's government, the exchange rate reached a peak of 61.1% in just one month. GDP contracted by 4.4% and poverty rose to 40.5% of the population.
2001/2002: End of convertibility
An exchange of currencies caused the banking corralito, a political crisis and, a few weeks later, the exit of the convertibility, which allowed the parity of the exchange rates to reach three times soon.
2008: international crisis
The crisis originated in the United States Subprime mortgages had an impact on the rest of the world and resulted in a restriction of international credit.
2018: The last major devaluation
Last year, the country experienced a 101% exchange rate hike after a mbadive capital outflow. This generated 47.6% inflation and a loss of purchasing power.
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