The Faltering Economy of Argentina

Economics Explained

This is Argentina – a South American nation that has been home to an unprecedented period of sustained growth quintupling in size in the last decade.

This nation has seen remarkable resilience through financial crises and even though it cycled through 5 presidents in two weeks, its continued re-investment in itself has paid off many times over as average incomes have doubled in the same time period to create fantastic increases in the quality of life for all the citizens of the nation.

Or at least that would have been the video we were making a few years ago.

Unfortunately today the economy of Argentina tells a very different story.

Just as quickly as the economy soared to these lofty heights it has crashed back down bringing about a period of heavy inflation and widespread poverty.

But perhaps this shouldn’t be a huge surprise, in the last 100 years, the economy of Argentina has been categorized by periods of massive growth followed by huge declines making the most recent decades little more than a continuation of that unfortunate trend.

This is a real shame because Argentina obviously has a lot going for it, from a healthy population of productive workers, strong natural resource reserves, and even a landmass that is very conducive to foundational industries like manufacturing and agriculture.

But despite all of these advantages Argentina has time and time again fallen into this unfortunate pattern and is now teetering on the edge of becoming a full-blown failed state.

Nobel prize-winning economist Simon Kuznets is said to have remarked in the early 1970’s that there are four types of economies in the world, developed, underdeveloped, Japan and Argentina.

We have already explored what makes Japan so weird, but to unravel the mystery of Argentina we are going to have to understand a few specific issues.

What has caused the various economic booms over the years?

What has caused the subsequent economic declines?

And why is this most recent downturn just a little bit different?

Once we have done all of that we can get to the fun stuff and put Argentina on the economics explained national leaderboard, how's that for a 2020 grand final?

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